Why Business Owners Beat Fitness Professionals Ep 198

In the Gym Secrets podcast, the host underscores the importance of transitioning from a gym owner mindset to that of a business owner to thrive in the fitness industry. Through the use of advanced marketing attribution tools, it's revealed that marketing efforts yield higher returns than expected due to secondary effects. The host shares insights on customer acquisition strategies, emphasizing the willingness to sustain short-term losses for long-term gains by understanding the lifetime value of a customer. A comparison between immediate and delayed returns on investment is drawn to illustrate the advantage of patience and strategic spending in marketing. The host also highlights the shift to remote services as a high-margin, scalable opportunity, urging gym owners to make decisions based on math rather than emotion to maximize growth and profitability.

• Investing in marketing can yield more profit than initially perceived.
• Marketing creates secondary and tertiary ripple effects beyond direct sales.
• Proper attribution tracking across various channels can reveal the true profitability of marketing efforts.
• Even when some marketing channels show a loss, the overall marketing strategy can still be profitable.
• Making informed marketing decisions can lead to significant customer acquisition, even at a loss initially.

"Whenever you market, you make a lot more money than you think you do."

This quote emphasizes the idea that the return on marketing investments is often underestimated due to the ripple effects that are not immediately apparent.

"They were able to better attribute how much money they were making across all of their marketing."

The importance of attribution tracking in understanding the effectiveness of marketing efforts across different channels is highlighted in this quote.

• Fitness professionals often lack the business mindset that leads to success in the industry.
• The most successful fitness companies are typically not owned by fitness professionals.
• Thinking like a business professional involves making strategic decisions that may not have immediate payoffs.
• Willingness to sustain initial losses for customer acquisition can lead to long-term profitability.
• Understanding the lifetime value of a customer is crucial for making investment decisions in marketing and growth.

"The reason that business owners beat gym owners and the reason that the biggest fitness companies in the world are not owned by fitness professionals is because fitness professionals don't think like business professionals."

This quote underscores the distinction between having a fitness-focused mindset and a business-oriented mindset, suggesting that the latter is more conducive to success in the fitness industry.

"I'm willing to go into a loss to acquire a customer because I understand what the lifetime value of a gym owner is for us."

The speaker's willingness to incur short-term losses for long-term gains is based on their understanding of the customer's lifetime value, demonstrating a strategic business decision.

• Presenting different investment scenarios to illustrate the concept of time value of money.
• Fitness professionals may struggle with the concept of delayed gratification in business investments.
• The ability to wait for a larger return over time is a key business decision-making factor.
• The hypothetical investment scenarios range from immediate returns to substantial returns over a longer period.

"Give me a dollar and I'll give you a dollar back tomorrow... or give me a dollar and I'll give you $10 back in six months."

This quote presents a series of investment options with varying time frames and returns, highlighting the concept of the time value of money and the importance of strategic patience in business investments.

• The speaker discusses various investment scenarios with different timeframes and return rates.
• There is a comparison of returns on day 1, day 30, day 60, and six months with increasing returns over time.
• The speaker suggests that most people would choose the option with the highest return, which in the example given is ten to one back in six months.
• The speaker highlights that gym owners often do not apply this principle of seeking higher returns over time in their businesses.

"Maybe I give you too many options. Let's just say day one is one to one. At day 30, you're two to one. Day 60, you're four to one. And day six month, you're at eight to one. Right. We'll just use those because it's simple."

The quote explains the different investment options with varying returns based on the time of investment. It simplifies the concept for better understanding.

• Gym Launch is a business model that provides gym owners with a four to one return on investment within the first 24 hours.
• This model was successful because it allowed individuals who were not business owners to make money as business owners do.

"The reason gym launch exploded was also because we found a way to make people money four to one in their first 24 hours."

This quote illustrates the success of Gym Launch due to its ability to quickly generate a significant return on investment.

• The speaker is considering a new service with high margins (80% or 90%) and discusses the cash flow from this service.
• The new service allows for a return of investment and continuous profit after the initial exchange.
• The speaker emphasizes the high profitability of remote services compared to traditional brick-and-mortar businesses.

"But here's the kicker. You give a dollar today, I give you $0.50 back tomorrow, you give me a dollar today, I give you a dollar back in 14 days. You give me a dollar today, and I give you a dollar back in 30 days. But from that point going forward, you continue to make all profit after the purchase of this dollar exchange."

The quote describes the initial investment and the subsequent returns over time, leading to continuous profit from the new service.

• The speaker discusses the concept of lifetime value (LTV) and how it changes the rules of running a gym due to different service margins.
• There is a significant difference between the margins of in-person and remote services.
• The speaker provides an example to illustrate the difference in take-home profit between traditional and remote gym services.

"If you had a client that the LTV was $1,000, right? So you're billing $100 a month, 10% churn is $1,000. Okay? Now, if you're making a 25% margin and you want to do it off gross margin, right? So you're making $250 for you to take home after that person has been serviced, et cetera, right?"

This quote explains how to calculate the lifetime value of a client and the resulting profit margin in a traditional gym setting.

• The speaker discusses the current trend of consumers being comfortable with buying online, which benefits remote services.
• There is a focus on the importance of customer acquisition in the success of online services.
• The speaker is optimistic about the potential of the online fitness industry and is strategizing on how to capitalize on this trend.

"The difficulty is acquisition, right? But if acquisition is taken care of, because it is right now, because people are very, very, very comfortable buying online right now because they have to."

The quote highlights the current opportunity for online services due to the shift in consumer behavior towards online purchasing.

• The speaker stresses the importance of being willing to invest with a long-term view for continuous profit.
• There is a critique that gym owners often do not make this decision, which hinders their ability to compete with other business owners.

"Are you willing to put a dollar in today and then make $1 back in 30 days, knowing that that thing will become a $200 a month profit stream every month thereafter."

This quote challenges listeners to consider the long-term profitability of investments rather than focusing solely on immediate returns.

• The speaker promotes their book "100 million dollar offers" available on Amazon.
• The book has received positive reviews and is offered at a low price on Kindle.
• The speaker mentions the significant effort put into writing the book, suggesting its value to readers.

"Hey guys, real quick, if you're new to the podcast, I have a book on Amazon. It's called 100 million dollar offers. At over 8005 star reviews, it has almost a perfect score. You can get it for $0.99 on Kindle."

This quote serves as a promotion for the speaker's book, highlighting its high rating and affordability.

• Understanding the financial strategy behind customer acquisition is crucial for business growth.
• A willingness to take initial losses can lead to acquiring more customers and expanding the business.
• The timing of breaking even on customer acquisition costs can significantly impact the number of customers acquired and the company's growth potential.
• Adjusting the breakeven point can allow a business to target a larger market segment, including warmer and colder audiences.
• Emphasizing the importance of making decisions based on math rather than emotions to optimize for long-term profitability.
• Utilizing credit facilities can align with strategic acquisition costs and repayment schedules to leverage growth without immediate capital.

"The guys who I know who own the biggest businesses, take massive losses in the acquisition so that they can acquire more customers."

This quote highlights the strategy of successful business owners who are willing to incur upfront losses to acquire a larger customer base, which can lead to greater long-term profits.

"If I said I have to break even by day 30, I could probably sell three times as many customers just from that one switch of going from break even day one to break even day 30."

This quote illustrates the impact of extending the breakeven point on customer acquisition, showing how a longer timeframe can increase the number of customers acquired.

"And the reason that I'd be able to acquire that many more customers is that typically in any market, you have your red hot buyers, you have your people who are most interested, right? And then you have warmer audiences, and then you have colder audiences."

This quote explains that by delaying the breakeven point, a business can afford to reach out to a broader audience, beyond the most interested buyers, potentially increasing the customer base even further.

"Your ability to win will be on your ability to make decisions with math and not emotions."

This quote emphasizes the importance of data-driven decision-making in business, suggesting that successful entrepreneurs rely on quantitative analysis rather than emotional impulses.

"You can get a credit card that you put the card down, you pay for all your acquisition costs. 30 days later, you recoup the money, you pay it off, and then everything you have as a result of spending that money, the customers and the excess cash you need is yours."

This quote suggests a practical financial strategy where a business can use credit to cover initial acquisition costs and then repay the debt once the investment begins to yield returns, effectively managing cash flow for growth.

• Marketing investments have the unique potential for quick breakeven compared to other investment opportunities.
• Owning a business and understanding the stock market are fundamentally about buying and selling businesses.
• The size of the market a business can target is directly related to its willingness to wait for a return on investment.
• The more extended the period a business is willing to wait to break even, the larger the potential customer base it can target.
• High-profit margin services that are not geographically constrained offer significant growth and revenue potential.

"What investment opportunity can you break even in 60 days on? None, except for marketing, right?"

This quote indicates that marketing investments can have a very short breakeven period, which is rare among investment options, highlighting the unique advantage of investing in marketing.

"Fundamentally, what is the stock market? It's buying and selling businesses. It's what it is. It's just small pieces of it, but the fundamentals work the same way."

This quote links the principles of business ownership to the stock market, illustrating that both involve strategies related to the acquisition and growth of businesses.

"You're talking ten times the size, 20 times, 50 times the size of the market that you can go after, all right?"

This quote underscores the exponential growth in market size a business can target by adjusting its financial strategy and being willing to wait longer to break even on customer acquisition costs.

"We've got guys right now who are selling 66 every two weeks into remote, all right? 66 every two weeks. That's one person."

This quote provides an example of a successful acquisition strategy in practice, where a business achieves high customer acquisition rates by adopting the discussed financial strategies.

"The opportunity becomes far more interesting."

This quote concludes that by adopting the strategies discussed, the potential for business growth and profitability becomes significantly more attractive.

• Emphasize the importance of thinking like a business owner to succeed.
• Business owners see current market opportunities and are excited by the shift to high profit revenue service models.
• The market is now open to buying in ways they haven't before, removing geographic constraints.
• Making logical decisions over emotional ones is key to business growth.
• It's necessary to consider customer acquisition costs and lifetime value.
• Patience in breaking even is advocated, suggesting waiting 30 to 60 days if needed.

"And so if you want to win in this world, right now, you have to think like a business owner, not like a gym owner."

The quote stresses the need to adopt a broader business perspective rather than a narrow industry-specific mindset to achieve success.

"But all of that will come down to your ability to make a logical decision instead of an emotional one."

This quote highlights the importance of logical decision-making in business operations, particularly in financial aspects like customer acquisition and assessing lifetime value.

• The marketplace is shifting towards high profit revenue service models.
• Many businesses are transitioning to these models, which offer higher margins.
• The service provided after initial customer acquisition requires less upkeep, thus increasing profit margins.

"A massive amount of the marketplace is now 100% trying to go into a high profit revenue service model, and they're willing to buy in a way they've never bought before."

This quote indicates a significant trend in the marketplace towards service models that promise higher profits and a new willingness among consumers to engage with these models.

• Understanding customer acquisition costs is crucial.
• There's a high success rate in converting initial customers to continuous clients.
• The back-end service is high margin and low upkeep, which is advantageous for business growth.

"And right now, we had our first groups of gyms started doing their halfway appointments, and they're closing over 75% of those people into continuity."

This quote provides evidence of the effectiveness of the business model, showing a high conversion rate to ongoing services, which implies a strong customer retention strategy.

• Using Other People's Money (OPM) like credit cards for customer acquisition is suggested.
• The strategy involves acquiring customers at a higher volume to increase overall profit margins.
• The willingness to delay breaking even can lead to a much larger client base and thus higher absolute returns.

"Use OPM. Use a credit card that you can to acquire the customers and inquire two, three, five times the volume so that you can actually make the absolute margin that's even bigger in the business."

This quote suggests using leverage to amplify customer acquisition, which can increase the scale of the business and the potential for profits.

• Fixed costs are constant, while variable costs increase with scale.
• As revenue increases, the proportion of fixed costs decreases, expanding profit margins.
• The willingness to wait for a return on investment can lead to covering fixed costs and earning more profit on additional revenue.

"The first $5,000 most of us make every month is not money we get to keep. That's money we have to pay just to run a business. But the last $10,000 you make on top of whatever it is is typically all profit most of the time, right?"

This quote explains the structure of business costs, distinguishing between the money used to cover fixed costs and the additional revenue that often translates directly into profit.

"If my fixed cost is five and I make 100 grand, my fixed cost is 5% of my income. So my margin expands as I make more money."

The quote illustrates how increasing revenue leads to a more favorable ratio of fixed costs to total income, resulting in higher profit margins.

• There is a current opportunity for expansion beyond traditional geographic and physical limitations.
• The market will become more competitive, with price competition expected to increase.
• High-margin business models with one-on-one coaching are currently feasible and profitable.
• There is urgency to make strategic decisions quickly before the market changes.

"We can expand far beyond our marketplace. We are no longer limited by the Square footage."

This quote emphasizes the new opportunities for businesses to grow beyond traditional physical limitations due to changes in consumer behavior and market dynamics.

"But right now, people are willing to spend two $300 a month to have a one on one coach."

The quote highlights the current consumer willingness to invest in personalized services, which presents a lucrative opportunity for businesses that can capitalize on this trend.

• Emphasizes the importance of making decisions based on data and metrics.
• References specific success metrics like lead conversion rates for sales calls.
• Encourages the audience to stay informed and utilize available data to drive business decisions.

"GLX has 41% of leads are showing up for sales calls. It's like one out of two leads is getting pitched."

This quote provides a specific metric on lead conversion, suggesting a high level of efficiency and success in the sales process, which is crucial for business growth.

"I have so many more DATa points. I'll probably share them with you next week."

The speaker indicates the importance of data in guiding business decisions and hints at sharing further insights, reinforcing the value of a data-driven approach.