Two-Brain Business has the biggest data set in the fitness industry.
Every month, we find the top gyms in different metrics categories, call them up and ask, “What are you doing that no one else is doing?” We ask a few more questions, then update our curriculum and deliver it to Two-Brain gyms.
This is what “business leaderboarding” looks like.
Starting this month, I’ll publish some of these metrics publicly for the first time. If you’re a regular reader of my blog, you know why: I’m sick of the snake oil and false claims in the fitness business. I want to make gym owners successful, and that means helping them get clarity.
This month, I’m going to focus on how the best gyms get—and keep—high-value clients.
Our metrics of focus are average revenue per member per month (ARM) and length of engagement (LEG). You can read more about the specific details of these and other key metrics here. We teach gym owners how to improve each of them in our Mentorship program. And we track them every month on the Two-Brain Dashboard.
In brief:
ARM is a sales metric. It’s a measure of the value you deliver to your client.
LEG is an operations metric. It’s a measure of how long a client perceives you to be valuable.
In the next post, I’ll talk about how the top gyms in the world average over $300 per client per month.
In Part 2, I’ll tell you how the top gyms in the world keep their clients for around three years.
Super exciting: Some of the same gyms are on both lists. Wow.
First, though: How many clients do you need?
More Is Not Always Better
More clients equal more expenses. As your class sizes grow, you need more space, more equipment and more coaches. Unfortunately, you also need a lot more marketing because retention is poorer in gyms that mostly sell big group classes. Churn is higher, so you have to get more new clients every month. It’s a vicious cycle.
A 300-person gym with 10 percent monthly churn—which is better than average—still needs to get a new client every day to stay the same size.
This more-is-better myth came from the martial-arts community, where classes can be scaled without adding coaches, space or equipment. In a typical dojo, the first three or four class attendees pay for the coach, the next three pay the rent, and everyone after that is gravy.
But in a microgym, every additional client requires more equipment and space. And at certain thresholds, you have to add a new coach. There are sweet spots, but most gym owners just think “more.”
Proof in Numbers
It’s hard to remember that a 13th person and a second coach might make a session less profitable than training a dozen people with one coach.
Example: 12 people pay $10 per class, with one coach paid 44 percent (the 4/9ths Model).
Revenue: $120
Coach cost: $53.33
Facilities, equipment and other fixed costs: $26.66
Profit: $40
Example 2: 13 people, pay $10 per class, with the lead coach paid 44 percent and a second coach paid $20.
Revenue: $130
Coach cost: $77.77 ($57.77 to the first, $20 for the second)
Facilities, equipment and other fixed costs: $28.88 (you need more space and another barbell)
Profit: $23.35
Yes, profit will increase as the 14th person is added, but to get back to $40 profit for the session, you need 17 in the class. There’s a point, between 13 and 17 members, where you’re actually less profitable.
So How Many Clients Do You Need?
What’s the sweet spot?
The most profitable gyms typically have around 150 members. Their focus is on coaching, not selling 24-hour access or large group classes.
And they’re really good at getting and keeping high-value clients.
