Demographic data is lying to you.
In 2005, the average family income in Sault Ste. Marie was just over $85,000 per year. Thirteen years later, it’s slightly less than $64,500. Yet Catalyst’s gross revenue has increased 600% in that time. How can that be possible?
Because average is irrelevant.
The problem with demographic data is that we only think about the mean. The mean is what you calculate when you put all possible options into a pot, and then divide by the number of original options. For example, if you add 5 plus 14 plus 20 and divide by 3, you’ll get 13. 13 is the mean average of 5, 14, and 20…but it’s not actually the same as any of those. 13 is not 14. 13 is definitely not 20. And 13 isn’t even close to 5.
Why is this important?
Because on hundreds of free calls with gym owner, I’ve heard one of these:
“We live in the poorest state in America…”
“No one around here will pay that rate…”
…It’s always true. And it’s never important. Usually it’s an excuse.
You sell a high-value service. That means it’s not for everyone. The average family in the Sault might not be able to afford Catalyst…not unless their health is a huge priority. But the highest-earning 20% sure can. They’re still here.
In fact, if you looked at a modal distribution of my city’s earnings average, you’d see a bunch of families earning over $150,000 per year; many families earning around $75,000 per year; and many families who really need financial help. I do a lot to help people who need help, but they’re not my client. I’m charitable, but my business isn’t a charity. I don’t set my rates based on “the average”, because my service isn’t average.
I also don’t try to target “soccer moms” or “old people”. I try to target Kelly. And Rob. And then I try to target Sam.
People don’t come to Catalyst for average reasons. Their reasons are unique to them. So I ask, “How can I help your dad?” and then I offer to help their dad.
Our groups are not average groups. Our groups are an assembly of individuals training together. We’re CrossFit coaches, not choreographers. We explain how the workout will benefit them today; then we tell them how they’ll achieve that result with the thrusters or burpees or whatever. We don’t just address the group average; we coach the individual.
The key to good business is knowing exactly who your client is, and what they want. That will help you know exactly who your next client is likely to be, and why they’ll come to you. It will help you decide what to charge them for your personal attention. It will help you change your question from “Who will pay $200 per month for CrossFit in my town?” to “What service is worth $200 per month to Rob?”
By Anastasia Bennett, TwoBrain Mentor
Why should you evaluate your staff?
“The goal needs to be to get the team right, get them moving in the right direction, and get them to see where they are making mistakes and where they are succeeding.”
― Daniel Coyle, The Culture Code: The Secrets of Highly Successful Groups
Regular evaluations during the year will help your staff have a clear understanding of how they measure up against their targets and standards.
The purpose of evaluating your staff is to give them an opportunity to grow.
Evaluation and constructive feedback is a gateway for improvement. Don’t wait until your staff do something wrong. Conduct your evaluations every 3-6 months, and schedule them in advance.
We teach consistency and evaluating your staff should be part of it. If you are consistent with your evaluations, there won’t be any surprises for your team. If you wait until they’ve done something wrong, that’s unfair to everyone. Be proactive, rather than reactive.
Evaluation sessions are a great way to acknowledge performance achievements as well. It will help your staff to feel safe and secure, It will build a stronger culture within your workplace.
“Group performance depends on behavior that communicates one powerful overarching idea: We are safe and connected.”
― Daniel Coyle, The Culture Code: The Secrets of Highly Successful Groups
It is very important to keep your feedback informative, positive and constructive. Coyle recommended using this line in your delivery:
“I’m giving you these comments because I have very high expectations and I know that you can reach them.”
Celebrate great performances in public: praise a staff person in front of your team. Give them visible rewards and tangible experiences. make sure everyone receives praise for their specific actions, instead of general “good job team!” posts. Team posts are the bare minimum; individual praise for specific traits or actions is much more powerful. Brag them up!
As a leader you should learn to have positive conversations and achieve good outcomes: active listening, creative thinking, asking critical questions, exploring concerns and interests, and constructive conversations.
Evaluations are a great tool for you to become a better leader, designer and successful business owner.
Here is a free sample of a Coach Evaluation for you to download.
When we teach metrics to business owners, we keep it simple.
Two of the metrics we teach in The Incubator are ARM (average revenue per member per month) and LEG (length of engagement). These are TwoBrain terms, but their simplicity is making them popular with others, so you’ll see them on software platforms and dashboards everywhere soon.
ARM is really a measure of sales and marketing. LEG is really a measure of your operations.
Each is a multiplier of the other. Amazing operations with no sales? You’re multiplying by zero.
Great marketing with low prices and poor retention? Zero. Failure.
We work VERY hard on sales and marketing. But our specialty is retention, and good retention isn’t about birthday cards and automated emails. Good retention is about systems.
What’s at stake here? An extra $45,000 per year for you, without attracting one. single. extra. client. or taking on one. more. dollar. of. cost.
But let’s make it simple: If you charge $200 per month, and keep a client for 1 month, then your marketing efforts were worth $200.
If you keep that same client for two months, your efforts were worth $400.
If you keep that same client for a year, your efforts were worth $2400.
If you keep them for ten years, your efforts were worth $24,000.
And the cost to acquire them was the same in EVERY CASE!
Here’s how we improve LEG through mentorship:
- Clear definition of roles. We want ONE person responsible for tracking clients. This gives that person a clear focus, for a few hours every week.
- Clear definition of success. We measure success by increased LEG. Are you getting better at retention, or not? If not, we give you followup actions.
- Gold standards discussion. What are the best gyms in the world doing?
- Mapping the client journey. What happens, and when? Listen to our podcast about it here.
- Setting up automations (flags, emails, actions, rewards, badging) along the client journey. Really, all the talk about “ten year gifts” and “sending birthday cards” is irrelevant without a system behind it. Those are all good ideas, but start at #1 to make sure you can do them consistently. Imagine sending half your clients a birthday card or PR text, and not the other half…
- Tracking LEG long-term. We want to know your LEG score every single month. Some software platforms (like Wodify) are getting really good at this.
We work 1:1 with around 500 clients from every continent in the world. We can’t visit every business in person. But using metrics like LEG gives us critical, unbiased insight into their gym: if their retention score is low, we know there’s an operational problem.
Every one of us thinks our gym is nearly perfect. We think our systems are amazing, that our clients “get us”, and that we’re building some kind of emotional bank account with them. That’s a fantasy. If your service is bad, your clients will leave. And they should.
We’re blind to operational problems because we think our kid is the most handsome in school.
“Every girl should love you, schmoopie! You’re mommy’s handsome boy!”
That’s why we need objective data, like LEG. And we need to track it over time to see the effect of our changes. Because we’re also totally enamored with our own ideas: when we start something new, it’s the best idea everrrrr, and we tell everyone about it.
“My baby’s got a new haircut! Everyone else is jealous of you, snugglemonster!”
But is the new idea having any real effect? Unless we’re measuring LEG over time, we don’t know.
Objective measurement like ARM and LEG helps your mentor remove personal bias from your business and give you clarity. It helps us prescribe action and build your profit. Sales are fun, but (don’t do it Chris) without retention (resist!) you won’t have a (he’s gonna do it!) LEG to stand on. (groan.)
“I have a new F45 gym in my neighborhood. And I hear there’s an Orange Theory opening up soon, too. How can I possibly compete against these guys?”
Big chains are very good at selling group fitness. They’ve taken the CrossFit group model, built a solid system and brand around it, and they’re selling it in your neighborhood. They’re probably selling it for more than you are. They’re probably paying their coaches less. They probably have less equipment and space, but cleaner floors and nice bathrooms. They’ve commoditized intensity, and they’re better at business than you are.
How do you compete? You don’t. Here’s how to build a business that benefits from The Knockoffs, instead of trying to put them out of business:
- Sell coaching, not choreography.
Coach people 1:1 in your classes. Coach people 1:1 in a private setting. Coach people between classes with goal review sessions. Coach your clients in your private Facebook group.
Consider yourself the umbrella: prescribe exercise, nutrition and lifestyle to your clients.
Imagine yourself saying, “Based on your goals, I recommend three HIIT workouts per week, and one slower, easier day on your bicycle. We’re going to eat 16 Zone blocks per day for the summer, and we’ll reconfigure for the fall. I want you to finish these three books before September when we meet again.”
That seems simple, right? But a truly evolved coach could follow that question with this one:
“Where would you like to do the HIIT component of your program? You can do it here with me, or you can do it at Orange Theory. I have a contact there who can set you up.”
Could you still make money by sending people to Orange Theory? Well, you tell people to ride their bikes, right? And you don’t sell bikes. You don’t have to own every piece of their prescription to get paid as their coach.
- Consider the “other guys” as an OnRamp to your program.
One of the big mistakes I made when I opened was slamming P90X. Most of the local firefighters were doing P90X DVDs at the fire hall. I thought that was my competition. I should have realized they’d all get bored after the 8-week challenge ended, and want the next rung up the ladder–CrossFit.
I should have said, “When you reach the eighth week, come into the gym and let’s do the Ab Ripper together!” and then provided an easy segue into a CrossFit class. But I didn’t. And there’s still a wedge between Catalyst and firefighters.
- Build your prices above their threshold.
The truth is that The Knockoffs are doing you a huge service: They’re anchoring a higher price for coaching, and filtering people who want to pay for coaching. They’re spending thousands on lead generation in the local market. And their BEST clients really want YOU–or will soon.
Your WORST clients might want THEM. What does that tell you? That your clients don’t really have a problem with price, but they don’t see the value in what you’re selling. They see you as the same commodity, not as their coach, and they’re willing to pay more for the better commodity offering. Unless, of course, you’re doing the stuff I listed in #1.
- Let them put a chip on your shoulder.
That’s right, get mad. These guys took Greg’s ideas and didn’t contribute to our Movement. They’re not better coaches than you, but they’re earning the owners more. Their science is usually fluff. And your clients like them better!
Use that chip on your shoulder to get up early and get better at business. Shoot a coaching video every morning, correcting some wrong you see in the local market. Teach, don’t rant, but use them like a pebble in your shoe (I do this with other ‘business consultants’ in the fitness space.)
Open before they do. Call and text your clients. Run your warmups outside their front door. Teach your clients to know more than their coaches do. Steal their soap–well, maybe take a class and steal their best ideas. Don’t steal their soap.
We actually love Orange Theory and F45, because they’re better at sales and pricing than most CrossFit gyms. That means they pull the price anchor upward. Read more here.
And boxes who can place themselves above The Knockoffs on the value ladder–by offering more coaching during, around and between class workouts–actually benefit from having a Knockoff gym in their market. Some of that is mindset, but some of it is strategy. Depending on which phase of entrepreneurship you’re in, you and your mentor can build a strategy to knock out The Knockoffs.
They’re sitting ducks, my friend. None of their coaches care about their business, their livelihood or their clients as much as you do. Prove it.