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Welcome everyone to episode two of Jim Secrets Podcast.

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My name is Alex Tremosi and I will be your host on this magic carpet ride.

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Hope you guys have an awesome morning or whatever time of day that you guys are listening in.

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One of the concepts that I want to talk about today is probably the first thing that I bring

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up with every single gym owner that I get on the phone with. And I usually talk to two to three

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new gyms a day. And it's going to be central to everything that I talk about with regards to gym.

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So I figured it would be salient to bring it up in the first podcast and it's

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and it's the basic concept between how do you attract customers and what is your initial offer going to be.

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On one hand I would say most gyms, gurus, whatever it is, what a spouse doing a low-barried entry

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offer and LBO is probably how I refer to it going forward. And here's here's going to be a numerical

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demonstration of why I don't think that's why that makes any sense. And then I'll maybe talk

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I'll touch a little bit on the psychological reason why I don't think it makes sense. But the

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biggest one is it's going to be the dogs in sense reason. So no matter what you're doing or where

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you're advertising and if you're not advertising them or do we need to talk. But no matter where you're

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you're running your ads or you're getting your traffic from whether that's YouTube ads, Instagram ads,

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Facebook ads, you're running newspaper ads, direct mail, whatever it is, right. You're going to be

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paying a certain amount for a certain amount of attention, right. And then you're from that you're

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going to be able to convert a certain amount of attention into increase and from this increase

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a certain amount of those into sales, right. So it's going to come, the cost of acquisition is going

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to be really important. I don't understand. And then how it relates to cash flow. So I'll break down

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this. If you were to think about this mentally is two different sides of the piece of paper. On the

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left side you have an LBO and on the right side you have what I would consider a medium ticket offer

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which would be like a five hundred six hundred dollar offer, which I think works best for the

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introductory offer for a low ticket pricing recurring. So if your recurring is like around the you

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know one hundred to two hundred dollars a month range. And then I would consider that a low ticket

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recurring, which is usually your large group of boot camps, your cross fits and you know circuit style

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whatever you want to call it training facilities. Now here's what how this works from the number

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standpoint. So let's say in LBO you spend a thousand dollars on advertisements wherever you get them

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from. And let's say from that thousand dollars you get a hundred leads, okay. A hundred leads.

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It's cost you about ten bucks a lead. And then from this hundred leads let's say you convert 30%

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of those people over the phone into you know a twenty one dollar, twenty one day promotion. So

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you convert thirty people at twenty one dollars you make six hundred and thirty dollars on the

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front end from your thousand dollars spent. Now there's a couple of important numbers from here.

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So from a hundred leads you get six hundred and thirty dollars means you have six thousand

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thirty cents per lead in revenue, all right. Which will be an important number I'll get back to you.

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So six thousand thirty cents per lead. The other important thing to note here is that time duration.

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So usually this will take let's say two weeks to start you know to run the whole campaign and then

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maybe twenty one days obviously to fulfill on that twenty one day promotion. And then once the

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twenty one day promotions over maybe a week to convert everyone right over into EFT. So the whole

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thing will take six weeks. Here's why I don't think that works well. So I used to work with like

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that the concept is okay well I lost a little bit on the front end it's been a thousand

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means six hundred so I lost more in her bucks. Not too big video because I'm going to get

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of these thirty people and going to get half of them to stay like that's the thought. But

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how it works on reality and the reason that we think about that is because like most of us grew up

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with Ellie fitness and twenty for our fitness and all the big gyms and that's how they did it right.

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They ran LVOs, free months, free whatever's to get people in the door and then keep them on

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twenty nine dollar month memberships right. So I've worked with some of these big gyms and I know

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what their numbers are. So usually they spend about a hundred and fifty dollars to acquire a

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customer that pays twenty nine dollars a month for thirty six months. It's usually their lifetime

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they've got it. So you're like they're happy to do that. Now the caveat is it takes them five

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months to recoup that initial hundred and fifty dollars that they spent in the acquisition process

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and I don't know about you but most small business owners especially small gem owners don't have

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the cash flow to flow or the cash reserves to float five months of acquisition costs for a new

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customer. So if you had to spend money on marketing for five straight months and not make any money

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and then finally turn your first dollar of profit most people couldn't do that which is why running

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our gyms and our promotions that way doesn't make sense because I'll go back to the example

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and show how this gets limited. So you have like that whole process right you two weeks of sales three

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weeks of fulfillment and then maybe a week in versions was maybe six weeks. So the average gym

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let's say has a hundred clients all right on EFT that I talk to not people not like

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successful gyms I'm just saying the average gym right and a hundred gyms is a hundred people

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is just enough to pretty much break even and live out of the business account and spend less than

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five hundred dollars a week and try not to spend any money. That sounds familiar to anyone we should

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talk but anyways shameless plug anyways so from that from that hundred people most people have

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about a 10% nutrition rate like I said average average gyms do 10% nutrition so they lose 10 people

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a month they sign up 10 people a month and that's where they stay and they stay in that rodeo for

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years sometimes because they can't sign up more than they're losing right so if that LBO offer

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let's say they sign up 30 people over the phone that means 25 people actually show up because it's

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so cheap and they don't care about it anyways from the 25 people that show up actually

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you'll keep let's say half if you're if you're if we're being really optimistic right

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um because the jump from 21 to you know two hundred dollars a month is fairly significant

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whatever right so 12 people end up staying over that six week period right uh because

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that's that's the end result of that whole campaign now mind you in that's because this whole

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the campaign didn't happen in a vacuum you weren't not just net 12 positive you had time that

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elapsed and you had to make up for a nutrition like a nutrition's like the inflation for the dollar

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but for a gym right it says like you might have made some money but at the same time your money

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got to value so you might have signed up some clients but your gym lost members so over that

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whole six six week period you would have lost you know 15 members from nutrition and then you

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gained 12 clients off this marketing campaign and so over that whole period of time your net

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negative and you lost four hundred dollars in the front end and guys can continue to get on this

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train and ride it over and over and over again and usually they start they end up back where they

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start and they don't know why they don't know why their gym will grow right if this sounds similar

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to anyone good because there's other ways to do it okay so keep that in your mind that's that's

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the old way of doing things okay most nation real quick if you are a business owner that has a

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big old business and wants to get to a much bigger business going to 50 hundred million dollars plus

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we would love to talk to you and if you like that we would like to hear more about it go to

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acquisition.com you can plan anywhere on the page and talk to one of our team and see if we can

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help you get there the new way of doing things is by offering medium and high ticket offers is

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front end offers now here's why this makes sense okay I'll just give the numbers behind a medium

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ticket offer let's say Eastside people have put a six hundred dollar you know six week offer

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to start off with and most people are like I could never charge them much I promise you we've

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done it in a hundred in some markets you can we sold it in the hood of DC you can I promise all right

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but just walk with me in this very land for a moment so let's say you spend the same thousand

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bucks you get the same hundred leads okay realistically you'd probably be cheaper leads because

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the offers better but I will get into that so let's say you spend a thousand you get a hundred

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leads from those hundred leads equals 20% of those people into a six hundred dollar offer okay so

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it's twelve thousand dollars right there from there you upsell them another hundred and fifty

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dollars ahead in supplements with fifty percent margin so you're making seventy five dollars and

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I'll top that so you're making six seventy five per person do sign down okay times twenty all right so

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you're looking at thirteen thousand five hundred dollars off of that initial thousand dollars of

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that spent all right now obviously getting thirteen and a half to one which is great but here's

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where it gets even cooler if you compare the two revenue per lead okay the first example we had

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with six dollars and thirty cents per lead this example is a hundred and thirty five dollars per

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lead so if you'd a backup and look at it you're like okay this guy makes a hundred and thirty five

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dollars lead this guy makes six hundred and thirty cents okay so if I have all these different

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avenues of buying traffic who's going to be able to reliably buy more leads the guy on the right

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the guy who had a hundred and thirty five dollars per lead who's going to be able to buy more

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expensive leads him who's going to be able to buy more quantity of leads him if it's an auction

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based thing who's going to be able to price two out of the marketplace he's going to be able to

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price the other guy to marketplace he's getting twenty one times the revenue on the front end

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as the guy on the left okay now here's where it gets um I think even cooler so the reason that we

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have been able to fill up gyms in thirty days and that was like my claim to fame and I always open

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my gyms of full capacity except for my first one which I learned my lesson firm and then everyone

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after that we opened a full capacity so it works like this okay if every time so from a day to day

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standpoint let the guy on the on the left he lost money in the front of which means he had to

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take money out of his pocket spend it hoping to acquire customers and then recover that money

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on the back end over time right with an increased DFT that's the hope the reality isn't that

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which is hopefully what I explained okay now the the opposite of that and that's why I might do

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as a side note why people in the fitness space used to we're like a lot of gym owners like

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Facebook used to work doesn't work anymore they changed their algorithm is like they didn't change

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algorithms better competitors came to marketplace and like you just no longer were a strong competitor

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because stronger guys came in and they were able to outbid you for the same amount of attention

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the same amount of impressions and so when you're making six dollars and thirty cents per lead you

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can't go very far when you're making a hundred and thirty five dollars lead if they five x their

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prices we're still making four to one and we can still play here you can't because you're doing

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six dollars and three cents hopefully this is resonating with someone who's listening um

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but uh here's how it works from a day to day standpoint and I think this is probably the most

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powerful piece of why the new way is the new way and it's the better way it works like this so

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let's say you spend fifty dollars on day one fifty dollars typically speaking um as an aggregate

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of all the campaigns that we've been running usually will get you about 15 leads okay so you get

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fifteen leads for fifty bucks and you're closing twenty percent which means you close three sales

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six hundred so you make eighteen hundred bucks day two you close three sales at six hundred you

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spend the same fifty bucks you make eighteen hundred day three same things spend fifty make eighteen

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hundred now here's the cool thing one day four if you have any kind of processor my bodies and

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plan or water five whatever it is right that first uh sales day all right uh eighteen hundred

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dollars will hit your account okay and so at that point let's say you started with your account

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with five hundred dollars so it emptied fifty fifty and fifty all right so you were down to three

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fifty for this marketing campaign but on day four eighteen hundred dollars it's that account

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so now you're at twenty one fifty and then on Friday another eighteen hundred dollars hits

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and so you're at uh thirty nine fifty okay and you're still spending fifty dollars day

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so what happened here your initial budget grew because of the positive cash flow in the acquisition

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process now this is why this is super important a lot of people always ask me well how much how much

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should I budget for marketing I'm like we don't budget for marketing we make money when we market

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which is why we could continually I call customer financed acquisition but customers were financing

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the acquisition of more customers so all we really needed to do to start a gym was put five

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thousand dollars aside sign a lease and then within thirty days we bought the flooring painted

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the walls bought the equipment put the front desk in put the sign out front did all that stuff

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while selling and opening the gym with 200 people so when you sign up 200 people at six hundred

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dollars you make a hundred twenty thousand dollars when you open your gym starting with an empty bank

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here so like how cool would it be to be paid to open your gym like there's a reason we were able to open

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six and such short amount of time off cash flow like this is why this is how we did it right and

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if you follow the same logic if it doesn't cost you money to acquire customers and you make money

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in the acquisition process then you would logically always be in the acquisition process because you

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can do so profitably and as long as you can do so profitably then your gym will always be a full

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capacity which then raises the next question once my gym is a full capacity then what do I do

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which I will address in the next gym secrets podcast so anyways hope this was useful for you

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guys it's a really central concept to how I talk about gyms and how we talk about acquiring

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customers and how to talk about filling gyms which if your gym isn't full and you've been

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open for longer than 30 days this is for you all right so hope you're having an amazing amazing day

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and I will catch you on the flip side tomorrow maybe in a second if you're binge podcast

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listing hi duckies in or mosey out