📣📣GOOD NEWS Why gyms arent going anywhere in the new economy...and how if you are doing a $99mo bootcamp...you're gonna lose. Ep 46

In a discussion led by Alex from downtown Austin, the conversation delves into the future of the fitness industry amidst the rise of automation, AI, and dominant online retailers like Amazon. Alex posits that the service industry, particularly high-value services, will thrive despite the retail shift online. He argues that experiences and personal services, such as dining or personal training, cannot be replaced by technology and that brick-and-mortar businesses must adapt by offering superior service and experiences. He emphasizes the importance of being high-ticket, providing exceptional value, and focusing on customer satisfaction to succeed. Alex also touches on the benefits of niching for online businesses but recommends general population targeting for local businesses to maintain a competitive edge.

• Alex shares thoughts on the longevity of the gym industry amidst advancements in automation, robotics, AI, and large retail players like Amazon.
• He believes the gym industry will survive due to its nature as a service business.
• Retail spaces are predicted to decline due to online competition, which will free up physical space for service-based businesses.
• The future of mini malls and retail spaces is expected to focus on services that require physical presence: food, services, and experiences.

"And so with the future of automation in terms of robotics and AI and Amazon coming in and being a behemoth in retail, it makes sense to ask yourself, especially if you're trying to do this for a while and make a career out of owning a gym, is this industry going to be here in ten years or 20 years or 40 years or whatever?"

This quote expresses Alex's consideration of the impact of technological advancements on the longevity of the gym industry and the importance of contemplating this for those intending to make a long-term career out of gym ownership.

"And the good news is I think that it will be. And here's kind of my argument around that."

Alex is optimistic about the future of the gym industry, indicating he has reasons to support this belief, which he is about to outline.

"So I think we're in the right business because we're in a service business. And if you look at the future of little mini malls and shopping malls and where retail looks like all retail stores are going to go away, they're going to disappear because you're going to have an online source that's going to have more variety, have better pricing because they have astronomies to scale, period."

Alex suggests that the gym industry is in a favorable position because it is a service business, which is less likely to be replaced by online alternatives. He predicts a decline in physical retail stores due to the competitive advantages of online shopping, such as variety and pricing.

"And so it's going to free up a lot of space, right. And so when everyone's like, man, there's no space for my jujitsu, there's always space, promise you. Because all these other places are going out of business because of Jeff Bezos, right, but what is the future of those mini marks? What are they actually going to look like?"

Alex anticipates that the reduction of retail stores will result in more available space for businesses that require a physical location, such as gyms and martial arts studios. He poses a question about the future appearance and function of mini malls in this changing landscape.

"And so it means that the things that people actually need to do in person still are going to be related to two things, really. Three, food services experiences, right. Those are the things that people are actually going to have to go and take their body to the store to get their experience."

Alex identifies the three categories of services that will continue to necessitate in-person attendance: food, services, and experiences. He implies that businesses offering these will still have a place in the future market.

• Alex emphasizes that certain activities require physical presence and cannot be replaced by online alternatives.
• Examples of such activities include going to movie theaters, restaurants, getting haircuts, and visiting healthcare providers like chiropractors and dentists.
• These activities are categorized as experiences, food services, or personal care services.

"A movie theater, for example, is an experience. Going to a restaurant is food and experience together or getting their haircut or going to the chiropractor or going to the dentist. Those are things you actually have to take your body into the store to go do,"

This quote lists examples of activities that inherently require physical presence, supporting the idea that not all services can be digitized or automated. It underscores the continued need for certain in-person experiences and services.## High Value Services

• The market for low-cost, high-volume services is consolidating, making it a competitive and undesirable space.
• High value services are essential for survival in the current business environment.
• Businesses should focus on providing service rather than competing on equipment or price.
• Service quality is the primary reason customers choose certain businesses.

"And so the first thing is you have to have high value services because if you're trying to do a cheap model, like a cheap gym model, high volume model. Those, again, are going to consolidate."

This quote emphasizes the importance of offering high value services over engaging in a low-cost, high-volume business model, which is prone to consolidation and intense competition.

• Competing on price and facilities is not sustainable due to market consolidation.
• Equipment investments are not as crucial to the bottom line as service quality.
• Selling high-ticket services is necessary for local businesses to survive against large-scale competitors and online retailers.
• The only viable competitive edge for small businesses is to offer superior service.

"That's not a game that we want to play. We don't want to get into that game."

Alex is highlighting the strategic decision to avoid competing in a market that is focused on having the lowest prices and the best facilities, which is a race to the bottom.

• Local businesses need to adopt a high-ticket model to thrive.
• Selling low-cost items or services is unsustainable due to competition from large corporations and online marketplaces.
• High ticket services must provide the highest value to justify their cost.
• Reputation and expertise in offering high-value, high-ticket services are crucial for success.

"Because a, you can't sell widgets because Amazon got you. Period. Widgets are going away. You can't sell high volume because the guys who have $10 million gyms are selling them for $30 a month. You're not going to win at that game."

This quote underlines the challenge local businesses face from large online retailers like Amazon and large-scale gyms, necessitating a shift towards high-value, high-ticket services to remain competitive.

"But the reality of high ticket is that the only way to be high ticket is to be the highest value."

Alex asserts that to justify a high-ticket pricing model, a business must offer the highest value service, linking price directly with service quality and value.## Pricing Strategy

• Alex emphasizes the importance of pricing based on the value provided.
• High-priced offerings should deliver significantly more value to the customer.
• Justifying a high price point requires delivering a service that can generate substantial returns for the customer.

"get from us is expensive as heck. Like, it's by far 3410 times as expensive as anyone else in our space. But it's because we're the best and because what we sell you for 20 grand will make you 200."

This quote highlights the rationale behind Alex's pricing strategy, where the high cost is justified by the high return on investment for the customer.

• To sell high-ticket items, one must think about providing value that significantly exceeds the price.
• Thinking in terms of value changes the approach to service creation, setting one apart from low-priced competitors.

"And that's the issue. And so if you're like, man, I want to sell high ticket, you got to get into that space of, like, how can I provide? Like, if I want to sell $3,000 package? How can I provide $30,000 of value?"

Alex is explaining that in order to sell expensive packages, one must focus on creating a value proposition where the customer perceives they are receiving ten times the value of what they paid.

• Increasing the average lifetime value of a customer allows for more investment in customer acquisition and retention.
• High-value services lead to happier customers who stay longer and refer others.

"Because then when your average lifetime value goes up, you can acquire customers more easily, they stay more easily, they're the best customers."

This quote connects the concept of providing high-value services with the benefits of increased customer lifetime value, which in turn improves customer acquisition and retention.

• The future of the economy is service and experience, especially for brick-and-mortar businesses.
• Investing profits back into the service enhances the customer experience and results.

"Just like I said before, service and experience is why is where the new economy is going, right? For brick and mortar."

Alex suggests that for physical businesses, the key to success in the new economy is to focus on providing an exceptional service and customer experience.

• The internet allows for ultra-specific niching, catering to very specific demographics.
• Dominating a niche category is important as there is often only one winner in each niche.

"If you were a vegan power lifter, you can find some dude online who's a vegan power lifter."

This quote exemplifies the idea of finding a niche market on the internet that caters to very specific interests or demographics.

• Brick and mortar businesses should focus on serving the general population in their area with superior experiences and results.
• Providing superior service allows for higher customer retention and the ability to outspend competitors.

"Which means if you are brick and mortar, most of the time you're going to be focusing on general population in your area and then providing an experience that's superior than everyone else's, providing results that are superior than everyone else can."

Alex advises that physical businesses should concentrate on outperforming competitors in their local area by offering better experiences and results to the general population.

• Providing excellent customer support is part of creating a positive customer experience.
• Having a responsive and capable support team is a significant part of the value proposition.

"Because I have a full american, red blooded tech support team. I got eleven people full time. We have a five minute promise."

The quote emphasizes the importance of a robust customer support system as part of the overall service offering, highlighting the size and responsiveness of Alex's support team.## Growth Through Word of Mouth

• Speaker C emphasizes the importance of word-of-mouth for the growth of the podcast.
• There is a deliberate avoidance of traditional advertising methods like ads, sponsorships, or sales.
• The speaker expresses gratitude and encourages listeners to share the podcast as it was shared with them.

"The only way this grows is through word of mouth. And so I don't run ads, I don't do sponsorships, I don't sell anything."

This quote underscores the podcast's growth strategy, relying solely on organic sharing by listeners to expand its audience.

"If it was a review, if it was a post, if you do that, it would mean the world to me and you'll throw some good karma out there for another entrepreneur."

The speaker conveys the personal significance of audience engagement and the positive impact of sharing content.

• Speaker A discusses the high success rate of their customers, attributing it to the company's ability to provide superior service.
• The margin created within the business model allows for investment in services that meet customer needs.
• The speaker implies that their approach is future-proof, especially for brick-and-mortar businesses.

"Anybody else have that? Of course not, because no one else has the margin to do it, but it's a need that was there that we satisfied."

This quote highlights the unique position of their business in satisfying customer needs due to having a sufficient profit margin to provide enhanced services.

"That's why instead of having 10% of our customers succeed, we have 90% of our customers who succeed is because we had the margin in order to make a service that was superior."

Speaker A explains the correlation between the company's financial strategy and the high rate of customer success.

• Speaker A argues that people will always value human interaction over automation, especially for accountability.
• The speaker suggests that social status is a driving factor for people to engage in services like personal training.
• The idea is that people are less likely to feel accountable to a robot than to a human being.

"People will always pay another human being to hold them accountable."

This quote reflects the belief in the enduring value of human connection in service industries.

"But people are driven by status, and if they feel like their status gets decreased by them not showing up, they'll come."

Speaker A discusses the motivational role of social status in maintaining commitments to services like personal training.

• Speaker A expresses confidence in the future of their business model, which is built on relationships rather than low margins and high volume.
• The speaker reassures listeners that there is no immediate threat from automation, such as personal training robots.
• The emphasis is on the importance of building relationships to ensure business longevity and success.

"But at the end of the day, relationships are going to build it and that's what's going to bring people in and that's what's going to solidify us in the future."

This quote asserts the foundational role of relationships in business growth and customer retention.

"So might as well start playing a different way and hop on board. The water is warm and you can help you get there."

Speaker A invites listeners to adopt their relationship-focused business approach, suggesting it is a welcoming and supportive environment.

• Speaker A concludes the conversation with a positive message, wishing listeners well and expressing a desire to communicate again soon.
• The sign-off is informal and friendly, maintaining the personal connection with the audience.

"So anyways, lots of love, guys. Have a happy hump day and I will talk to you guys sooner."

This quote serves as a warm and affectionate farewell, reinforcing the speaker's personal connection with the audience.