Serve less Make More Raising your EFT Ep 29

In this episode of Gym Secrets, Alex and his wife Layla discuss strategies for gym owners to increase their Electronic Funds Transfer (EFT) prices, particularly when facing full capacity and legacy members with grandfathered rates. Alex advises owners to confront the need to raise prices by communicating honestly with clients about the business's growth and the necessity for profitability. He suggests personal conversations over mass emails to renegotiate terms, emphasizing the importance of maintaining the business's viability. Alex also touches on the psychological barriers owners face in adjusting prices and the benefits of an effective acquisition system for replacing members who might leave due to price increases.

• Alex introduces the podcast after a brief hiatus due to a hurricane in Puerto Rico.
• Layla, Alex's wife, is present post-dinner and date night.
• The topic of discussion is increasing Electronic Funds Transfer (EFT) prices for gym memberships.

Hey, what's going on, everyone? And welcome to the Gym Secrets podcast. This is Alex and it has been at least a week since the last podcast. So I have, we've been crazy busy and we had a hurricane in Puerto Rico. If you heard about that. It was nuts. Anyways, so I'm here with my lovely wife, Layla. We just had our dinner and date night and today we're to be talking about an awesome topic about increasing your efts because that's what we talk about when we're at our to take night dinners on date night.

This quote sets the scene for the podcast episode, introducing the hosts and the main subject of increasing EFT prices.

• Gyms at full capacity face the challenge of increasing revenue.
• Gyms often have members paying legacy rates due to initial promotions.
• Gym owners struggle with the decision to raise prices for long-term, loyal members.

And what happens is we give them an acquisition system that makes them money and then all of a sudden they've got half their members at a price that we tell them to put, which is usually fifty dollars to one hundred dollars higher than what their old price is. And then their gym gets to full capacity and they're like, I want to be making more, but my gym is at full capacity and so we have to raise their prices, right?

Alex discusses the common scenario where gyms reach full capacity but desire more revenue, leading to the need to increase membership prices.

• Gym owners face an ethical dilemma when considering price increases for members with lifetime low rates.
• The commitment to original members conflicts with the financial needs of the business at its current state.

But I have all these people who are grandfathered in. They've got a lifetime thing. I told them I did a presale that was like, lifetime low rate. And now these people, and these people mean a lot to you and they should because a lot of these people have been the core of your gym.

This quote highlights the moral conflict gym owners face when they consider raising prices for members who were promised lifetime low rates.

• Gym owners must confront the reality of limited space and session capacity.
• The decision to increase revenue involves either accepting current limitations or renegotiating terms with legacy members.
• Business decisions made at the start may not hold once the gym grows and learns from experience.

And so you have to say, okay, either I am okay at this level of revenue because you're full now, or you have to basically go back to people and say, I made a mistake, right? Like I made a mistake because I didn't have all of the information that was necessary to make the decision that I like, the correct decision for the business when I started it.

Alex outlines the two options gym owners have: accept the current revenue with full capacity or admit to legacy members that initial pricing decisions were made without full foresight.

• The process of transitioning legacy members to higher rates can be challenging.
• Some gym owners have successfully started transitioning members to new pricing models.

And I've learned leaps and bounds about this business from the day that I started it till today. And I can no longer provide the services that I could before at that rate. And so you have to kind of like if and when you are going to raise your eFT prices and you want to confront raising the eFT prices for some of these legacy members because I got off the phone with a guy yesterday, and since he's been working with us, he signed up 100 people on a front end offer and he's starting to transition them over.

In this quote, Alex discusses the evolution of understanding in the gym business and mentions a case where a gym owner has begun to transition legacy members to updated pricing.

• Alex discusses the need to adjust pricing for a gym owner with two different member pricing groups.
• Lower-paying members contribute less, so their potential departure is less financially impactful.
• Having a reliable customer acquisition system can mitigate the loss of members due to price changes.
• It is important to communicate openly with customers about pricing changes and release them from contracts if services can no longer be provided at the original rate.
• Emphasizes the importance of profitability for sustainability and growth of the business.
• Suggests personalized communication (calls) with customers rather than mass emails when addressing pricing changes.

"But he had another 100 members that were at 67 or 97 for unlimited boot camp. And I was like, dude, we're going to have to confront this."

This quote highlights the initial concern about the discrepancy in membership pricing that needs to be addressed.

"Benefit number one is if people leave who are paying not much, you don't lose much because they weren't paying much anyways, right."

This quote points out that losing lower-paying members will have a minimal financial impact on the business.

"Second benefit is that if you have an acquisition system that allows you to fill your gym up, you can always replace those spots very easily, right."

Alex emphasizes the importance of a good customer acquisition system to quickly fill the spots of members who may leave due to price adjustments.

"The third thing is that when you are going to have that conversation, what you want to do is you want to say, hey, listen, agreement is two ways."

The quote underlines the need for a two-way agreement and the necessity to renegotiate contracts that are no longer sustainable for the business.

"We need to have profit at the end of the month, and we can't fulfill services and give you unlimited training sessions for $67 a month."

Alex explains the rationale behind raising prices: to ensure profitability and the ability to continue offering quality services.

"If you don't have a lot of members at your gym, what I wouldn't do is I wouldn't just send a mass email out. I would put the elbow grease in and I would call all my customers."

This quote suggests a more personal approach to communicating price changes by directly calling customers to explain the situation and renegotiate terms.

• Alex advocates for direct communication with customers, especially in sensitive situations like price increases.
• Personal calls are preferred over mass emails to maintain and strengthen customer relationships.
• The effort put into one-on-one conversations can lead to better customer retention and understanding during transitions.

"I know that sounds like the big w word, like work, but if you had the opportunity to sit down with 67 customers who were the most qualified customers of all time because they've already bought with you, already have a relationship with you, to sign them up for EFTs, wouldn't you make the time to meet with a customer that was like that?"

Alex is suggesting that the extra work involved in personal outreach is worth the effort because of the established relationship with existing customers, which can lead to more successful negotiations and retention.

• Emphasizes the necessity of a profitable business model to ensure long-term sustainability and the ability to reinvest in the business.
• Points out the risk of becoming overworked and not achieving the desired freedom if the business is not profitable.
• Notes the rarity of businesses being able to operate sustainably at very low price points without a high capacity to service customers.

"Otherwise there's no profit left over, right? And then there's nothing to reinvest in the business."

This quote explains that without profit, there is no opportunity to reinvest in the business, which is crucial for growth and sustainability.

"And then ultimately you're just a slave to it and it never gives you the freedom that you wanted it to give you."

Alex warns of the consequences of not having a profitable business, which can lead to the owner being trapped in a cycle of work without the benefits they initially sought from entrepreneurship.

• Addressing customers personally and with transparency when discussing business changes.
• Emphasizing the value provided to the customer and the relationship built over time.
• Acknowledging past pricing mistakes and explaining the necessity for change.
• Offering options for payment terms to accommodate customer needs while maintaining new pricing.

"And so you have to see these customers as the most qualified prospects of all time. And so I would at the very least close it over the phone. If not do as many of them as I could in person throughout the week as an unofficial start, like that whole week."

This quote underlines the importance of personal engagement with customers, especially when discussing sensitive topics like pricing changes. It suggests prioritizing in-person or phone conversations over impersonal methods like email.

"The easiest thing to do is just be honest, is just say, I did not know what I know now when I came into this space."

This quote emphasizes the power of honesty in business communications, admitting past mistakes to build trust with customers.

"Because then we'll have profit that we can reinvest back in the business so that we can continue to grow it, improve the facility itself, the equipment, how much training I can provide, my trainers, all of that kind of stuff."

This quote explains the rationale behind price increases, framing it as a means to improve the customer's experience and the quality of service by reinvesting profits.

"I want you to stay. And this is what the new rate is going to be now. And I want to honor you by talking to you about it."

This quote shows how to communicate price changes while expressing a desire to maintain the customer relationship, demonstrating respect by having the conversation personally.

"I can't afford to train you for $67 a month for unlimited sessions. I can't afford it as a business owner."

This quote is an example of clear communication about the unsustainability of current pricing, directly linking business survival to the need for price adjustments.

"I can't change the price, but I can change the terms upon which that you're giving me this money."

This quote suggests a compromise by maintaining the new price point but offering flexibility in payment terms to help customers adjust to the change.

• Recognizing the importance of sustainable pricing for business survival.
• Understanding the impact of pricing on service quality and business growth.
• Communicating the necessity of price adjustments to customers for the long-term benefit of both parties.
• Offering flexibility in payment terms to mitigate the impact of price increases on customers.

"And my first job as owner of this business is to make sure that this business continues to exist."

This quote highlights the primary responsibility of a business owner, which is ensuring the business's longevity, sometimes necessitating difficult decisions like price increases.

"And so, as such, I've been working with a couple of people who have been able to advise me on pricing and fulfillment so that we can ultimately provide you a better service."

This quote indicates that the speaker sought professional advice to recalibrate pricing, reinforcing the decision's credibility and its aim to enhance customer service.

"And it all comes down to making sure that our prices make sense, right?"

This quote reinforces the idea that sensible pricing is crucial for the health of the business, implying that previous pricing may not have been sustainable.

"If you're sticking to a price and you're doing a price increase, it has to stay there."

This quote stresses the importance of firmness in implementing new pricing, ensuring that the business does not compromise its sustainability by negotiating on the new rates.

• The real earnings of a gym are determined by dividing the total monthly earnings (EFT) by the number of paying members.
• Many gyms have a blended average of around $100 per month, which is often not sufficient for sustainability.
• The blended average is an important metric for assessing the actual value each customer brings in.

"But if you look at your eft every month, divide how much money you make on eft by how many people you have that are paying you. That's what your real eft is, right? That's what your blended average is."

This quote explains how to calculate the real earnings from electronic funds transfers (EFTs) and introduces the concept of a blended average, which is a key metric for understanding a business's revenue per customer.

• Gym owners should consider raising their prices to increase revenue and create a more sustainable business model.
• Presenting price increases in smaller increments (e.g., weekly rather than monthly) can make the change seem more palatable to customers.
• Communicating price increases with sincerity and appreciation can minimize customer loss.

"So, hey, we're raising it by $15 a week. Okay. That's one. The next thing is, though, after you've raised the price, I'm just telling you, I guarantee you, if you do it in this way, you talk to me and say, I want to honor you."

This quote suggests a strategy for communicating price increases to customers, emphasizing the importance of framing the increase in smaller terms and having personal, respectful conversations with customers about the change.

• Losing a portion of customers after a price increase is normal, but it can be offset by the higher prices paid by the remaining customers.
• A calculated price increase can lead to higher overall revenue even with fewer customers.
• The reduction in customer base can also free up capacity to acquire new customers at the higher rate.

"And if you can lose 20% of your customers, right? So let's do the math. You have 100 people paying you $100 a month...you're making 12,000 a month in efts, and you lose 20%. Right. That's 24 people."

This quote provides a hypothetical scenario illustrating how a gym can increase revenue by raising prices and accepting a potential loss of customers, demonstrating the financial benefit of this strategy.

• Copying pricing models from other gyms is not advisable, especially if those gyms are not financially successful.
• Gym owners should develop their own pricing strategies based on their unique costs and business goals.
• The speaker encourages gym owners to think critically about their pricing and consider the advice given.

"Don't copy them. So I will leave you with that. Think on that. Mull it over."

This quote warns against blindly following the pricing strategies of other businesses and encourages the listener to reflect on the information provided to develop a more effective pricing strategy for their gym.

• The speaker offers a case study and application process for gym owners to learn how to reach full capacity.
• The website mentioned provides resources to help gym owners increase their customer base and revenue.

"If you are a gym owner and would like to see how we get gyms from zero to full capacity in go to. I do not hate moneY. Or it's actually, I don'thatemoney dot and download the case study, and you can apply on the next page and see a bunch of awesome gym owners that we've worked with to get them to full capacity within 30 days."

This quote provides information about where gym owners can find additional resources to help them grow their business and increase profitability, specifically by reaching full capacity.