Why Gyms Fail...☠️❌ ...and Why Your Classes Dont Matter Ep 102

Summary Notes


In a candid discussion about the pitfalls of micro gyms, the speaker emphasizes the importance of recognizing the true business they're in, which is not merely fitness but premium service, including fitness, nutrition, and, crucially, accountability. They argue that gyms often fail due to a lack of context and misunderstanding their competitive edge. While large fitness chains offer similar or superior physical amenities at competitive prices, micro gyms must excel in personalized accountability and community engagement to retain members. The speaker urges gym owners to focus on fostering genuine relationships, personalized interactions, and consistent member support to differentiate their services and ensure sustainability, especially during economic downturns.

Summary Notes

Reasons Why Gyms Fail

  • Gyms often fail due to a lack of understanding of their actual business model.
  • Micro gyms tend to fail because they lack context in their market positioning.
  • During economic constraints, such as the 2007 recession, significant changes in business conduct can lead to later profitability.
  • The average price point for CrossFit, boot camps, and semi-private facilities is $118 a month.
  • High-end gyms like Lifetime Fitness and Equinox offer services at a competitive rate starting at $99 a month.
  • Luxury gyms provide additional amenities such as marble bathrooms, high-quality equipment, and extra services.
  • Micro gyms often mistakenly believe they offer superior fitness classes, which may not be true.

"And so the number one reason that micro gyms fail is because they don't know what business they're actually in."

This quote emphasizes that micro gyms often misunderstand their market position, which is a primary reason for their failure.

"That's the actual average. Not what people say, but that's the actual average."

This quote clarifies that the speaker is referring to concrete data regarding the average price point for certain gym services, which is essential for understanding market competition.

"And so they offer comparable services to what we as micro gym owners are offering, except they also have marble bathrooms and beautiful countertops and massive 100,000 square foot facilities with beautiful equipment and daily usage gyms and nice lockers and all of these things that we don't offer."

This quote details the additional amenities offered by luxury gyms, which are often lacking in micro gyms, contributing to their competitive disadvantage.

"You are not in the fitness business despite the fact that you have fitness classes at your facility."

This quote stresses that merely offering fitness classes does not define the business model for a gym, indicating a need for a broader understanding of what they provide to their customers.

The Misconception of Business Identity in Gyms

  • Micro gyms often incorrectly identify themselves as being in the "fitness business" solely based on offering fitness classes.
  • The actual business encompasses more than just fitness classes; it includes additional services and amenities that attract customers.
  • Customers may prefer larger, more luxurious facilities that offer equivalent or superior fitness classes plus added benefits.
  • These larger facilities often charge less than micro gyms while providing more value.

"I'm going to say it again, you are not in the fitness business despite having fitness classes your facility, because if people wanted that, they would go to the nicer facility that has equal or better training classes with better ancillary services."

This quote reiterates the misconception micro gym owners have about their business identity and highlights the importance of recognizing the broader scope of services that customers seek.

The True Value Proposition of Gyms

  • Gyms should focus on the unique value they offer, which may extend beyond just fitness classes.
  • The speaker identifies three main selling points in their consultation: fitness, nutrition, and accountability.
  • These elements can differentiate a gym and provide a more comprehensive service to members.

"So what business are you actually in? And so for those of, you know, our stuff, there's three main things that we sell in the console, right? It's fitness, nutrition, accountability."

This quote suggests that gyms should recognize the multifaceted nature of their business, which includes fitness, nutrition, and accountability, and market these aspects effectively to succeed.

Unique Value Proposition

  • Differentiation in the fitness industry often comes from offering unique value beyond just the facilities.
  • Nutrition is highlighted as a plus point that distinguishes one facility from others.
  • A holistic approach to the individual is emphasized as a key part of the value proposition.

"Now, some of those places don't offer the nutrition, so that's a plus point that we have." "That's one other thing that we're doing. We're approaching the person from a holistic standpoint."

These quotes underscore the importance of providing a value proposition that goes beyond the standard offerings of a gym, such as incorporating nutrition and a holistic approach to personal care.

Accountability as a Value Add

  • Accountability is identified as the main value addition provided by the facility.
  • The lack of true accountability in many gyms leads to high churn rates.
  • Facilities must actively work to foster accountability among their members.

"And so accountability is the overarching umbrella, but it's the main value add that you really offer as a facility." "But most gyms aren't actively doing anything to actually foster true accountability."

The quotes highlight accountability as a critical service that can set a facility apart from competitors, suggesting that many gyms fail to actively cultivate this aspect, leading to customer attrition.

Customer Retention and Community

  • The sense of community is a significant factor in why people choose to stay at a gym.
  • Gyms often overlook the importance of fostering a community and are surprised by high churn rates.
  • Providing a community feeling is not enough; active steps must be taken to maintain and strengthen it.

"And that's true. That is actually why people are coming. But most gyms aren't actively doing anything to actually foster true accountability."

This quote emphasizes the importance of community as a retention tool and the common oversight by gyms in actively nurturing this aspect of their business.

Competitive Advantage in the Fitness Industry

  • Competing with larger gym chains requires understanding the actual competitive advantage of a facility.
  • The competitive edge does not come from the sessions or facilities themselves but from the quality of service.
  • Premium service includes personal touches like reaching out, sending flowers, and handwritten cards.

"And so if you want to compete, you have to know what game you're competing at." "It's because if they don't show up, you reach out to them. It's because if they have a birthday or someone dies in their family, you send them flowers."

The quotes convey that the competition in the fitness industry is not about equipment or classes but about the level of personal service provided to members, which can include gestures of care and attention to individual needs.

Realities of the Trainer Pool and Prestige

  • Trainers have more prestige working for well-known gym chains like Lifetime or Equinox.
  • Gyms must face the reality that they likely do not offer a more prestigious or better facility than larger chains.
  • The competitive advantage lies in the service, not the quality of the trainers or the prestige of the facility.

"You're probably not because you have access to the same trainer pool, except there's more prestige in saying that you're a personal trainer at lifetime or personal trainer at Equinox than it is saying, I'm a personal trainer at Joe's fitness."

This quote addresses the misconception that smaller facilities can compete with larger chains on the basis of facility quality or trainer prestige, suggesting that these are not the true competitive advantages.

The Essence of Competition

  • Understanding the nature of the competition is crucial for survival in the fitness industry.
  • The real game is providing premium service, which is the true competitive advantage.
  • Those who do not recognize this are likely to fail in the market.

"So there is more opportunity for a lot of those trainers, like, so why would someone work for you? Why would they be better? They're probably not." "That's actually the game you're in. That is our competitive advantage. You're going to lose."

These quotes emphasize the importance of recognizing that the competition is not about the physical offerings but about the level of service provided. Failure to understand this dynamic can lead to losing in the competitive fitness industry.

Growth Through Word of Mouth

  • The podcast relies on word of mouth for growth, eschewing traditional advertising and sponsorships.
  • The host encourages listeners to share the podcast in the same way they discovered it, as a form of paying it forward.
  • Sharing the podcast is seen as a way to generate good karma, particularly for entrepreneurs.

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. My only ask is that you continue to pay it forward to whoever showed you or however you found out about this podcast, that you do the exact same thing.

The quote highlights the podcast's unique growth strategy focused on organic sharing and the personal connections of its listeners.

Accountability and Member Retention

  • Importance of having processes to hold members accountable, such as checking in if they miss classes.
  • The need for regular personal engagement with members, like pulse checks, to maintain a connection beyond the services offered.
  • The speaker suggests that without these processes, business owners may not understand the 'game' they're in or how to succeed at it.

And so right now, if you don't have processes in place to make sure you hold your members accountable, to make sure that if they don't show up by Wednesday, you're checking in with them to make sure that you're touching base with them at least twice a month outside of the classes, just to see, hey, pulse check.

This quote emphasizes the necessity of implementing systems to ensure consistent and meaningful interaction with members, which is crucial for retention.

The Importance of the Non-Fitness Aspects in Fitness Businesses

  • The speaker argues that the quality of fitness classes is not the sole factor for member retention.
  • The non-fitness aspects of a business, such as community and personalization, are what keep members loyal.
  • Facilities and equipment are not enough to compete with larger gyms; personalized service and community building are key differentiators.

No one cares, right? Like, no one cares. It doesn't matter. It's about everything that is not in the class, it's everything outside of the fitness. The fitness is what they come for. It's the burger, right? But everything else is why they stay.

The quote suggests that while the core service (fitness classes) attracts customers, it is the additional experiences and relationships built around the service that ensure customer loyalty.

Personalization and Community as Competitive Advantage

  • Personalization, such as knowing members' names, is a competitive edge over larger gyms that may not offer such attention to individuals.
  • The speaker advocates for enhancing the community aspect of the business to stand out in the industry.
  • Hosting member events and fostering a strong community are seen as essential strategies for success.

But you need to take that personalization aspect, that accountability aspect, that community aspect, and put it on steroids. Like, if you're not running members events, what are you doing?

This quote drives home the point that personalization and community engagement are critical components for differentiating a fitness business from its competitors and for winning in the market.

Authentic Community Engagement

  • Businesses claiming to value community must actively engage with members personally.
  • Knowing members' names and welcoming them is a basic yet crucial aspect of community building.
  • Personal touches, such as handwritten cards and acknowledging life events, are significant.

"We're all about family. Except you don't know everyone's name and your trainers don't know everyone's name and they don't welcome them by name when they come in."

This quote emphasizes the discrepancy between businesses claiming to value community and their actual practices, highlighting the importance of personal recognition.

"But when your members actually have life events, you're not writing them a handwritten card, you're not sending them flowers. You don't even know."

The speaker points out the lack of personal engagement with members' lives outside the business setting, suggesting that businesses should celebrate members' personal milestones.

Consistency in Business Practices

  • Implementing consistent processes is essential for maintaining the claimed business values.
  • Regular, genuine engagement with members is necessary to uphold a community-centric business model.

"Do you have processes in place so that it's consistent?"

This quote raises the question of whether businesses have established methods to ensure consistent engagement with their community, which is key to authenticity.

Understanding the Business Game

  • Recognizing the core competitive advantage is crucial for business success.
  • Businesses should focus on what truly retains customers, rather than solely on their primary service or product.
  • The "game" involves providing value that goes beyond the basic offerings.

"And that's the game. That's the game we're in."

The speaker metaphorically refers to business as a "game," implying the strategy behind successful member retention and the importance of understanding one's business niche.

Member Retention and Value

  • Providing value outside of the core service is essential for member retention.
  • Premium services and community engagement can make a business indispensable to customers.
  • Businesses should aim to be high on the customers' hierarchy of needs to ensure loyalty during economic downturns.

"And that is how you retain members. And that is how you make a robust business that doesn't waiver when someone loses a job, when someone gets a decrease in pay, when the economy turns down, whatever."

The speaker outlines the benefits of a strong community focus for member retention and business resilience, stressing the importance of being a valued part of members' lives.

Recommendations for Business Improvement

  • Businesses should reach out to inactive members, provide value outside of their core offerings, and create member events.
  • Engaging in charity work and recognizing members by name fosters a sense of belonging to something larger.
  • Celebrating members' life events demonstrates that the business is more than just a service provider.

"So if you don't have those things in place, if you're not reaching out to your members by Wednesday, if they haven't showed up, if you're not regularly providing value to them outside of the gym, if you're not creating member events, if you're not doing things for charity with them so that they can feel part of something bigger, if you're not recognizing them by name, if you're not writing handwritten cards to them every month to show them that you appreciate, if you're not celebrating the life events that happen outside of the gym, to show that you are more than just a gym, then you're going to lose."

This comprehensive quote provides a checklist of strategies for businesses to improve their community engagement and ensure they are not just service providers but integral parts of their members' lives.

Encouragement for Community-Building Efforts

  • The speaker encourages sharing practices that demonstrate commitment to providing premium, non-fitness related services.
  • The emphasis is on the importance of going above and beyond the expected to create a premium service experience.

"Say some of the things that you guys do to show that you go above and beyond on the non fitness side, because that is the game we're in."

By asking listeners to share their own practices, the speaker fosters a sense of community among business owners and emphasizes the need for exceptional service beyond the basic fitness offerings.

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