Your Inflow Is Your Bottleneck Acceptable Metrics Ep 207



In the Gym Secrets podcast, the host discusses the challenges gym owners face in scaling their businesses, emphasizing the importance of consistent sales and customer acquisition to achieve growth goals. He identifies a common disconnect between goals and the required actions, noting that many gym owners desire a full gym but are overwhelmed by the operational demands of managing high lead inflow. The host stresses the necessity of understanding and accepting industry churn rates, the math behind customer inflow and outflow, and the significance of structured time management for sales, onboarding, and customer retention. By confronting the reality of scaling metrics and operational capacity, gym owners can align their actions with their ambitions for business expansion.

Summary Notes

Expectations for Sales in Business

  • Sales are a fundamental aspect of business growth.
  • Businesses, especially in the service industry, should expect and be prepared for continuous sales activities.
  • The inflow of customers is often the limiting factor for business expansion.

"They're like, man, these guys just expect me to sell all day. And the answer is yes."

This quote emphasizes that sales are a constant expectation in businesses aiming for growth, and business owners should anticipate this as part of their operations.

Gym Secrets Podcast Introduction

  • The podcast focuses on customer acquisition, maximizing customer value, and retention.
  • It shares failures and lessons learned in the fitness industry.
  • The host aims to provide valuable insights and advice for gym owners.

"Welcome to the Gym Secrets podcast, where."

This quote introduces the podcast, highlighting its focus on providing industry secrets to running a successful gym business.

Setting and Achieving Member Goals

  • Gyms set membership goals but often overlook the necessary steps to achieve them.
  • Simple math and understanding inflow are crucial to reaching membership targets.

"And a lot of gyms are like, man, if I could get 300 members, that would be amazing. If I get 200 members, that would be amazing. If I could get 500 members, that would be amazing, right? And so they have these goals, right? And yet they don't follow the simple math of getting there."

This quote reflects the common disconnect between setting ambitious membership goals and understanding the practical steps needed to reach them.

Importance of Retention and Acceptable Metrics

  • Retention and customer lifetime value are key, but initial growth metrics are also important.
  • Service-based businesses are unlikely to reduce churn below a certain percentage.
  • Diverse growth strategies, including organic, outbound, and paid acquisition, are necessary for massive expansion.

"But at a basic level, there is at some point what I would consider acceptable metrics, right?"

This quote introduces the concept that there are industry-standard metrics that businesses should aim for to maintain healthy growth and retention.

The Challenge of Handling Inflow

  • Many gyms struggle to manage the lead flow and appointments generated for them.
  • Businesses may not be prepared for the realities of a full gym despite their goals.

"Last week, I think we had like ten gyms pause on GLX. And all ten of them paused because there was too much inflow."

This quote highlights a common issue where gyms are overwhelmed by the number of potential new members, indicating a lack of preparation for successful lead management.

Expectations Versus Reality of Growth

  • Gym owners may not anticipate the demands of rapid growth.
  • Achieving a full gym requires consistent selling and the ability to handle increased clientele.

"Most people want a full gym until they actually have a full gym or see what's required to get a full gym, right?"

This quote points out the discrepancy between the desire for a full gym and the understanding of the effort it takes to maintain one.

Analogy of Desire and Preparedness

  • The analogy of wishing for a weapon without the skill to wield it is used to describe gyms wanting growth without being ready for it.
  • Preparation is key to handling the success that comes with effective marketing and sales strategies.

"She wished for a weapon, but not for the skill to wield it."

This quote, taken from a magic card, is used to metaphorically illustrate the issue of desiring growth without having the necessary skills and preparation to manage it.

Client Acquisition Success Story

  • The top client's success in signing up a large number of new clients is highlighted as an example of what is possible with the right approach.
  • High client acquisition rates are essential for reaching large membership goals.

"Our top client right now, in the last 30 days, signed up 130 new clients."

This quote showcases a success story of significant client acquisition, serving as a benchmark for what other gyms could achieve.

Acceptable Metrics for Service-Based Businesses

  • Service-based businesses must accept a certain level of churn as part of their model.
  • The ease of customer entry and exit in services makes retention more challenging compared to products like software.

"If you have a service-based business, all right, services of any kind, anything that is easy in is easy out."

This quote explains that the nature of service-based businesses inherently includes a higher churn rate due to the low barriers for customers to enter or leave the service.## Scaling Service Inflow

  • Service providers must leverage the ability to scale quickly to gain a competitive advantage.
  • Achieving a specific membership goal, such as 300 members, requires understanding and managing churn rates and new prospect sign-ups.
  • The industry average churn rate is 10%, which must be factored into growth strategies.
  • The limitation of signing up only a certain number of trials per week, like ten, sets a cap on potential growth.
  • Converting prospects to committed members involves a "second sale," even if they initially sign up for recurring payments.
  • To reach high membership goals, one must accept the necessity of continuous selling due to the nature of service sales.
  • There is often a disconnect between goals and the actions required to achieve them, with many failing to do the necessary math.
  • Doubling inflow may not be sufficient due to efficiency losses and the need to outpace churn.
  • To replace lost customers, a service must convert a high percentage of trials, exceeding the industry average if necessary.

"Now your churn is 10% industry average and you can only sign up ten trials a week and that's you maxed out, right?"

This quote emphasizes the importance of understanding industry averages and the limitations of current sign-up capabilities in planning for growth.

"And so if you know you're converting half of your trials, that means you have to make 40 sales a month."

This quote highlights the direct relationship between trial conversion rates and the number of sales needed to achieve growth targets.

"The industry average, by the way, is 35%, which would mean that if you wanted to replace those 20, you'd have to sell 60 trials a month of some sort."

This quote provides a benchmark for conversion rates and sets a target for the number of trials needed to maintain customer numbers.

"If you want to scale, your inflow never stops. You have to be able to sign up people this week and next week and the week after that and the week after that and fulfill, you need to be doing both things concurrently."

This quote underscores the continuous nature of scaling in service businesses and the need for consistent sign-ups alongside fulfillment.

Team Management and Schedule Optimization

  • Successful scaling requires effective team management and schedule optimization to handle ongoing fulfillment and new customer onboarding.
  • Time must be allocated for different tasks such as outbound efforts, onboarding new customers, orientations, and sales meetings.
  • A structured schedule is essential to balance these activities and ensure the business model functions efficiently.

"They have to know that the first 2 hours of the day it's blocked on their time is going for outbound, for ongoing fulfillment, like they're reaching out to your existing customers to make sure that they stay."

This quote illustrates the importance of dedicating specific times for outreach and customer retention efforts as part of the daily schedule.

"Then you have 2 hours a day that's blocked for onboarding, for new customers."

This quote indicates the necessity of reserving time exclusively for integrating new customers into the service.

"And then you have sales, and you have to disperse the meetings that have to happen in order to make this entire model work."

This quote acknowledges the need for time management to accommodate sales efforts and meetings essential for the service model's success.

Growth Through Word of Mouth and Community Engagement

  • The podcast emphasizes the power of word of mouth for growth and the absence of traditional advertising methods.
  • Engaging with the community and encouraging them to share the podcast is crucial for its expansion.
  • The host relies on listeners to spread the word, reflecting a broader principle applicable to many service businesses.

"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 conveys the podcast's reliance on organic growth through listener recommendations rather than paid advertising or sponsorships.

"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."

This quote is a call to action for listeners to promote the podcast, illustrating the importance of community engagement in growing a service-oriented business.## Sales Process and Client Management

  • The process involves multiple stages: sales appointments, kickoff calls, builds, and ongoing check-ins.
  • Daily calls are conducted to ensure clients are able to sell and convert effectively.
  • Operational preparedness is crucial for handling a high volume of sign-ups.

"We've got sales appointments, we have kickoff calls, we have builds that happen in the background, and then we have ongoing check ins to make sure the clients are doing well."

This quote outlines the various stages of the sales process and the importance of maintaining regular communication with clients to ensure their success.

"Beyond that, we still have daily calls with me to make sure that they're being able to sell and convert and all that kind of stuff, right?"

This quote emphasizes the need for daily interactions to support clients in their sales and conversion efforts.

Goal Setting and Expectations

  • Setting realistic goals is essential for business growth.
  • Understanding the math behind growth targets is necessary to determine the required number of new sign-ups.
  • Adjusting goals or strategies is necessary when expectations are not met.

"So either switch your goal or switch your."

This quote suggests that businesses need to be flexible with their goals and strategies to achieve desired outcomes.

Growth Metrics and Conversion Rates

  • To maintain a membership base of 300 with a churn rate of 10%, 30 new sign-ups per month are needed just to break even.
  • Assuming a conversion rate of 50%, 60 new sign-ups per month are required.
  • Selling to five people per day over six days is a feasible target for meeting growth objectives.

"If you want to grow to, let's say, 300 members, okay? And let's say your churn is 10%. That means you need to sign up 30 people per month to break even."

This quote provides a specific example of how to calculate the number of new members required to maintain a certain membership level, considering churn rates.

Time Management in Sales

  • Allocating sufficient time for sales activities is critical.
  • Selling two days a week may not be sufficient to meet high growth targets.
  • Effective time management involves scheduling enough appointments to meet with the necessary number of potential clients.

"It's like, well, good luck trying to sell 30 people in two days. It's very unlikely that's going to happen."

This quote highlights the impracticality of expecting to meet high sales targets with limited selling days.

Appointment Efficiency and Scaling

  • Show rates for appointments introduce another layer of efficiency to consider.
  • Doubling the number of appointments may be necessary to achieve growth on top of maintaining current membership levels.

"So they go 30 goes to 60 appointments a week. Ooh, interesting."

This quote reveals the realization that the number of appointments required to maintain a membership base can be significant.

Emotional Resilience in Sales

  • Sales is a volume and numbers game, and rejection is part of the process.
  • Salespeople must be emotionally resilient and not get affected by individual rejections.
  • Understanding that rejection is not personal can help maintain focus on the overall sales targets.

"Champions have short memories, right? They bounce back fast. They're unaffected by losses because they're just thinking, I know I need to close half."

This quote conveys the importance of emotional resilience and the ability to quickly recover from rejections in sales.

"And, like, the most experienced salespeople, they don't get bothered. They're like, yeah. They understand that people come with their own preconceived notions to the call."

This quote emphasizes that experienced salespeople are not distressed by rejections because they understand that it's not a reflection on them but on the client's own issues or beliefs.

Client Preconceptions and Limiting Beliefs

  • Potential clients may bring their own emotional baggage to sales calls or meetings.
  • Salespeople need to recognize and accept that clients may have excuses or limiting beliefs.
  • Being empathetic towards the client's situation can help in managing expectations and maintaining professionalism.

"Of course they have excuses. That's why they're not in shape. Of course they have limiting beliefs. That's why they're not in shape."

This quote acknowledges that clients' objections or negative responses may stem from their own personal challenges and are not necessarily a reflection of the salesperson's ability.## Understanding Business Metrics and Goals

  • To achieve business goals, one must confront the math behind the necessary actions.
  • It's important to calculate the cost and effort required to meet specific targets, such as acquiring leads.
  • Goals without a clear understanding of the required investment can lead to shock when the reality of the effort needed becomes apparent.
  • One must be realistic about what they want and adjust their efforts accordingly.

"And I think that a lot of people don't confront the math. They make these goals and don't think about what it takes to get there."

This quote emphasizes the common mistake of setting goals without considering the practical steps and costs involved in achieving them.

Prioritization and Time Management

  • Priorities should be clear, and one must recognize that some are more important than others.
  • Conflicts in priorities are often about the nature of tasks rather than their importance.
  • Effective time management and delegation are crucial for fitting necessary tasks into a schedule.
  • Scheduling and understanding team capacity is essential for onboarding and conversion processes.

"There's never really conflicting priorities. You just have one that is a bigger priority than another."

This quote addresses the concept of conflicting priorities, suggesting that what appears to be a conflict is actually a matter of one priority being more significant than another.

Role Allocation and Task Breakdown

  • Assigning specific roles and tasks to team members helps manage workload efficiently.
  • For instance, one employee can manage onboarding, conversion sales, and outreach within a structured time frame.
  • A full-time salesperson may be necessary to meet high interaction targets with potential customers.

"And then you have a salesperson who's going to, I mean, that has to be a full time salesperson who's going to hit those numbers."

This quote highlights the need for dedicated personnel to fulfill sales roles and meet ambitious interaction targets.

Realistic Expectations and Continuous Improvement

  • It's unrealistic to expect 100% success rates in sales or customer retention.
  • One should work with realistic metrics and strive for improvement without waiting for perfection.
  • Starting with what is possible and improving incrementally is better than delaying action for ideal conditions.

"You're not going to have orders of magnitude improvements. You're not going to sell 100% of people who show up."

This quote sets realistic expectations for business outcomes, emphasizing that perfection is not achievable and one should work with attainable goals.

Bottleneck Identification and Resource Allocation

  • Identifying bottlenecks in business processes is critical to achieving growth.
  • Business owners may need to work extra to afford additional help that can alleviate bottlenecks.
  • The concept applies universally across different business types and situations.

"Your inflow is probably your bottleneck. And there has to be acceptable metrics that you can extrapolate off of and then work backwards into how much time that's required and how many people are required to help you get there."

This quote advises on identifying and addressing the main constraints in a business process, which often involve customer inflow and the resources needed to manage it effectively.

Conclusion and Encouragement

  • The speaker encourages listeners to apply the concepts of 'money math' and 'time math' to overcome business challenges.
  • The approach is applicable regardless of external factors or the nature of the business.

"So lots of love. Hope you guys are stoked for this week, because I am."

This closing quote conveys a positive and motivating message, encouraging listeners to approach the week with enthusiasm and apply the discussed strategies.

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