Ep 224 Guest Spot on Sales Conversion Podcast with Rylee Meek

Abstract
Summary Notes

Abstract

In this episode of the Sales Conversion podcast, host Riley Meek interviews Alex Z., the founder of Gym Launch, to explore the strategies behind transforming struggling gyms into profitable businesses. Alex shares that the key to success lies in understanding customer acquisition and creating a business model robust enough to eliminate traffic issues. By focusing on customer value and reversing engineering the process, Alex has expanded his expertise across various industries, including a multi-million-dollar software aimed at improving lead-to-customer conversion for brick-and-mortar businesses. Alex's holistic approach, detailed in his book "Gym Launch Secrets," is applicable across service industries and emphasizes the importance of offering superior products, upsells, and guaranteeing results based on customer lifetime value.

Summary Notes

Introduction to Gym Launch and Alex Z's Background

  • Alex Z is the founder of Gym Launch, a company that turned one failing gym into six profitable ones and eventually serviced over 3000 gyms.
  • Gym Launch has generated over 43 millionaires among gym owners and expanded into various business ventures.
  • Alex's approach focuses on customer acquisition and creating a strong business model to eliminate traffic issues.

"So soon, he turned one failing gym into six profitable gyms. And as Gym launch continued to grow, they expanded over 24 million a year. And within three years, they have serviced more than 3000 gyms, made over 43 millionaires out of gym owners, which has allowed him to expand into other operations, which I'm sure we'll wrap about here as well."

This quote summarizes Alex Z's achievements with Gym Launch, emphasizing the rapid growth and success in the gym industry, including the creation of many millionaires and expansion into other business areas.

The Importance of Customer Acquisition

  • The skill set of acquiring customers is crucial for entrepreneurs.
  • Many businesses mistakenly think they have a marketing problem when it is a holistic issue.
  • Fixing the business model from the back to the front allows the front to explode.
  • The goal is to create a business model strong enough to eliminate traffic issues by making more money per customer.

"Fundamentally, I think the skill set that every entrepreneur, to echo what you just said has to have is knowing how to acquire customers."

This quote highlights the fundamental skill of customer acquisition as essential for entrepreneurship, which is a central theme in Alex Z's approach to business.

Holistic Business Model Approach

  • Alex Z does not run an agency but looks at the overall business and the levers that influence profitability.
  • He focuses on the customer journey and value ladder to spend more to acquire customers.
  • The approach involves making the business model robust to eliminate the need for traffic generation.

"But it's kind of a holistic issue. And you need to fix the model from the back to the front to allow the front to explode."

This quote explains the holistic approach to business that involves addressing the entire model, from backend to frontend, to achieve explosive growth.

Application Across Various Businesses

  • Alex Z has applied his business frameworks across different industries and business types.
  • He has authored a book, "Gym Launch Secrets," which is applicable to any service business.
  • His success spans multiple seven-figure brick-and-mortar businesses, a multi eight-figure physical products business, a multi eight-figure coaching business, and an eight-figure software business.

"And so we've really duplicated this not even across industry, but across business type because a lot of people would say, well, this won't apply to me. My niche is special or my business type is special. And I don't really think it's the case."

This quote emphasizes the versatility of Alex Z's business model, which can be applied across various industries and business types, debunking the myth that certain niches or business types are exceptions.

The Shift from B2C to B2B

  • Alex Z transitioned from business-to-consumer (B2C) to business-to-business (B2B) based on advice from Russell Brunson, founder of ClickFunnels.
  • The transition allowed Alex to pursue his passion for business rather than just weight loss.
  • Moving to B2B enabled a national scale impact and allowed Alex to "unfurl his wings."

"And so that was really a big, fundamental shift for me because that's what took me from b to c to b to b, and that has been a great journey for me."

This quote describes the pivotal moment in Alex Z's career when he shifted from focusing on consumer-based gyms to providing business-to-business services, which aligned more with his passion for business.

Impact and Personal Fulfillment

  • Alex Z finds fulfillment in impacting more people through his B2B ventures than he could with individual gyms.
  • His passion for business, rather than just weight loss, drove the expansion of his ventures.
  • The ability to work on a national scale provided a greater sense of achievement and personal satisfaction.

"But being able to do it b two b at a national scale really allowed that to kind of, what is it? Like, unfurl your wings and kind of fly away."

This quote conveys the sense of liberation and growth Alex Z experienced by moving to a B2B model, which allowed for a broader impact and alignment with his business interests.

Passion for Impacting People

  • Riley expresses a passion for impacting people rather than just making money.
  • He mentions a recent conversation with his trainer about Alex's ability to help gyms gain members.
  • The trainer is curious about Alex's methods, especially during COVID times.

"My passion was people and being able to pour out, and you're able to really impact that many more."

This quote illustrates Riley's drive for making a positive impact on people's lives, which he finds more fulfilling than simply starting another company for profit.

Evolution of Business Model

  • Alex discusses the evolution from doing launches for gyms to teaching gym owners to replicate the process themselves.
  • Initially, the business model involved flying out and signing up members directly, but it was logistically challenging.
  • The shift to a teaching model allowed for greater scalability and impact, supporting gyms in generating substantial sales.

"But when I decided that that business model was logistically difficult, it had hair on it. I could get into some of the kerfuffles, you know what I mean? But fundamentally, as soon as we stopped doing it for people and started teaching people how to do, it was when we had a much more scalable model."

Alex highlights the difficulties of the original business model and the benefits of shifting to a more scalable approach, where they teach gym owners the system rather than implementing it for them.

Gym Launch Success

  • Alex's company has worked with 3200 facilities, contributing to a collective $1.5 billion in sales.
  • The marketing and advertising strategies used are widespread, often unrecognized as being from Alex's company.
  • The success of the gyms working with Alex's model is attributed to the effective systems in place.

"They collectively did a billion and a half in sales using our systems."

This quote emphasizes the significant financial impact Alex's company has had on the gyms they've worked with, showcasing the effectiveness of their systems.

Personal Business Experience

  • Riley shares his experience taking over a struggling gym with 600 members at age 23.
  • He enjoyed fitness but found running the business challenging and financially unrewarding.

"I've never worked so hard in my life and made so little."

Riley's statement reflects the tough reality of running a gym business without the right knowledge or systems in place, highlighting the grind and low profitability he experienced.

Customer Lifetime Value and Cash Flow

  • Alex discusses the importance of understanding customer lifetime value and managing cash flow in the gym business.
  • He emphasizes the need for a system that allows for immediate profitability or at least liquidating acquisition costs.
  • The goal is to have an unlimited marketing budget by reinvesting profits from successful marketing strategies.

"Now, if it's $2,400 over five years, most people still can't pay to acquire a customer in that setting."

Alex points out the challenge of customer acquisition when the lifetime value is spread over a long period, stressing the importance of strategies that address cash flow issues.

Four-Step Acquisition System

  • Alex outlines a four-step approach to customer acquisition for gym owners and other professionals like chiropractors and dentists.
  • The steps include an initial offer, a consultation, a low front-end offer, and a follow-up offer based on results.
  • The system is designed to reduce capital constraints and increase cash flow.

"There's kind of a four step approach that you can look at any acquisition system so that we can make it less capital constrained for them."

Alex describes a systematic approach to customer acquisition that is designed to be financially accessible for business owners, allowing for growth without significant upfront investment.

Business Strategy and Sales Approach

  • Alex Z emphasizes the importance of a structured sales process to achieve quick payback in the gym business.
  • The process includes initial transactions, physical products, upsells, continuity, and a portion of prepaid packages.
  • This strategy is designed to generate cash upfront, essential for businesses with less working capital.
  • Alex Z dismisses the need for strategy sessions, as they rely on a proven system that works for the majority with low to average skill sets.
  • He contrasts his personal approach to selling high-ticket items with the approach suitable for the average small business owner.

And so with that, we're able to pool cash up front on these customers. So that we can cash for the acquisition.

The quote underlines the strategy of pooling cash upfront from customers to fund further business acquisition efforts.

Because we've done this 3200 times, and we've tested all of the ideas you have thought of and the ones you haven't.

This quote emphasizes the extensive experience and testing that has gone into perfecting their sales process.

Customer Acquisition and Software Solutions

  • Alex Z discusses the shift from traditional brick-and-mortar business models to digital customer acquisition.
  • The software, Allen, addresses the gap between digital opt-ins and actual customer visits.
  • Front desk staff traditionally lack the skills to convert leads, which is where the software steps in.
  • Allen utilizes machine learning to optimize lead conversion across industries, outperforming average human efforts.

And so what the software does, and we saw the trends going over time, where pickup rates were going down over the phone, messenger and chat were blowing up.

This quote highlights the observation of changing trends in customer communication, leading to the development of the Allen software.

And so with that, we can pretty much double it. And because lead flow is variable, the cost is variable.

The quote explains the software's ability to improve lead conversion rates and its variable cost model that adapts to fluctuating lead flows.

Efficiency and Cost Management

  • Alex Z criticizes the inefficiency of traditional staffing models in small brick-and-mortar businesses.
  • He points out the waste in paying staff during periods of low demand and the inability to hire fractionally.
  • The performance-based model of the software eliminates recurring fees and aligns costs with actual campaign performance.

On the flip side is that an ad tanks, right. And you're still paying this person to sit on their hands all day long.

This quote illustrates the problem of fixed staffing costs when advertising campaigns underperform.

There's no ability to fractionally hire, and the fractional hires that you would be able to have even if you were, aren't going to be as good.

Alex Z emphasizes the challenges of hiring part-time or fractional staff and ensuring quality, which the software solution overcomes.

Lead Generation and Conversion Efficiency

  • Agencies can acquire leads inexpensively, at around $50 per lead.
  • The average front desk employee converts 15 out of 100 leads into shows (visitors).
  • Labor costs for the front desk can be significant, at $2,500 a month, which equates to $175 per show, not including ad spend.
  • Many businesses overlook labor costs when calculating the cost per lead conversion.
  • By partnering with agencies, the goal is to streamline the process and offer a singular price per show.
  • This model simplifies budgeting for small business owners and allows them to focus on sales and fulfillment.
  • The efficiency of the lead generation and nurturing process helps businesses scale by turning necessary jobs into low-skilled tasks.

And so they're able to get people with ad spend for $50. But if you are getting, let's say, 100 leads a month, and your front desk girl is getting 15 of those people in the door... we're paying for 15 shows, $2,500. Right. So we're paying $225 per show in labor.

This quote breaks down the cost of acquiring leads and converting them to actual customers, highlighting the high labor costs associated with conversion.

And so it makes it very simple for them to budget. It makes it really simple for them to actually run their operations because someone else is managing the lead gen, the nurturer is already being taken care of.

The quote emphasizes the benefits of outsourcing lead generation and nurturing, simplifying operations for small business owners.

Business Model Innovation and SaaS Solutions

  • The overarching mission is to help business owners make more money.
  • Providing value to the end consumer is essential for customer retention and back-end revenue.
  • The supplement line was created to offer a drop-shipping solution with integrated POS and aggressive commission models.
  • The concept can be applied across various industries, encouraging businesses to sell products they would otherwise refer out.
  • Small changes in the business model can have significant impacts on profitability and customer convenience.

All of these things are to make business owners more money... And so with the supplement business, there just wasn't really a solution that allowed you to drop ship to customers, sell big packages, go on recurring and then have a POS that was seamlessly integrated into the business model.

This quote explains the motivation behind creating a supplement line that addresses the needs of business owners for more efficient and profitable operations.

Just makes a big difference down the line with those small changes.

The quote underscores the impact of minor adjustments in business operations on long-term success.

Meal Prep Program as a Value-Add Service

  • The meal prep program is designed to complement the fitness and wellness offerings.
  • Meals are calorie-specific, catering to clients' weight loss goals.
  • The program operates with minimal profit margins, serving primarily as an additional benefit for gym owners' clients.
  • The food industry is challenging due to low profitability and high shipping costs.

The meals are 350 ish on the smalls, and then the larges are like 600, 650. And so that way they can replace one to two meals a day... It's not a super profitable business for us.

This quote describes the meal prep program's structure and acknowledges its role as a value-added service rather than a major profit center.

You have to do next day air if you want to be compliant, you want to be USDA, which no one is, but if you actually want to be legit, then you have to dry ice pack, you have to sell it in insulated boxes, and you have to do next day air for a 40 pound box.

The quote highlights the logistical challenges and expenses involved in the food industry, particularly in shipping compliant, perishable goods.

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