The best gym owners know that 150 good clients are worth more than 300 mediocre clients.
This is a tough lesson to learn, and it might be confusing to mention it in a week when we’re sharing our leaderboard for gyms with the most clients.
Here’s why we focus equally on client value (ARM, or average revenue per member), retention (LEG, or length of engagement) and headcount (clients) in our mentorship practice:
1. It costs more to serve 300 clients. You need more space. You need more equipment.
2. 300 clients require more staff. If you’re running large group classes, you need more coaches. They need to be trained and credentialed. They need to be evaluated. You have to build staff funnels because you’ll have some staff churn. And you’ll struggle to create meaningful careers for any of them because your other expenses will chew up your overhead.
3. 300 clients create a lot of churn. Big group classes have lower client retention than classes in the seven-to-13 range, and gyms with one to four clients in semiprivate or small-group training have better retention still. If we can’t keep people for two years, we’re not really helping them make meaningful life changes.
4. You’ll need more marketing to acquire and maintain a headcount of 300. With hundreds of clients, you’re going to have higher churn rates than a smaller gym. You’ll have to replace those who leave. You’ll need more leads, more ads, more lead nurturing, more sales appointments. You’ll need to spend much more time on client acquisition. For many gym owners, this is a trap: New clients come in but don’t stay more than seven months. They’re not around long enough to refer their friends. Then they have to be replaced, and the new leads get colder and colder.
5. In a 300-client model, the gym’s prices are often way too low because the owner thinks high volume will make up for low prices. And then other group-training options—like Revel and F45 and Nike and a hundred others—open up on the same block for $99, and the owner can’t compete. Or the local army base starts offering “crossfit-style workouts” for free. Or the local college does. And then it becomes hard for the local gym to distinguish itself in the eye of the consumer.
What’s really outstanding about the gyms on this leaderboard isn’t the number of clients they have. It’s that they have a lot of clients and a high ARM. And they keep clients around for a long time.
In fact, most gyms don’t have a problem getting clients—they have trouble retaining them. If they kept every client they got for two years, they’d have fantastic businesses. More importantly, they would really change clients’ lives.
Headcount is important. You have to have enough clients to pay your bills, employ your team and pay you more as an owner than you’d make as a coach. But even more important is client value (ARM) and client retention (LEG). Each of the three multiplies the others.
All three metrics have to be good for a gym to be great.
The gyms on our leaderboard have all been through Two-Brain’s mentorship. They didn’t start with a prayer to reach 300 clients and then work backward to choose their space, buy equipment and set rates. They built a great business with a strong 150-client model and then scaled that model up to 300-plus.
That’s why they’re so successful.
To talk to a member of my team about mentorship, click here.