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When you spend money on marketing you make more money than you think you do right you just collected other vehicles

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Welcome to the gym secrets podcast where you talk about how to get more customers?

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How to make more per customer and how to keep them longer and the many failures and lessons that we have learned along the way

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I hope you enjoy and subscribe

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Good morning everyone happy Friday. Hope you guys are having a fantastic Friday end of your week

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But let's be real weeks don't exist anymore

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And so I wanted to make something a little bit different less COVID related actually about business what a concept

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And so I want to talk about why business owners beat gym owners and so the only way that you can survive as a gym owner is to transition from being a gym owner to a

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Business owner and I thought there's one thing that kind of started this

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Started this thought process and then I want to tell you a story that I think we're really driving home

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So we have some pretty, you know, sweet marketing tools that we pay thousands of dollars a month for for attribution tracking

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And so that means is we can follow a click from a click on a website to a post to

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Something else to two pages and then they end up opting in and then whether they buy and we can see that over a six-month period

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Right, and so we can see a buyer journey and basically after looking at all of the data that that we have access to I have one simple conclusion from that which is

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Whenever you market you make a lot more money than you think you do and it's because there's all of these secondary and tertiary

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End results that start like the secondary ripple effects that happen from your marketing and so in the beginning

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You're marketing and you're just trying to convert through whatever offer you have and that's your direct attribution

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You usually have a decent most businesses have a decent level of attribution there now

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I was talking to a group of entrepreneurs and one of them has a cream company and they were selling about three

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30 million a year and he was looking to be acquired by a company that was doing a billion dollars a year in cream sales

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He said the one difference that I saw

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Between my company and their company is that they were able to better attribute

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How much money they were making across all of their marketing?

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He said and there were channels where they were losing money on their marketing

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But net across all of the other channels were recouping their ad expenses now I say that is just kind of preface

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To the the next story, which is so might might might take away from all of that stuff and the knowledge that we have is that

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When you spend money on marketing you make more money than you think you do right?

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You just collected other vehicles and so that leads me to kind of an example story

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I was gonna break down all the math and then my VP said you should just tell the story and not include the math part

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And so what I wanted to say is this so the reason that business owners beat Jim owners and the reason that the biggest

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Fitness companies in the world are not owned by fitness professionals is because fitness professionals don't think like business professionals

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All right, and so here's the decision that I see made over and over and over again

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That is is costing you money and is the reason that you're not growing all right

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So gym watch grew and has grown to be the biggest player in the space to my knowledge

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Not because of I mean well because of lots of things

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But one of them is because I'm willing to go into a loss to acquire a customer because I understand what the lifetime value of a

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Gym owner is for us and so there was a point I would say probably six months ago

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Maybe nine months ago where we were net negative for three months on the acquisition of a customer

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Before turning our first dollar of profit and because of that when I talk to other people who are in the space

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They're like how do you acquire so many gyms like you're doing five times ten times as many gyms as we are and

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They even tell me their cost of acquisition and believe it or not their cost of acquisition is cheaper than mine is right and so a lot of people think that

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You know, we're amazing marketers and all that stuff and I I would actually don't think we are

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I think we're just good at making business decisions and so what I want to do is relate that in in in in layman's terms to a story that I think makes sense

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So if I were to tell you or a finished professional, it's not you somebody you know, right?

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Hey, give me a dollar and I'll give you a dollar back tomorrow, right?

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Some of them would be like okay, I said or give me a dollar and I'll give you a dollar and 25 cents back in seven days

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Or give me a dollar and I'll give you two dollars back in 30 days or

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Give me a dollar and I'll give you five dollars back in 60 days or

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I'll give you give me a dollar and I'll give you

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$10 back in six months, right, but you can only get one of them and

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And so that's that's that's point one. So you can only pick one of those one of those things, right?

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And here's here's the kicker

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If you choose

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The six month one I will let you to put as I'll let you put

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$200,000 and give me $200,000 and I'll give you two million back

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For option B for the the the two to one or whatever for day day 30

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You can only give me $10,000 right for the 60 day one, which was four to one. You can only give me

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$50,000 right and so what you're seeing here

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Is now think about that trade. I might maybe I give you too many options. Let's just say day one is one to one

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Day at day 30 your two to one day 60 your four to one and day day you know six month you're at eight one

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Right, we'll just use those because it's simple, right? If you have that example

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Most of you hopefully would say I would give you as much the the highest amount that I could that I could put money into

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So probably the six month one where you can give me 10 to one back in six months, right? That seems like an obvious choice

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The problem is

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Most gym owners don't make that decision when they're running their actual business

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And so the reason Jamont exploded was also because we found a way to make people money

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Four to one in their first 24 hours, right?

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And it allowed people who weren't business owners to make money like business owners do

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Been super transparent, right? That's what it was, right?

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And right now we're on the precipice of another one of these opportunities that's coming up with remote, which is amazing

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And I'm thinking about how to best play these cards myself because it's it's pretty exciting

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But in this scenario

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Let's say like I don't want to add too many variables to this but

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Let's say the the the new service that we're selling has an 80% or 90% margin to it. Oh

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So we're actually making more money on the back end

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But here's the kicker you give a dollar today. I give you 50 cents back tomorrow

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I give you a you give me a dollar today. I give you a dollar back in 14 days

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Give me a dollar today and I give you a dollar back in 30 days

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But from that point going forward you continue to make all profit after the purchase right of this dollar exchange, right

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That's kind of what remote is looking like right now is a fucking cash cow on the back end

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And it's understanding what the lifetime value is and lifetime value

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Here's the big thing that everyone needs to understand across the fitness industry

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The rules of how you ran your gym with the metrics fundamentally change because the margin of the service that you're providing is not the same

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Right and in person brick and mortar business runs significantly lower margins than your remote only service

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Right hugely different the reason that most your owners can't have to make as much money on the front end

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Typically is because they only make 12 25%

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On the back end in terms of of of how much revenues brought in so let me make this real for you

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If you had a client that the LTV was a thousand dollars, right? So you're building a hundred dollars a month 10% turn is a thousand dollars

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Okay, now if you're making a 25% margin right and you want to do it off gross margin right

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Let's say so you're making 250 dollars for you to take home after that

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After that person has been serviced et cetera, right?

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And so you're only putting 250 dollars in your pocket

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Which is why so many gyms loved making five or six hundred dollars upfront because they actually

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Subconsciously realized they made less money right doing it the other way

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The difference is now in a remote setting if you have a thousand dollar LLTV

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You're taking home 800 of that right? It's much different because you don't have all of these ancillary costs that are

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Associated with running a brick-and-mortar in-person business, right? You don't have the toilet paper

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You don't have the the the the rent right? You don't have the front desk person you have to always staff there

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You don't have there's all of these little costs if you're not sure about what they are

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Just look at your bank statement like you'll see them right that aren't there in a remote setting

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Which is why so many people want to go online the difficulty is acquisition, right?

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But if acquisition is taken care of because it is right now because people are very very comfortable buying online right now

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Because they have to

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Everyone is learning to buy online the entire buying ecosystem is fundamentally right now for our best interest as a community

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Right they're allowing us to go into a high-profit margin service. It's fucking awesome. All right

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so

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If you have the frown turn it upside down because right now is when it's hot and I'm I'm thinking I'm really thinking about how to structure this thing to best

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To best crush this for the whole the whole industry and for us too

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I'm thinking about how I can hire trainers so we can do the film because I'm seeing the numbers and it's awesome

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All right, and it's understanding are you willing to put a dollar in today

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And then make one dollar back in 30 days knowing that that thing will become a two hundred dollar a month profit stream

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Every month thereafter

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That is the decision that most people are not willing to make and that is why gym owners do not beat business owners

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Hey guys real quick if you're new to the podcast

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I have a book on amazon called one hundred million dollar offers that over

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8,000 five star reviews and it has almost a perfect score you can get it for 99 cents on Kindle

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The reason I bring it up is that I put over a thousand hours into writing that book

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And it's my biggest gift to our community. So it's my very shameless way of trying to get to you to like me more

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And ultimately make more dollars to that later on in your business career. I can push the bar towards you

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So that's my give go check it out Amazon and back to the show

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Because they do not know how to do math or they do and then still don't make decisions based on math

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It's the only difference right the guys who I know who own the business biggest businesses take massive losses in the acquisition

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So that they can acquire more customers. So I'm going to give you a different example of this

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If I said I'm only constrained by breaking even on day one day one of my ad spend

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I may be able to acquire 10 customers per month all right now

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If I know my churn is 10% then that means that my company can grow to a hundred clients a month

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And it will never grow after that because I'm only bringing in 10 and I'm losing 10% of 100 which is 10

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All right, so it evens out I bring in 10 I lose 10 I bring in 10 I lose 10 and it will not grow past that okay

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And that's because I put a constraint on how is only to acquire customers which is I have to break even day one

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Now if I said I have to break even by day 30

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I could probably sell three times as many customers just from that one switch of going from break even day one to break even day 30

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So what that means is instead of having 10 new customers a month

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I could sell 30 new customers a month and if my churn remains the same of 10% then my company goes from 100 max to 300 max

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So simply by shifting when you're willing to break even on the customer you can make three times more money

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Simply by shifting the break even point from day one to day 30

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All right now if you wanted to be an absolute fucking badass and you were like I want to take over the industry because that's who I am

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Then you would say maybe I shift my dollar my dollar flag over to day 60 right that's where I'm willing to break even

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And then I look at my acquisition and thank holy shit

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I can actually acquire 60 clients a month or maybe more realistically when you shift it to that extreme

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It may be not just a 2x increase, but it may be a 5x increase

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I may be able to acquire 150 clients a month if I'm willing to wait 60 days to recoup my initial investment

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Now if you think about this in terms of in terms of investment opportunities like

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What investment opportunity can you break even at 60 days on none except for marketing right and if you've built a mouse trap around it

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That is how one of the best ways to create wealth is by owning a business right it is

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And fundamentally what is the stock market it's buying and selling businesses. It's what it is

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It's just small pieces of it, but the the fundamentals work the same way all right

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So if I now have this new company where I'm willing to spend for 60 days

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I'm willing to to to lose a dollar and then 60 days later make my fruit my dollar back right take 60 days

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And the reason that I'd be able to acquire that many more customers is that

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Typically in any market you have your red hot buyers

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You have your people who are most interested right and then you have warmer audiences

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And then you have colder audiences and so what this does is if you're willing to break even at say day 60

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You can actually go after a much wider slice of the market and it may cost you more to reach these people

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Or to convert these people

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But the bucket is enormous you're talking 10 times the size 20 times 50 times the size of the market that you can go after

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All right, and so what that means is now I've got 150 clients a month that I can that I'm bringing on now

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That may sound unrealistic to some of you we've got guys right now who are selling 66 every two weeks into remote all right

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66 every two so that's one person. I'm thinking man. I'm pretty good at operations

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I'll bet you I could do more than that right and so that person is already on pace for doing 130 new remote clients in 30 days

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all right

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So if my churn is 10% that means that I could grow my remote business to 1500 clients a month all right at 200 to 300 month

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Now we're talking two to three million dollars a year all in a high-profit margin service that isn't geographically constrained

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The opportunity becomes far more interesting. Okay, so

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To to to pull to pull this all back the big takeaways that if I can if I can give them to you

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Your ability to win will be on your ability to make decisions with math and not emotions

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right now

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For you to be able to break even in 30 days on a customer is already happening pretty much across the board

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all right

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But if you're willing to just make decisions that way and the beautiful thing is that the economy is already structured like that

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You can get a credit card that you put the card down you pay for all your acquisition costs 30 days later

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You recoup the money you paid off and then everything you have is a result of spending the money the customers and the the access cash you made is yours

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That's yours someone lends you the money 10 grand for 30 days

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And then you brought in off of $10,000 a hundred customers

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Fantastic and so then you pay off your acquisition cost to $10,000 right so let's say you made a hundred dollars in each of them after everything is considered

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Right so you pay that off and now you have a hundred customers and then the next month you get 20 grand

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Right except no one thinks that way no one makes those decisions

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And so if you want to win in this world right now you have to think like a business owner not like a gym owner

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All right, because the business owners are gonna see right now. They're salivating. I'm salivating at the opportunity that's existing

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A massive amount of the marketplace is now a hundred percent trying to go into a high-profit revenue service model

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And they're willing to buy in a way they've never bought before

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And you're no longer geographically constrained

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It's awesome

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And so if you can make your decision like that and just think i'm willing to give you a dollar today

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And then make the dollar back in 30 or make the dollar back in 60 you will be able to far outpace everyone else in your marketplace

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And ultimately grow a much bigger business and have a bigger impact as i think most of us wanted to do

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But all of that will come down to your ability to make a logical decision instead of an emotional one and looking at

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How much does it cost your car customer? What's my lifetime value?

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And right now we had our first our first groups of gyms started doing their halfway appointments

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And they're closing over 75% of those people into continuity

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And so what that means to me is the metrics of the game are the same except

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now

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All of the service on the back is extremely high margin and requires very little upkeep all right

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So anyways, I get very excited about this hope you're as excited as i am about it make decisions like a business owner

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Be the one who wins because you make math decisions instead of instead of feeling decisions

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Wait 30 days if you have to to break even wait 60 days if you have to to break even

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Use opm use a credit card that you can to acquire the customers and inquire two three five times the volume

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So that you can actually make the absolute margin that's even bigger in the business

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Okay, so the one story that I didn't tell you is this

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If you're the guy who says I have to break even day one right if you were that person and that's okay

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That's fine and you were limited to 10 new customers a month all right

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That's what you're limited to you will have costs that are associated with business and some of those costs will be fixed

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Which means

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That guy will always make only enough to cover his costs and maybe a little bit more

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But if you were willing to wait 30 days or wait 60 days

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All of a sudden you have a 300 client business or 500 or a thousand client business and now

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Even though your relative return was lower your absolute return expands by 5x 10x

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Over that period of time and now you're not just making just enough money to get by

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But you have all of the extra the excess that comes because your fixed costs are covered and the remainder of your costs

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Are variable cost which means that you always are making the same fixed margin on all the rest of your money

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All right the first

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$5,000 most of us make every month is not money we get to keep that's money

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We have to pay just to run a business

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But that the last

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$10,000 you make on top of whatever it is is typically all profit

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Most of the time right and so right now if you have a fixed a variable cost that goes up used to scale the more money you make

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The the lower the percentage of your total revenue your fixed cost becomes okay if my fixed cost is five

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And I make a hundred grand my fixed cost is 5% of my income all right so my margin expands as I make more money

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If my

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If I'm only making $20,000 a month total my $5,000 is 25%

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So it's five times greater by proportion to my revenue

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Because I was not willing to spend 30 days to recruit my initial investment in acquisition all right

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So

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Anyways guys

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The opportunity right now is enormous we can expand far beyond our marketplace

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We are no longer limited by the square footage we're no longer limited by by by packed class times

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Like we're no longer limited by so many things right now and the opportunity is and the thing is is it's going to vanish

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It will there's gonna be tons of people in the flood in the marketplace

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Price there's gonna be price competition's gonna start driving the price is down

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But right now people are willing to spend two three hundred dollars a month to have a one-on-one coach

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And the business model that accompanies that is significantly a higher margin than it was before

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So anyways make this smart decision make the business order decision and win and come out of this way on top

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You can do it we can help lots of love

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Keeping amazing by the way

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Geolex is 41% of leads are showing up for sales calls

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It's like one out of two leads is getting pitched. How fucking insane is that?

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I'm super pumped anyways. I have so many more data points. I'll probably share them with you next week

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Keeping amazing all right catch you soon. Bye