Changed The Entire Gym Industry Ep 359

Summary Notes


In the podcast, the host discusses strategies to reduce customer churn in the gym industry. The host, who previously owned a chain of gyms, shares his journey from operating his own gyms to licensing his customer acquisition system, and eventually tackling the widespread issue of member retention. He organized a roundtable of top-performing gym owners to identify their successful practices. Through this collaboration, five key retention strategies were identified: proactive member engagement, exit interviews, community events, personalized communication, and regular personal check-ins. The host emphasizes the importance of genuine care for customers over automated systems and highlights that solutions to complex problems often exist within a community, requiring a consultative approach to uncover and implement them effectively.

Summary Notes

Introduction to Gym Industry Churn Issue

  • Speaker A has experience with founding and growing a chain of gyms using effective marketing and sales strategies.
  • Speaker A pivoted from running gyms to licensing their customer acquisition system to other gym owners.
  • A significant problem identified in the industry was the retention of customers, despite successful customer acquisition.
  • The issue of churn is applicable to any service-based business with a recurring revenue model.

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

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

These quotes introduce the central issue of customer churn in the gym industry and Speaker A's experience with solving it.

Speaker A's Background and Expertise

  • Speaker A founded a chain of gyms in California in 2013, achieving growth purely through cash flow.
  • By 2016, Speaker A had six gyms and was recognized for their ability to open gyms at full capacity.
  • After growing their own gyms, Speaker A began licensing their customer acquisition system to other gym owners.
  • Speaker A also engaged in turnaround projects, filling other gyms for a share of the revenue.

I had a chain of gyms in California I founded in 2013. I had six gyms by 2016 that I grew just using cash flow from the growth of the facilities.

This quote outlines Speaker A's history and success in the gym industry, highlighting their expertise in gym growth and customer acquisition.

Churn Rate Challenge in the Gym Industry

  • Speaker A noticed that while many gyms could acquire customers, they struggled to retain them long-term.
  • The challenge was not with the acquisition system but with maintaining customer retention.
  • The problem is relevant to any recurring revenue service-based business.
  • Speaker A sought to address this issue by finding solutions within their community of gym owners.

And one of the issues is that all these guys are bringing people in the door, but they can't retain them for a long time so they can convert them into members because we had a process around that, which, again, was sales, but they couldn't keep them for a long time.

This quote emphasizes the retention problem that many gyms face despite successful initial customer acquisition.

Analyzing Churn Rates and Industry Averages

  • Speaker A asked their community if anyone had achieved a monthly churn of 3% or less for six straight months.
  • They demonstrated the math to show that with 3% monthly churn, a business retains 69% of customers annually.
  • A 3% churn rate is considered excellent, with most gyms averaging around 9%.
  • At 9% churn, only 32% of customers are retained annually, leading to significant business losses.

So if we want to see what percentage of your customers are staying, and if you have, let's say, 3% monthly churn... That means that I'm going to keep 69% of my customers. I'm going to lose 31% of my customers year over year.

This quote conveys the calculation of customer retention based on a 3% monthly churn rate, illustrating the impact of churn on customer base.

Now, if you want us to have something that freaks you out, let's just do this one together. So 9% means we retaining 91% per month... Look at the difference there. 32% of your clients are still there, meaning you lose 68% of your, of your recurring clients if your monthly churn is 9%.

Speaker A presents the stark contrast between a 3% and a 9% churn rate, showing how higher churn rates can severely affect a business's sustainability.

Customer Churn and Retention Strategies

  • Speaker A highlights the challenge of maintaining a customer base in the gym industry, with a high turnover rate expected by year-end.
  • Speaker A conducted a poll in a community group to identify members with less than 3% monthly churn for six consecutive months.
  • Only 20 out of approximately 1000 community members qualified, representing the top 2% in customer retention.
  • Speaker A organized a roundtable with these top performers to discuss their strategies for providing value to members.
  • The discussion was meticulously documented, resulting in four pages of notes.

This is a problem because I'm going to have to keep showing them all these new tips and tricks to get new people in, because literally by the end of the year, they're going to have already turned over three quarters of the customers.

This quote explains the urgency of addressing customer churn due to the high turnover rate anticipated within the year.

I put a poll in the group and I said, hey, if you've had less than 3% monthly churn for six straight months, I'd like to invite you to a roundtable.

Speaker A describes the criteria for selecting participants for the roundtable, focusing on those with exceptional customer retention rates.

And I wrote down every single thing that every one of them had.

This quote shows Speaker A's commitment to capturing all the strategies used by the top performers in detail.

Analysis of Effective Retention Strategies

  • Speaker A edited the call and reorganized the notes to identify common and unique strategies among the top performers.
  • Tracking and focusing on churn metrics was identified as a critical practice that many neglect.
  • The top performers employed various strategies to combat churn.
  • Speaker A emphasizes the importance of understanding Lifetime Value (LTV) and how reducing churn can significantly increase LTV and profitability.
  • Strategies were consolidated into categories, and the most commonly used ones were considered the most critical for success.

So this is what I did next. We edited the call. And so I looked through all the notes, and then I recategorized them because a lot of them were repetitive, some of them were different, one off, weird things.

Speaker A explains the process of analyzing the collected data to identify key patterns and strategies.

And the first one being they actually track it and focus on the metric, which 95% of people don't even do, which is why most people are poor.

This quote underlines the importance of tracking churn rates, which is often overlooked by the majority.

And so what I did was I did 100 divided by 3%. That's $3,300 of LTV, right? Lifetime value.

Speaker A calculates the LTV based on a 3% churn rate, demonstrating the financial impact of customer retention on revenue.

The people who had conquered their churn made three times more revenue per customer than everyone else.

This quote highlights the direct correlation between churn management and increased revenue per customer.

And so the goal is how little, how few of these things are the thing.

Speaker A concludes by emphasizing the objective of identifying the minimal number of effective strategies necessary for achieving low churn rates.

Book Promotion by Speaker D

  • Speaker D promotes their book "100 million dollar offers" available on Amazon.
  • The book has over 800 five-star reviews and is nearly perfectly scored.
  • It is priced at $0.99 on Kindle as a gift to the community.
  • Speaker D invested over a thousand hours in writing the book.
  • The purpose of the promotion is to build rapport with the audience and potentially partner with them in the future.

"On Amazon, it's called 100 million dollar offers that over 8005 star reviews. It has almost a perfect score. You can get it for $0.99 on Kindle."

This quote highlights the success and accessibility of Speaker D's book, emphasizing its value and affordability as a resource for the community.

Retention Strategies in Gyms by Speaker A

  • Speaker A discovered five key retention strategies used by gyms.
  • The strategies are not exclusive to gyms and can be applied to various businesses.

Strategy 1: Accountability Around Consumption

  • Gyms escalate the situation if a member misses sessions by Wednesday.
  • Different gyms have different processes, but the goal is to contact and schedule time for the member to come in.

"First thing that they were all doing, all of them, is that if someone missed, they're not showing up at the gym by Wednesday of that week... They escalated them."

This quote outlines the first retention strategy, which involves monitoring and responding to member attendance to ensure service consumption.

Strategy 2: Exit Interviews

  • Exit interviews are conducted when a member wants to leave.
  • They provide valuable feedback to improve the business.
  • Often, these interviews can lead to reselling the member a higher level package.

"Number two, the vast majority of them had exit interviews, meaning if someone wanted to leave, they would have to come in and talk to somebody."

The quote explains the second retention strategy, which focuses on understanding and addressing member concerns, potentially leading to customer ascension.

Strategy 3: Member Events

  • Regular community events are held to strengthen community bonds.
  • The frequency of events varies, but quarterly events are recommended.

"Number three, they all did member events."

This quote briefly mentions the third retention strategy, which is about creating a sense of community through events.

Strategy 4: Handwritten Cards

  • Gyms send out handwritten cards to members.
  • Cards may include gift cards for referrals, appreciation notes, or kudos.
  • The personal touch of the cards is crucial for their effectiveness.

"Number four is that they had handwritten cards that they would send out on a regular basis to each of the people in their community."

The quote describes the fourth retention strategy, emphasizing the importance of personal appreciation and recognition in maintaining customer relationships.

Personalization in Communication

  • Personalized communication is crucial for customer engagement.
  • It's not enough to send generic messages; messages must be tailored to individual progress and achievements.
  • Personalization can be applied to any business, not just gyms.
  • Specific examples of progress should be highlighted in communications to reinforce positive developments.

"So it can't just be, hey, thanks for being a member. Love you lots. Send doesn't work. It has to be, hey, Charlote, you've really been advancing on your pull ups."

This quote emphasizes the need for personalized communication rather than generic messages, highlighting the importance of acknowledging individual progress.

The Consultative Method for Problem-Solving

  • The consultative method involves gathering experts and community members to solve complex problems.
  • Solutions often already exist within the community; they just need to be identified and consolidated.
  • This method includes interviewing experts, tabulating answers, and determining the most common successful strategies.
  • The consultative method can lead to significant rewards and solutions to complex business issues.

"And so the way that this is done, this is called a consultative method, but you go and you talk to experts in the space."

The quote describes the consultative method as a process of engaging with experts to find solutions, indicating its effectiveness in problem-solving.

Regular Personal Check-Ins

  • Regular contact with customers on a personal level is key to maintaining a relationship.
  • Personal check-ins should be independent of service-related interactions.
  • These check-ins should be frequent (e.g., every two weeks) and inquire about the customer's well-being, not just their progress with the service.

"Every two weeks, they were able to contact them on a personal basis independent of the service based stuff."

This quote highlights the importance of regular, personal check-ins with customers to maintain a relationship beyond just the service provided.

Human Touch vs. Automation

  • Automation should not replace personalization and human interaction.
  • When communications are perceived as automated, customers disengage.
  • Personal touch in communication is vital for customer retention and satisfaction.
  • Systematizing service does not mean removing the human element.

"As soon as someone finds out that communications are automated, they stop paying attention because you stop paying attention to the communication."

This quote captures the negative impact of automation on customer engagement, stressing the importance of maintaining a personal touch in communications.

Genuine Care in Service

  • Showing genuine care for customers is essential for successful service-based businesses.
  • Customers can discern between genuine attention and automated responses.
  • Authenticity in customer service can lead to customer success and loyalty.

"Okay, so the best way, as a total side note of getting people to think you give a shit is to actually give a shit."

The quote asserts that the most effective way to convey care to customers is to genuinely care about their experience and well-being, which is fundamental to service excellence.

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