Andrew (00:02):
It’s Two-Brain Radio. In this episode, Chris Cooper reviews CrossFit LLC’s new affiliate playbook. Chris, a longtime affiliate owner, digs into the playbook and offers his thoughts right after this.
Chris (00:13):
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Chris (00:39):
Hey everybody, Chris Cooper here, and today, I’m excited to be talking to you about the new CrossFit affiliate playbook. That’s right. Excited. But if you’re not a CrossFit affiliate, this episode is still for you because I think it illustrates the value of having consistency and having your business outside of your head and written down into a playbook format. I have been a CrossFit affiliate since 2008 after opening my gym in 2005. In 2020, I actually thought about de affiliating.
Chris (01:07):
I took the CrossFit name off my big billboard off the front of my gym, off our business cards and t-shirts and stuff. And I called CrossFit HQ and said, you know what? I think I’m done. Like this is just, it’s a personal choice after having, you know, interacted with some people and talking to my clients, I think it’s the right time for me. And Dave Castro said, give us three months. And at that time, I think maybe Dave knew that the business is going to be sold. I didn’t. And he didn’t share that with me. And then when Eric Roza bought it, the day after he called me and said, give us six months. And so I kept hanging on and finally my renewal date came up and I said, OK, I’m just going to keep renewing because I want to see what happens.
Chris (01:49):
And I am interested. I’m not confusing the methodology with the model. I know that CrossFit has always left the business part of owning a CrossFit business to the business owner without any help at all. And while I do feel like it’s kind of the responsibility of CrossFit HQ to at least gather data on its affiliates and present them back to the affiliates, that’s never been the case. And a couple of years ago, I realized that that’s really been up to me as a position that I hold that was both close to CrossFit HQ and a position of trust with affiliates, that it was really up to me to gather that data because nobody else was going to do it. And so we’ve started doing that. We’ve put together the state of the industry report. The second annual one is coming out right now.
Chris (02:34):
And it talks about more than just CrossFit affiliates. It talks about data across the entire industry, focusing specifically on micro gym owners. However, one of the very first things that I’ve always taught to CrossFit affiliate owners, to yoga gyms, to bootcamps, to strength and conditioning gyms, to every type of micro gym owner is the need to build a playbook for your business. This is a lesson that I learned at the foot of my first mentor. I thought that when I signed up, he was going to give me some marketing lessons. Instead he said, the first thing we need to do is build a playbook. And I didn’t understand how that was going to create a better business for me, but what it really does is it creates a solid foundation, which means that your business can stop slipping backward. And then you can start taking the steps to move it forward.
Chris (03:22):
The problem in my case was that the business was all in my head and none of my staff knew how the business ran and none of my clients knew how to behave properly because I left it all in my head. I didn’t tell them. I sure got mad when they didn’t read my mind and didn’t do exactly what I thought they should do. I thought that, you know, they would just have quote unquote common sense, not realizing that that didn’t actually exist. And so when I built my actual playbook, things started to turn around for me because I wasn’t always taking two steps forward and two steps back and two steps forward and two steps back. And so in 2012, when I was recruited to mentor other gym owners through a website company at the time, I thought about the 10 big things that had made a difference in my gym.
Chris (04:07):
And one of those very first things was a playbook. And so if you’ve worked with me through that old website company, or starting in 2016 through Two-Brain business, you’ll know that building a staff playbook has always been part of our curriculum. In the early days, the early incubator was like 1200 bucks or something. And one of the very first things that you did was you wrote your own playbook. And even now the playbook is part of our ramp up program. Although now we give you a more complete template for you to just customize a little bit, instead of starting from scratch because a playbook’s a lot of work. And here’s why this is so important. I have never ever met a CrossFit gym or a yoga gym or a personal trainer or a bootcamp owner, a Pilates instructor who wasn’t good at their job.
Chris (04:54):
I’ve never met one who wasn’t passionate. I’ve never met like a bad coach who didn’t want to be better. And I’ve met very, very few bad coaches in my career. I’ve never met a coach who intentionally harmed anybody. I’ve never met a coach who wasn’t invested in getting their clients results. That’s never been the problem. Likewise, I’ve never met a gym owner who was greedy, who was only in it for the money. I’ve never met a gym owner who, like, you know, put money ahead of their clients who didn’t want to be good at coaching their method. I’ve never met that person, but I’ve met a lot of gym owners who have failed. And in fact, you know, just speaking about the CrossFit affiliate playbook, over 10,000 CrossFit affiliates have failed in the past. And unfortunately the lessons that they’ve learned were never passed on to anybody else.
Chris (05:45):
Like their hard lessons, their mistakes. They died with those affiliates because nobody was actually taking the lessons, recording them and teaching them to everybody else. One of the reasons that they failed was not because they were not good at coaching CrossFit, right? It was because they didn’t have a playbook. They didn’t have an operational system. And so if you looked at their business and the six ways that we now measure gyms, you would see like they had common strengths, but also common weaknesses that were causing them to fail. So strength, coaching, they were all pretty darn good coaches, right? That’s one thing that CrossFit fixed. It made better coaches. They had a good method that actually worked, you know, before high intensity interval training, a lot of people were just using like bodybuilding plus jogging and they weren’t really getting their clients results. So those weren’t the reasons that these affiliates fail.
Chris (06:35):
The reasons that they failed were operational reasons. They didn’t have a standardized set of operations. And so if you graded these affiliates up until this point, what you would see is they would be like an eight out of 10 in coaching. And they would be like a nine out of 10 in method. And they would be like a two out of 10 in operations. They just didn’t have a business. A lot of the times they would confuse the method, CrossFit, Pilates, yoga, for the model, which was actually a business. And so this CrossFit affiliate playbook is going to help affiliates. It won’t help every affiliate. It won’t help the affiliates who are at the top, who already have good systems, who have a playbook, who have solid ops, but it will certainly help the affiliates who are still scoring like a two or a three in operations, but should be making a better living because they’re an eight or a nine in coaching.
Chris (07:29):
And while this playbook definitely will not bring them up to a 10 operationally, it might move them from a two or a three up to a five, to a level of sustainability that will let them stay in the game a bit longer, make a bit of money, reinvest in mentorship or coaching or help from other business owners who have been more successful and eventually thrive. More than anything else, having this playbook will show affiliates the need to have a playbook. And in fact that the method is not the model. So while I am very aware that this playbook is the intellectual property of CrossFit HQ, and I can not reveal any very, very specific parts of this, I’m also aware that the playbook has already entered the public domain, that other people have shared this before, and talking with a national or regional manager, whatever they call them.
Chris (08:21):
I brought it up that this thing was already out there and that non-affiliates had it. And he said, yeah, we kind of knew that would happen. So I’m going to be general. I’m not going to say on page 16, the CrossFit Affiliate playbook says this phrase. What I am going to do is talk in broad terms about what’s covered in the playbook, why it should be there and the top lessons that I hope people take from it. So the very first thing is you need to have a playbook, right? It’s great. And so the playbook opens with a self-reflection exercise on why do you want to open an affiliate? And there’s a good balance here between I want to make a living in fitness and I want to create an impact in my community. There are good questions. Like how will I balance my family and business?
Chris (09:06):
And these are expectation-setting questions. A lot of people, they think about entrepreneurship and they just see Gary V standing on stage with his slouchy hat and his, you know, fashionably ripped jeans. And they’re like, wow, that’s the life I want. You know, you grind grind, grind, and then you’re famous. But what they miss is that you have to learn how to operate a business. What they miss is that being a good coach is not enough to make a good living in the fitness business. And I think the affiliate playbook sets those expectations really well early. One of the questions is what sacrifices and risks am I willing to take on to be successful? And if nothing else, this is just a good reflection point for the future affiliate that there are sacrifices and risks necessary. The next thing is, you know, there’s a section on what gets you excited about opening an affiliate?
Chris (09:55):
And then what does success look like to you? And this is a really important question to ask because success to me might mean sustainability. I just want to keep my gym open long enough to have a meaningful impact on my local community. To somebody else, it might mean I want to be financially successful because I want to retire earlier. I want to be financially successful so that I can open multiple gyms and expand my impact. And we have a number of these people in our program right now. The problem is that CrossFit HQ doesn’t give us a definition of what a successful affiliate means. And so it’s really important as you’re going through an affiliate playbook or any like survey based, you know, opinion piece like this, that you understand that the definition of success from the people who wrote the book might not be the same definition of success that you have.
Chris (10:51):
I believe in an objectively measured definition of success, which is the freedom of time and money, to be more specific. I think that at minimum, if you own a CrossFit affiliate, you should be able to make a hundred thousand dollars per year in net owner benefit and work 40 hours a week or less. That’s how I define success. It’s very important that you understand when you’re going through an affiliate playbook like this, that not everybody giving opinions in the playbook has met that definition of success. Because my definition of success might not be theirs. They might have day jobs. They might not make a dollar from their gym, but they might still be portrayed as successful because that’s not what they want in life. OK. My mission is to make gym owners wealthy and by wealthy, I don’t mean you’ve got a yacht. By wealthy,
Chris (11:45):
I mean, you are objectively successful and measurably so. The next part of the book is writing core values, mission statement, and vision statement. And while this is important, it’s important not just that you have these things, but that you write them down and writing them down is, it’s a good exercise because iit forces you to stop and think about these things. And basically it’s like, you know, what do you want to get? Now while there’s not a lot of help in writing a mission statement and there’s not a lot of explanation on why you should do that, I definitely agree that that should be done because if your goal is to help 7,000 people in Sioux Sault Marie extend their lives in a meaningful way, which is my mission, then everybody on your team can work toward that mission. Now, 7,000 people, we can ask like, how many people do I need to serve at once?
Chris (12:35):
Is it 700? Is it 7,000? Or is it 70? And I know that I’m going to own this gym for 30 years. And so I know that I only need to serve 150 people at a time given my retention rate and how long it takes to have a meaningful impact on somebody’s lives. So, you know, the affiliate playbook does cover that.
Chris (12:53):
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Chris (13:31):
The other thing that it does is talk about culture. Now, now culture is kind of this shifty term that a lot of business book writers are talking about right now. It’s a really easy topic to talk about. You can generate a book on culture because it’s indefinable. In general, we all know that we want a happy, upbeat culture, but we also want a culture of accountability. We want a culture of fairness. We want a culture of generosity, but we also want to know that everybody’s paying the same amount and that they’re all paying enough to keep the owner around and fed, right? So while inclusivity is amazing and you know, you want to think about that as part of your culture, meaning you don’t want to discriminate based by gender or race or skin color or political preference or anything like that.
Chris (14:20):
You also have to understand that you are selling an exclusive service and exclusive in the sense that not everybody will want it. Not everybody will afford it, and it will not solve everybody’s problems. Not everybody will want to do what you do and that’s OK. They might want something else. Not everybody will be able to afford the service you’re offering. And that’s OK. Not everybody coming to your gym is actually equal, you know, financially, or just maybe they have a longer drive to the gym than other people are. Or maybe they have a bias that would prevent them from getting results. And that’s OK. Right. You can be giving, you can be open. You can be generous. You can believe in equality, but you have to know who your target audience is. OK. And so, while it’s really important that in this affiliate playbook, they talk about being open to everybody.
Chris (15:15):
You still need to balance that against knowing like your job is not to give free memberships or to have like a scaled rate for people who quote unquote can’t afford your service. Your job is to make money and then be generous with that money as an entrepreneur. And these are two different things. All right. The next part of this book that I really like is like how to serve people better. You know, how to listen, how to be a professional, how to educate and inform, how to overcome obstacles. But there are also very specific things here about brand consistency, how to know everybody’s name and how to have gym hygiene. Now it seems like these are very basic things. You should have a clean gym with floors that aren’t covered in sweat and chalk dust, right? But nobody has ever told us this before.
Chris (16:08):
And if nobody tells us, then we tend to think like, well, you know, maybe that’s not critical. And until I had an affiliate playbook, I actually thought that to be quote unquote, counterculture, I needed a big pirate flag over my bathrooms, and I didn’t want super clean floors. I wanted chalk dust around and I wanted dirty hand prints. And I wanted pictures of ripped hands on the internet. I used to tell people, if you puke in your first workout, you get a free hat. And that was a point of pride. Instead, that actually kept a ton of people away from my gym, because who wants to puke in front of strangers? Nobody. So this is a great member experience checklist. It’s very basic, but again, most gyms fail not because they’re not good at coaching and not because they’re not passionate, but because they do not have a minimum set of standards, right?
Chris (16:59):
Like make sure your music is not offensive. If nobody tells you that you might play offensive music or your coaches might, or your members might come in and crank up, you know, some offensive music and that actually hurts your business. So even though we think this stuff is like common sense, maybe 10 years ago, it certainly wasn’t. And it’s not common sense for everybody today. For example, having a positive first impression, right? Safety and security, these are important things. And if we don’t spell it out, we can’t be sure that it’s going to happen every single time. The next section of the CrossFit affiliate playbook is it’s a business plan and there are some sample business plans I think for people to download. I’m going to tell you right now that the pillars that they list, while similar, are not the same six pillars that we teach at Two-Brain Business. Our pillars are based on data.
Chris (17:51):
And we know that there are six ways to actually grow a gym. Yes, getting more members is one way, but keeping members longer is another way. Having a high client value, ARM, is another way, minimizing business expenses or matching expenses to ROI is a fourth way. A fifth is operational excellence and a sixth is paying the owner. There are good examples of all six of these, where a client might have really great client value, but they don’t have enough clients. Or there are other examples where a gym might have 400 clients, but the client value is so low that they have massive churn. And the owners still can’t make a dollar. There are other examples where the gym is sitting on like $30,000 in cash. And the owner’s family is starving because the owner is paranoid that something’s going to happen. And so they hoard cash.
Chris (18:45):
You know, there’s lots of examples where any one of these six strategies, if done improperly can kill you. And at the start of this episode, I said like this playbook exists to address one of the six strategies, operational excellence. There’s no playbook in print that will tell you how to address all six. I tried to do my best with the gym owners handbook, my last book, I’m trying to do my best with my next book, which is start a gym. But the bottom line is that strategies change over time. What’s really important here is that you understand that there are six strategies and that the specific tactics might change or might be different for each gym. For example, I said that one of the six strategies is get more clients at my gym. We don’t run ads except for maybe twice a year.
Chris (19:30):
There are some outlying experiences, but generally we have built a referral culture and we use affinity marketing to turn those referrals from passive into active. And so we don’t need to run ads. Twice a year, August and December, we will run ads to build up a little bit of momentum before the busier periods of September and January. And then when our gym reopened in May, there was a bit of confusion around what was allowed. And so we ran some ads to educate our audience about what we were doing. In the CrossFit affiliated playbook, there’s a bunch of stuff about how to write a business plan, right? Like how do I identify who the ownership is? An executive summary is like what your business does, right? Then there’s a paragraph on your target market, really though your target market is everything. You don’t open a gym just to teach a method.
Chris (20:23):
As much as you open a gym to serve an audience and a client centric business means that while your audience grows and expands, it also deepens. And as you understand your audience better, you might change your method. You might change your model. You might change what you offer to match that audience best. That’s really important here, instead of doing like a local market analysis and measuring demographics and trying to figure out what the average person earns and then extrapolate to what should my prices be based on what people can afford. Look that doesn’t work. What you have to actually do is ask who is my ideal client. And if you already own a gym, you start with your three best clients and you say, what do these people want? And then you duplicate them over and over. The SWOT analysis, that’s in the CrossFit affiliate playbook.
Chris (21:11):
Again, it’s good. And it will take you from a level two to a level four, but it will not make you the best gym owner in your town. The seed client exercise is way more effective than this. But again, you know, if you’re operating, you’ve never done a client avatar, you don’t know who your ideal clients are. You’re trying to get everybody in. You’re trying to compete on price. You think that the guy down the street is your competition, then yeah. This will take you from like a three to a five. One of my favorite things in here is the revenue model. Now the CrossFit affiliate playbook does not give you a revenue model. We give you a great revenue model in our ramp-up program, and we give you industry averages in our state of the industry address. What this does though, is it gives you some big questions to ask.
Chris (21:59):
Number one, do you have access to experts in the field? You know what the best people are charging. Number two is how and why is the product or service priced this way? I think this is a really important question for CrossFit affiliates to ask, because most of us set our rates based on what everybody else was charging minus $5 or 5%. And we mistakenly fell into this trap of decreasing prices across the world, because instead of saying, what should we be charging? And using math to figure that out objectively, we said, what have other people charged? Not realizing that they didn’t do the exercise either, right? They just kind of guessed. The other question that the playbook asks is what are the associated costs and what is the profit potential? A lot of us got into this because we wanted a job coaching forever. Instead of asking ourselves like, how much can we actually profit?
Chris (22:50):
How much do I need to profit to make sure that I stick around long enough? We just said like, what am I supposed to charge? And so there’s no specific financial plan in this CrossFit affiliate playbook. We give you that in the ramp up program. Again, the affiliate playbook does a great job of triggering that question and also setting the expectation that you should profit. The next part of the playbook is an opening Growth ToolKit about how to find location. Should you buy or lease equipment? You know, what should you expect from a lease when you’re signing it? How do you get out of a lease? What’s a good faith clause. Do you need a partnership? What kind of legal entity should you set up? And then how to build out an affiliate. These are great. And they take advice from a lot of affiliate owners and they put little videos in, which are great.
Chris (23:40):
The thing that you’ve got to understand again, is that the people who are making recommendations based on their experience are well-meaning longstanding affiliates. That does not mean they’re successful in the same way that you want to be successful. Right? You have to understand that. Also their model might not be your model. So this, this book gives you lots of different options. When you watch the videos, you need to understand that there’s more than one way to do it. And I haven’t watched the videos myself. So I don’t know if they’re are any good or bad, but what they probably do is say here is the model that I have built out. Now. Here’s what I’ve noticed from the affiliates that are featured by CrossFit home office. Now a lot of these affiliates go after the big group model, they want 300 clients. Everybody’s coming to a group.
Chris (24:29):
If you read the state of the industry and you look at objective data, this is not the model that is most successful for the most people. Most of the people who said this is the best model didn’t really do well long term, and especially through threats, like COVID, the model of just having like big group classes is inherently fragile and it’s susceptible to retention problems. You have to have a mixed model of one-on-one training, maybe some nutrition coaching and group to build a sustainable, but scalable business. You also have to have a really solid way of onboarding new clients that usually involves some one-on-one coaching. Now there’s different ways to do this, of course, but what you have to understand is that the model of just big group classes is actually a risky model because that tells you you should rent a big space.
Chris (25:24):
You should have a billion pieces of equipment. You should have a dozen coaches when really you don’t need to do that. And that’s not even what Greg Glassman did. And so if you’re presenting an objective view, based on data of what’s actually been proven to work, you might hear from different experts than who’s chosen for the CrossFit affiliate playbook, you might not, right. These people might be actually successful using the big group model. They might have something else. They might be successful with partnerships, you know, but how do you resolve that dispute? And how do you overcome the data showing like 70% of partnerships in this model just generally don’t pan out, right? So there are some, actually some good tips in here about like preventing a broken partnership and addressing expectations and stuff like that. And these are very useful, especially at starting a new affiliate.
Chris (26:19):
What they don’t tell you though, is how to use a partnership to optimize it and become more than the sum of its parts. Right? So again, if you’re just starting out and you’re thinking about taking a partnership as I did, here’s some tips for maybe figuring it out. But it doesn’t tell you whether you should do it or not. OK. The next thing is calculating membership to break even. So this is this the part of the affiliate playbook where I struggle. So for example, they’re saying like figuring out your financial calculator, figure out what it’s going to cost to operate your location, and then choose your membership fees based on market rate in the area. This is a flaw. This is probably the weakest part of the affiliate playbook because it presumes that somebody along the chain has figured out market rate and they haven’t. Even the biggest affiliates with the most members in the world did not start by figuring out what the market will bear.
Chris (27:15):
They started from what is the minimum that people will pay with the intent of raising value and raising prices over time. But none of them actually did that. And so what happens is that new affiliates coming in, start with a slightly lower price. I’ll give you an example. When I was speaking with CrossFit HQ’s traveling road show in France, we were visiting a gym. It was an awesome gym and they were charging about $170 per month for their peak service. OK. In the room were about 200 CrossFit affiliates. And we were talking to them about price and most of them were charging like 130 a month, which is not enough. And it’s actually below the world, average of 154 per month. When I said, why aren’t you charging more? They said, well, because you know, we’re at Daniel’s gym and he charges 170 and we can’t charge more than him because he’s the best.
Chris (28:09):
And I said, well, what do you mean he’s the best? And they said, oh, he’s got all these certifications. But none of them said, what is the value of what I’m selling? They said, what is the ceiling? And the ceiling was artificially low. You know, Daniel’s gym could have been charging 300 a month. They could have been charging way more. But the affiliate looked at the 170 and said like, this is what the best charge, you know, compared to him, I’m running a B plus affiliate. So I need to be charging 10, 15% less than that. And that’s how people set their rates. It’s not what the market will bear. Definitely not. You should not look at other affiliates to set your rates. I promise you they’re way too low. Usually by about half. Then the affiliate playbook says, check your membership potential. And it says, what are the realistic prime hours of the day?
Chris (28:59):
The realistic prime hours of the day for any business are the times that their customers are available. So that’s before the customer’s workday begins and after the customer’s workday ends and on the customer’s weekends, that’s what it really comes down to. And then, you know, the recommendations kind of flow from there, again from this like high volume model that we know is pretty fragile. It doesn’t actually work most of the time. So I’m going to end my review there. And because it gets into pricing structures and models and stuff, but basically what it goes down to is they want you to, or they propose and promote this model of, you know, like a high volume class, because that is quote unquote CrossFit. This is a big myth. And while the CrossFit affiliate playbook will help you get better at that model, you have to ask yourself like, is that the actual model that will make you objectively successful, help you stick around
Chris (29:56):
long-term, make you flexible enough to pivot in times of crisis like global pandemics and do the best job for your clients? I don’t think it is. I think that you need to have a prescriptive model where you’re meeting with clients, you’re reviewing their goals. You’re not just selling them workouts in a friendly community every day, but you’re actually making sure that they make progress. Changing that prescription over time, between nutrition, one-on-one, online, accountability and group classes, whatever, and tailoring your options around what your clients need. If you’re selling a big group class model only, then you’re probably selling a service that is not significantly different, at least to the uneducated consumer, from the guy down the street. And when you’re selling the same thing as the guy down the street, you’re selling a commodity. And what happens when you’ve got a commodity? Price drops to approaching zero.
Chris (30:53):
If you really want to make a living here, you can’t go with the big group class model anymore. You have to have differentiated service at the bare minimum. You have to have one-on-one available. This is what scales, this is what makes you resilient. This is what makes you flexible. This is what creates enough client value that you don’t need 400 people to be profitable. That you can make a hundred thousand dollars a year with 150 clients. And if you want to see a Growth ToolKit on how to do that, you can watch a video that I’ve got in the show notes here, how to make a hundred thousand dollars with 150 clients. If you start with that, then you can always get more clients, but you have to start with client value at the core of your business. And what is valuable to the clients? You have to ask the client. Building a client centric business does not mean selling one type of class to 400 people.
Chris (31:45):
Building a client centric business means identifying who the best clients are for you to serve, identifying what’s most valuable to them, and then building your service around that. That’s the real playbook to success. And the CrossFit affiliate playbook does definitely shadow that in certain areas. If you don’t have a written playbook in your business, the CrossFit affiliate playbook will take your business from, you know, having a weak, operational link in your chain, you know, from a two or three and operations to about a five. It’s certainly better than nothing. It is not a Growth ToolKit to success, but it will definitely lift you up if you’re weak in operations. So kudos to CrossFit HQ or home office for providing this, kudos to the people who don’t need it because they’re already past it. And I hope that this brings everybody up to the bare minimum, sustainable level so that they can actually thrive, own several affiliates and make a bigger impact down the road
Andrew (32:44):
Two-Brain Radio’s your source for the best advice in the gym business. Subscribe so you don’t miss an episode. And now Coop’s got a special invitation for you.
Chris (32:52):
Thanks for listening to Two-Brain Radio. If you aren’t in the Gym Owners United group on Facebook, this is my personal invitation to join. It’s the only public Facebook group that I participate in. And I’m there all the time with tips, tactics, and free resources. I’d love to network with you and help you grow your business. Join Gym Owners United on Facebook.
