How To Stack EFTs For Real...💰💰💰👆🏼👆🏼👆🏼 3 WAYS TO GROW YOUR RECURRING LIKE YOU MEAN IT #gymgrowthacking #notnattygyms #unnaturalgrowth Ep 82

Abstract

Abstract

In a detailed breakdown, the host explains the intricacies of increasing Electronic Funds Transfer (EFT) for gym owners, focusing on the PI (or pie) equation which factors in referrals, cold traffic, and attrition rate. The host emphasizes the impact of reducing attrition rates and increasing sign-ups on the potential growth of a gym's recurring revenue. By engaging with clients through personalized outreach and improving service delivery, gym owners can substantially lower their attrition rates, thus doubling or even quadrupling their EFT cap. The host uses real-world examples, including their top program, Legacy, to illustrate the exponential growth achievable by tweaking these variables, ultimately providing gym owners with actionable strategies for business expansion.

Summary Notes

Introduction to EFT Growth Strategies

  • The goal is to provide insights on how to break through Electronic Funds Transfer (EFT) plateaus in the context of gym memberships.
  • Dylan, the sales director, prompted the creation of a video to explain EFT growth strategies.
  • The speaker plans to explain the math behind EFT growth and the general workings of EFT models.

"So my sales manager, Dylan, was like, excuse me, sales director Dylan was like, hey, bro, do you think you could make a sweet video about how to break through EFT plot tips?"

This quote establishes the purpose of the discussion, which is to create a resource explaining how to overcome growth plateaus in EFT for gym memberships.

Understanding the EFT Model

  • The EFT model is not well understood, even by gym owners with recurring revenue models.
  • The speaker introduces an equation, referred to as the PI equation, to help understand the EFT model.

"And most people don't know this, like, who even own a gym and have a recurring revenue model."

The speaker emphasizes the lack of understanding of the EFT model among gym owners, setting the stage for the explanation of the PI equation.

The PI Equation for EFT

  • The PI equation is a tool for calculating the potential maximum EFT for a gym.
  • The speaker named it the PI equation due to a personal affinity for pies and a visual resemblance.

"So for those of you who are in my world, I call this the PI equation."

The quote introduces the PI equation as a concept developed by the speaker, with a personal anecdote about its naming.

Components of the PI Equation

  • The top part of the equation consists of referrals and cold traffic sign-ups.
  • Only those who sign up for recurring EFT are considered, excluding one-time or front-end offers.
  • The bottom part of the equation represents the attrition percentage.

"The top of the equation, you can split into two pieces, all right? You've got referrals, people who come in and sign up because their friends told them about it. And the other side, you've got cold traffic."

This quote breaks down the first part of the PI equation, which accounts for new sign-ups through referrals and cold traffic.

Understanding Attrition in the EFT Model

  • Attrition is the percentage of members who cancel their EFT memberships each month.
  • New sign-ups do not impact the attrition percentage calculation.
  • A 10% attrition rate is considered the industry average for micro gyms.

"And then on the bottom here, you're going to have your attrition percentage."

The quote explains the importance of attrition in the EFT model, which is a key factor in determining the potential growth or decline of EFT memberships.

Mathematical Breakdown of EFT Growth

  • Using hypothetical numbers, the speaker demonstrates how to calculate the potential maximum EFT.
  • The equation involves adding the number of sign-ups from referrals and cold traffic, then dividing by the attrition rate.
  • The example uses an industry-average attrition rate of 10% to predict a cap of 100 EFTs.

"So 10% is the industry average for people who have micro gyms, owner operated facilities. And if you look at these numbers, these are all pretty average numbers for the industry."

The quote provides context for the example used in the mathematical breakdown, indicating that the numbers are representative of industry averages for micro gyms.

Predicting Business Growth with EFT

  • The speaker suggests that using the PI equation allows for accurate predictions of future EFT numbers.
  • The mathematical approach removes emotions from business decisions, allowing for more rational and profitable choices.

"They're like, he said that six months from now, we would have 500 people in legacy. I'm like, yeah, it's math."

This quote highlights the speaker's confidence in the predictive power of the mathematical approach to EFT growth, as it has been validated by their own experience.

Summary of EFT Growth Calculation

  • The PI equation is presented as a tool to calculate the hypothetical maximum for EFT.
  • The speaker emphasizes that without changes in the sign-up rates, the EFT will not change.
  • The next step is to discuss how to grow the EFT beyond the current predictions.

"So this is the equation. This is how you calculate your hypothetical max for your EFT."

The quote summarizes the utility of the PI equation in calculating the potential maximum number of EFT memberships, setting the stage for growth strategies.

Concept of Growth and Attrition in Business

  • Introducing a business growth concept through a hypothetical program named Schmim Schlaunch.
  • Signing up 40 people on the front end and retaining 75% on the back end.
  • Calculating the attrition rate at 10% and its impact on growth.
  • Using a mathematical approach to project growth over time.
  • Explaining how growth slows down as the business approaches its hypothetical maximum (asymptotic growth).
  • Discussing strategies to increase the number of sign-ups as one method to grow the business.

And so you had 40 who came in on the front. And then that means you had 30 people. Oops, that's ugly. Who ended up staying on efts, okay?

This quote refers to the initial number of customers who sign up (40) and the number who remain engaged with the service (30), highlighting the retention rate.

Now you have 30 on the top side, but let's say that you haven't improved your fulfillment at all and your attrition is still 10%. That means that you're looking at 30 over 10%. Which means your new hypothetical max is 300 efts.

The speaker is calculating the hypothetical maximum number of customers (EFTs) the business can sustain, given a constant attrition rate of 10%.

So you have plus 30 on the top. But -10% times last month, which was 100.

This quote demonstrates how the growth in customer numbers is offset by the attrition rate applied to the previous month's total.

So that means that you now have 120 efts.

The calculation here shows the net growth after accounting for the attrition from the previous month.

So you grew by 20 even though you added 30 because you lost ten. Month 2120 is our last month number.

This quote explains the net growth of 20 EFTs, which is the result of adding 30 new EFTs and losing 10 from attrition.

So you have 14 people who are going to get lost this time. You add 30, lose 14. Now, you only netted 16 as your growth.

Speaker A is illustrating the diminishing returns in growth as the attrition starts to take a larger percentage of the increasing customer base.

And so what happens is your growth rate, if you look at it on a graph, it's an asymptote.

The speaker is using the term "asymptote" to describe the growth pattern, which indicates that the growth rate will slow down as it nears the hypothetical maximum.

And then you're going to be at 250. And then it's going to start edging.

This quote anticipates the point at which growth becomes marginal, suggesting that as the customer base grows, the impact of attrition becomes more significant.

Strategies to Reduce Attrition and Enhance Growth

  • Discussing the importance of reducing the industry-average attrition rate to grow the customer base (EFTs).
  • Suggesting personalized outreach strategies to reduce attrition, such as bi-weekly customer contact, handwritten cards, and attendance tracking.
  • Highlighting the potential impact of improved customer service on attrition rates.

The second way to grow your EFT, let's take the same numbers. Now, in the original example, we said we had ten sign-ups, two referrals, and eight cold traffic.

This quote introduces the second strategy for growth, which involves the same initial numbers but focuses on reducing attrition.

So if you have 10%, let's say you cut that from 10% because your staff, you decided to start reaching out to your customers on a biweekly basis. You decided to write handwritten cards once a month, and you decided to track your attendance and call anyone who hasn't showed up by day three of the week.

Speaker A suggests specific customer engagement strategies that could potentially lower the attrition rate from 10%, thereby improving customer retention and business growth.

Video Version Benefits

  • The video version of the podcast includes more effects, visuals, and graphs.
  • Visual aids can enhance understanding by stimulating different brain centers.

If you ever want to have the video version of this, which usually has more effects, more visuals, more graphs, drawn out stuff, sometimes it can help hit the brain centers in different ways.

The quote highlights the potential cognitive benefits of the video version due to additional visual elements that may aid in learning and retention.

Access to Content

  • The content is freely accessible.
  • Encourages the audience to check out the YouTube channel for visual content.

It's absolutely free.

This quote emphasizes the cost-free nature of the content, suggesting it is a beneficial resource that's easily accessible.

Reducing Attrition

  • Cutting attrition from 10% to 5% can have significant impacts on business metrics.
  • The example given is within the context of a hypothetical gym's membership retention.

But if you just did those two things, you would measurably cut your attrition from 10% to 5%.

This quote explains the direct effect of certain actions on reducing attrition rates by half.

Impact of Attrition on Hypothetical Max

  • Reducing attrition can effectively double the maximum capacity of a gym.
  • The relationship between attrition rate and maximum capacity is exponential.

Your hypothetical gym max is 200 efts. So we went from a hypothetical max of a gym with 100 to a hypothetical max with 200. We doubled the gym by cutting this percentage by 5%.

The quote demonstrates the mathematical relationship between attrition rate and the maximum number of members (efts) a gym can sustain.

Legacy Program Example

  • The Legacy program has a low churn rate.
  • The mathematical implications of low attrition on the maximum capacity of the program are significant.

Right now we sign up, on average, about 45 people a month into legacy... our hypothetical max is 45 divided by zero one. Who knows what that number is? 4500 gyms in legacy.

This quote provides an example of how a low churn rate (1%) in the Legacy program allows for a high maximum capacity of 4500 members.

Attrition Calculation Clarification

  • Sign-ups do not affect the attrition rate.
  • Attrition is calculated based on the number of people from the previous month who continue their membership.

You're multiplying. Let's say this is July, or let's just say last month, okay, last month you had 100 efts. This month, this month of those hundred, you had 90. That means you lost 10%.

This quote clarifies the method of calculating attrition, which is a common point of confusion.

Separating Sign-Ups from Attrition

  • It's important to distinguish between new sign-ups and attrition.
  • Growth in numbers does not negate the existence of attrition.

So you have to separate the fact your sign ups in no way affect your attrition.

The quote emphasizes that sign-ups should be considered separately from attrition when analyzing business growth.

Combining Growth Strategies

  • Growth can be achieved by combining strategies that address both sign-ups and retention.
  • The example of Joey Huber illustrates the potential of these combined strategies.

And this is how guys like Joey Huber right now are adding 100 efts a month.

This quote provides an example of successful growth through a combination of increasing sign-ups and reducing attrition.

Scaling Delivery

  • Having systems and processes in place is crucial for scaling.
  • Regular outreach and events can contribute to lower turnover rates.

You need to have systems and process in place. Are you reaching out to everyone on a regular basis? Are they getting handwritten cards? Are you holding an event every month?

The quote suggests practical actions for maintaining customer engagement and satisfaction, which are key to reducing turnover.

Reducing Churn and Increasing Sign-Ups

  • Churn reduction is essential for business growth, particularly in the context of a gym.
  • Realistic goals for reducing churn and increasing sign-ups can lead to significant growth.
  • Implementing customer engagement strategies like handwritten cards, regular calls, and messages can effectively reduce churn.
  • Focusing on client finance acquisition can help in increasing sign-ups without being constrained by a marketing budget.

"That's how you measurably reduce churn. That's that bottom number that massively multiplies how much you're getting."

This quote emphasizes the importance of churn reduction in multiplying business revenue. Churn reduction is highlighted as a key factor in business growth.

"You go to 20 efts a month that you sign up and you cut your attrition in half."

The quote suggests that by doubling the number of sign-ups and halving the rate of attrition, significant business growth can be achieved.

"Just a pulse check to make sure they're alive and they like us."

The speaker suggests a simple strategy of regular check-ins with customers to maintain engagement and reduce churn.

"I'm going to start using client finance acquisition and start spending money, or, sorry, making money in the acquisition."

Here, the speaker is highlighting a shift from spending to making money on client acquisition, which changes the dynamic of business growth.

Impact on Revenue and Growth

  • The mathematical example provided demonstrates the potential for a fourfold increase in Electronic Funds Transfers (EFTs) by halving attrition and doubling sign-ups.
  • The industry average for EFTs is around 100, and the strategies discussed can increase this to 400 EFTs.
  • Achieving a reduction in churn from 10% to 5% is seen as realistic and attainable for most businesses.
  • Reducing churn below 3% requires more deliberate effort, including consistent systems, well-trained staff, and fostering relationships.

"This is what happens to your hypothetical EFT. This guy's hypothetical eft is 100. That's the industry average. That's what most people come to us with, is around 100 efts, give or take."

This quote provides a benchmark for the industry average of EFTs and sets the stage for the potential growth that can be achieved through the strategies discussed.

"Going from 10% to 5%. Everyone can do that."

The speaker asserts that halving the churn rate is an achievable goal for businesses, indicating its feasibility as a strategy for growth.

"Just by doing that, you forexed your gym."

The speaker illustrates the dramatic impact of the strategies on business growth, suggesting a quadrupling of the gym's size.

Calculating Attrition and Understanding Lifetime Value

  • Understanding how to calculate attrition is crucial for managing and improving it.
  • Attrition is calculated by the number of people who could be billed in the current month versus the last month.
  • Reducing churn by even 5% can lead to doubling the business size, not just a 5% increase in revenue.
  • Client finance acquisition can significantly increase revenue when combined with decreased churn.

"It's last month. How many people from last month I was able to bill this month. That is what the attrition number is."

This quote explains how to calculate the attrition rate, an essential metric for understanding business retention.

"Seeing the power of lifetime value in how going down by 5% doesn't just mean you make 5% more. It means you double your gym."

The speaker highlights the exponential benefit of reducing churn on the lifetime value of the business, equating a 5% reduction in churn to doubling the size of the gym.

Conclusion and Call to Action

  • The speaker concludes by emphasizing the practical nature of the strategies discussed, differentiating them from more theoretical content.
  • The aim is to provide actionable tactics for gym owners to grow their business and stack their EFTs.
  • The speaker encourages sharing the content with others who could benefit from understanding these business growth tactics.

"This is hardcore math tactics. This is how you grow your gym. This is how you stack your eft."

The quote reinforces the practical and tactical nature of the content, focusing on concrete methods for business growth.

"Haven't amazing Monday, everybody. Hope you are crushing your goals. Living the dream."

The speaker closes with motivational sentiments, wishing the audience success in achieving their goals and living their ideal life.

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