Ready for a little “tough love..?”
I am reacting to a flurry of negative, whining phone calls I’ve received, lately.
The negative calls, coming from club owners, studio owners and independent trainers — have all been about:
- Not making enough money
- Unfair competition
- Feeling powerless to change their plight!
WTF…??? It’s time for a reality check!
So, this is going to be a bit rough. If it sounds self-serving… well, so be it.
But, remember, the essence of my business is to help you become more successful and profitable by:
- Building your brand
- Increasing your profit margins
- Outsmarting your competition
So… I ‘m going to share with you sort of a condensed version of the actual “process” I use to identify the mindset of management and/or the owner — along with my recommendations.
I don’t expect you’ll agree with all of them — and, in fact, I fully expect some “push back” from various owners, managers, consultants and others who read this blog!
But, objectively, business is business. We all make decisions. Some help our businesses grow — and others don’t. So, if the shoe fits….
Follow me on this….
Do You See It..?
It’s amazing how many seasoned fitness business professionals continue to hemorrhage money… without realizing it. It’s also amazing that many fitness business consultants don’t see it, either! YIKES!
You Are In the Fitness Business Because..?
Motivation: You are in this business primarily because you are passionate about health and fitness as well as the desire to help people achieve some form of a healthy lifestyle.
What I say: If this is not your primary reason, you should really get out. It’s too difficult if you’re only in it for the money. Nonetheless, you DO need to show a profit at the end of the year… or, you will be forced out. So, finding this BALANCE (passion + profits) is the challenge.
Let’s Agree on Your #1 Profit Center
Primary Profit Center: Yes…yes… yes… you and I both know that you are in the business of selling new memberships or gaining new clients. It is your #1 profit center.
And… Ohhhhh… how we all love that recurring revenue stream. Every month it all comes in like a “cash flow” drug. It’s no wonder that everyone focuses on it!
What I say: New Memberships / New Clients are a “no-brainer.” Of course “new business” is the main objective… BUT, new member/client acquisition costs are HUGE.
And, in today’s market competing against $10 per month, no-contract memberships, most fitness businesses can no longer be complacent thinking they’ll survive on member dues alone. To spend 100% of your time, money and effort strictly on new business development is business suicide!
Do the Math – You Need a Number!
Secondary Profit Centers: Secondary profit centers that deliver positive cash flow consistently every month are crucial to the growth and success of today’s fitness business.
What I say: STOP RIGHT NOW….! Stop reading and make a simple calculation:
How many active members and clients do you have right now?
Seriously… don’t do anything else until you have that count.
Next, calculate how much more revenue would be generated if each active member spent an extra $10 with you each month.
How would it affect your business?
I respectfully ask every fitness business owner to consider this: Whatever number you calculate (members x $10) is your new monthly goal. Simple… right?
Do You Sell Supplements?
A Natural Secondary Profit Center (repeat purchase): (If you don’t believe in, or take supplements, yourself, then skip this section.)
Health clubs, studios, spas and independent trainers who actively EDUCATE their members on the benefits of quality supplementation (to enhance proper nutrition) consistently earn significant amounts of additionalrevenue:
- week after week;
- month after month;
- year after year.
For many it is an additional 15-20% of additional revenue on the balance sheet. That’s amazing!
What I say: First off, not everyone is going to purchase supplements. And, they should not be “pushed” into it either.
But, if you provide information and allow your members and clients to self-educate, by providing tri-folds or information sheets at the front desk, proshop, personal training desk and wall posters — you’ll be amazed at how quickly these revenues add up.
And, grow incrementally over time.
MLM PRODUCTS = Huge Money Leak… PERIOD!
I know… I know…. it’s so easy when you sign-up for an affiliate program or MLM that sells supplements directly to your client/members with drop-ship / auto-ship programs, weekly emails and promotions.
I mean they are “marketing machines”.… right?
And, talk about CONVENIENCE..! They do it all… credit card transactions, order processing and shipping! Wow… you do absolutely nothing and get a monthly commission check!
And, after all… you’ve rationalized (or been told by the MLM recruiter) that you’re WAY TOO BUSY and DON’T HAVE TIME to manage supplement sales… so you swallow the MLM/Affiliate offer hook, line and sinker!
But, it’s a HUGE MONEY LEAK…!
What No One Ever Tells You About MLMs and Affiliate Commission Programs
- MLMs and Affiliate programs offer lower profit margins. Usually between 15-25% as opposed to 80-100% with your own brand.
- Their products are available everywhere and to everyone. Often your own members become recruiters within your own facility
- You end up building their brand as opposed to building up and creating loyalty to YOUR OWN BRAND
- You give up your most precious asset – your membership/client contact list including emails, addresses, phone, etc. (THIS IS CRAZY!)
- While it may be convenient for you… it is NOT convenient for your members, clients and guests.
- Autoship programs typically turn into a messy situation with customers getting “stockpiled” ultimately blaming YOU!
- MLMs and Affiliates eventually no longer need you since they already possess your member/client list!
Just Look at the Numbers!
Just take a look at a typical single supplement purchase below with the exact same retail pricing. Look at the difference in profit margins. Now, multiply it by 100! Would you rather make $6,800 or $2,799..?
It’s Easy to Sell Against MLM Products
If you are selling MLM products… and I am your competitor… I would USE that information to sell AGAINST you.
I could easily make the argument to a new prospect that I have researched the industry for the absolute best formulations before putting my own name on them.
That’s because I care about providing my clients/members with the absolute best products and services available.
And that you, as well as all other competitors who market MLM products, are too cheap to invest in an inventory of quality products. That this is a reflection of your business practices and the type of services they can expect from you!
At the end of the day, I will get the client as well as the repeat sales of supplements. Every time!
What I say: Let me be perfectly clear. I believe most products from MLMs or Affiliate Programs are solid. This is NOT about the quality of the products or formulas.
What I object to is the PROFIT MODEL for YOU — especially if you intend to grow a profitable, successful business.
If you are selling supplements via MLM or Affiliate Commission programs, then, you have NOT taken the time to really think this through.
You are demonstrating your preference for CONVENIENCE over your COMMITMENT to build your BRAND/BUSINESS.
It’s is a poor business decision in so many ways. Read the bullets again. Beyond the money, even the non-tangible impact of MLMs and/or Affiliate programs is ultimately a MONEY LEAK.
And, if your sales and marketing consultant is pointing you toward a specific MLM or Affiliate commission program, then ask him/her if they get a commission or override from your sales or recruitment. I’ll be willing to bet on it!
Yes… I know it’s hard work. But, you’re in the highly competitive fitness business…. so, I know YOU are NOT afraid of hard work.
You just need to get pointed in a more profitable direction and become a business warrior for your secondary profit centers, too!
Mandate Accountability andMake Money Doing It!
O.K., this really is a blatant plug for our Journals, but here goes: Allowing your clients to use their iPhones or other mobile apps for dieting and exercise is another MONEY LEAK.
I won’t go into detail here, but, from a money, marketing and credibility standpoint, most fitness related apps do absolutely NOTHING for your business and are really horrible in dozens of ways….
What I say: CLICK HERE….
Just Say No..
They build the cost of the journal plus $8.00 profit into the price of their training packages.
The “adult conversation” goes something like this:
Look, you are about to spend your hard earned money to accomplish very specific goals. It’s my professional obligation to ensure you get there in the most efficient and effective manner possible. Therefore, it is mandatory that you use the tools, techniques and protocol that we already know are proven successful.”
So, all three of these highly successful professionals MANDATE their protocol — including their branded Daily Journals — and get incredible results! Sure, it’s not huge money maker. But, the point is… a Journal… one where a person immediately records his/her exercise.. WORKS! Here’s proof: CLICK HERE…
Super successful fitness marketers know something else about the Daily Journals. Not only do they serve as a credible tracking log… but, also MULTI-TASK as a REFERRAL SOURCE.
What I say: Think about it. With your logo on the cover, the Journal leaves your facility and penetrates your market area.
And guess what. Most people show their Journals to their friends, family, co-workers, etc. They actually demonstrate and showcase YOUR BUSINESS! Yes, that means REFERRALS!
In fact, one trainer has us insert “Discount Coupons” for training packages inside the Journal. And, pays his clients (the ones with his journals) a commission if their friends, family or co-workers sign-up. Now… that my friends, is how to make money!
3rd Party Programs = Money Leak
The newer group cardio/dance programs are really fun and exciting. So are some of the Yoga, Pilates, Aquatics and Kettlebell programs.
Most 3rd party programs provide all kinds of support materials, training, marketing collateral and, in some cases, web support, e-mails, direct mail copy… all kinds of stuff.
Some of them charge for their programming/training and others don’t. Either way, you’re going to spend a bunch of money getting them up and running via staff training, marketing and promotion.
BIG QUESTION: WHY are these group programs offered by clubs (that cost so much to set-up and promote) provided to members for FREE?
Seriously… at the end of the day, you’ve done nothing more than add overhead to your business.
Please don’t give the “Retention” argument. It just doesn’t hold up. This is more than a money leak. Hell, it’s a flood!
What I say: Create your own “Signature Classes and Programs!”
Listen, you are going to put time, money and effort to create it, anyway. So make it your own. This will give you the opportunity to customize it to your own market. It will reinforce your brand and increase name awareness throughout your market area.
In a recent issue of Club Solutions, Brent Holten, owner of i.d. Gym, is already headed in this direction creating their own Signature Programs with such names as “The Caveman Workout” and “Fly Yoga.”
Other Signature Program names I’ve heard include,
- “Gym Brats”
- “Fancy Pants”
- “Balance Team”
… and the list goes on and on.
What I say: If you’re going to go down this road, then, at least give yourself the opportunity to turn lemons into lemonade! Monetize these programs by offering value-added bundles or packages.
Three is Enough..!
Alright, so these are just three examples (supplements, journals, signature programs) where fitness businesses could plug the money leaks.
There are plenty more.
Most fitness facilities and studios have plenty of money leaks. It’s often a case where the day-to-day operations blind management to some of these money leaking issues.
Sort of a “can’t see the forest for the trees” type situation.
Think and Grow Rich
Yes, Napoleon Hill’s best seller is perfectly appropriate in referring to the fitness business.
Our industry is changing.
It is a wildly exciting time with huge opportunities for rapid growth. And, contrary to popular belief, it’s NOT based on new technology. It’s based on CREATIVE and STRATEGIC THINKING!
I sincerely hope that if you’re a seasoned pro, you’ll take the time to re-access every area of your business. Every nook and cranny.
If you’re like most, you’ll probably find “money leaks” all over the place. So, shore up the leaks and welcome back to profitability!
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