Over the last several years, we’ve been tracking the best microgyms in the world. Their success led us to build the Two-Brain Roadmap. In this series, I’m sharing the six things they all have in common—The Six Habits of Highly Successful Gyms.
I’ll wrap this series up on Jan. 24 with a free webinar on the topic. You can register here (500 people max, and it filled last time).
In the previous installment, I wrote that the first two habits of highly successful gyms are Focus and Metrics. Today, we’ll focus on the next two habits: Delegation and Pricing.
What’s the difference between working in the business and working on the business?
Working in the business means coaching classes and mopping floors. Working on the business means hiring staff, marketing for growth and improving your operational excellence.
When you’re a coach, you should work hard to get better at coaching. But when you own a business, coaching is no longer your primary job.
The best gym owners in the world know that their jobs changed the moment they opened their own gyms. Now, some love coaching, and some actually have the goal to just coach all day. But all the best gym owners know that if they spend all their time coaching, their businesses will die.
The best gym owners focus their time on the things that will grow their businesses. To figure out where they should focus, they calculate their Effective Hourly Rate.
Calculate your daily wage (your monthly wage divided by 30 days). Then count up the hours you spend working. Do a time audit to determine where you spend them. Divide your daily wage by the hours you work in a day. That’s your Effective Hourly Rate.
$2,500 / 30 days = $83.33 per day
$83.33 / 13 hours = $6.41 per hour (ouch)
Now, prepare to delegate the lowest-value roles on your schedule.
Group tasks together to make up the roles. You can download all the roles and tasks in your gym from our guide “Free Hiring Plan and Job Descriptions,” found here.
After you assign an hourly value to each role, hire someone to replace you in the cheapest one. Use that time to work on a higher-value role, like sales. We call this “climbing the value ladder,” and it’s part of the step-by-step process we mentor you through in our Incubator and Growth programs.
The best gyms in the world know what they’re worth and charge that amount.
Other gym owners “know they should charge more” or “know they’re worth more,” but they don’t know exactly what they’re worth and don’t charge anywhere near that amount. The weakest gyms charge what their owners think clients can afford to pay (they’re always wrong and they always guess low).
How do you set your prices?
Weak gym owners look to see what everyone around them is charging and then subtract $20.
They think, “This is what the market will bear!” and then justify that myth with stuff like “I’m in a poorer demographic.”
They tell themselves stories that cripple their businesses.
How should you set your prices?
Set your rates based on what you want to make.
Let’s say you want to make $100,000 on a business with a 33 percent profit margin.
You’re going to have to work to make that profit margin happen, but you can do it. On the next edition of Two-Brain Radio, Peter Brasovan and Jared Byczko will tell you how they did it in a gym with revenues over $1 million (it’s a great podcast episode).
Here’s the math:
We use the number 150 (Dunbar’s number) to make the math simpler.
What about discounts? Even for marketing purposes?
Discounts mean you’ll have to work harder for less money. And they don’t work anyway.
With discounts and sales, you’ll need more clients. That means more coaches, more space, more equipment. You’ll need to spend more time and money on marketing and more time and money on retention. You’ll have to closely monitor your churn rate. You’ll always be seeking the next big marketing idea instead of comfortably banking on a loyal audience. You’ll always be victim to underpaid coaches leaving, discount gyms luring clients away and people complaining about your programming.
It’s been proven over and over again—if you haven’t heard stories from gyms that were killed because of the discounts they offered, it’s because they’re gone.
When we post stories about gyms that charge $400-$1,000 per month for membership, many other gym owners don’t believe it’s possible. They comment on our social-media posts and deny the truth before them. But gym owners who have successfully implemented what they’re taught in our Incubator know the truth and live it. They follow the six habits and see why the top gyms in the world are so successful.
Want a mentor? Click here to book your call and get started.
Spoiler alert: Every one of the top microgym owners in the world has a business mentor.
Other Media in This Series
The Six Habits of Highly Profitable Gyms
Habits of Highly Successful Gyms: Focus and Metrics
Two-Brain Radio: The $1 Million Gym Built by Two Guys Who Once Rationed Paper Towels
When I visited Westside Barbell a few years ago, I was surprised (and a bit disappointed) to find all the lifters doing sets of 50.
After waiting around in the parking lot for over an hour, I wanted to see bleeding noses and bulging eyeballs and 900 lb. on a bar. But Louie had everyone doing high-rep work that day. He told me he wanted to help his elite lifters “hardwire” the movements. I was familiar with the concept in kids, but this was new: Even pros have to get a lot of basic reps in to progress.
I thought of Louie last week when a friend shared this with me: “Sales is a perishable skill.”
Joe Marcoux was my first sales coach. He’s been in the fitness industry a long time, and he’s sold millions of dollars in products and services. He prompted this series of articles: help gym owners practice their business skills. In this and several other posts, I’m going to give you scripts, templates and scenarios. You’re going to put in practice reps.
Sell to Your Dog First
We’ve been tracking data on lead generation, appointments and conversions for over a year.
Your ability to get people to join your gym really comes down to one thing: your ability to get the interested people to sign up.
This is really the narrowest point in the funnel. Lead generation, lead nurture and ads—that’s actually the easier stuff. The hard part is learning to say, “Would you like to join us?”
After tracking this data with hundreds of gyms, we know that teaching you the “how” isn’t the big difference maker. We teach you exactly what to say, and to whom, in the Incubator.
But reps really make the difference.
Don’t get your reps on a live audience. It’s too expensive. Instead, practice on your coaches. Or your spouse. Or your dog. Or the mirror. But you must practice.
The Two-Brain Scenario Deck is the most popular item in the Two-Brain shop because it makes sales fun. We ship a deck to every gym owner who signs up for the Growth Stage.
Today, I want you to practice the scenarios below five times each. If you’re really shy, practice in front of a mirror—top salespeople do it all the time.
Practice Reps: Sales
1. A new client wants to lose 30 lb. in the next six months. Present your plan, including nutrition coaching and exercise. Tell the client the price and ask if he or she is ready to buy.
2. A new client says, “I know what I need to do. I just need you to hold me accountable for doing it.”
3. A new client says he or she wants to sign up but has to check with a spouse. Help the client take action now.
4. A new client says he or she has to “think it over.” What do you say?
5. A client says, “That’s a lot more money than I thought I’d pay for a gym membership.” What do you say?
It doesn’t matter if these practice sessions go well. It doesn’t matter if you feel like an idiot while you’re practicing.
What matters is that you start learning how to help people get the results they want.
And if you can’t convince them to join your caring circle of fitness, they’ll waste their money somewhere else. It’s really your duty to be good at this. Someday, you might hire staff to do this for you. But for now, it’s up to you: Save them.
Other Articles in This Series
Rep Week: Goal Reviews
Rep Week: Affinity Marketing
Rep Week: Coach Evaluations
Rep Week: Hard Conversations
Over a decade ago, I realized that my job had changed: I was no longer an employed personal trainer but a business owner.
The next epiphany was that my knowledge was asymmetrical: I knew a lot about fitness and exercise science but almost nothing about business.
I’ve always read for at least an hour every single day, but my crazy lifestyle was squeezing out reading time: I’d be in my truck by 4:30 a.m. to get to the gym and wouldn’t get home until 10 p.m. I’d collapse into bed without reading a word.
Then a friend turned me on to Audible. I bought a Seth Godin book. And I started to translate what I learned from general to specific: I wrote about how I’d use Seth’s material in my gym (publish more content). I did the same for other authors. And I started to churn through books pretty quickly.
But I still made two rookie mistakes that cost me a ton of time: I made myself finish every book before starting the next. And I also thought it was best to get a ton of different books instead of focusing hard on a few.
Naval Ravikant recently tweeted: “The smarter you get, the slower you read.” That was interesting but not true for me in all cases. Sometimes I can read the first few chapters of a book and skip the rest (as in David Goggins’ book). Sometimes I think it’s better to reread a great book and pick up the smaller pebbles that I missed than to buy a new one. I listen to “Resilience” every year.
The hard part isn’t finding a good book. The hard part now is finding the right book at the right time and catching the most important message. There are now a handful of services selling 10-minute versions of top books. I actually wrote “Founder, Farmer, Tinker, Thief” to filter huge ideas according to when the entrepreneur needs them most.
Top Tips for Buying and Learning From Books
1. Eighty percent of the time, buy the audio version. Twenty percent of the time, buy the print version. For instance, the first chapter of “Scaling Up” is almost impossible to follow in audio. You have to buy the print version. On the other hand, any of Nassim Taleb’s books are far more entertaining as audio.
2. Don’t be scared to buy multiple copies. I found myself lending out “Rich Dad, Poor Dad” to everyone and never having a copy on hand. Now, if you visit the workshop, you’ll see 20 copies of that book, 20 copies of “How to Win Friends and Influence People,” and 20 copies of “Never Split the Difference” on my shelves. I hand them out to nearly everyone (my nieces and nephews have stacks of books from Uncle Chris by now).
3. Don’t place a budget on books. Like mentorship, you’ll get personal growth from books … but your business will pay for it. Every book is a tax-free, life-changing event.
4. There’s no such thing as a bad book. But don’t get buried: Overwhelm leads to paralysis. After you take our Founder, Farmer, Tinker, Thief Test, make the best choices based on your current phase of entrepreneurship.
5. It’s better to retain a little than to read a lot. To make the messages from each book stick, I have to “teach them back.” That means talking about them with other people, or just blogging about them in my own words. That’s why I started my original blog (dontbuyads.com) back in 2009: to make the lessons I was learning stick better. It works.
The Top 11
Seth is trend-proof. He got that way by teaching principles instead of tactics. While we, the folks in the trenches, can be swayed by sexy business fads (like Facebook marketing, office “culture” and personality testing), I always come back to Seth’s message of authenticity and relationships. And the experts always come back, too: Facebook now says that building a content platform is critical for paid lead generation to be successful, for instance.
This is possibly his most specific book, and it’s required reading for anyone who wants to succeed at the long game. Seriously, buy it.
Recommended for: Founders, Farmers, Tinkers and Thieves.
It’s rare for an author to say “if you buy this book, you don’t have to read my other books,” but that’s what attracted me to “Scaling Up.”
As an author, I sometimes wish I could go back and rewrite “Two-Brain Business” (or even take it off the shelves, because “Founder, Farmer, Tinker, Thief“ is so much better).
“Scaling Up” is a step-by-step process for growing your business as a CEO.
Recommended for: Farmers preparing to be Tinkers.
The key to business growth isn’t customer acquisition; it’s customer retention. Habits are formed slowly. Coleman believes they require careful nurturing over 100 days. The book focuses on mapping the client journey in your business and then digging really deep into the first 100 days. We teach the client journey map in the Two-Brain Incubator, and our focus has always been on retention before marketing. This is a book every gym owner should read.
Recommended for: Founders and Farmers.
Most business books focus on “what can you change, add or improve?” Maxwell’s books tend to focus on the how: How to lead through change, how to inspire others to stay on the bus when the destination isn’t clear and how to help people grow as leaders. In fact, many of the other books on this list borrow from Maxwell. They say things like “a leader’s job is to create leaders” and other maxims that originally came from Maxwell. So reading Maxwell is going back to the source, in many cases.
The hard part of shifting from Farmer Phase to Tinker Phase isn’t the money: it’s leveling up from “boss” to “leader.” Very few of us have the education, experience or practice necessary to do so when the time comes, so we have to lean on lessons learned in the trenches from guys like Maxwell. Half of the value of his books is in the content; the other half is in the delivery. Maxwell doesn’t bury anyone in statistics. Most of his teaching comes from stories. You can learn a lot about leadership just by observing how he leads his audience.
Recommended for: Farmers and Tinkers.
This book isn’t really about being “disliked.” It’s really about Joseph Adler, who wrote that “every problem is an interpersonal relationship problem.”
The book digs deep into Adlerian psychology and gives entrepreneurs really solid tools for having tough conversations, for relating to staff better and for knowing when to draw really clear lines. For me, the book helped me realize that being clear isn’t harsh; it’s actually doing everyone a favor.
Recommended for: Tinkers.
It’s rare for business books to be directive. Most teach broad concepts and ideas, and good entrepreneurs are left to figure out how to apply them in their own businesses. I try to write directive books (“Do exactly these things in this order”). But “Never Split the Difference” is a directive book covering one of the hardest topics of all: really hard conversations when there’s a lot on the line.
We lean heavily on Voss’ lessons when we’re guiding entrepreneurs through rate increases, firing staff or removing tough clients. I keep 20 copies of this book in my office and frequently ship a copy to my own mentorship clients. Like “Rich Dad, Poor Dad” and “How to Win Friends and Influence People,” I give a copy of this book to kids in my family when they turn 18.
This book is so important that we’re bringing Voss in to deliver the keynote speech at the Two-Brain Summit in 2020.
Recommended for: Founders and Farmers.
I think it’s been a few years since I published a list that didn’t have Mike Michalowicz on it. His books are funny and easy to read—and always include at least one key concept that changes the way you look at business. In “The Pumpkin Plan,” Michalowicz taught us how to identify and keep our best clients and to build our businesses around them. In “Profit First,” he taught us how to make sure we got paid. In “Clockwork,” I think Michalowicz’s biggest idea is the Queen Bee Role.
A CEO should narrow his or her focus to doing the one thing that grows the company. For me, that’s thinking and then writing about it. That’s hard for people to understand—many people think I’m riding my bike for fun or “hiding” in my office when the door is closed. But really, the more time I spend getting into flow state, staying in flow state and publishing content, the better my businesses grow. That’s my QBR.
Recommended for: Tinkers.
I often say that “the people who got you here might not get you there.” But what if that person is you?
The Founder’s lifestyle—long hours alone, working with single-minded focus—can harm relationships and business. Ultimately, entrepreneurs need completely different skill sets—like the ability to lead a team and trust that their vision will be fulfilled. But the things that made them great in Founder Phase are probably harmful in Farmer Phase. So they need a “reboot.”
Jerry Colonna is called the “CEO Whisperer” in his Amazon profile (and he often winds up whispering in the book). It’s a guided journey through your demons, your ego and your weaknesses. And it’s directive: There are specific exercises and assignments to help you take the first steps to bettering yourself. I’ve never found a book that gave me a sense of therapy. But underneath all the habits, skills and knowledge is you—and you’re not perfect. Here’s how to deal with it, fix your problems and grow as a person.
Recommended for: Tinkers.
In 2018, I identified that I wasn’t equipped to lead a rapidly growing international company, so I started seeking mentors to help me learn to lead. I changed my world view and habits significantly, had some hard conversations and took some bold risks. But it was exhausting, and “boss Chris” wasn’t really the person I wanted to be at home. So Herman’s book made me ask: “Can I be the CEO part time and shed that skin when I don’t need it?”
According to the book, you can. And Herman shares a ton of examples that show how celebrities and athletes have used the “alter ego” to do the same. We introduced the concept to gym owners as part of their sales training (Herman originally tested the method when he was selling personal training). It’s definitely useful, and I signed up for Herman’s one-on-one guidance because the book was so powerful.
The hard part is switching into and out of an alter ego … but, like fitness, it takes practice. Herman uses “totems” at home to switch into “dad mode.”
Recommended for: Farmers.
This isn’t promoted as a business book, but few books make me pull my truck to the side of the road and say “holy shit.” So I included it. And the message definitely has bearing on you as a leader in the public eye.
Jordan Peterson is a polarizing figure. I wondered, “What’s this guy actually saying?” so I read the book.
The book itself is an epiphany. I recommend it to everyone. “Make your kids strong, not safe” is a transcendent lesson that every leader can use (replace “kids” with “business” or “relationship” or whatever). And Peterson models that “strong, not safe” approach to life: He’s attacked in the media pretty often for being anti-whatever. But his critics almost always take his message out of context to further their causes.
Peterson is an example of standing up for your beliefs (and also a warning). If you say “this is wrong” when you disagree with a popular trend, you’ll attract criticism in volumes. Not everyone can handle that. I certainly couldn’t take the storm of hate that Peterson deals with daily.
Recommended for: Everyone (you’ll either love it or hate it).
Collins doesn’t publish often. He doesn’t even appear on podcasts often and rarely takes the stage. But when he talks, everyone listens.
“Turning the Flywheel” was a curiosity buy—I loved “Good to Great,” “Great by Choice” and “Built to Last,” and I wondered what a “monograph” meant to Collins. This is really a how-to book: His previous books had so many huge concepts that he needed something to tie them all together. Don’t read this until you’ve read at least three of his other books, but when you have, this is an inspiration.
Recommended for: Farmers and Tinkers.
We’re in the business of behavioral change. “Atomic Habits” is a more useful tool for a fitness coach than almost any fitness book. It’s directive, and if coaches simply copied his model with their clients, they’d make more money for longer. Most of the big ideas are front-loaded, so this is a quick read.
A great story about creating change in a change-resistant environment. The typical model of submarine command depends on one leader rigorously enforcing predetermined rules. But Marquet pivoted—tough to do in the Navy—and eventually got buy-in from his crew. Best lesson: A leader should be measured on the success of his team years after he’s gone.
Unfortunately, the stories didn’t lead to a clear directive path (“Do this in your company”) but did offer some exercises (“Ask yourself, ‘How can I use this in my company?’”).
Another ex-FBI guy, Schafer is behavioral scientist to Chris Voss’ hostage negotiator, and the book reads like it. “The Like Switch” is really interesting and good at explaining why people behave the way they do. But where Voss’ book is directive (Step 1: do this; Step 2: do this), Schafer’s is mostly theory. If you want a scientific dive into “How to Win Friends and Influence People,” “The Like Switch” is a good one.
Dalio’s premise—that life, management, economics and investing can all be systemized into rules and understood like machines—is a pretty bold one. I was excited to read it. But “Principles” mostly just created “book guilt” for me: I have a lot of friends who loved this book, but I really couldn’t get into it. So it sits in my Audible account unfinished.
The counter to Dalio’s book is “This I Know.” Dalio has deep insights and draws conclusions based on profound experience. O’Reilly tells amazing stories. His book is really hard to put down. And while his insights might not be deep (he actually tries to present opposing viewpoints instead of saying “do this one thing”), I’m a huge O’Reilly fan. You can learn more from his delivery than from the content of most books on this list.
A marketer’s education should start with this book. But it shouldn’t end there. Most of us try to be too artsy—we make complicated websites that actually stop people from booking or signing up. We try to be different at the expense of being clear. Miller’s book is the antidote. It’s well written and clear (of course). Consider this the CrossFit Level 1 Course: enough to get you out on the floor. And Miller’s storytelling makes the message stick. But he doesn’t provide conversion data to back up his claims. If you don’t read any other marketing book this year, read this one. But I hope you read more than one.
Crabtree is a “celebrity accountant,” a status that’s pretty hard to achieve. His book makes accounting as clear as it can be. I was thrilled to find a higher-level accounting method that dovetails perfectly with the 4/9ths and Profit First models that we recommend at Two-Brain. And after reading the book, I signed up for his service; his firm now provides the CFO for my company. They build dashboards that help me figure out where to spend and where to save, and they bring a lot of clarity to my rapidly expanding company.
I started listening to this book while riding my bike. But after an hour, I realized that I should have been sitting in front of a laptop. The book is so directive that you could listen to a chapter and clearly understand the work to do, then listen to the next chapter, and so on. Several of the mentors at Two-Brain recommend this book, and our CPO is in Herold’s mentoring group. Highly recommended for entrepreneurs at Tinker level and above.
Books I Didn’t Like (But You Might)
Nassim Taleb once wrote that “most books would have made a good article,” and Naval Ravikant followed with “most articles would make a good tweet.” Like many business books, “Can’t Hurt Me” started with a good premise and then filled hundreds of pages with examples. The whole book could be summed up in a hashtag: #HTFU.
The Zappos story was a revolutionary one in 2005: an online retailer whose clients were raving fans. But Zappos leaders claim that their real strength is in creating “culture” in their team. In fact, “culture”—the biggest buzzword of 2019—probably originated with Zappos.
There was nothing really new in the book. But I’m biased: The team of mentors at Two-Brain gets to work on interesting problems all day long. They’re emotionally invested in their work. Zappos staff sells shoes. They need workplace engagement, tricks and “culture boosters” to keep them around; I don’t.
If you run a software company or online shoe store, you might need to artificially infuse “culture” into your workplace. If you run a service business, your culture is determined by your care for your clients.
Yeah, I wrote this one. After publishing “Two-Brain Business” in 2012, I’ve spent thousands of hours on the phone with other gym owners, collected libraries full of data and seen new ideas rise (and old ideas fall). I’ve spent hundreds of thousands of dollars in mentorship, read hundreds of books and spent thousands of hours online talking to others in the industry.
There’s a lot of knowledge out there. Frankly, there are too many ideas. The most common problem for entrepreneurs is actually overwhelm: We can’t act on everything, so we get paralyzed.
I wrote ‘Founder, Farmer, Tinker, Thief” to give you the distillate: When you boil it all down, these are the habits, tactics and directives that you’re left with. And because not everyone needs everything at the same time, I broke the entrepreneurial journey into four phases. This book is a filter for the best strategies that we’ve actually proven to work.
Schrage’s premise is to start with ideal customer outcomes and work backward. How will your customers be transformed by your service? What will they look like after they’ve used your service successfully?
This is a useful idea for the service industry, and I think it could help gym owners. By painting an aspirational avatar (“here’s what a client should look like after three years at my gym”), a coach could work backward to set up an “ideal client journey.” But those are my ideas, not Schrage’s. His book sticks to high-level concepts and the usual examples (Google, Apple, Starbucks, etc.).
My mentor, Todd Herman, told me that I needed to listen to Christensen. He’s a pretty dry speaker, so his YouTube videos aren’t popular. But his ideas are: Others talk about him in their engaging videos.
The biggest epiphany I got from Mike Michalowicz’s “Pumpkin Plan” (now required reading for all Two-Brain clients) is that I should ask my best clients what they want instead of trying to guess. Christensen’s message compounds on that concept: We should all ask ourselves “What job is this service being hired to do?”
Christensen’s “jobs to be done” idea is a huge game-changer. But his explanations are so complex that other authors will probably simplify his ideas and make far more money on them.
I’m a fan of Diamandis, and this book is a good “big-picture” read. It reminds me of “Guns, Germs and Steel” but with a future-focused perspective instead of a historical one.
I wrote that “The Like Switch” was the science behind “How to Win Friends and Influence People.” Contagious is like that for “Made to Stick.” But Berger’s book is entertaining, with examples from music and pop culture. “Earworms,” memes and viral videos are all examined in the book. It’s academic instead of directive—you’re never told “do exactly this one thing today”—but it’s still a good lens through which to view your own content.
I had this book on preorder for nine months, and it was a great surprise when it was finally published. I’m not always a fan of Sinek’s work. His theories sound good (“Leaders Eat Last”) but often lack in-the-trenches proof. So when this book started out really strong, I was thrilled.
I wrote about “playing the Infinite Game” in the fitness business because I was very inspired by the first few chapters. Unfortunately, the book took a dip in the middle and spent several hours berating CEOs for focusing on shareholder profit instead of employee happiness. Everyone agrees that employee happiness is important, but Sinek makes a logical leap over and over: that happy employees will automatically create happier customers which will automatically create more profit. As gym owners know, that’s a deadly false belief.
Luckily, I found myself with a long bike ride and nothing else to read, so I finished the last hour of the book. I’m glad I did: Sinek comes on strong again at the end. But you can probably skip the middle.
“Culture” is the top buzzword of 2019. As more and more people work remotely or sell a product online, we lose our sense of “cause.” In the description of the Zappos book above, I said that people in the service industry probably don’t need tips and tricks in the workplace—care for the client was probably enough.
Coyle lists many strategies for “building culture” that he pulled from the Navy SEALs and pro sports teams, but what’s missing is the reason people signed up for these teams in the first place. That reason was just cause: They believed in a mission higher than themselves (or, maybe, fame and fortune). The effect of cause is huge, and outweighs working conditions, boredom and the lure of incrementally better benefits or wages. When you give up a high-paying job to help people get healthy, you probably don’t need drinking games or cereal in your boardrooms to keep you engaged.
If you do need those things, then “The Culture Code” has some great examples.
Every summer, I roll up my garage door, pull out my barbell and listen to “Resilience.”
Greitens is a storyteller. He’s a real hero: He could have taken an academic path, but after volunteering in refugee camps, he realized that some situations required force to help save people.
That was a huge epiphany for me. His stories about boxing as a poor kid, turning down teaching jobs to volunteer in war-torn areas and ultimately leading a SEAL team are more than inspirational. They give perspective on your life and your place in the world.
What do you think of these lists? Do you agree with the summaries or have something to add about one of the books above? Did we miss something? Did you read something that changed your life or your business in 2019? Please leave a comment below and let us know what we should read next!
Think about the gym industry as a spectrum of coaching.
On the left side, we have gyms selling access. No coaching, just a monthly membership.
On the right side, we have coaches selling only coaching: no access without appointment, everything done one-on-one. In some cases, there’s no equipment at all; clients have to join a gym to do their homework.
In the middle, we have group fitness classes.
That’s where things get murky.
Big globo-gyms offer group fitness classes for free with membership or for a tiny rate. These classes are usually minimalist in terms of equipment—like spin bikes or yoga mats or “pump” classes with PVC weights or Zumba. Coaches are mostly following preset choreography (playlists and moves).
Slightly to the right are the group-class-coaching gyms, like Orangetheory or Barry’s Bootcamp. Coaches still follow preset choreography, but the equipment is more varied and the atmosphere is more exclusive. They can be more intense because the clients accept that intensity coming in.
This is where most owner-operator HIIT gyms sit. Unfortunately, it’s also the same chair that Orangetheory and F45 and the others want to occupy. When the music stops, I think it will be the single-gym owner who’s lost his or her seat.
Allison Schrager, author of “An Economist Walks Into a Brothel” (Courtesy of Allison Schrager)
This is “the middle” of the industry: Gym owners charging more for group fitness classes and slowly being pushed out because they can’t move to the right (toward individualization).
On Two-Brain Radio, I talked with Allison Schrager, an economist and author of “An Economist Walks Into a Brothel.” Allison has a personal trainer she’s never met. She details her experience, then we zoom out to talk about the meta view of the entire industry and the very real threat to the microgyms in “the middle.”
Click here to listen to the interview and share it with a friend.
In the next article in this series, I’ll tell you how Two-Brain gyms are shifting toward the right edge of the spectrum to separate themselves from downward price pressure, low quality control and high competition.
Other Articles in This Series
State of the Fitness Industry: 2019
State of the Fitness Industry: Your Brand
State of the Fitness Industry: New Tools
State of the Fitness Industry: Rebirth
Change is happening faster than ever before, bringing new challenges, new knowledge and new opportunities.
Online personal training, connected exercise devices and new microgym franchises are now in the market, and their popularity is growing rapidly.
Each brings new market awareness to the value of coached fitness. But each also competes with small owner-operator microgyms. Any of the three elements above could be a huge opportunity; or any could be the end.
In this series, I’ll share insights into industry data that matters to you. I’ll talk about what we know, what others know, and how it affects your business.
I’ll organize these recommendations by key topics:
1. What knowledge can you trust? (this article)
2. How you should position yourself for 2020 (should you affiliate?).
3. How can you leverage these new tools in the fitness world? (new tools)
4. The disappearing middle—why breakeven gyms are folding (my interview with economist Allison Schrager, author of “An Economist Walks Into a Brothel”—Thursday).
5. What should your gym evolve to be? (Saturday)
Some of these posts will be long. That’s because they’re important. As you’re building your annual plan for 2020, you’ll need to have a clear vision of what operational excellence will look like a year from now.
If you don’t write an annual plan—or don’t know how to write one—get to the Growth Phase of mentorship fast. Start with the Incubator.
Most gym owners won’t read this entire post. But the best ones will; you can be sure of it.
Before I get into it, let’s talk about where our information comes from.
First, I have the fortuitous viewpoint of someone who’s been commenting on the fitness industry for over 10 years. Starting with DontBuyAds.com, I’ve written every single day about best practices, ideas and new technologies.
But I’ve also shared what doesn’t work. I hate the online experts who sell untested ideas to gym owners. In my book, that’s close to fraud. Similarly, I don’t like the trolls who attack data-based knowledge just to get a share of the spotlight. So it’s important to understand where our knowledge comes from.
Stories and Data
Over the years, we’ve taken close to 3,000 free calls with gym owners. These calls last an hour. I did the first 1,500 myself. They cost us tens of thousands of dollars in phone bills and far more in time. We’ve also spent tens of thousands of hours on calls mentoring gym owners (we average around 270 hours on the phone every week). We tracked every story and followed every gym. We know where the real problems are, and we know what gyms have done to overcome them. That’s where our qualitative data comes from: real live conversations with real live gym owners.
Second, we’ve spent years building a quantitative tracking dashboard. Just over two years ago, I told the story of the industry’s need for objective, measurable data to prove what’s working, what’s not working, what has potential to work and what has stopped working.
Three years ago, I was having breakfast with some higher-ups at CrossFit HQ. We were sitting outside a cafe in Santa Cruz, California. I asked how many CrossFit gyms were owned by women; I had an idea that the number was higher than the U.S. average for small businesses. The short answer was, “We don’t know.”
I asked how many members the average box had; I got the same answer. I asked what the average lifespan of a gym was, and the same thing happened. I said, “Someone should be measuring this stuff,” and I got agreement. Then—dead air. So I decided to do it myself.
After hundreds of thousands of dollars spent trying to get an accurate measurement of gym health, we’ve finally got a working system: the Two-Brain Dashboard. To be clear, I don’t sell our dashboard. But spending that money and time allows us to figure out what’s actually working for gym owners, who’s really doing well and, ultimately, what’s true. We get daily data from a large sample size. We get real numbers. We get the truth. And we get it every day.
We’ve done it: the Two-Brain Dashboard is running and collecting data from 800 gym owners every single day. We have bedrock data. Now we can build on it.
Why We Don’t Trust Surveys
Several companies in the fitness industry attempt to publish an annual survey. Most of them ask us for help or commentary. But we don’t believe survey data is trustworthy for a few reasons.
First, respondents are biased by definition, so you get over-reporting from the best and worst gyms. Second, most surveys are ill defined, so questions can’t possibly provide an accurate measurement. And third, a combination of confusing software and confusing language means that many gym owners can’t provide their real numbers.
Last year, an accountant friend told me that he couldn’t even figure out the numbers required by an industry-leading survey. And I don’t know anyone else who would spend hours trying; most of us just guess.
The value of an industry survey isn’t the data; it’s the analysis. Unfortunately, any analysis built on skewed data is automatically irrelevant.
This year, we published two specific and objective reports on gym management software and coaching software.
What Does the Real Data Show?
The best gyms are becoming very profitable faster than ever before. And the worst gyms are failing faster.
What makes a gym the “best” or “worst”? Well, it has very little to do with the quality of coaching. Not anymore. A decade ago, quality coaches stood out. But now social media has really leveled the playing field (and better instruction, like the CrossFit Level 1 Seminar, has raised the standard). There are still some mediocre coaches around but few dangerous ones.
The best gyms have the best systems, the most professional staff and a close, personal relationship with each client. I’ll talk more about this in the next article in this series.
The gyms in the middle are in trouble. If you’re selling group fitness—CrossFit, HIIT, bootcamp, whatever—you’re competing against commodity brands. Five years ago, this wasn’t a big threat. But now it is: You can’t run on low margins like Orangetheory or Barry’s. When prices drop, you can’t stay on the roller coaster; you just don’t have the reserves to do so.
But if your gym is really great at offering group training—and that’s all—then you’re facing downward price pressure and some very lean times in the next two years.
The 2019 Trends We Saw and What They Mean for Your Gym
Marketing: Six-week challenges remain popular, but retention sucks.
People are attracted to six-week challenges. They’re novel and exciting. There’s a clear end point. They align well with what clients see on TV. However, the things that make six-week challenges attractive also make them very poor for retaining clients.
Our solution was to use what works in ads (six-week challenges) in a way that improves long-term retention. We do personal six-week challenges, and the end of the first challenge leads to the start of the second personal challenge. This keeps the process exciting, keeps our clients ascending and keeps them around.
There are still the old bait-and-switch tactics out there: “Sign up for this free thing. Pay here. We’ll give you your money back at the end if you complete it and jump through many hoops—sorry, we’re keeping the money.” They’re crippling gyms.
Nearly 40 percent of the gym owners who booked a free call with our team in 2019 have had a horrible experience with this marketing tactic. Now they have a crazy churn rate, their best clients are gone, and they’re no further ahead.
Get our free Retention Guide with step-by-step instructions here. Money-back guarantee! Just kidding—it’s free.
You need to produce content now more than ever.
The spotlight is also swinging back toward long-term media production. Even Facebook now recommends producing long-form content to build trust (we’ve been calling this “authority” for over a decade).
It takes a while to gain momentum, but producing content regularly works. It’s worked for my gym for 14 years (and for me as a coach for three years before that). And authority compounds: I now publish less media for my gym than ever, but we still benefit from SEO, word of mouth and back linking.
Here’s how it shakes out: If you have a bunch of people who would like to try your bootcamp or HIIT class or CrossFit program but haven’t signed up yet, Facebook marketing will push them over the edge. They’ll come in. But if your systems aren’t excellent or you don’t have a plan to retain them after their first “challenge” ends, you’ll never see them again. But if you regularly produce videos and blog posts to help your community, you’ll retain people longer and have higher trust when they do come in. You need both.
If you’re a CrossFit affiliate, you lost your content engine when HQ essentially shut down its media department at the beginning of 2019. Many are just starting to notice the effects. But the effects compound. If you’re not telling your story, and your clients’ stories, and answering questions to serve your local community—no one is.
Retention is money—literally.
Great books like “Never Lose a Customer Again” and “Atomic Habits” were money in the bank for gym owners in 2019.
Our data shows that the average gym owner could make an extra $40,000 per year just by keeping the average client three months longer. That means learning how to keep people longer is a great use of your time.
There’s a ton of research money flowing into addiction now—specifically product addiction. We know how the brain becomes hooked. We can use that power for good instead of for evil.
We now teach the “100-day journey” in the Incubator (yes, it ties into personal six-week challenges). That’s a great start. Long term, you need more than pub crawls and the Open to keep people around. Download our Retention Guide for free here.
Competition you might not know about.
While many gym owners are eyeballing the big chains or other local HIIT gyms, they should really be looking at the fastest-growing sector of “coaching”: online workouts tied to equipment.
Peloton is the most popular example, but if you haven’t heard of Zwift, TrainerRoad, The Sufferfest, Strava—I’ll spare you the whole list—then you’re missing the elephant in the room. Most treadmill manufacturers are positioning their equipment as part of the program instead of as a mere product for one-time purchase. Most blood-testing companies realize they can sell a coaching program or diet on the back end (and make more money). Many supplement companies are now gating their workout plans and unlocking them with purchase.
In a subsequent post, I’ll write about how to literally turn all of this around and get these ideas working for you. But if you want to read more about why these technologies are so addictive (and see some screen shots), you can read “Don’t Fear the Cyber” from last year.
Coaching is about “soft skills.”
The industry has always been dominated by tactical coaching: “Here’s how to teach the snatch better” or “Here’s how to apply the Zone Diet.” But education on the “soft skills”—how to greet people, how to keep them around, how to tailor a group workout to the individual—has always been sorely lacking. In 2019, the most remarkable shift in business thought leadership is that the soft skills are the real skills.
That means coaches should be excellent at speaking in public. They should be warm and encouraging and focus on getting the client to come back. The old coaches who loudly shout “I ain’t here to be no cheerleader!” are mostly gone. Most of the great cheerleaders are still around.
Josh Martin, one of our gifted Two-Brain Mentors, has built an amazing program for developing coaches. He starts with the skills they’ll need to deliver a program (any program) 1:1. Then he teaches them how to deliver a program to a group. Then he teaches them how to program 1:1, and then how to program for a group—using data instead of novelty.
It’s brilliant, it’s simple and it’s backed by an insurance underwriter. I’ve put all my coaches through the first two degrees. Josh is method agnostic (you can use CrossFit or bootcamp or any other tool to train people). I think every coach should start here.
Gyms need to be better at selling.
If you’ve followed our blog, you’ve probably noticed an uptick in posts and videos about “selling.”
This is where most gym owners fail.
I wrote “Help First” to provide the philosophy and strategy of selling as helping. But after going through a mountain of data, we realized that we needed to publish tactics, scripts and support. So here’s our YouTube Channel, and here’s my blog series on Building a Sales Engine.
In short, the data went like this: Gym owner closes warm leads well. Friends of clients always want to sign up when they visit for the first time. But their visits are too infrequent. And the referral rate is too passive (most of us just wait instead of taking control of referrals).
Gym owner starts marketing. New leads start coming in. First leads are warm. Gym owner doesn’t sign up everyone, but he or she signs up a ton of people.
Gym owner continues marketing. Leads get colder. Fewer leads sign up. Gym owner starts noticing a lot of no-shows and cancellations. And because the gym owner is not good at sales, the conversion rate is very low (usually 10-30 percent).
We can help best by boosting conversion rates, then by improving “show rates” for appointments, then by improving “set” rates for leads coming from ads. Basically, we walk up the funnel from the bottom and fix everything. We actually rebuilt the Incubator in 2019 to accomplish this better.
The flywheel must be round.
Out of the massive pile of data, we’ve identified six areas where gyms must improve. When a gym owner fixes one of these areas, that’s awesome: His or her business flywheel turns a couple of degrees. But if one area is lacking, the wheel is flat. The owner can push and push, but the wheel won’t turn.
Here’s my series on Building an Unstoppable Business (and here it is on YouTube).
We round out the flywheel in the Incubator with proven systems and tactics. Then, in Growth Phase, we push the six “handles” so your wheel turns faster and faster and your business grows. These are the six levers you can push to grow, and data supports the theory. Any coaching program, any book, any strategy that doesn’t take all six handles into account will just create a flat.
The Future Is Bright
As 2019 ends, I’m more excited than ever. I think first-time entrepreneurs can make an amazing living. I don’t think fitness entrepreneurs have to become slimy bait-and-switch marketers. I don’t think they have to sell shady supplements to make a decent income.
I think they can do all the right things for all the right people for all the right reasons and still become wealthy.
Other Articles in This Series
State of the Fitness Industry: Your Brand
State of the Fitness Industry: New Tools
State of the Fitness Industry: The Disappearing Middle
State of the Fitness Industry: Rebirth
It doesn’t matter who reads the most books.
That’s not the contest.
The contest is “who can build a sustainable gym that pays you really well?”
I’ll never tell anyone to read fewer books. I was raised by teachers. I have hundreds of books in my Audible account and hundreds more scattered between my office and my home. When I find a book I love, I buy 20 copies and hand them out to Workshop visitors.
I read a for nearly three hours every single day.
And it’s not enough.
I still can’t read everything. So here’s what I’ve learned:
When it comes to reading business books, I encourage everyone to read more intensively, not extensively.
Here are my rules for reading business books:
1. Don’t Plan to Read the Whole Book
Paraphrasing Nassim Taleb, “Most books would make a great blog post.”
Most business books follow a new format: one central idea, some supporting evidence, and stories of the idea being put into practice. I won’t explain why here (but I write about it more on the Two-Brain Media blog).
That means it’s really easy to understand the author’s point. But it also means you don’t need to read most of the book.
Read the intro and then the first few chapters. If you understand the idea, you can skip to the middle of the book—or even the end.
If the first few chapters make you excited to read the rest, keep going. Every chapter should sell you on the next one.
2. Don’t Pass the Halfway Point Without Action
When you hit the halfway mark in a book, pause and reflect.
Ask yourself: “What action have I taken since starting this book?”
If the answer is “none,” put it down. This information isn’t moving you forward.
If you can clearly point to an action you’ve taken or a habit you’ve created since starting the book, keep going.
And put it in your pile to read again in six months.
3. Avoid the Novelty Bias
When you finish a book, ask yourself:
“Does this book complement something I already knew or does this book replace something I used to believe?”
In other words: Is this new, supportive information or did it change my mind?
We’re all wired to believe that the last thing we read is the best thing ever. That’s a logical fallacy, and it keeps us constantly consuming more and more (but acting less and less).
I love buying books but force myself to go back through my library every three months and ask, “Should I listen to any of these again?”
If I’ve done a good job filtering in #2, the answer is often obvious.
4. Make It Stick
Summarize what you’ve read as soon as you’ve finished.
Pretend you’re teaching the book to someone else. How can you concisely sum up the book?
When you teach something, you get to learn it twice. And focusing on the key insights will make them stick in your brain longer.
This is why I started writing my first blog to help other gym owners in 2009: I was really just taking notes for myself in the most effective way. Dontbuyads.com translated the top lessons from business books into directives for gym owners.
If you had to tell me about the book in 1 minute and pass along its key lessons, what would you say?
These lessons aren’t just for books. Use them in seminars, webinars, podcasts, courses and even mentor meetings.
We used to have a “Books” page on this site, but I took it down. I wrote “Founder, Farmer, Tinker, Thief” to help entrepreneurs filter through the noise, beat overwhelm and take action. You don’t have to read all of it.
Just take the test to determine where you currently sit on the entrepreneur’s journey.
Then read the intro and that section.
Which stage of entrepreneurship are you in? Take our 20-question quiz to find out and get the exact steps you need to take your business to the next level.