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What is going on, everyone? Happy Thursday. Hope you guys are having an amazing, amazing Thursday, a terrific Thursday, a tremendous Thursday.

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So I wanted to break down the cost of retention. So I talk a lot about cost of acquisition, being able to outspend your competitors, being able to make money in the acquisition, etc.

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So that you can market your asset. But the other side of the equation a lot of people don't want to break down.

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And I want to break this down dollars and cents for you the cost of retaining a customer. So if you look at how much it, like so the average business, what's up Steve?

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The average gym has a 10% month over month chart, right? So they're losing 10% of their EFTs month over month.

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Now, there's two numbers that I want to tell you. One is that the average lifetime value of a gym EFT is 10 months, 10 months, according to like mind body and what's the other one?

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Waterfies and plan are those ones. They release benchmark reports, which I always like to go through. The difficulty is that most gyms, most cross-hits boot camp semi-private facilities are usually in that 50, 80, 100 max.

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Type clients and most of those people are OGs who have been grandfathered in. They're still being operated by the owner. So they're usually not owner, like the owner is not just owning, they're usually owner operating, which skews the numbers, right?

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So that's what the average number is most of the time, because most of those people are owner operating, whereas most, or at least a lot of people watching this have transitioned to at least mostly owning and are definitely not doing any sessions, things like that.

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And so I want to break down the actual cost of retaining customers, EFTs, if you were I've transitioned to ownership, right? And so what happens a lot of times is that you have this base of EFTs, the OGs, your original gangsters, your clients that you grandfathered in at $99 a month,

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who you love, they were the bumper stickers, they take them all your time, you love them, but they pay less than everyone else. And then the top, you know, the 25% that's at the top of your EFT continues to turn that you brought it off of marketing, et cetera.

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So how do you transition from this kind of bifurcated gym where you have your OGs, and then you have these transient people that are coming on average for only three-ish three to four months.

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A lot of people who are on here already know about that, because it's like, why is it, why is it three or four months? So the actual average where people are coming in off of culture having marketing is much less. And I don't think it's because of the fulfillment, I think it's because of the fact that the type of owner who is doing that has already transitioned to ownership, and it's no longer operating the business.

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So let's get to the new degree. If that type of gym, which is the majority of people who are on here, has a 10% month of a month churn for clients, then if we were to implement retention strategies, and we were to cut that to 3% month of a month churn or less, what does that actually mean?

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So if you go from 10% to 3%, then it means that you're 3.3 axing your lifetime value of a customer, more than tripling your lifetime value by going from 10% to 3%.

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So the question is, how much does it cost to do that? We know how most people at least who work with us know exactly down to the penny, how much it costs to acquire a customer, but don't know how much it costs to retain a customer.

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So if we were to break this down, let's look at the actions that you need to do to retain a customer.

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First, you need to make sure that you're reaching out to every single one of them by Wednesday of that week to make sure that they've actually showed up.

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You're not going to do this to the majority of your people because most of them are hopefully showing up.

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So it's going to be a majority of people, let's say 20%, who don't show up, that would still be huge.

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But let's say 20% of your customers, which would be enormous, don't show up by Wednesday, okay? That's one.

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Second is that you're reaching out to all of your customers on a 14 day basis. So basically twice per month, you should be reaching out to them just to say hello, checking on them, you know, pulse check, just make sure they're alive and well and tracking their stats etc.

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Third is you should be making sure that you're writing them a handwritten card once a month, either that's inviting them to a member event or just saying, I love you or saying, hey, if you can give this to a friend of yours, we'll give them a free month, blah, blah, blah, etc.

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So if we were just to look at those three things, which do measurably reduce churn from 10%, usually for most people who just do those three things, cuts them sub three.

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So if you go from 10% to 3%, what is the cost of implementing those tactics, what's the cost per member per month?

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Alright, so if you look at it dollars per hour, the actual, so the actual envelope and the handwritten card, etc., plus about $2 all in, including like the man hours, the man hours that it costs takes like a minute and a half to actually write a card if you're doing, if you take 60 minutes, you're right, 20 cards.

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So in your paint someone 15 bucks an hour, like it works out about $2 per card, including the stamp and the paper and everything.

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Okay, so you got $2 there and then per customer, let's say the remaining $8 that you have would be another 45 minutes or 40 minutes or so of one trainer's time per month.

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Okay, so that like let's say the 20 minutes is pushed towards the reach out that you have on Wednesday and reaching out texting back and forth twice throughout the month.

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Okay, so that means going to cost you $10 and hard costs to retain a customer that's an EFT.

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Now, if it cost you $40, let's say because the average person, if you weren't doing these things would stay three to four months.

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Right, so it's going to cost you 40 bucks to do that for the first four months.

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But then if it triples your lifetime value, right, you go from four months to 14 months of life to 3.3 or 13 months, let's say 13 months.

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Most of the nation real quick, if you are a business owner that has a big old business and wants to get to a much bigger business going to $50, $100,000 plus we would love to talk to you.

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And if you like that, we'd like to hear more about it. Go to acquisition.com and you can plan anywhere on the page and talk to one of our team and see if we can help you get there.

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So to triple that, you get 13 more months by spending $10 extra per month. So version one is you spend nothing on retention and you make let's say 150 times four, which is $600.

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Okay, version two, you spend $10 per month, including month one month, two month, three month, four. So that's an additional cost that you didn't have the first time and you're getting the same months revenue that you would have anyways.

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So in those months, you're technically losing money. So just want to be clear about that. Okay, but if you get an additional 10 months on the back end at $150 a month, right, we're saying on average, right, then that means you're making an extra $1,500 for an extra $100 of labor.

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So you got 40 on the front and then 10 months at $10 again. So $140 all in adds an additional $1,500 on the back end.

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Okay, so you get a 10 to one return forever. Always you never have to worry about what app platform you're spending on. You don't have to worry about your headlines, you're converting, you're whatever, you don't have to do any of that stuff.

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But you're guaranteed a 10 to one return on your dollars in lifetime value of a customer. So do you want to do them? I think it's a very good use of your time and money.

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So cost of acquisition, how much it costs to get someone in cost of retention, how much does it cost us to keep them paying us? Okay, and so if you were to simply implement those things and say, I'm going to mentally allocate $10 per month to retain these people.

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So let's say your EFT is $150, you're going to say right off the bat, 10 of that goes to keeping them. That's it. So if you need to mentally shift in terms of how you see the money that comes in, 10 of those, if you need to add $10 for whatever doesn't matter, add a $30 sign up fee and then that covers your first three months.

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Whatever it takes for you to like wrap your head around being okay with this, you need to preach this to your trainers because ultimately if we're, if we claim that we're trying to help people, if that's what we claim, right, then we need to help them stick with it.

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And so when we help people stick with the commitment that they're trying to make, we do a couple things. One, we're providing actual value because the person is actually sticking with the commitment, which is the hardest part.

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Our fitness programs, our nutrition programs, the coaching, not like the actual sessions. None of that is that valuable. I'm going to be super real with you. It's not. Why? Because you can get it at $20 for our fitness for $20 or $9 a month. You can go and get group classes for less and have a better facility, better parking, better everything, right.

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What is the main thing people are actually paying for? They're paying for accountability. They're paying for you actually keeping them on track. Most people are more than happy to pay for things that are positive habits if they use them.

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No one has a problem paying for a gym membership, even at $200 a month, as long as they are using it. No one quits when they're using something virtually ever, right. I mean, unless some catastrophic, whatever government shutdown, you get my point. But like most times, that's not the case, right. And so our objective is how can I get this person to stick with the commitment that they started with, right.

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It's much easier to quit a membership than it is to quit a relationship. And so the goal of these tactics that I just outlined is to build and foster a relationship and communication with these people.

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So you're in tight communication so that they will continue to stay with you, right. And they stay with you because they're continuing to work out and get healthy, which is the promise that we made them when they walked in the door and they gave us money.

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So how much does it cost? Cost 10 bucks a month, 15 bucks a month top to retain a customer. Okay, cool. So you're giving 10% of your gross revenue to 10x, what they're going to pay you.

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I think that makes sense. Sorry, 3.3x, excuse me. What they're going to pay you. I think that that makes a whole lot of sense.

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So anyways, I hope that makes sense for all of you guys. Cost of retention broken down. If you're not doing that, you should, because ultimately, if you don't, you'll get put out of business by someone who is.

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So lots of love. Have an amazing, terrific, tremendous, ventagulous Thursday. Talk to you soon.