Mike Warkentin (00:02):
Big news, our “State of the Industry” report is out, and you can get it for free. You have to go to twobrainbusiness.com/data. You need this report if you own a gym or you’re thinking about starting one. Today, on “Run a Profitable Gym,” we’re going to dig into this book and give you perspective from the top people in the industry. I’ve got with me Chris Cooper: He’s the CEO and founder of Two-Brain Business. And I’ve got John Franklin: He is a big wheel at Kilo, he is the Chief Marketing Officer at Two-Brain Business, and he’s also the host of the podcast “Gym World Worldwide.” I’m your host, Mike Warkentin. Please hit “Subscribe” before you forget. And now, we’re going to get right into this because it’s the info you need to help you run a better gym. So, guys, a big one right off the top—I need your perspective on this: We saw that expenses are up in gyms. Revenue isn’t. What is going on here, and how do we fix it?
Chris Cooper (00:49):
I think any gym owner who just heard that will automatically know what’s going on in their gym. A lot of landlords now are forced to come back from COVID by raising rates. Property values are going up; interest rates are going up, so it’s harder to find space, and that means you’re going to be paying more in expenses. And actually, what we saw here on page 21 of the guide is that expenses are going up like 8 to 9% a year, and revenues aren’t. So that’s really what I’m mostly concerned about. The average revenue increase on page 39 was $3,617 more a month. So, like if your gym is paying you $3,500 a month right now, and you haven’t raised rates—you don’t have a plan to make more revenue—basically everything that you earned last month is going to the landlord next month.
Mike Warkentin (01:35):
Inflation is crushing people, exactly like you said. John, what are you seeing in this?
John Franklin (01:39):
So my head went to the same spot as you, Chris. If you are not raising your rates to go in lockstep with inflation in the higher cost of everything else, you are probably struggling as a gym owner. In the guide, we saw that the average cost per lead is up about 70% year over year. So, in addition to just general ad fatigue and ad costs going up, it becomes a lot harder to backfill members that leave. So, each incremental member that you’re replacing—for each one that leaves—costs way more money. So, if you’re not monetizing your current client base by serving them well, you’re just going to get farther and farther behind every year that you continue operating.
Mike Warkentin (02:18):
Guys, back when I was running a gym, it was like I was so horrified to raise rates, and I only did it like one time with the help of a Two-Brain Business mentor, and we did it to solve a massive problem where we were bleeding money out. But should gym owners be looking at tacking on like an annual increase every year? Now, is that something that we’re looking at because inflation is like 5% or more in some places?
Chris Cooper (02:37):
It’s not a bad idea because this stuff will balance out over time. You know, we just came through an amazing, unprecedented period, especially in North America, with pretty consistent stock market growth, and everybody should have been able to grow in this culture of growth. Right now, we’re hitting the first speed bump that a lot of entrepreneurs have seen, but it’s not unprecedented. Like there’s always going to be speed bumps every few years. And so, you can balance that out by having an annual rate increase plan, but most gyms are priced so low right now that they need to take fairly decent … I also want to say like, this is a great time for you to review your lease. A lot of people get into this, and they’re surprised when their landlord is like, “Okay, well now your rent is going up 10% next year.” And they immediately … To be honest—and I was in that position too—it’s on you. Like you have to read your lease and say, “What’s in there?” Like, are their CAM charges going up? Are there rental increases planned? And the only bad thing that can happen here, really, is that it comes as a surprise, catches you off guard, and that can smoke you. But if you know that it’s coming, then you can plan for it, then you can plan your rent increases or you can work with your mentor, so you know there’s going to be more revenue coming in when those rates go up. It’s surprise that creates catastrophe, and it’s surprise that wipes gym owners out. Having a plan will help you survive.
Mike Warkentin (04:01):
Having this guide will help you survive too because Chris talks about having a plan—you can’t have a plan without data. To get this: twobrainbusiness.com/data. John, any thoughts to close this section out?
John Franklin (04:11):
Just looking at the expense stuff, it’s pretty lean, right? Even though the expenses went up close to 20%, the average gym’s still only spending … dollars a month. So, it’s not like there’s a ton of meat on the bone, right? The only way—the only levers you have are decreased expenses, which what we’re saying here is they’re kind of lean. You have your lease; that’s your big one. You have your staffing; that’s your big one. But if you don’t have that, the other lever’s revenue, right? And I’m sure we’ll talk ad nauseum on ways they can increase revenue, but yeah, in general, it’s easier to grow the top line than the bottom line if you’re starting from just such a lean model to start with.
Mike Warkentin (04:51):
$250—if we’re looking here, we’ve got expenses. Cost of gym space for CrossFit gyms from 2022: $4,709 was the average for our survey respondents. This year: $4,949. So, about a $250 increase, something like that. That’s not a huge, huge number, but we are seeing some other expenses. We’re going to talk about staffing and so forth. There were some crazy numbers in the staffing section. We’re going to get to that shortly because there’s some interesting things that gym owners are going to have to consider. Before we do that, let’s talk about members per gym. Everybody says, “Oh, I need more revenue; I need more members.” So, the question for you guys is: Is that actually the case? And I’m going to pull up right away here, on page eight, the stats of what we have for average gym membership, but is that the solution to this problem? More members?
Chris Cooper (05:29):
So there is one more thing here I want to mention about expenses, and that is: If your lease isn’t going up this year, this is your opportunity, and your waving red flag to plan for that. You know, I own some commercial buildings, and I’ll tell you, any buildings that your landlord still has a mortgage on, their costs are going to go up, and your landlord is probably smart enough to pass those costs onto you and they probably had the foresight to put that into your lease in advance. So, you need to plan for that too. And even if your lease isn’t going up right now, you can bet it’s going to go up next year or on your next renewal. So, plan for that now and start building up revenue reserves to make it worthwhile.
John Franklin (06:04):
So Chris, one of the things I want to talk about is the 4/9ths Model. For people who are unfamiliar with it, could you give us the 101 on it?
Chris Cooper (06:12):
Yeah, basically your staff costs should be about 44% of your gross revenue. And you know, this is a very common accounting principle called contribution margin. Another way to look at it is that every staff person that you hire should generate about 2.5 times their cost in revenue. And the easiest way for this to work in a gym is to tag what your people earn to what the gym is making in revenue. So basically, if you’re just running group classes, you take the revenue they make from group classes, divide that by nine, multiply by four, and that’s your budget to pay your coaches. The way that your coaches earn more per class is by charging more per class or making more revenue from classes. And the way that you do it for one-on-one training is that you pay your coaches 4/9ths or 44% of the hourly rate, and you do the same for semi-private. And basically, there’s a lot to this, but the reality is you create a bigger pie, and that’s what pays people more. But you also don’t starve yourself to pay your staff. And the 4/9ths Model is just a great applicable plan that you can use when you’re saying, “What should I charge for things, and how much should I pay my staff?” And when your staff needs to earn more money, that’s your cue to charge more.
John Franklin (07:25):
So basically what you’re saying is you have a dollar, and it represents like a dollar revenue in your gym. And so, you take the dollar and chop it into nine different parts, and the first four parts go to paying staff, right? And then so, what do the remaining five parts go to?
Chris Cooper (07:41):
About two parts would go to covering your fixed costs. So, for example, your rent, the things that don’t change your insurance. And the other three should be going to profit or net owner benefit. There are some nuances to the model, and that’s why you want to work with a mentor to get your model right because we don’t force a model on anybody. We teach people different models that they can use and how to apply them to run a sensible business that’s going to last forever, but basically 2/9ths—so 22 to about 30%—should be your total fixed cost expenses every month—including your rent, including your insurance, including keeping the lights on.
John Franklin (08:16):
So that’s great because that ties into exactly what we are talking about here. Mike said the average CrossFit gym—or Mike had a page up saying that the average CrossFit gym is spending about 5,000 on rent. So, if a gym owner—you told gym owners to be on the lookout to expect a rent increase. We obviously have a bunch of gym owners or future gym owners listening. How do they think about like, “How much can I afford to spend outside of staff?” Right? Like, “How much space can I afford for the revenue I’m making?” Is there a framework you’d tell them to think through using the 4/9ths Model?
Chris Cooper (08:47):
Yeah, I think the first thing that you do is you, you think, “Okay, well 25% of my revenue on average—and that’s the low side, so maybe it’s even 30%—is going to go to cover my space. So, the lower that space cost is, the lower my revenue has to be to be profitable and create opportunities for my staff.” So, a lot of people will start planning their gym, and they’ll be like, “Okay, the bigger the better.” And they have this myth in their head that like, “If I build it, they will come, and more space equals more opportunity for more clients.” But the reality is that the most successful gyms very often bootstrapped. You can listen to Mike’s podcast episodes where he interviews the top gyms in Two-Brain, and a lot of them started out in a garage, in a park, you know, with a thousand square feet.
Chris Cooper (09:32):
And there are certainly models out there where having a small base—2,000 square feet in a semi-private model—can still create a half million dollar a year in revenue. But there are also models where, “Oh, we’re going to have 18, 30 people in a class,” and you’re starting off with just such a huge nut that you’ve got to cover every single month in expenses that you can never make any money. And another way to look at this is you think about: On what day of the month are all my bills paid? So, I’m not talking about staff costs, I’m talking about like my fixed costs, my rent, my insurance, my website costs. How many days do I have to work until those bills are paid? And you think of that as like “the speed bump,” okay? Or like the one day of the month—the break-even day.
Chris Cooper (10:18):
And in Canada, we actually call this Financial Freedom Day. So, I’m going to call it that. That’s the day on which your taxes and your fixed costs are paid. So, if it takes you 10 days of the month to earn enough revenue to pay your rent and your insurance and the lights and the heat and your website costs, then that’s Financial Freedom Day for you. Your first goal should be: Let’s make more revenue so that we can pay all those bills off by the ninth day or the eighth day. And that is another great way to look at this instead of worrying about like percentages and profitability.
John Franklin (10:53):
I’m just giggling about Financial Freedom Day in Canada. Just what is it, Mike? A Freedom Day in Canada?
Mike Warkentin (10:58):
It’s not a thing, Chris. They canceled it.
Chris Cooper (11:01):
It’s canceled.
Mike Warkentin (11:01):
It used to be a thing. It’s a good concept.
Chris Cooper (11:03):
It used to be—it used to be June 21st or something.
John Franklin (11:06):
Yeah. So, you’re saying the top end of that expense range should be about 30% of revenue. Like that’s pushing it to the high side. So, one of the questions we get asked very frequently is like, “I’m in this building; I want to expand to this building.” And so, if you’re thinking of rent as your main fixed expense, a little trick that you can do is you can literally take the rent of the new space and divide that by 0.2 and that will tell you how much revenue you need to make to actually be able to afford that, right? So, if it’s $5,000 a month rent, you divide that by 0.2. That means you have to make $25,000 in revenue to actually be able to afford that space. And if we look at the average gym revenue data that Whatify gave us, it’s $12,000 a month, right?
John Franklin (11:52):
So, that’s the average gym revenue. So, if you want to see how much rent you could afford based off of that, you just take that and multiply it by 0.2. So, that means if you’re making $12,000 a month in revenue, the amount of space you can afford is $1,200 a month in rent because you’re going to have your insurance, your utilities, all this other stuff. So, using Chris’s model, you can use that as like a quick little framework to figure out “How much can I currently afford?” and “How much I would need to make in order to grow into my dream space?” whatever that may be.
Chris Cooper (12:19):
One of our keys is that we want to teach gym owners how to do the math that John just did in his head so that you can make these decisions for yourself, but you can’t make these decisions without data. And that’s why Mike is going to keep reminding you to go to twobrainbusiness.com/data, so you have the starting numbers, and you can do these calculations for yourself.
Mike Warkentin (12:37):
So, here’s a calculation that I make in my head as a gym owner and say, “Oh, you know what? I need more revenue. I’m going to get more members. I want 350, and that’s going to solve all my problems.” I’m going to pull up right here for you guys what our average gym has in terms of membership. And I want you guys to tell me if my solution to this problem is actually going to work. There we are. That’s what PushPress says: 159 average members per gym. That is a 3.2% increase year over year. 2022 numbers: 154. What do you guys see in that? Can you solve revenue problems by packing more members in? Is that the answer?
Chris Cooper (13:08):
I don’t think so. For most coaching gyms, the answer is usually to increase ARM, which is average revenue per member. The idea that you wanted to get 300 members in a gym, it didn’t come from CrossFit, it came from martial arts where you can put 30 kids in a class, and everybody’s choreographed and doing the exact same kicks and punches at the same time. What we’re recommending is that you learn how to read a P&L, but more than that, that you know your numbers well enough that you can build a plan where 150 members can pay you $100,000 a year. And that usually means increasing ARM for people. The reason we picked 150—there’s a multitude of reasons, but the reality is the average gym gets about 150 members. From an anthropological point of view, we can maintain about 150 relationships.
Chris Cooper (13:56):
There’s a lot of reasons and a lot of science behind 150. One-fifty is not your limit. We’re not saying stop there; we’re saying that 150 should pay you $100,000 a year. It should let you hire a full-time coach and another halftime person and, basically, take care of people—like what you want to do. If you get to 150 and all those things are true, by all means scale to 200, scale to 250. But don’t try and build a business model from the start assuming you’re going to get 300 members because it just doesn’t happen. You know, there are a few random people out there who opened up the first CrossFit in Florida, and they’re going to get 300 early adopters. They’re going to struggle to keep those people. And long term, we’ve seen this thousands of times. Like that model just doesn’t play out—unless you start with a working model at 150, make a good business, and then scale up from there. And that’s really the key here is you need to have these numbers so that you can make these appropriate decisions instead of constantly kicking profit down the road, taking on massive expenses, and going bankrupt in year three.
Mike Warkentin (15:01):
So Chris, I’m going to ask you this: You mentioned average revenue per member in the 150 model; what’s a starting point for average revenue per member? And let’s compare that to what I’ve got on the screen here for the average group training price.
Chris Cooper (15:11):
Yeah, well, we want you to hit an average revenue per member of about 205 to start with. And you know, in most markets, just taking an average $205 per month from 150 members pays 100K a year. Now, obviously if you are in Vancouver, then you’re going to need more revenue than that because your expenses are higher. And so, you do the same math that John just laid out: You take your rent, you divide by 0.2, and that tells you how much revenue you need. And of course, your rent’s going to be higher in Vancouver or downtown LA than it is for me. But that also means that your revenue per member should be higher. Like you can’t run a gym in rural Nebraska and charge the same rate that people in downtown San Diego are charging. And vice versa, right? If you live in a high-income, very expensive real estate area, you should be charging more for your service. Again, that’s just the bottom line. So, ARM has to be even higher, but 205 is a great mean average for people. You know, raise that up if your expenses are higher.
John Franklin (16:16):
And some people misinterpret this to mean that we think people should get to 150 members and stop.
Mike Warkentin (16:21):
And just stop.
John Franklin (16:23):
Which is very clearly not the case. There are plenty of gyms in Two-Brain that have over 500 members. And so like, it’s not something we advocate, it’s just the model needs to work at 150 members. If your model is dependent on getting to 300, our data says that there’s a very low likelihood that that’s going to happen. If you look at this group training slide, I think it’s on the next page. If you look at the amount of gyms that have more than 10 people in their class, it’s like 2%. So, to get a large group training model where the average attendee or the average class is more than 10 people—and like only like 2-3% of gyms actually ever get there. So, it’s incredibly difficult to do. So, if you get there, congratulations, you’re an elite gym owner. It’s just down a bit there, Mike.
John Franklin (17:08):
You’re an elite gym owner, and you’re doing great. But all we’re saying is at 150 members, you should be able to make a comfortable living. And that’s something that’s going to give you a little bit of longevity, right? There seems to be this idea, especially in the large group training space, that caring about your clients and making money are at odds with each other. And the unfortunate downside of that is over the last three years, we’ve lost credible gym owners who’ve just shut down and said, “Hey, I’m done with this. This is too hard. I’ve been doing this for 10 years; I want to be able to make a decent wage.” And so, they shut down their gym. And the reality is you need to make a comfortable living. You need to be able to have around the median household income from all the stress and risks that are associated with running your gym. And so, not to put words in Chris’s mouth, but you know, he’s saying, “At 150, you should get there.” And if you get more than that, congratulations; that’s great. But if you’re not there at 150, there’s something inherently broken about your model that needs to be fixed.
Chris Cooper (18:09):
Yeah, I mean this, this data set is not just Two-Brain gyms; there’s over 12,000 gyms thanks to our partners at Whatify and PushPress, and you can see out of 12,000 gyms worldwide, it’s like less than 1% have an average of more than 10 people showing up per class. It’s just how the model is. If you’re not profitable at 150, I really doubt you’d be profitable at 300 anyway.
Mike Warkentin (18:33):
There’s a really interesting stat—this is the one that stood out for me as the biggest one of the year—that’s attached to what you guys are talking about. Because if you start talking about big groups of people, and “I’m going to have classes of 10; I’m going to have all these classes.” “If I build it, they will come.” That whole thing. We start to get into staff costs. When my gym was in trouble, the reason I ended up connecting with you, Chris, here at Two-Brain was because my staffing costs were out of control, and I was losing a ton of money every month, almost solely due to labor. So, I’m going to pull up this thing here, and I want you guys to take a look at this: staff cost increases from year to year. And you tell me what you guys see here because this one blew my mind, as a guy who used to pay less than this. Check it out. Average cost to staff a class across all gyms increased by almost five bucks from $22 to $26.46. That’s for one class. And in CrossFit gyms, it increased by $6.36 to be $27.36 on average. So, these labor costs are up big time. What do you see here?
Chris Cooper (19:29):
Well, they should be. I mean, this is still too low, but the bottom line is, if you look at like the average classes that most gyms run per week—I think it was 53—and you multiply this, it’s an extra $4 or $5—$4.50 let’s call it—per class, so there’s another $230 per week. It’s $1,000 a month, and you’re just delivering the same service you were last year. Of course, that’s going to eat into the owner’s bottom line. Now, should coaches make even more than this? Absolutely. But again, across 12,000 gyms, this is the average. And if you’re not raising rates to follow, you’re just chipping away at your income as the owner.
John Franklin (20:08):
I was talking to Chris about this yesterday. We’ve probably seen a decent amount of the gyms. Like when I was operating my gym, it was like very normal to just be like, “Steve, you have an L1, why don’t you coach two classes, and I’ll trade you a membership?” And there were entire gyms that were coached by people who weren’t paid. It was just like a barter system. And that probably led to fairly inconsistent product, which was okay in 2011, right? Like when you were the only CrossFit in town. But now in 2023, it’s a lot more professionalized, and a lot of those gyms probably got washed out. And so, what you’re seeing is the stronger gyms remaining, and in order to be strong, you need to have professional coaching, and professional coaches want to get paid a living wage. And I agree with Chris, like even though it’s up 20%, it’s still way too low. It’s the same thing I feel about owners’ pay. For the service they’re delivering, for the problems they’re solving for their member base, they deserve to do better than that.
Mike Warkentin (21:06):
I’m going to take you to owners’ pay, but I want you to look right now at what I’ve got: your highest earning staff member. It’s exactly what you said—average wage of the highest earning staff member across all segments: $30,408.
Chris Cooper (21:18):
Yeah, you know, Two-Brain does have to take some blame here because Two-Brain gyms are able to pay their staff a lot more than other gyms. And so, I mean, that’s great because we are creating professional opportunities in the industry. And what that also means though is that the staff at the Two-Brain gyms are less likely to say, “I’m starving, I’m going to go open my own gym because I don’t know how I can ever make more money in fitness.” You know, that’s the problem that I had to solve for myself back in 2005 and more and more in Two-Brain gyms, people just make more money, and so they don’t get desperate, and they don’t do crazy things like become your competitor. So, we are pulling the industry average up, and quite often, we say things like, “Best finds best,” and this is actually a concept that came to me through Greg Glassman.
Chris Cooper (22:07):
And when we were talking about churn of gyms—even back then in 2014 and some CrossFit gyms just weren’t making it—what he said was like, “The cream’s going to rise; the best gyms will survive. And that’s what’s supposed to happen. The trainers from the other gyms will go where the opportunities are. They’ll get to the best gyms. The clients at the weakest gyms—they’re not going to quit exercising. They’re going to eventually go to the best gyms too.” And so, I think, given a long enough timeline, the best gyms who can pay people the most are going to win. And that should be incentive enough for gym owners to say, “I need to charge a good rate here” because the survivors win. It’s a game of attrition.
Mike Warkentin (22:48):
I interviewed a gym owner: CrossFit Reform down near LA. He’s making a ton of money himself. He’s also got two full-time staff members, I believe, with benefits packages and so forth. And this is in a hyper-competitive California market where CrossFit has existed for like 25 years now or whatever it is. It can be done. I’m going to show you, though, the average here. I’m going to take you from the highest earning staff member; I’m going to take you to net owner benefits stats. Tell me what this does for you guys. Half of survey respondents take home as owners less than $4,000 a month. That is exactly the same as it was in 2021 and 2022.
Chris Cooper (23:22):
Well, that’s what’ll kill a gym. The bottom line—all three of us have been there; all three of us have had this conversation with our spouse. You come home on Friday, and they’ve got the groceries, and you’re like, “You spent too much on groceries,” and you feel horrible saying that. They feel horrible hearing that. And eventually that conversation becomes, “We can’t keep doing this.” And that’s what forces gyms out of business. It’s not that they’re not pursuing their Level 3, it’s not that they’re not good enough as coaches, or they’re not passionate, or they’re not even working hard enough. They’re doing all those things. But where the rubber meets the road is if you’re not taking enough money home, you can’t support yourself or your family, and your gym’s going to go out of business. So, while I do think this is still too low, it’s … … are rising even above last year and rising above and kind of pulling the industry forward too.
John Franklin (24:15):
I mean, this makes me profoundly upset. Like if you have a $4,000 net owner benefit, after tax you’re looking at about 3,000. If you look at—like the health insurance payment for my family is $1,700 a month. That’s for health insurance and dental for a family of four in the U.S. You subtract that from $3,000, there’s literally $1,300 left. That’s grocery money. That doesn’t include a place to live; that doesn’t include your kids’ activities. It’s just too low. So, when I see thought leaders in the industry telling gym owners not to focus on money—like that money isn’t important or money comes after excellence or something like that—it makes me want to hit my head against a wall because you can’t continue to live—like a family can’t live on this wage in many parts of the U.S.
John Franklin (25:05):
They simply can’t without making extreme sacrifices, like not having health insurance. And so, the reality is the best thing that a gym owner can do if they want to obsess over their customers and chase all these things, which are—no one’s going to say they’re evil or bad—but the reality is, you need to be comfortable. You need to be able to know that your family’s okay, and that you can afford berries for your kids. If you want to think on a long-term time horizon, if you want to put in the work necessary to deliver operational excellence, but you can’t do that if you’re worried about, like, “If my kid breaks his arm, it’s going to bankrupt my gym.” And so that’s why this stuff makes me profoundly upset. And that’s why I think what we’re doing here at Two-Brain is really important: to normalize talking about money and encouraging gym owners to charge what they’re worth because you deserve—you’re doing an important service—you deserve to make a living wage.
Mike Warkentin (25:57):
We’ve seen way too many gyms just go out of business because the owner was a great coach who couldn’t make a living. And that crushes the clients, it crushes the staff, the gym owner’s got to go somewhere else and find a whole new career set when he or she was a great, great trainer. I’d like to see more people stay in the industry, John. So, I’m right there with you. Let’s go to a positive stat here. That’s a tough one, and we want to pull that number up. The Two-Brain number by the way is $800 a month higher. So, if you want to add some revenue, think about working with a mentor on that. But I’m going to take you to this guy here. We touched on this briefly, but I want to just point this one out because it is a big deal. I’m going to share my screen here. Pardon me. So, gym owners are, this year, running classes with more people in them. The stats are: Percentage of gyms with average class sizes of one to four decreased by 23, 24 points. Percentage of gyms with average class sizes of five to eight increased 26% or 16.68 points. This is a huge deal because all of a sudden, those unprofitable classes become profitable. Chris, is this a big deal for coach—for gyms?
Chris Cooper (27:00):
It really is for a number of reasons. So, number one, if you’re running a class for two people, you’re basically giving them personal training at group coaching rates, and you really can’t afford to do that. And if you’re paying a coach to run a class for two people, you’re probably losing money on that class. So, I’m glad to see that there’s fewer of those instances. But what’s really cool is that if you track retention data across class size, you’ll see that—you know, personal training has the best retention—but when you’re running a group class, the ideal group class size for member retention is seven to 13. And so, if that is the segment that’s growing is those classes of seven to 13 people, then I am thrilled. As a coach, that is a fun class. 7, 8, 9, 10 people—there’s enough people that it’s really exciting, but everybody’s still getting some one-on-one coaching. They don’t feel like a number; they’re not lost in the crowd. You don’t have these high churn rates anymore. So, these are very encouraging numbers.
Mike Warkentin (27:58):
That’s as good of a place as any to take you over to this one: length of engagement. What you guys see here—because length of engagement is a huge deal. If every client stays one month longer and pays you one more month, you could really turn your gym around. But 7.8 months—the industry average length of engagement—that’s not enough to change a life. It’s also not enough to change a business. What are you seeing here, guys?
Chris Cooper (28:18):
Well, the scary thing for me is the first thing you said, Mike. Like seven months, eight months is not enough for people to build a lifelong habit. So, our goal at Catalyst, my gym, is like two years, three months. Because we know from looking at clients—like when a client’s been with you for two years and they quit your gym, they’re joining another gym, they’re cycling, they’re taking up swimming, they’re going do something else. Like you have changed their life, right? Mission accomplished, really. Most gyms overestimate this. They say, “Oh, my length of engagement is five years,” because they have a couple of members who’ve been around for five years. But you have to look at your newer members and say, “How long are they staying?” And there’s also some really interesting points here. If you can increase your length of engagement by three months, then all of that revenue just compounds and builds every month. And the average gym owner could take home another 30, $40,000 a year in income if they could just keep all their clients for another three months. And so, it’s worth focusing on this. We don’t really look at churn. We look at like, “How long do the clients you have actually stay with you?” Because we want to know that you’re making a difference in their life, and they’re returning the favor by making a difference in your business.
Mike Warkentin (29:30):
John, does this stat hit you below the belt too?
John Franklin (29:32):
It doesn’t—it doesn’t give me the same type of feels as net owner benefit, but yeah. Class size and LEG are closely tied together. If you can go back to the previous slide, if you look at the sweet spot there, it seemed like most of the people are offering classes in like a four-to-seven-person range, right? And if you look at LEG, it seems to be substantially longer over like a coaching gym than some of the larger—like if you think of some of the group models that scaled, like a Barry’s, an Orange Theory where they’re packing 20, 30 people in a class. It’s more or less the same class over and over. It’s a very operationally efficient model, but people get burnt out and bored of it. If you look at the lower end—like the small group training gyms—it’s a similar service, but you’re training in like a pod or a small team.
John Franklin (30:23):
The majority of the people listening to this are somewhere in the middle of in that six-to-10-person range—offering large group class, but not really charging small group prices, and they’re not really charging boutique prices. And Chris did a writeup in the guide about how you don’t want to be competing with like the Nikes of the world. So, Nike’s now opening their own chain of gyms. Chris, can you kind of break down the difference between small-group training, large-group coaching gym, and large-group boutique, and how gym owners should be thinking about where they’re positioning themselves in the market?
Chris Cooper (30:58):
Yeah, so, basically, the more you’re just offering group classes, the more you’re opening up to commodity pricing. So, what that means is that from the outside looking in, the buyer—the future client—can’t tell the difference between your gym and the Nike gym and the F45, right? Like, they’re going to understand there are subtle differences. If there are five or six CrossFit gyms in your town and opening right beside them is a Barry’s Bootcamp and right next to them is a Nike, and Nike’s charging 99, you are trying to charge 165, so you can get to an ARM, like the client’s going to choose Nike. Now, the problem is that all of these services have an average LEG of like three to four months. So, it’s very high churn. You’re not changing the client’s life; they’re moving on quickly. And so, you have to replace those clients really quickly, and you’re competing against a low price point.
Chris Cooper (31:50):
So you’re trying to bring these clients in on price, you’re not making any money, the clients are churning, you become like a broke marketer basically instead of like a gym owner and coach, and it’s just a downward spiral. These things compound and create the perfect storm that kills a lot of gyms. So, here’s the difference John asked about. Obviously personal training is one-on-one. Semi-private training is when you’re training a group of four to five people, and they all have different programs, but they’re all working together with one coach, right? This is what I do as a client in my gym. Small group training is when you have five or six people training together. They train as a squad; they’re all following the same program, and this is basically what Greg Glassman did at the original CrossFit. Large group training is when you have more than seven people training together—maybe even up to 30. Everybody who comes into class likes the training, but after three or four months, they start to look at, “Well, Nike’s got this new gym, and it’s half the price of this one. It looks pretty awesome. Or Orange Theory looks like they’ve really got their act together, and I don’t have to deal with the dirty bathrooms anymore.” You open yourself up to this commoditization effect where you’re competing with people who can charge less and smoke you.
John Franklin (32:56):
And they, yeah—like the two advantages are: Coaching a bootcamp-style class requires way less coaching. Like if you got 10 people in class for your gym and you’ve got Snatch in the program, you can’t have somebody who has been coaching for three weeks teaching that class and doing it effectively. And then the second thing is: They’re way more space efficient. So, they’re not doing a workout that requires a row or a box, a pull-up bar, and a barbell for each person. So, they can pack a bunch of people into—if you look at the footprints of some of these, they’re around 2,000 square feet, and they can run 30 people. Like you can’t run a 30-person CrossFit class consistently in a 2,000-square-foot space. You’d have to truncate it somehow. So, they have operational advantages that allow them to price lower.
John Franklin (33:43):
If you look at the other end, in the small group, those guys are in the 300-600 a month range, but their class size is the same. And so, if you’re trying to price on the low end, but you’re delivering—like if you’re a CrossFit gym, there’s four or five people in your class, and you’re delivering essentially what’s small group training—you know, the average person comes into a five-person class—you’re competing the low end on price, but delivering the high end of service, which kind of puts you in this weird middle mark, which goes back to what we were talking about, which is positioning, packaging, and pricing your service properly for the value you’re delivering.
Chris Cooper (34:14):
The challenge with running a big group model—say you’ve got 30 people in a class. Let’s even say you’ve got 20 people in a class; that’s pretty fun to coach. But the reality is there’s not a lot of coaching going on. It’s almost like this industrial machine where everybody’s coming in, we’re trying to get people synced up, we’re going to start precisely on time. Everybody’s going to do the same warmup, everybody’s going to do the same lift at the exact same time. I don’t have time to come around and spend 90 seconds coaching anybody, so what I’m going to do is like spot the flaw and correct the mistakes on the—you know, just like an assembly line. Like I’m going to have somebody—just the machine’s going to do the work, but I’m going to watch for the mistakes, and I’m going to like flag those things. And the problem with that is that it’s an industrial model. Industrialization leads to commoditization. The customer can’t tell the difference. And so, they’ll choose the lowest priced option. Instead, you’re best to focus on class sizes of seven to 13. Give everybody at least 90 seconds of one-on-one coaching within that class framework. Keep everybody together, make it really fun, focus on retention, and focus on being profitable with classes that size. Because nobody is really running a great profitable, duplicatable model with 30 people in a class anyway—unless it’s Nike.
John Franklin (35:30):
Chris, it looks like people are taking your advice and getting rid of their dead classes, right? So that’s a question we get asked all the time in our Facebook group: Gym Owners United. Go to gymownersunited.com to join. “Hey, I have this class, it has X amount of people in it. I’m worried because core people will quit if I cancel it.” Like how—if you’re a gym owner who has some of these underperforming classes on the schedule, how do you have them think about whether to keep it or whether to cancel it?
Chris Cooper (36:00):
Well, we just have them do math, and say like, “What is the average person paying per visit?” What are you paying your coaches? If you’re losing money on that class, then you need to move it. The hedge that we teach people is that you announce your schedule in quarters. So, for example, next Monday, we’ll announce our Winter 2023 schedule for Catalyst. Actually, we’ve got that, so we’ll announce the spring schedule when this comes out. We’ll be halfway through the winter calendar. People understand, over time, that that schedule might change, just like the local basketball court or swimming pool—like schedules are subject to change. And so, if you’ve got a couple of people in your morning class and it’s only two, the first thing you should do is give yourself three months to try and get that those numbers up, right? Give it your best shot. Find people who are like those people who are in your class. “Hey, there’s only two or three people, but they’re all nurses.” Fantastic, let’s start marketing to nurses and fill up that class. If that still doesn’t work, I mean, you owe it to your coaches and to your business and to your family to get rid of that class. And so, what you do is the next time you roll out your schedule, you just remove that class from your schedule.
Chris Cooper (37:10):
You call the people in that class say, “I don’t know if you noticed, but we don’t run this class anymore. Do you want to flip this into a semi-private option? Do you want to flip this into one-on-one?” And not everybody will take that option, again, because there’s price sensitivity. But some people will. And what a lot of Two-Brain clients have found is like, “Wait a minute—training these two people at semi-private is actually better for them, better for my coaches, and better for my business than running that class with four people in it Monday, Wednesday, Friday.”
John Franklin (37:36):
So, you brought up a good point because there, there’s two variables, right? We talked about net owner benefit, which is the total amount of money a gym owner makes. There’s a second page in this guide that talks about effective hourly rate, right? So, the two variables of a life of a gym owner: It’s the amount of hours you are working and the amount of money you take home. And so, essentially, if you take the amount of money you take home divided by the amount of hours you work, that gives you kind of like an hourly rate. And so, in the example of net owner benefit, where you got the guy whose gym is making $3,900—if that guy isn’t working in his gym at all and he has a job at the firehouse that gives him great benefits, like that’s a great gym. He’s doing well, right?
John Franklin (38:18):
But if you have somebody who’s doing 60 hours a week coaching all the classes, doing splits, and he’s taking home the same 39 hours, his effective hourly rate—like the amount he’s getting paid for each hour of work—is probably worse than just getting a job at McDonald’s. And so, you have to take the amount of time you work into consideration. So, the other thing is: If you’re one of these owners who’s still coaching every single class, cutting your underperforming classes is essentially giving yourself a raise.
Chris Cooper (38:48):
Yeah, and not because you’re lazy, but because you’re going to reinvest that hour in doing things that will actually grow your business. So EHR is a measure of how good of an owner you are. You should be able to make more per hour as an owner than you would make as a trainer working for somebody else. And for a lot of us, this isn’t true. I mean, I was only making about 25 bucks an hour as a trainer working for somebody. So, I was like, “I can open this gym and make more money.” And then when I calculated my effective hourly rate, I realized I would’ve been better off working at McDonald’s and paying for a gym membership. I would’ve made more money. But this number is really important to keep an eye on because you want to make sure that your time is more valuable as an owner than it would be as a trainer working for somebody else. And at 50 bucks an hour, that’s probably true. At 38, it’s kind of a toss-up.
John Franklin (39:36):
And so what’s a good target, Chris? What are you aiming towards?
Chris Cooper (39:39):
Well, ideally, I’m aiming towards 70 bucks, which is like the personal training rate for an hour at Catalyst, right? So, I know that if I spent that time working in my gym as a trainer, I would take home that full 70 bucks. So, I want my effective hourly rate as an owner to be higher than that because I don’t want to be most valuable to my business as a trainer. Now, if I’m working as a trainer for somebody else and they’re paying me $35 out of their $80 personal training rate, then my time as an owner just has to be more valuable than that. But I think there are stages. So, first you want to make sure that your time as an owner is more valuable than your time as a cleaner—12 or 15 bucks an hour. Then you want to say, “My time as an owner is worth more than my time spent coaching a group.” We just saw 28 bucks an hour. Then your effective hourly rate, you want it to be over $38 right here, right? And then you just keep going up. So, it’s a process, but you have to stay focused on being a better CEO and growing your business. If you do want to coach, awesome. Great; good for you. Be a trainer, be a coach. But your responsibility when you open a gym is to become a good gym owner because other people are depending on you to do that.
Mike Warkentin (40:49):
And I can tell you that in our survey responses, there were some effective hourly rate calculations of $900 to $1,000 or more.
Chris Cooper (40:56):
Yeah.
Mike Warkentin (40:57):
And that blew my mind. But when I saw who entered them, I knew exactly why. And they were top-level Tinker gym owners that Two-Brain has. And these are not—they were not errors; they were not made-up numbers. These people—those numbers are possible. So, 38 and versus 900—like that is actually what those gym owners are making for their time, so that’s pretty incredible. I’m going to take you to another interesting one here. We’re going to talk a little bit about revenue streams. We’ve talked—Chris has said a lot of times, “Don’t do all the things; just do a few things,” right? So, like nutrition and kids’ coaching are often the ones that gym owners look toward because they’re so obvious. Your clients have kids; they probably need nutrition coaching to get the results that they want, but here’s something: We’re not seeing the gyms actually get the results that they maybe thought they would. So, I’m going to go first here to kids’ classes. Average percentage of total revenue for survey respondents who offer kids’ coaching is 7.6%. It’s down from 9% in 2022. What’s going on here, Chris? This seems like a home run, but maybe gym owners aren’t hitting it. What’s up?
Chris Cooper (41:55):
Yeah, I think it just comes down to underpricing. I made a note in the guide that, if you look, if you separate out cheer gyms, gymnastics gyms, swimming lessons, you’ll find that they earn a lot per kid per month. For example, like if you put your kid into cheerleading, you’re probably going to pay an average of about 600 bucks a month because once you pay for the access, the classes, the coaching, the travel, those outfits, whatever—my problem in my gym was that I think I was just pricing per pound or something. And I charge like 70 bucks a month for the kids’ classes. And that’s a terrible mistake because kids’ classes churn through coaches really quickly, and you have to have different insurance, and you have to have different certifications. And so, if your kids’ class isn’t like super profitable, you’ll do what I did, which is just kill it, and now you’re not helping kids anymore. So, the bottom line is most gyms just need to charge more for their kids’ classes. I think it’s an amazing opportunity to help and teach kids. I’m very lucky in my city that I have other gyms around with amazing kids’ programs that I can refer out to. But if you feel like, “Man, I’ve really got to provide something for local kids,” please charge appropriately so that it is worth your while, you can pay a staff person to keep it going, and it doesn’t just collapse.
John Franklin (43:12):
As someone with two young kids, I can tell you the value of an hour of quiet in my house is way more than $70 a month.
Chris Cooper (43:20):
One parent one time said to me, “You should stop calling this”—back then it was CrossFit Kids—“and you should just call this Early Bedtime 70 Bucks.” And yeah, that’s exactly it.
Mike Warkentin (43:30):
And yet we all undercharge for it for some reason. You know, it doesn’t make any sense, but when you look at the price—Chris, you’ve laid this out in our blog—when you look at the price of what it costs to put a kid into hockey or gymnastics, any of that other stuff, we’re undercharging as gym orders. I’m going to give you another stat here. I’m going to pull up another page. Similar question: nutrition coaching. Again, this seems like a no-brainer, and there are Two-Brain gyms—Clark Hibbs, Yellow Rose Fitness: He makes more than 20% of gross revenue from nutrition coaching done in a spare bedroom by his wife with no face-to-face interaction with clients other than like on Zoom or whatever, yet we’re seeing 4.3% of average total revenue for survey respondents comes from nutrition coaching. That’s not super great. What do you see, Chris?
Chris Cooper (44:10):
Well, this is another painful one because you just can’t get your clients’ results without teaching them nutrition. Like that’s the bottom line, so it has to be done. The question is—so the mission is let’s teach them about nutrition. The model is how we deliver that nutrition coaching, and it looks like the model is probably wrong. So, there are different models out there that work, like let’s run three or four nutrition kickstarts a year and get people thinking about it. But more and more, talking to gyms, it’s very rare that you have people sign up for nutrition coaching and then just like pay monthly forever. You know, they sign up for nutrition coaching, maybe they might pay for nutrition coaching for about three to four months. If anybody’s listening to this and they have a dramatically different experience, good; I’m glad.
Chris Cooper (44:57):
But the bottom line is, after three or four months: Okay, they’ve established the habits; what do they need to keep going? Maybe some accountability, maybe some reminders, but that’s about it. You’re not teaching them anything anymore. The thing about your gym is, you’re not a teaching business, right? You’re an accountability business, and you’re a fun business. And so, if you’re building your nutrition program around this recurring monthly thing, it just doesn’t work out. And this does make me sad, but it also spurs me to say there’s probably a better way to do this. At my gym, we partner with Smart and Simple Nutrition. They do everything for us remotely. So, we run a few kickstarts a year to get my clients fired up. They love it. They get some results. And then the ones who want to continue with accountability and planning and habits, Smart and Simple just does that for me.
John Franklin (45:46):
I think nutrition is incredibly difficult to do well at the gym level. And so, there are a lot of outlier gyms that we see who, like Clark—Jared Byczko is another one where they were doing, like Jared Byczko was doing like $15,000 a month in nutrition. But they usually have someone who fell into their lap, like their wife was a nutrition coach, or their best friend was a nutrition coach, and there was like an inherent level of trust. But like in Jared Byczko’s case, the guy was like, “Built this business,” and was like, “Okay, bye. Peace.”
Chris Cooper (46:20):
Yeah, I’ve seen that.
John Franklin (46:21):
Boom. 15,000 bucks—poof, gone. Like, there’s key man risk because you’re a coach, like you coach fitness, and I agree with what Chris said, you absolutely can’t deliver results without nutrition being a part of that. But for 4% of your revenue to have to learn how to coach nutrition, how to deliver nutrition, and honestly, the better you get, the higher your churn is because if you offer some type of macro-based coaching, people don’t want to count macros forever. It’s like that’s miserable. And if you offer some type of principle-based coaching—like Glassman did it in a sentence, like, “Eat meat and vegetables, nuts and seeds, some fruit, little starch, and no sugar. Keep intake to levels that will support exercise but not body fat.” Like, okay, once you internalize that, what does it take—maybe two, three months? Like, what are you going to do for the remainder? So, it’s a lot of work for not a lot of revenue where like if you just partnered with someone who’s incredible at delivering it, you can probably make a similar amount of revenue without any of the drag of having to find a coach, train the coach, learn how to train the coach, keep the systems in place, and figure all that out on your own end.
Chris Cooper (47:24):
Pay more in insurance; pay for a separate app. Yeah.
Mike Warkentin (47:28):
I like what Chris said too. It’s not—it’s, you know. Teaching someone to eat, it’s not the same as asking them, “Did you eat vegetables?” every day. And that accountability element—and that’s what my wife is finding in her business—that accountability aspect is what clients actually want and need. It’s not teaching them that they need, you know, why they need to eat vegetables and meat and nuts and all that other stuff. It’s asking them, “Did you eat it?” And so that accountability can be a completely different program that doesn’t require elite-level nutrition knowledge. It just requires you texting someone saying, “Did you eat vegetables today?” And that’s a huge deal.
John Franklin (47:57):
I mean, you guys are gym owners and nerds and value health to some degree. Like what’s the longest you’ve ever had a nutrition coach for?
Mike Warkentin (48:06):
Zero days?
Chris Cooper (48:07):
So, I’ve had a nutrition coach named Jen for about three years, but my nutrition plan is literally this: I get a text on Sunday, “What’s going on? How did you feel this week? How’d you perform?” She’s looking at my performance metrics from my cycling coach, and she’s saying, “I notice your performance is going down Thursday, Friday—like, what’s going on?” So, last week that’s exactly what happened, and I’m back in the gym doing more resistance training. She’s like, “Are you eating more carbs?” And I’m like, “No, I’m just eating protein.” She’s like, “It doesn’t seem like you’re working out long in the gym, but you’re only burning carbs while you’re there. During your lifting, you need to increase your carb intake.” “Oh, damn, right.” And that’s it; it’s a text conversation. It’s less than seven minutes. That’s enormously valuable for me.
Mike Warkentin (48:55):
And I say zero days because I couldn’t stomach the fact—I couldn’t. Like measuring food—my OCD would go berserk. I can’t deal with that. But if someone said to me, “Hey man, did you eat vegetables today?” Which my wife says—that’s what I need. So, I’m with you on that. Like, it’s exactly the same thing, just those habits and so forth.
John Franklin (49:12):
So, there’s a new wave of nutrition accountability companies popping up where for $700 to $900 a month, a dietician does exactly what Chris is saying. They call you daily, and say like, “What did you eat yesterday?” And then, if you do something, then you build a plan for that day, and then they call you again. And that’s the whole program. And so, you can scale down kind of like going to the gym two times a week versus five times a week. You just pay for the amount of calls, and that’s the whole program.
Mike Warkentin (49:40):
It’s a number we’re going to have to watch over the next months for sure—or next year.
Chris Cooper (49:43):
It’s not going to be long until somebody has an AI engine just doing this.
Mike Warkentin (49:47):
Okay guys, I’m going to bring up a word that would not have been heard if we had this conversation five or six years ago: marketing. Because I was just a great coach, people just showed up at my gym—until they didn’t. So, we’re going to go to the marketing section here, and I wanted your thoughts on like sales funnels, lead flow—all that interesting stuff that never would’ve been part of the conversation in 2010. It would’ve got you laughed out of the forum. Okay, so here we go. Average number of leads per month. Twenty-eight is the average number of leads. And you’ve got the breakdown on the side. And I’m going to go down just a little bit further. These stats come from Kilo. This is what a sales funnel looks like. Twenty-five leads—nine of them book appointments; six of them buy something. So, guys, what do you see here?
Chris Cooper (50:27):
I’m going to let John go first on this.
Mike Warkentin (50:29):
Dig in, buddy.
John Franklin (50:30):
I see a bar that’s set very low, right? And so, within Gym Owners United and within Two-Brain’s group, I think marketing is one of the most overcomplicated areas of running a gym, right? If you get on ten Two-Brain sales calls, and you ask them, “What’s the biggest challenge you’re facing in your gym?” A lot of people say, “I just need bodies in the door, and if I just get more bodies in the door, all my problems will be solved.” And so, we just spend an hour talking about how that’s not necessarily true. Like if your model’s broken, you get more bodies in the door, you’re just going to have more problems because you’re not fixing the underlying issue. But let’s assume that you fix that. You got a Two-Brain mentor; you’re packaged and priced correctly. What I’m seeing here is there really isn’t—the amount of leads a gym owner is getting is only putting them in a position where they’re treading water. If you look at the Whatify data on page 10 and 11, you can look at the tables at the bottom. So, this one’s showing canceled users by region. So, if you look at that—June 2023—they’re hovering around 4-5% there. Now, if you go down and look at new joins—so this is additions—it’s hovering right around 3-4%. So, according to this data, the average gym is shrinking a little bit. If we’re being generous, they’re treading water, right? But if you look at the lead flow data, the average gym’s only getting 28 leads. If you look at CrossFit, it’s closer to about 20, right? And so, if you can increase your lead flow by 20%, that could put you in a position where you’re trending upward. Like you’re just growing a little bit, which is great. And so, one of the easiest ways to do that, I’ve found, is running ads.
John Franklin (52:11):
And so, it’s just replicable in every market; there’s just a proven system for doing it. But it is something that is hated, universally hated every time it is brought up amongst gym owners, right? And I understand why. If you’ve been doing this for 10 years, you probably started during an era where Facebook ads cost, like Facebook leads cost a dollar, right? And if we look here, the average lead now is pushing 50 bucks. And there’s a lot of reasons for that. But the reality is, if you can take your gym from 20 leads to 30 leads for $500 a month, that’s a 50% increase. That’s a lot more “at-bats.” It gives you a lot more opportunities to take that number from the average. One thing to note: The average signup number—this is gym reported—is very different than the Kilo-reported and PushPress-reported numbers of what members actually got. So there seems to be a little bit of data inflation when you ask a gym owner, “How many new members do you get every month?”
Mike Warkentin (53:08):
“A bunch. I got lots.”
John Franklin (53:09):
But yeah, if the actual number was nine, there would be net growth, right? And so, they’re really only like 10 leads away from that. And at 50 bucks a lead—assuming that a lead is a lead is a lead—that’s very achievable for the average gym owner.
Chris Cooper (53:27):
I think also there’s a big opportunity just looking at that funnel. You know, my mentor brain is like, “If you had 35 leads, that would result in 11 appointments and maybe seven sales.” However, if you got better at lead nurture, then the same 25 leads that you’re getting might result in 12 appointments, which would result in eight sales. And if you got better at sales, then the same nine appointments or whatever might result in an extra sale. So, there’s lots of opportunities through the funnel. I think what’s really important here is that people understand what a lead is because a lot of people who aren’t in Two-Brain will say, “Facebook ads don’t work.” And the reality is, if you don’t know these numbers, you don’t know if they’re working or not. Like you could be getting 300 leads a month and none of them want to come and talk to you, or you can’t close any of them. So, you really have to be able to understand what that funnel looks like before you can say whether something’s working or not. And that’s another point of this guide is to teach people how these numbers work and how it can help them have a better business.
John Franklin (54:30):
So if you look at the numbers, it’s assuming like a 36% booking rate. So that means if—for every lead you get—if you get a hundred leads, 36 of them are going to book an appointment with you. And so, that tells me that is just some toasty, warm leads, right? Those are people just coming in through an organic channel, right? I would kill to have a 36% booking rate for Two-Brain, I would absolutely murder for that, right? That’s a huge opportunity. And so, one of the things that a lot of gym owners take for granted is if they’re doing marketing—whether it be through nurture, trying to get more out of each existing leads or at the top of the funnel trying to get more leads—yeah, lead quality is going to go down. If you’re used to just only selling or dealing with people who are like, “Randy told me your gym was good, so I put my information in your website.”
John Franklin (55:18):
Like, that person is a layup, right? That’s not—that’s not sales. You barely—you just take their credit card and swipe it at that point, right? But if you’re someone off the internet who entered their information on the toilet when they’re drunk at the bar one night, like that person’s going to be a lot harder to sell. And that requires developing your skillset and upleveling a little bit. While software can help—right, I’m obviously biased; I think software helps—there’s still a skillset that you have to develop to take those people and move them down the funnel faster. And I think a lot of gym owners are reluctant to develop that skillset because they think it’s like slimy. But in reality, if you don’t sell that person, they’re just going to go buy at Nike. And so, if you think Nike delivers a worse service at their gyms than yours or Orangetheory or F45 or whatever—your competitor—you should learn how to do this. And you should learn how to nurture leads because you’re helping that person.
Chris Cooper (56:12):
Randy.
Mike Warkentin (56:12):
“Randy told me to come to your gym. That’s why I’m there.” Guys, we’ve gone through a ton of data. I’ve been scrolling through here. There are just mountains of stuff. We had like 13,444 gyms contribute in various ways throughout their survey or through our partners or through Two-Brain app data to this thing. We’ve got more data than anyone else in the fitness industry. My question is: Why is this stuff all here? And what are gym owners—like how are they going to use it? What happens?
Chris Cooper (56:37):
Well, I want to empower gym owners to make decisions about their business so that they can be profitable and stick around for a long time. You know, Two-Brain doesn’t push a specific business model on anybody. We don’t say, “Don’t run group classes,” or “Only go personal training,” or “You should switch to semi-private,” or anything like that. Instead, what we want to do is arm you with the knowledge to make your own decisions and build the gym that you want to build. And if you want to have group classes, then great. We want to show you, “Here’s what you have to do to be successful with group classes.” And to be successful means knowing the numbers well enough that you can make informed decisions. I mean, John is very good at this. You heard him rattle off a bunch of math; he’s really sharp and really quick. When I was starting my gym, I was actually the polar opposite.
Chris Cooper (57:23):
I was terrified of my numbers. I didn’t even want to look at my bank account every day. But understanding these numbers is what empowers you to actually fix your business. So, if we gave you some numbers, that’s the first step. Like you’ve got to have the numbers before you can use the numbers. But if you don’t understand the numbers, then you need to work with a mentor to actually learn what they mean and then understand the changes that you have to make in your business. And then actually get through those changes to have a more profitable gym. If you’re a gym owner, congratulations; we’re doing better. We’re still not doing well enough. And the key is first measuring how we’re doing and then looking at ways to improve it, and that’s what a mentor does. So, we know that mentorship is more than just making you more profitable.
Chris Cooper (58:05):
It’s leveling yourself up as a leader. It’s leveling up your business, obviously, but it’s also creating a future for your family. It’s creating opportunities for your team, and it’s also making sure that your clients get better results and stick around long term and actually change their lives. That’s what this is really all about, and I hope this serves as a cornerstone for you to do that. We don’t take that lightly. That’s why we invest so much in building these things every year and then giving them to you for free. So, if you want to get this, just go to twobrainbusiness.com/data. It’s our gift to you. Use it to make whatever decisions you want.
Mike Warkentin (58:39):
Thanks for being here, guys. This is “Run a Profitable Gym.” Please hit “Subscribe” on the way out wherever you’re watching or listing. The cheat codes for gym ownership are given out on the show every single month. Thanks for watching, guys.
