How to Drive Revenue Online Ep 215

In the episode featuring Alex Hermosi, author of Gym Launch Secrets, the conversation pivots around adapting fitness business models to the current market shaped by the pandemic. Hermosi emphasizes the opportunity for gym owners to pivot to remote services, highlighting the increased profit margins and the necessity of maintaining customer relationships via accountability and personalized communication. He outlines a sales strategy that includes an initial high-value offer followed by upselling nutritional guidance and long-term fitness packages, stressing the importance of adapting sales pitches to survival rather than growth during recessionary times. Hermosi predicts a permanent shift towards online fitness services and the enduring importance of skills like phone sales, suggesting that the post-pandemic landscape will favor those who can successfully integrate digital and in-person services in a 'hybrid gym' model.

• People generally prefer the status quo over change, even if it means facing losses.
• Crises, such as the COVID-19 pandemic, present opportunities for businesses to adapt and thrive.
• Remote services, especially in the fitness industry, have become highly demanded during the pandemic.
• Businesses can capitalize on the decreased competition and reduced marketing costs to acquire new customers.

"The vast majority of people hate change more than they hate losing and would rather just lose."

This quote highlights a common human behavior where the fear of change outweighs the fear of loss, which can lead to missed opportunities, especially in a business context.

"We're in a place right now where remote is selling like hotcakes, and the vast majority of people hate change more than they hate losing and would rather just lose because they were so burned out of being gym owners that this gave them a perfectly acceptable they could look at their parents, they could look at their wife, and they're like, you know, I tried my hardest and everyone's going to say, you're right."

This quote illustrates how the pandemic has provided an excuse for gym owners to exit the industry due to burnout, while also highlighting the increased demand for remote services.

"If you want to quit, this is the absolute best opportunity to quit. But if you're not that person and you want to win, this is how you do it. And you can do it now, because the people who actually execute right now, lead costs, are 50% off right now because no one's marketing, especially other gyms in your area."

This quote emphasizes that the current crisis is a pivotal moment: it's the best time to quit for those who want out, but also the best time to succeed for those willing to seize the opportunity, particularly because of lower marketing costs.

• The shift to online business models can be profitable if aligned with current consumer needs.
• Remote and online fitness services have grown significantly due to the pandemic.
• Gym owners can pivot their services to online formats, leveraging their existing skills in nutrition and coaching.
• The online training model offers higher profit margins due to lower operational costs.

"Whenever there's panic, panic is just an expression of pain, just larger pain within a marketplace, right? That's what panic is. And so whenever there's lots of pain, it means there's always lots of problems. And problems means opportunities to be solved."

This quote explains that market panic is a reflection of widespread problems, which in turn represent opportunities for businesses that can provide solutions.

"If you can make the pivot, then you can actually meet an outsized demand where there's less supply of it."

This quote suggests that businesses that successfully pivot to meet current demands can benefit from a market with reduced supply, leading to potential profit increases.

"Online training and remote training has far higher margins than in person brick and mortar service."

This quote emphasizes the financial benefits of online training, which has higher margins due to reduced overhead costs associated with physical locations.

• In a constrained environment, businesses must focus on revenue-generating activities.
• Employees in a remote gym setting should be involved in customer retention or new client revenue generation.
• The proposed compensation structure for remote services is an 80-20 split between the business and coaches.
• By eliminating physical location expenses, businesses can achieve higher gross margins.

"Every employee, and remember, if you've changed your model, you can never have the mindset of, I have to create work for someone, you have to create a business model. And then people either fit in that model, they don't."

This quote stresses the importance of aligning employees' roles with the new business model rather than trying to create work to justify their positions.

"The difficulty is an online acquisition, but if you crack the acquisition part, then you actually have a very, very sound model because the compensation structure for remote, the way that we promote it within our community, is an 80 to 20 split."

This quote discusses the challenge of online customer acquisition and proposes a compensation model that could make the business model sound if acquisition is successfully managed.

• Businesses should not pause services but adapt their delivery method to fulfill their promises.
• The fitness industry's competitive advantage lies in personalized accountability and service.
• The value proposition shifts from group training to one-on-one coaching in a remote setting.
• Fitness professionals should focus on the accountability aspect to differentiate their services.

"Don't pause, people, you just have to shift what you are fulfilling."

This quote advises against halting services and instead suggests adapting the service delivery to the current situation.

"The primary value that the fitness professional is providing in a remote setting is the gap between what people think they should be doing and what they are actually doing."

This quote identifies the key value provided by fitness professionals in a remote setting: bridging the gap between knowledge and action through accountability.

"People pay for you to pay attention."

This quote succinctly captures the essence of the service being sold in the fitness industry: personalized attention and accountability that leads to action.

• Fitness professionals should reconsider what truly attracts and retains their clients, especially when shifting to remote services.
• The actual workout might not be the central element that clients value.

"Why were people paying me the $150 in the first place? And maybe the workout is obviously going to be a big part of it, but maybe the workout isn't the most important thing that I can offer while I'm remote."

The quote suggests that fitness professionals should reassess the primary reasons clients choose their services, hinting that workouts may not be the sole or even the primary draw for clients.

• The true value offered by fitness professionals is often the service and community, not just the workouts.
• Selling community is challenging, but relationships and personal connections keep clients engaged.

"It's been the service and the community. But you can't sell community, right? You sell the result. When someone walks in the door, but they stay because of the relationship that they have with you, the coaches and the other people who they work out with."

This quote emphasizes that the service and community aspect of fitness services is what retains clients, not just the workouts themselves. It highlights the significance of relationships in the business model.

• Fitness professionals need to find ways to maintain accountability and community in a remote environment.
• Communication cycles between clients and coaches are crucial for accountability.

"So I think the first thing people to do is primarily going to be weight loss, but thinking, why were people coming to me in the first place? And then really thinking, how can I create that accountability?"

Kevin Manion is prompting fitness professionals to consider the underlying reasons clients seek their services and to devise strategies for fostering accountability remotely.

• A structured communication cycle between clients and coaches is key to remote coaching success.
• Clients should have minimal tasks, and coaches should ensure compliance and engagement.

"It's a communication cycle. So what we recommend is that you have to have some things that are expected of the client and some things that are expected of the coach."

Alex Hermosi outlines the importance of a communication cycle where both clients and coaches have clear expectations to ensure the success of remote fitness coaching.

• Clients are generally not as invested in fitness as professionals, so tasks should be easy to complete.
• Regular communication through simple means like texting can be effective without fancy apps.

"They actually don't care about fitness. And so it has to be as minimally invasive as possible."

Alex Hermosi acknowledges that clients may not share the same passion for fitness as professionals, highlighting the need for simple, non-invasive methods of maintaining engagement.

• Recommending supplements can provide additional revenue for fitness businesses.
• Clients are more likely to purchase supplements from a trusted authority.

"Tie in some supplement revenue into your business, because right now, supplements are up 30% of the category."

Alex Hermosi suggests fitness professionals can boost their business by incorporating supplement sales, leveraging their authority to recommend products clients are already interested in.

• Daily weigh-ins provide consistent data and psychological motivation for clients.
• Coaches should acknowledge receipt of weigh-ins and reach out proactively with tailored questions.

"The reason you want to do it daily is for a couple of reasons. One is it keeps them honest, right?"

Alex Hermosi explains that daily weigh-ins help in maintaining client honesty and providing more accurate data for tracking progress.

• Coaches should inquire about clients' fitness, nutrition, and overall well-being on different days.
• Separating client outreach over the week can manage the coach's workload.

"You want to be proactive in your reach out to them and ask a specifically catered question."

Alex Hermosi emphasizes the need for proactive and personalized outreach from coaches to maintain engagement and support clients effectively.

• With the shift to remote services, certain staff roles like front desk personnel may no longer be necessary.
• Trainers can manage a full-time remote client load and engage in revenue-generating activities.

"So if you're looking at your staff, right, and you have a front desk person and you've got two trainers, and you, if you were to allocate the way your time is going to go, you probably don't need the front desk person."

Alex Hermosi discusses the reallocation of staff roles in a remote fitness service model, suggesting that some positions may become redundant while others should focus on client engagement and revenue generation.

• Communication frequency should increase to maintain gym membership.
• Gym owners should focus on revenue generation and be active on social media to engage with members.

"You need to make sure that from a maintaining of your gym membership, communication needs to stay high."

Alex Hermosi advises that to retain gym members, communication should be frequent and gym owners should actively engage with members through various channels.

• Stopping sales and marketing activities marks the beginning of a business's decline due to inevitable customer attrition.
• Even in a crisis, businesses must continue to acquire customers to replace those lost through attrition.
• Remote services are in high demand and can be a lucrative opportunity for those willing to adapt.
• The current market conditions offer a competitive advantage to proactive businesses, with reduced lead costs and less competition.
• Businesses that survive will have the chance to capture customers from competitors that fail.
• A hybrid gym model, offering both remote and in-person services, can create dual revenue streams and higher profit margins.

"One, the moment you stop acquiring new customers is the moment you start the ticking time clock of when you're going to die, right? Because attrition is going to happen no matter what."

This quote emphasizes the inevitability of customer loss and the critical need for ongoing customer acquisition to sustain a business.

"And here's the good news. If you are the top 5%, guess what happens when half the gyms go out of business in 90 days, right? Because they only have 14 days of cash flow on hand."

Alex Hermosi highlights the opportunity for top-performing businesses to capture a larger market share as competitors close due to limited cash reserves.

"You have both remote services and you have in person services. And so you have a dual revenue stream and the secondary revenue stream. The remote revenue stream is not geographically confined and is higher profit."

The quote outlines the strategic advantage of a hybrid business model, offering both remote and in-person services to diversify and increase revenue streams.

• Focusing on customer retention is crucial, especially when resources are limited.
• Utilizing trainers for customer outreach rather than just training can provide better value.
• Businesses should consider how best to allocate staff time to maximize customer retention and engagement.

"So I think summarizing on the retention, it's actually a very good point that in the time it takes to do a 45 minutes one on one training session, could maybe do 45 reach outs or one on one communications."

Kevin Manion considers the trade-off between direct training and customer outreach, suggesting that outreach may be a more efficient use of time for retaining customers.

• Consumer behavior shifts towards preservation during a recession, and businesses must adjust their messaging accordingly.
• The demand for survival-focused products and services increases significantly in a recessionary economy.
• Offers should be constructed to appeal to the current economic climate, with price points that are accessible to customers.
• High-ticket offers can still be successful if they are positioned as valuable and necessary for the customer's immediate needs.
• Businesses should create a sequence of sales opportunities that maximize customer value and business revenue.

"Prosperity doctrine is grow, thrive, et cetera, like transform. All of that works in every type of normal economy. As soon as you're in a recessionary economy, the buying behavior flips and it goes to preservation."

Alex Hermosi discusses the need to shift sales messaging from growth to preservation in response to changes in consumer behavior during a recession.

"The actual buying demand is four to one for preservation in a recessionary economy versus two to one for growth in a normal economy."

This quote highlights the increased consumer demand for products and services that emphasize survival and preservation during economic downturns.

"The first is going to be your service sale... The second sale is going to happen 24 to 48 hours later... And the third sale should happen at day 14."

Alex Hermosi outlines a three-step sales process designed to build trust and maximize revenue, with a service sale followed by nutrition consultation and supplement sales, and finally, a long-term package offer.

• Changing the value proposition to focus on survival or avoiding regression is crucial in the current economic context.
• Despite the shift in messaging, businesses can still achieve significant revenue by correctly pricing and structuring their offers.
• Diagnostic selling processes can be adapted to the current situation, with an emphasis on remote services and immediate customer benefits.

"So listening to you there, I see how you've changed the value proposition. So I see how you've changed it from survival or avoiding going backwards rather than making massive gains."

Kevin Manion acknowledges the strategic shift in value propositions from growth to preservation in response to the recessionary economy.

"Before this, our guys were selling 2000, 3000 up front on the first visit. So this is significantly less."

Alex Hermosi contrasts the current sales strategy with previous approaches, noting the adjustment in pricing to fit the economic circumstances while still achieving sales.

• High pricing can lead to frequent affirmatives if the value proposition is correctly positioned.
• Struggles with closing low-cost memberships indicate issues with the value proposition, not market weakness or lack of closing skills.
• Understanding how to provide value in the context of the product or service is crucial.

"You do 600, then spread it out. And so you keep working your way down. And the nice piece is that if you have a high pricing by the time you get to $600 after saying 4000 for the people who are less skilled, you're able to get yeses very frequently. And so if anyone who's listening to this is like, man, I can barely close a $99 membership, it's because your value prop is wrong, straight up."

The quote emphasizes the importance of a strong value proposition in sales, especially when dealing with high-priced items. It suggests that difficulties in closing deals are often related to the value proposition rather than external factors such as market conditions.

• There's no shortcut to mastering phone sales; it requires actual practice and exposure to the selling environment.
• Watching training videos is insufficient; one must engage actively in the sales process to develop the skill.
• It typically takes 25 sales opportunities to become desensitized to the stress of a new selling environment.
• The effectiveness of communication in sales is significantly influenced by tonality and framing, not just the words used.
• Phone sales can be less exhausting than in-person sales, allowing for a higher volume of sales per day.

"There is no fast way of doing it... At a certain point, you need to dive in the water, you need to step in the ring and get punched in the face... It just basically takes 25 attempts of sucking to kind of figure out the flow of how the script works."

This quote highlights the necessity of hands-on experience and resilience in learning phone sales. It acknowledges that initial attempts may be unsuccessful, but practice leads to improvement and eventual mastery.

• The pandemic will likely change how fitness is consumed and how gym memberships are sold.
• Selling over the phone could become more prevalent and efficient.
• Some consumers will prefer online workouts due to convenience, despite an expected demand surge for in-person services post-pandemic.
• The fitness industry may see a slower recovery due to phased economic reopening and the nonessential, high-contagion nature of gyms.
• Skills like phone sales and online relationship management will become integral to the fitness business.

"I think that this will fundamentally change the way that people consume fitness with technology... I also don't think it's going to be as much of a boom as people expect because I think most countries are not going to turn their economies back on like a light switch."

The quote predicts a lasting impact on the fitness industry due to technological adoption and changes in consumer behavior. It also sets realistic expectations for the industry's recovery post-pandemic.

• The Hybrid Gym Program is a business model that combines in-person training with online accountability services.
• This model allows fitness businesses to increase their geographical reach and offer additional services to existing members.
• It aims to maximize profits and customer retention beyond what group training alone can provide.

"We started something called the hybrid gym program, which is basically espoused this exact thing, which is providing one on one accountability services for your members and using it as an upsell for an additional $49 a week."

The quote describes the Hybrid Gym Program, which was designed to adapt to changing consumer needs and preferences, highlighting its potential benefits for gym owners.

• Success in business, especially during challenging times, requires continuous effort and willingness to confront difficulties.
• The difference between successful individuals and others is the effort put into trying and persevering.
• Witnessing others succeed should serve as motivation, reinforcing the idea that anyone can achieve success with the right mindset.

"Winners win... And the only thing that separates people who don't win from the people who do is the ones who try."

This quote serves as a motivational reminder that consistent effort and the act of trying are fundamental components of success in any endeavor, including business.