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about how I solve to churn for the entire gym industry.

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Welcome to the game where we talk about how to get more customers,

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how to make more customers, how to keep them longer,

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and the many failures and lessons we have learned along the way.

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I hope you enjoy and subscribe.

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In this video, I'm going to tell you a story about how I solve to churn for the entire gym

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industry. And I think there are a lot of things you can take from this, both in the actual

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outcome itself, but also the process that was used to achieve it.

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All right, so one of the things I'm going to rewind the time clock here,

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so for those who don't know me, I had a chain of gyms in California.

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I just founded in 2013. I had six gyms by 2016 that I grew just using cashflow from the growth

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of the facilities. And so I was very good at the marketing and selling process of getting people

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in the gyms and opening them at full capacity, which was kind of my claim to fame.

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And so over time, I then pivoted to licensing that acquisition system

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to other gym owners across the US. So that was kind of the path, and then gym knowledge

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kind of took off from there. There was a two-year stint in between there, where I did turn

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arounds, and I'd fill other people's gyms up for a percentage of the revenue that I was bringing

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in. So that was kind of the long story short. Now, fast forward, and now we've got thousands

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of gyms, right? This is still a few years ago, but fast forward in the story.

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It's got a few thousand gyms at this time. And one of the issues is that all these guys

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are bringing in people in the door, but they can't retain them for a long time. So they can convert

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them into members because we had a process around that, which again, with sales, but they couldn't

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keep them for a long time, right? And this wasn't because of the acquisition system. They just

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couldn't keep any other customers for a long time. And so what's interesting about this is that

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this is for any type of service-based business that has any kind of recurring, you know,

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revenue model whatsoever. And so here's what I did to solve a problem that I did not know the answer

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to. All right, so this is the take away that you can take from this. So what I did was I said,

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hey guys, has anyone in this huge community achieved 3% monthly turn or less four, six straight

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months? All right, so 3% monthly turn, if you do the math on it, let's actually look together,

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shall we? So if we want to see how much what percentage of your customers are staying,

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and if you have let's say 3% monthly turn, so that's 0.97, right? And let's say that this is for 12

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months. All right, so we're going to go x to the y for 12 months. That means that I'm going to keep

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69% of my customers. I'm going to lose 31% of my customers year-over-year if I have 3% monthly

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turn. That's still a decent amount of customers that we're losing, right? Just being real with you.

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Now 3% is like the top 1% of gyms, I'll be row with you. Like most gyms do not do that,

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the industry average is about 9%. Now if you want to have something that freaks you out,

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let's just do this one together. So 9% means we're retaining 91% per month. Now we're going to do

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our little twisty twistyness so that we can do our fancy math. We go x to the y and we'll do 12

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months again, right? Right. Look at the difference there. 32% of your clients are still there,

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meaning you lose 68% of your recurring clients if your monthly turn is 9%.

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This is why people don't want to buy these types of businesses. This is what makes your business

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unsellable. And so I had this problem, right? I was like all these gyms are acquiring customers

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and their industry average is that they're going to lose three-quarters of their customers by the

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end of the year, right? Right. This is a problem because I'm going to have to keep showing them all

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these new tips and tricks to get new people in because literally by the end of the year,

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they're going to have already turned over three-quarters of the customers, right? This is a problem.

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So this is what I did. I put a poll on the group and I said, hey, if you've had less than 3%

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monthly turn for six straight months, I'd like to invite you to a round two. So 20 people

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out of the, you know, thousands of them were in the community at the time, 20, all right? It's

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a very small percentage. I said, hey, I meet this qualification. So I said, okay. So if you think

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about this math wise, right? I've already got the top 1%, I guess this is the top 2%, but top 2%

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of the entire gym one. And so I had them all together on a call and I said, I need you to tell me

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every single thing that you do to provide excellent value or a customer surplus to your members, right?

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And so I went person by person by person and I would sit there and I was like, and then what do you

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do? And then how does that work? And then why do you do that? And XYZ, right? And I wrote down every

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single thing that every one of them had. And so by the way, I like four pages of notes, right?

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So this is what I did next. So we ended the call and so I looked through all the notes and then I

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recategorized them because a lot of them were repetitive. Some of them were different, you know, one

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off weird things. And so I said, okay, it's clear that all of them do lots of things. And the first

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one being they actually track it and focus on the metric, which 95% of people don't even do, which is

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why most people are poor. Number one, second thing that all of them did is that they had lots of

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different strategies to combat churn because they know that and you guys want to know something

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crazy? Of course you do. We're watching the world's coolest YouTuber, all right? So if you, let's

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say, let's say you have a service that's $100 a month, okay? $100 a month. And let's say that your

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churn is 3% right? Because that was the goal of these people, right? So 3% churn, all right? And so

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what I did was I did 100 divided by 3%. That's $3300 of LTV, right? Life time value, right? Life time

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amount of revenue they're going to be able to collect over this customer. If they pay $100 a month,

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they're going to get 33 months of this person because it's 100 divided by 0.03. Watch this. Same $100

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price point. When I said the industry average is 9, divided by 0.09. 11, 11, all right? 1100 bucks

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is what the LTV of those gyms are. So the people who had conquered their churn made 3 times more

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revenue per customer than everyone else. But here's what's even crazier about that. If you make

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3 times more revenue per customer, think about how much more profit you're making. A lot more,

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all right? And this is why this was such an important thing. So a lot of them were doing lots of

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things. I consolidated all of the things into buckets. And then I said, what are the things that

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every single one of them is doing? And you can think about this like a voting system. If all of

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them are doing one thing, then that's probably an important thing. If I've got 20 guys and there's

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something that only one of them is doing, it's probably not important because the other 19 are

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accomplishing the objective without doing it. And so the goal is how little, how few of these things

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are the things that are actually driving the outcome, okay?

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Hey guys, real quick. If you're new to the podcast, I have a book on Amazon called 100 million

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that book. And it's my biggest gift to our community. So it's my very shameless way of trying

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Amazon and back to the show.

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And so what I ended up figuring out after doing this entire process is that there were five things

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that they were all doing to maintaining their members. Now you can either say, oh, okay, Alex,

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well, the next five things that he's going to share are probably only for gyms. Yeah, because

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humans are totally different in your business. But anyways, so let's rock and roll.

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First thing that they were all doing, all of them, is that if someone missed and they're not showing

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up at the gym by Wednesday of that week. So they missed my name is Tuesday. They escalated them

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and they had all of them had different processes around this. Some of them did it by Friday.

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Some of them did it by Tuesday. But the end point was if someone was not consuming the service,

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they immediately escalated it and would repeatedly try and contact them to get them scheduled

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four time to come in, which means they had accountability around consumption. Number one,

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number two, the vast majority of them had exit interviews, meaning if someone wanted to leave,

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they would have to come in and talk to somebody. And there's two benefits to this. One is you get

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to identify the things that are wrong with your business because these people will tell you why

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they're leaving. This gives you the opportunity to fix things that are not good, which is great,

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which is incredibly valuable data, right? Number one, number two, is a lot of times people just

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need to vent and the things that they're venting about, it sounds like pain, means it can be soft,

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which means a lot of times over half those people get resold into a higher level packet. Just like,

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no one ever contacted me. It's like, well, you're not in the contact me plan. You're in the,

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you know, do it yourself plan. You should get into the coaching level where we actually hold

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you accountable. I didn't know you guys had that. Yeah, we just didn't know that you needed that.

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Ah, that's our fault. We should have asked you better questions on the front end, right?

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Right. Cool. And then all of a sudden this person goes from being a loss and a cancel to being

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an ascension. So number one, they make sure people are consuming. Number two, they save exit interviews

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so they can collect data and ascend existing customers. Number three, they all did member events.

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All right. So they had some sort of community component that happened on a regular basis. The

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the extent to which they had it was different. The cadence was different. But I'll tell you right

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now that if you do it on a quarterly basis that usually works, you know, for in terms of bringing

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the community together, you're usually in good hands. Number four is that they had handwritten

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cards that they would send out on a regular basis to each of the people in their community.

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And some of them would send it out with gift cards to bring friends, which is a great way

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to generate referrals as well. Some of them would just have it as appreciation. Some of them

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would give them some sort of kudos or whatever. And the here's the key point about how these cards

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had to be written. They had to be personalized. All right. So it can't just be, hey, thanks for being

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a member. Love you lots. Send. It doesn't work. It has to be, hey, Charlotte, you've really been

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advancing on your pull-ups. And if you're like, well, this only works for gyms, I'm not even going

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to comment on that. Use your brain. Can you personalize something to any kind of improvement that

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someone has had in your business? Probably, hopefully. But it's like, hey, Charlotte, you made a

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lot of progress in your pull-ups. When you got here, you had to use the big thick black band.

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And now you're using the yellow band, which is, you know, twice as twice as hard in terms of

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the resistance level for you. Keep, you know, keep it up. You're doing great job and you're already

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down 10 pounds. So they're also reminding them of the victories that are happening, right,

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on a recurring basis. And the fifth one, I honestly cannot remember what the fifth one was.

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But the point of this story is the process of solving the problem, right? That was the point.

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All right. The process of solving a problem. And then you can use this for any type of complex

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problem that you have. And so the way that this is done, this is called a consultative method.

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But you go and you talk to experts in the space. So if you sit on top of the community,

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all of the solutions to all of the problems that you have already exist in that community,

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someone has solved it. And so all you have to do is get all the smartest people in one room

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and then interview them, tabulate the answers, use a weighing system of which of these answers

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comes up most frequently, and then consolidate to what are the fewest number of these things that

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everyone is doing to solve this complex problem. And a lot of times when you use that type of

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process and that type of thinking, you will be able to solve the more complicated issues that

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come up in business. And a lot of times the payouts can be rich and very rewarding. All right.

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Oh, remember the fifth thing. Every two weeks they were able to contact them on a personal

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basis, independent of the service-based stuff. So it's just checking in on them as humans every

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other week or so. So it's like, hey, you know, imagine your phone buzzes with a text every 14 days,

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every 21 days or so. And it says, hey, just checking in, how's life, how's things, how you doing,

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just making sure everything's great. And you know, just want to help you accomplish your goals.

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Right. And so you get that text from your service provider and you're like, wow, it almost

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appears this though. They care. Isn't that wild? Of course it is. And that is why people pay you

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to pay attention. That is what they're literally paying for. All right. People want your attention.

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And so do not automate what you should systematize. It's one of the things I have when it comes to

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service. All right. As soon as someone finds out that communications are automated, they stop paying

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attention because you stop paying attention to the communication. All right. And so that's a little

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little nugget, little little tidbit for you as well is that do not automate what you should

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systematize. Okay. You can have a system around something. Just do not automate it because as soon

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as human touch is gone, people stop caring about it altogether. And it actually withdraws good

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will from the good will of making out of your customers rather than depositing. It's better to say

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nothing at all than to automate things for the most part. Many times I have found when it comes to

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customer success and getting people to believe that you give a shit, which is kind of the point

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of most services. Okay. So the best way as a total side note, getting people to think you give a

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shit is to actually give a shit.