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Are You Maximizing Your Gym's Revenue Potential? Uncover the Key Growth Indicator · Gym Business Coach Podcast

• 0:08
  [SPEAKER_00]: You are listening to the built-to-grow podcast delivering the knowledge in all things, fitness, business.
• 0:16
  [SPEAKER_00]: We help jimrollers win, hear your hosts, ten lions, and Randy Axton.
• 0:27
  [SPEAKER_02]: All right, welcome back to the built-to-grow podcast.
• 0:29
  [SPEAKER_02]: My host Tim Lines joined in studio today by Randy Axton.
• 0:34
  [SPEAKER_02]: It's up, buddy.
• 0:35
  [SPEAKER_02]: How are we doing?
• 0:36
  [SPEAKER_02]: Good.
• 0:36
  [SPEAKER_02]: Good.
• 0:36
  [SPEAKER_02]: We were driving home the other day from the mountains and we noticed a sign and I thought it was like very relevant to this topic because it was a golf course.
• 0:47
  [SPEAKER_02]: Yeah.
• 0:49
  [SPEAKER_02]: I'd never seen that golf course do this before, but after thinking it through, it makes total sense.
• 0:54
  [SPEAKER_02]: So the golf course had a sign that said unlimited golf, two hundred seventy-five dollars a month.
• 0:59
  [SPEAKER_01]: Yep.
• 1:00
  [SPEAKER_02]: And I'm like, son of a gun.
• 1:02
  [SPEAKER_02]: I don't know if I've ever seen a golf course, run a subscription model.
• 1:06
  [SPEAKER_02]: like a membership, you know, to a golf course or like a club like a country club membership versus this is the public can go sign up for a membership at the golf course.
• 1:16
  [SPEAKER_02]: I'm so used to going in and paying T. T. Fee isn't unlimited golf for two hundred seventy dollars a month now.
• 1:23
  [SPEAKER_02]: You know, you gotta remember that probably that price point probably wouldn't fly here in Scottsdale.
• 1:28
  [SPEAKER_02]: This was in the small town of Sholo's Heber somewhere in between there.
• 1:33
  [SPEAKER_02]: You know, it had to be higher because people would use the hell out of that.
• 1:36
  [SPEAKER_02]: And they would be booked up all the time.
• 1:38
  [SPEAKER_01]: But they probably two outings.
• 1:41
  [SPEAKER_02]: Yeah, one, right?
• 1:43
  [SPEAKER_01]: Yeah.
• 1:44
  [SPEAKER_01]: Yeah.
• 1:44
  [SPEAKER_02]: You know, so maybe nine, ninety seven or something like that, you know, but that's irrelevant.
• 1:49
  [SPEAKER_02]: The point I'm trying to make here is like, hey, hey, this is a, you know, a subscription model.
• 1:57
  [SPEAKER_02]: in a, you know, in a different style of industry and I, it made total sense.
• 2:03
  [SPEAKER_02]: So then since I started thinking like, limited bowling memberships, limited like, you know, top golf, do they have an unlimited membership?
• 2:10
  [SPEAKER_02]: Every time it's like, you book a thing and you go and pay that time and it's like, you know, it's interesting that most industries are trying to get over to this subscription model.
• 2:20
  [SPEAKER_02]: And it really,
• 2:23
  [SPEAKER_02]: You know, it was very relevant and prevalent when the subscriptions for the software that used to go to staples and best buy and get the box for office.
• 2:35
  [SPEAKER_02]: And I had a bunch of CDs in there and you owned the software.
• 2:39
  [SPEAKER_02]: Now everything's subscription and it's like, you know, why are they doing that?
• 2:43
  [SPEAKER_02]: Well, it's recurring revenue.
• 2:45
  [SPEAKER_02]: It's predictability.
• 2:46
  [SPEAKER_02]: It's projections.
• 2:48
  [SPEAKER_02]: It's knowing that, you know, the revenue is coming in next month in the month after.
• 2:53
  [SPEAKER_02]: then you start looking at churn and you start looking at, you know, cost per acquisition and client lifetime value.
• 2:57
  [SPEAKER_02]: You know, these things that are kind of just baked into the fitness industry that we take, you know, for granted in a lot of ways.
• 3:04
  [SPEAKER_02]: And, you know, the gyms that focus on recurring revenue growth, which is what we call the delta.
• 3:11
  [SPEAKER_02]: It's a formula we've created that allows us to know whether or not we won the month or not.
• 3:17
  [SPEAKER_02]: And it's month specific.
• 3:19
  [SPEAKER_02]: It's an individual month within itself.
• 3:21
  [SPEAKER_02]: Okay.
• 3:22
  [SPEAKER_02]: This isn't growth over the prior month.
• 3:24
  [SPEAKER_02]: This isn't growth of the prior year.
• 3:26
  [SPEAKER_02]: It's the first to the month to the end last day of the month.
• 3:30
  [SPEAKER_02]: Did we win the month?
• 3:31
  [SPEAKER_02]: And that's how we focus on recurring revenue growth because when you do, when you get your recurring revenue to a point where all bills are paid, your projections for next month, you know what you're bringing in.
• 3:45
  [SPEAKER_02]: Everything changes for your gym.
• 3:47
  [SPEAKER_01]: Yeah.
• 3:47
  [SPEAKER_02]: And that's what all these other industries are trying to get to, recurring revenue, projections and stability.
• 3:55
  [SPEAKER_01]: Yeah.
• 3:56
  [SPEAKER_01]: My favorite aspect of it is the exponential growth factor, right?
• 4:00
  [SPEAKER_01]: Because what we don't think about what we often overlook is the fact that you signed somebody up for an annual agreement in January.
• 4:07
  [SPEAKER_01]: They're paying you in February.
• 4:09
  [SPEAKER_01]: You add people to that group in February.
• 4:13
  [SPEAKER_01]: They're paying you in March, right?
• 4:14
  [SPEAKER_01]: So it's this month's growth, compile stacked on top of next month's growth, on top of next month's growth.
• 4:21
  [SPEAKER_01]: And I think that right there is this strategic advantage of the MRR and the long-term focus, like annual membership focus, that's how we get James to, thirty thousand, forty thousand, fifty thousand every single month
• 4:36
  [SPEAKER_01]: because it's the compounding factor, right?
• 4:39
  [SPEAKER_01]: There's Darren Hardy wrote the compound effect.
• 4:42
  [SPEAKER_01]: I think it's Jeff Olson wrote the slide edge, both very, very similar books that talk about the power of compounding interest, right?
• 4:50
  [SPEAKER_01]: How fast you can get that to stack on top of itself.
• 4:54
  [SPEAKER_01]: Our business model is created around that.
• 4:58
  [SPEAKER_01]: You don't have to go like, and that's the opposite, right?
• 5:01
  [SPEAKER_01]: So the short term low barrier offers or challenges or things that you're selling today that have a short term bracketed expiration date, call it six weeks, whatever it may be, thirty days.
• 5:14
  [SPEAKER_01]: You have to resell that, right?
• 5:15
  [SPEAKER_01]: So that's not a consistent, you're not growing on top of that at once you've collected that revenue.
• 5:20
  [SPEAKER_01]: when you focus on the MRR, every single time you add somebody to that, you're getting it.
• 5:25
  [SPEAKER_01]: So it's almost like double dipping.
• 5:26
  [SPEAKER_01]: It's such a powerful component.
• 5:28
  [SPEAKER_01]: It's the penny, penny doubled every day type of thing.
• 5:31
  [SPEAKER_02]: Not quite, but I would love that to be the case.
• 5:34
  [SPEAKER_02]: But we overlook it as homeowners.
• 5:36
  [SPEAKER_02]: You're like, well, that's just the way it's always been.
• 5:38
  [SPEAKER_02]: But when you start to get greedy and start going down this path of paid-in-folds at discounts and just trying to get the extra cash of front,
• 5:49
  [SPEAKER_02]: you realize really quickly how volatile that is and how
• 5:54
  [SPEAKER_02]: every single month you're on edge.
• 5:56
  [SPEAKER_02]: You don't know what to do.
• 5:57
  [SPEAKER_02]: Like it's all about marketing, marketing, sales, and it's like it's your whole focus of what you really started your gym for, which is to help people have a great product to serve them.
• 6:07
  [SPEAKER_02]: Focus is over.
• 6:08
  [SPEAKER_02]: Like how are we going to get the patent for this month?
• 6:10
  [SPEAKER_01]: Yeah.
• 6:10
  [SPEAKER_02]: How what's the hook?
• 6:11
  [SPEAKER_02]: What's the thing?
• 6:12
  [SPEAKER_02]: Email the list and you lose focus really quickly about the task at hand, which is let's serve these clients.
• 6:19
  [SPEAKER_01]: I would say that I don't know if I would say greedy as much as desperation.
• 6:23
  [SPEAKER_01]: Because if I think about the gym owners that we've spoken with or those that traditionally gravitate back towards that stuff, it's because they don't have the MRR, but they need that revenue today.
• 6:35
  [SPEAKER_01]: And it's constantly like to your point, right?
• 6:38
  [SPEAKER_01]: You're not building the foundation of membership base.
• 6:41
  [SPEAKER_01]: You're grasping at straws for revenue today.
• 6:44
  [SPEAKER_01]: And so I see it as more of a desperation tactic than it is a greedy aspect.
• 6:49
  [SPEAKER_01]: I think it's, I mean, there's probably
• 6:52
  [SPEAKER_01]: There's, there's some of those, you know, greedy components, where you're doing high tickets.
• 6:55
  [SPEAKER_02]: I don't think it's greedy, like you said, I think it's dope.
• 6:57
  [SPEAKER_02]: I mean, there's, yeah, it's dope.
• 7:00
  [SPEAKER_02]: I mean, we're hit off, we closed the deal today.
• 7:03
  [SPEAKER_01]: We closed a big deal.
• 7:04
  [SPEAKER_02]: Five grand, three grand, seven grand, whatever it is.
• 7:08
  [SPEAKER_02]: Um, and you know, here's what's interesting.
• 7:10
  [SPEAKER_02]: We've, you know, well, they know we talk about them on this show.
• 7:13
  [SPEAKER_02]: We've got a iron circle client that's been in and out of our group a couple times.
• 7:17
  [SPEAKER_02]: They're in now and that they're loving and their whole business is changing.
• 7:20
  [SPEAKER_02]: And they were that gem.
• 7:21
  [SPEAKER_02]: They were, they're a million dollar gem.
• 7:24
  [SPEAKER_02]: So like on the on the surface, like off a fantastic million dollar gem.
• 7:29
  [SPEAKER_02]: They would have twenty and thirty thousandless swings a month over.
• 7:32
  [SPEAKER_02]: So like they could do seventy thousand this month, a hundred and then sixty and then eighty two and then fifty eight and then you know what I mean?
• 7:40
  [SPEAKER_02]: It's just like this high low thing.
• 7:44
  [SPEAKER_02]: They made a post in our group last night.
• 7:47
  [SPEAKER_02]: They are, what do they say?
• 7:49
  [SPEAKER_02]: This year we've been consistently well over eighty thousand month for the whole year and it's a totally different level of peace of mind, stable, steady, reliable.
• 7:59
  [SPEAKER_02]: I know it's coming in and it's allowing me to think ahead instead of constantly reacting.
• 8:05
  [SPEAKER_02]: Projection wise, I'm not looking too far out yet, but I can already tell when a much stronger, healthier place than this time last year.
• 8:13
  [SPEAKER_02]: Total game changer with the Delta Focus.
• 8:17
  [SPEAKER_02]: And it's true because sometimes it feels like you're doing the wrong thing.
• 8:22
  [SPEAKER_02]: When you stop selling the paid-in-fals, you stop getting those chunks.
• 8:26
  [SPEAKER_02]: Instead of doing the paid-in-fals, you convert them to an EFT model, like a recurring subscription.
• 8:34
  [SPEAKER_02]: So you're saying no to the fifty-two-hundred-dollar chunk and you're saying yes to the hundred and five-dollar week thing.
• 8:42
  [SPEAKER_02]: And it feels like, oh my god, we're going to take a dip.
• 8:45
  [SPEAKER_02]: But again, stack, stack, stack.
• 8:47
  [SPEAKER_02]: And then before you know it, you take a zoom out view of this thing.
• 8:51
  [SPEAKER_02]: Instead of a hundred and twenty thousand dollar month, and then an eighty, and then a sixty, and then a seventy eight, and then a ninety two, it's eighty five, eighty seven, eighty nine, every single month, and it's ticking up, and the next month is eighty nine, and then it's ninety, ninety two, ninety five.
• 9:07
  [SPEAKER_02]: totally different game.
• 9:08
  [SPEAKER_01]: Yeah, we've talked about it quite a bit on this show.
• 9:10
  [SPEAKER_01]: I think something has to do with the confidence in their product and the client's staying.
• 9:18
  [SPEAKER_01]: It's easy to take that cash grab up front if you don't know if that person's going to be with you in three months, right?
• 9:23
  [SPEAKER_01]: I think part of that's not knowing your numbers, not knowing your average length of stay, not having confidence in the product that can keep somebody
• 9:31
  [SPEAKER_01]: beyond twelve months to fourteen twenty four thirty six months right when you know that that's the average that you can keep somebody play for that that's just great place to be in right much rather have the it at the end of the day it's about the total revenue that you can generate from that one client over the length of time that they're going to be with you right if you can take let's call five hundred bucks a month for thirty six months
• 9:56
  [SPEAKER_01]: or you can get fifty two hundred dollars one time.
• 9:58
  [SPEAKER_01]: And they're gone.
• 9:59
  [SPEAKER_01]: Yeah, three times the value.
• 10:01
  [SPEAKER_01]: Exactly, right?
• 10:02
  [SPEAKER_01]: And so I think the more clear you are on your numbers and the better your product can be, continually deliver that result for the client over the long haul.
• 10:11
  [SPEAKER_01]: And there's a lot to go into it.
• 10:12
  [SPEAKER_01]: We were just talking about the short-term mentality crash result type focus that usually those high ticket programs throw everything in on, right?
• 10:21
  [SPEAKER_01]: Let's get him as much weight loss as possible.
• 10:23
  [SPEAKER_01]: It's all the bells and whistles into this program.
• 10:26
  [SPEAKER_01]: Is that what happens at the end of that?
• 10:28
  [SPEAKER_01]: Are you re-selling them into that?
• 10:29
  [SPEAKER_01]: Can't will they move into a annual EFT model?
• 10:32
  [SPEAKER_01]: If you strip away three-quarters of the things that they were just receiving as part of the high ticket program, can you bake all that stuff into your daily deliverable for every client and just consistently have it happening in your business all the time?
• 10:46
  [SPEAKER_02]: stuff to look at for sure to optimize your delivery of your product your product needs to be the the best in class like period you need to have your main thing like be the best that it could be in a lot of times it's not into your point if you're seeing churn at four or five six months well then yeah it would make a lot of sense to get the year upfront because you're doubling your client life time value
• 11:09
  [SPEAKER_02]: But I'm here to tell you, there's another client out there.
• 11:12
  [SPEAKER_02]: There's another client that stays fifteen years.
• 11:16
  [SPEAKER_02]: This is a different person.
• 11:19
  [SPEAKER_02]: Now, there's a lot that goes into somebody's staying fifteen years.
• 11:24
  [SPEAKER_02]: One of those things is they can't move away from the area and there's some of those things you can't control.
• 11:29
  [SPEAKER_02]: And if you were to look at the age of the people that move versus the ages of the people that don't, and the kind of like, I don't know what the word is, socioeconomic statuses of those clientele.
• 11:41
  [SPEAKER_02]: They're just different people and it's okay.
• 11:44
  [SPEAKER_02]: But it took us a long time to realize who is our best client.
• 11:49
  [SPEAKER_02]: You sometimes early on in your businessmen wouldn't be cool to just train young athletic bodybuilder fitness model girls all day.
• 11:59
  [SPEAKER_02]: But then until you realize that they own stick around and pay the pills over the long term, you make that decision really quick.
• 12:07
  [SPEAKER_02]: And I remember being in that sales seat for years and having people ask about the paid in full, because that's a common thing in most gems.
• 12:15
  [SPEAKER_02]: If we pay in full, did we get a discount?
• 12:18
  [SPEAKER_02]: If we pay in cash, did we get a discount?
• 12:21
  [SPEAKER_02]: It's another topic.
• 12:23
  [SPEAKER_02]: The answer to me is always been no.
• 12:25
  [SPEAKER_02]: We don't want the paid and full with a discount or the discount.
• 12:30
  [SPEAKER_02]: I would rather have the recurring revenue.
• 12:31
  [SPEAKER_02]: And I've told them, I've told people this because hey, you know, like, here's the deal.
• 12:36
  [SPEAKER_02]: I would rather have a built up stable business than not knowing the next month.
• 12:42
  [SPEAKER_02]: And most of the time they're fine.
• 12:44
  [SPEAKER_02]: Like, if they're not going to sign up at your gym and they're going to walk out and go somewhere else, then sell them the paid and full.
• 12:50
  [SPEAKER_02]: Like, it's just what do you why not?
• 12:52
  [SPEAKER_02]: Sure.
• 12:52
  [SPEAKER_02]: But most of the time, they're just looking for a little discount.
• 12:56
  [SPEAKER_02]: If they're already thinking a year out, that's kind of a good thing.
• 12:59
  [SPEAKER_02]: Just be like, hey, no, we're going to put you on an annual membership.
• 13:02
  [SPEAKER_02]: You're going to pay monthly or weekly or whatever it is.
• 13:04
  [SPEAKER_02]: Yeah, and we would never do the discount.
• 13:07
  [SPEAKER_02]: And I remember just, and that was, I mean, think about this.
• 13:09
  [SPEAKER_02]: This had to be a decade ago.
• 13:11
  [SPEAKER_02]: I was saying no to that stuff.
• 13:13
  [SPEAKER_02]: Isn't that weird?
• 13:13
  [SPEAKER_02]: And it's just like, I just knew what I wanted and I had this business.
• 13:16
  [SPEAKER_02]: So something to think about, guys, all these other industries are trying to get what we already have.
• 13:23
  [SPEAKER_02]: Focus on Delta.
• 13:25
  [SPEAKER_02]: There's a link we'll put in the show to us track your Delta.com.
• 13:28
  [SPEAKER_02]: It's a free training.
• 13:30
  [SPEAKER_02]: We give you your sheets and stuff.
• 13:32
  [SPEAKER_02]: It's a little outdated when you get the sheets, probably you'll say, twenty four, twenty three in the Google sheet, but that's irrelevant.
• 13:38
  [SPEAKER_02]: The triggers are all the same.
• 13:40
  [SPEAKER_02]: And you can start tracking this as your main KPI, which is the only KPI care about.
• 13:46
  [SPEAKER_02]: in our business.
• 13:47
  [SPEAKER_02]: If I look at it every month, when I work with Zach, like that's the one, if do we win the month?
• 13:53
  [SPEAKER_02]: Every month is a new month.
• 13:54
  [SPEAKER_02]: because you stack Delta on top of positive Delta on top of positive Delta.
• 13:59
  [SPEAKER_02]: You turn around, my God, you're in a wholly totally different business.
• 14:01
  [SPEAKER_01]: That was the story I was thinking about too, was everybody Tommy, when he was opening the gym.
• 14:10
  [SPEAKER_01]: He could have absolutely floated a bunch of those sales, tried to get as much a cash.
• 14:15
  [SPEAKER_01]: He's what a year and a half into business right now.
• 14:18
  [SPEAKER_01]: And three months, it took him three months to get to a thirty thousand, roughly three months, right?
• 14:24
  [SPEAKER_01]: To get to a thirty thousand monthly recurring level that Jim owners that we know had spent ten, fifteen, twenty years never getting to because of what they're focused on, how they're going about delivering that offer and what they're selling clients into.
• 14:43
  [SPEAKER_01]: to your point earlier, every agency's pushing cash grabs right now, there's so much of it that I think is the opposite of the way to grow a true stable business that we always say clarity sets in, right?
• 14:58
  [SPEAKER_01]: When your base operating expenses are covered by your monthly recurring, you have clarity on your business,
• 15:04
  [SPEAKER_01]: That should be the first mission at hand.
• 15:07
  [SPEAKER_02]: First mission, guys.
• 15:08
  [SPEAKER_02]: If you're not there, if you go and look at your expenses in your negative, very month, like your recurring revenue is in, you know, if you're using my body or what we recommend as well in this living to kind of like track all of your membership revenue, go look at the number and go look at your P&Ls.
• 15:26
  [SPEAKER_02]: If your month recurring is not as high as your expenses,
• 15:31
  [SPEAKER_02]: Whether or not you're profitable because there's two different things recurring revenue against base operating expenses that's that's the equalizer when it's a it's twenty grand expenses and if you're at eighteen over here and recurring revenue get it to twenty when you get it to twenty that's your only focus when you get it to twenty take a deep breath and get it to thirty
• 15:51
  [SPEAKER_02]: I would be surprised if that twenty in expenses goes up to thirty.
• 15:54
  [SPEAKER_02]: It might go to twenty three because you got a new payroll or more hours, but you can now get your occurring revenue to forty.
• 16:02
  [SPEAKER_02]: I bet you that twenty three goes to twenty seven.
• 16:05
  [SPEAKER_02]: Okay, so now you're thirteen.
• 16:06
  [SPEAKER_02]: You know, and then gets the fifteen is probably thirty.
• 16:08
  [SPEAKER_01]: Yeah, twenty.
• 16:10
  [SPEAKER_02]: Yeah, like just for every recurring membership you add to your business does not add expense.
• 16:15
  [SPEAKER_02]: Correct.
• 16:16
  [SPEAKER_02]: If you do it the right way, the right model, I guess.
• 16:18
  [SPEAKER_01]: Yeah, that's a whole other kind of worms.
• 16:20
  [SPEAKER_01]: But uh, so many things to teach.
• 16:24
  [SPEAKER_02]: Anyways, guys, it hit me with the golf membership.
• 16:27
  [SPEAKER_02]: It makes total sense for golf industry to go this way.
• 16:31
  [SPEAKER_02]: We already have that advantage.
• 16:32
  [SPEAKER_02]: Take advantage of it.
• 16:33
  [SPEAKER_02]: Don't squander it by doing painful discounts, challenges, things like that.
• 16:38
  [SPEAKER_02]: Get the long-term client that stays seven, eight, ten, twelve, fifteen years.
• 16:42
  [SPEAKER_02]: The life will change.
• 16:43
  [SPEAKER_02]: Hopefully that helps you guys.
• 16:44
  [SPEAKER_02]: That's it for this episode.
• 16:45
  [SPEAKER_02]: Until next time, keep changing lives.
• 16:47
  [SPEAKER_02]: We'll see you on the next show.
• 16:48
  [SPEAKER_02]: Bye.
• 16:49
  [SPEAKER_02]: Alright, thanks for listening to another episode of The Built Grow podcast.
• 16:52
  [SPEAKER_02]: If you want more help growing your business, join our free Facebook group, profit accelerator, hoping training gyms grow to thirty thousand dollars a month and beyond.
• 17:02
  [SPEAKER_02]: We'd love to see you there.
• 17:03
  [SPEAKER_02]: Go check out the show notes for the link and keep building something great and we'll see you in the next episode.