[00:00:00] Hello, my friends, before I dive into today’s episode and tell you what you’re in for, I want to make a really special announcement, which is we are just now opening up spots to our very first unicorn society retreat in 2024. As you know, our unicorn society members have a few retreats per year and we open up just a few spots to folks who are muggles who are not members of unicorn society, but would like to join our retreat.
So let me tell you about it. The first retreat we’re doing is in Austin, Texas. It’s Saturday, March 2nd and Sunday, March 3rd, and the focus is going to be on marketing and sales. If you come to this retreat, you’re going to learn how to create a steady stream of high quality leads to effortlessly convert those prospects.
To have your month over month revenue grow. Plus you’re going to learn how to really overall how to generate more income, more impact, and get more freedom as a gym owner. I think the added benefit to these retreats is that you get to connect with like minded community of gym owners and all of us business unicorns coaches who are going to be there.
This retreat is extra [00:01:00] special because we have a special guest star, uh, social media, superhero, Jordan Syed is going to be there to share his wisdom and knowledge with us. So. Again, it’s an awesome Texas Saturday, March 2nd and March 3rd, and we have 10 spots for non unicorn study members. And we have early bird pricing from December 26th through January 14th.
So for the best possible rate, you got to get to us before January 14th. Keith, I’m positive that those 10 spots will go by then. So if you want to learn more, DM us on Instagram, our Instagram, a link is down below in the show notes, shoot us a DM and let us know you’re interested in coming to Austin.
We’ll give you even more details and make sure that we reserve you a spot. I hope to see you there. Now onto today’s episode. Today’s episode is actually going to be an episode I did on another podcast. So some of you might already listen to our friends podcast, which is called gym world worldwide, and it’s our friends, Mateo Lopez and John Franklin from over at Kilo.
They have a fantastic podcast [00:02:00] that’s specifically for gym owners. Like all of you. Talking about industry trends, news in the industry. And I joined their podcast for an episode called what sets the most profitable gyms apart, where we go through our 2023 gym owner benchmarking report and talk about all the similarities between the top 10 highest performing performing gyms.
On our report. So if you haven’t gotten to that report yet, a link to it is down below, but listen to this episode. If you want to learn how you stack up against the highest performing gyms, we surveyed. Enjoy this episode and hope to see you in Austin.
Welcome to the business for unicorns podcast, where we help gym owners unleash the full potential of their business. I’m your host, Michael Keeler. Join me each week for actionable advice, expert insights, and the inside scoop on what it really takes to level up your gym, [00:03:00] get ready to unlock your potential and become a real unicorn in the fitness industry.
We make sure that you, no one leaves a class without making a new friend. There’s more Americans. I think in my boat. Then in the boat of people who like think of themselves and want to be an athlete. I think sometimes we as entrepreneurs and marketers, I think we give people too much credit for thinking that they know what they want.
Hello and welcome to gym world worldwide. Today I’m joined. With my friend, Mateo. How are you, Mateo? Great. Do you remember Mark Fisher, who once upon a time would come on this show and talk to us about his musings from the fitness business? I vaguely remember him. Why? Did you know he has a partner? I actually did know that, but I can keep going with the bit.
No! Really? Who? In every partnership, [00:04:00] there is, there is the partner who does all the work, and then there’s the asshole who takes all the credit, right? Many great partnerships are like that. Steve Jobs, Wozniak, Mateo Lopez, John Franklin, Mark Fisher, and then we have his workhorse, the man behind the scenes getting things done, Michael Keeler.
How are you today? Hello, friends. You also forgot that I’m the more handsome one. But I’m happy to add that on your behalf. Yeah. No, it’s true. We’ll make it a quick edit. We’ll make a quick edit to that. Yeah. And you got, and you got the glasses. You can only, you make the pod look nice with this symmetrical line.
That’s true. This is like a Warby Parker commercial across the screen. Yes. And so we invited you. On here today, not to talk about Mark Fisher fitness, which we’ve talked about a few times before we invited you on today because you just released a benchmark report where you surveyed a hundred gym owners.
Were they primarily [00:05:00] your clients, all your clients, like what a mix? What was the breakdown? Um, majority, I think it was about 65 percent our clients. Okay, great. And by about, exactly 60, I was going to say, I saw the like 65 to 70 percent of people use the mentor. So I just assume that was, yeah, exactly. So it’s definitely skewed to our community, but everyone that did it had been at least followers of us.
These are people we pulled from PR email list. Should we clarify real quick for people who have just. Maybe just tuning in. Who are your clients? Why do you have clients? What’s your thing? Great question, Matteo. What do you mean? Start with context? How dare you? Yeah. What are you all about? What’s your deal?
Other than Mark and I being business partners in Mark Fisher Fitness, we’re also business partners in Business Free Unicorns, which is a coaching group for gym owners. And so the list I’m talking about is a list of people who own gyms, and there are some probably stray trainers on our list as well. But the clients we work with are people who own specifically strength and conditioning gyms for the most part, [00:06:00] which is, I’m sure, as we’ll talk about, which is a big difference between a lot of other coaching groups.
And certainly the True Brains report is representative of a lot of CrossFits, and we almost work with zero CrossFits. So we primarily work with boutique training gyms. I can’t think of a single one in your group. No, I don’t think I can either. That’s to be fair. I don’t, this sounds too shady. I don’t mean to sound this for this to sound shady.
I know some that used to be. Like, we have a bunch of people in the group who, at one point, were CrossFits. Is that a fire? And then you killed them.
Is that shots fired? And you, they’re, and they’re dead now. You murdered them. You put them out of business. Yeah. Uh. You put them out of their misery, really. They were limping along and you just, you know what, let’s just put you out the back. I supported them in the transformation that they chose to make is what happened.
Ah. Okay, that makes more sense. Yeah. You guys tend to. Steer towards like small groups, semi private, there’s four to eight people running in a session, higher session rate, right? So [00:07:00] when we talk, that’s going to be like your bread and butter. Exactly. Even this report, I think 88 percent of people who did this report, their primary, primary driver of income is small group personal training, which is somewhere in that three to eight people range.
And when I see like strength and conditioning gym, I feel like people running that exact model. Those are the gym owners who identify with that model. And I do think there are other masterminds that cater to that group. What I think is unique about yours is that. You have a lot of like sports performance gyms because you have Pete Dupuis, who’s Eric Cressey’s partner as your figurehead.
And I don’t know what percentage of that group is guys running baseball, hockey, lacrosse gyms, like these specialty sports performance centers. It’s a good question. I actually don’t know the exact number off the top of my head, but if I had to take a informed guess, I would say we’re probably in the. 20 percent range.
We probably have a 20 percent of our members at this point who are [00:08:00] primarily consider themselves sports performance gyms. Um, and I would say a good majority of them both do sports performance for youth athletes and adult training. There’s very few that we work with that are just youth athletes training, which is similar to Cressy.
Cressy both had books without youth athletes and adult athletes. All right. So let’s pull up the actual report and get into some of this. Some of these numbers here. So you, I think like small group personal training is this model where you basically charge in between large group. And the idea behind it is it allows you to, it allows you to scale up a little faster without having to get 100, 200, 300 members, which is difficult to do and maintain.
Exactly. How do you price it? How do you tell your gyms to price? Yeah. So I [00:09:00] think what was reeled in this report, or just really reinforced this report is that really the rates per session are Kind of double as you scale up personalization, right? So we’re talking about large group classes, which for most of our members and people who participate in the survey, we’re talking about groups of 15 or more, sometimes even 20 or more is large group.
And that average rate per session is around 27 bucks. But then the minute you go down, scale down to three to eight people per session, it almost doubles to like almost 50 bucks. And then if you continue scaling up to just one on one personal training, which a lot of our, a lot of people who’ve just been in the survey still do, it’s usually a secondary driver of revenue, but they still do it, then it doubles to over 80.
And so we saw like a clear kind of doubling as personalization continues and you’re right, you need way less clients. To do small group personal training, then you do large group classes. And so that’s part of the value is that simplicity can help drive profitability. As we all know, from [00:10:00] lots of experience, the number one enemy of profitability is complexity.
And so having less people means you can do things simpler and faster. But if you’re a gym owner, you’re building your business plan. You say, okay, personal training, pretty easy to calculate. Like it’s eight, like we’re looking at the bottom here. It’s 80 bucks, right? So every session I do is 80 bucks. Now you look at a small group.
It’s about 50, a 50 session rate. So if you’ve got six people in there, that’s 300, right? So you can see how that’s better now, large group. This is an expensive session, right? This is higher than I would’ve expected, but Yeah, I was gonna say that too. So it’s 30 bucks, and so if you can get 15 people in there, what you were saying, that’s $450 for the session.
Yeah. So the large group has the potential to be more profitable. The challenge for most places are they just, they can’t pack a class consistently all day long. They just can’t, they can’t get 15, 20 people in there consistently the same way they can get [00:11:00] six. So that’s what I’ve been harping on pretty consistently in the newsletters.
If you look at all, I’m going to switch back and forth. So two brain business just put out their state of the industry report and we pull data from Wattify, Kilo, PushPress, TeamUp. And so we have a pretty large, pretty large dataset as well as surveying all our clients as well. And so if you look at this information that, that Wattify provided, you can see that most of these gyms.
Sorry, wrong slide. Most of these gyms, their group classes are under seven people. So most of the group classes are between four and five and then push press, they said 6. 9 was their number. So then if you do that math of Okay, if we have 6 people at 28 a class, that’s 168 for a session hour. If you can get, let’s say if you moved to semi private and was just doing, and you were just doing 4, that’s uh, 4 at 50 a session, [00:12:00] that’s 200.
So then you’re actually making more in semi private and it’s a lot easier to get four people at the same time paying 50 bucks than it is to consistently get eight, nine, 10 people paying 28 bucks. And so that’s why this model seems to work really well. Yeah. I think the other thing that compounds that as well, John, is that for group classes, often the way people pay trainers is a flat rate per class.
Right. And the way people often pay trainers for small group personal training is per person in the room. And so the amount you’re paying your trainer scales with how busy those sessions are in the same, in a way that classes tend to not. And certainly there are some places who pay trainers, um, for classes in a way that scales, but most don’t.
Most it’s a flat rate and So that’s another thing that makes classes harder. So a lot of people are trying to run both, especially in the CrossFit space. We see people wanting to move to this model. It’s very difficult to run both. You may have an interesting perspective because you guys made millions of dollars on a front end offer that was large [00:13:00] group.
And managed to sell it in the small group. Maybe you can run through that. Yeah. MFF. We’ve always done both. We used to call it semi private training instead of small group, but I have almost everyone’s abandoning the semi private language and moving to small group, but we’ve always done it since day one of Mark Fisher fitness, we’ve done both.
And I will say that we are, MFF is a unicorn in many ways. And I think this is probably another reason why it is we’re in a city of millions of people, and we tapped into a community that was a very robust community we, for those of you who don’t know, MFF has always been strongly associated with performers and the Broadway community and which is a thriving group of thousands of people in midtown Manhattan, who are looking for a place to To have a second home, have a fitness home.
And so that’s, I think I have to be honest and say like our circumstances are part of the reason we could sell a lot of group classes, a lot of actors, performers, and creative types who couldn’t afford what gyms were offering in New York city and MFF offered not a cheap option, but an option that fit their budget and their needs and their flexibility, which was group classes.
And so I think that was part of it. The other thing that I think has kept [00:14:00] people around in classes for a long time is that we really try and make classes as personal experience. As personal training. And you all know this from Stopping by MFF, and I’m sure Mark has mentioned this. We make sure that you, no one leaves a class without making a new friend.
And that’s a big part of what makes people come back again and again to classes, is yes, they’re getting results. But aside from results, the number two thing they care about is like connection. Belonging. They want a community. And that even showed up in our report, that people say that their unique value proposition as a gym is their community.
And that’s been true for MFF since day one. So I think if you’re going to do group classes, you’ve got to make sure people are getting results, and you have decent programming in those classes, and that they’re making friends. I thought that was interesting on page 18, I know we’re skipping ahead, but owners from your survey said was community was the thing that keeps clients coming back.
And I thought it was interesting. No one said results, which I think was interesting. The second thing they said, it was close to results. The second thing they said was customized programming. [00:15:00] Like individualized, maybe is a version of results, but yeah, it’s, they didn’t say that. And I think that’s interesting too, because a lot of times marketing, this is something we said a lot often too, it was like, community is great and people stay for it, but your marketing, it’s hard to market community, right?
You want to market results first and then they’ll stay because of the community. But yeah, it’s interesting that everyone thinks that the most valuable asset is the community piece, which I think is. I actually hate, I hate when gym owners try and sell their community. It’s, we’re in software now, Mateo is a sass kingpin, I don’t know if you knew this.
Um, but like in software, everyone’s, we’re an all in one. We make running a gym easy. Our software is so intuitive. We give you the right metrics and it’s, it’s this fluff. And if everyone’s saying it, it doesn’t really mean anything, right? It’s very hard to stand out. And so you guys. did have a cool community.
You had to go there [00:16:00] to experience it. But like, how do you tell the, how do you actually stand? Okay. Let’s say for example, you, your community is a special snowflake, a one of one, which probably isn’t, but like, how do you like position yourself? Or, or what else can you tell a gym owner to do to stand out on the internet?
It’s a great question. I’ll say this. That the, we actually did and still do sell community, but here’s why is that’s part of the results our avatar is looking for. So our avatar is basically me. It’s a gay male in his 30s or 40s living in New York City who has maybe a bad taste in his mouth from growing up and being, feeling rejected from heteronormative fitness spaces.
Uh, and is a little nervous to even step foot in a gym. Maybe very nervous to step foot in a gym, and maybe I haven’t in Decades because I’m so nervous. And so for us, that sense of belonging, that sense of finding a fitness home, you love, which is exactly the headline on our website [00:17:00] right now, that’s part of the result that is at the top of their mind.
Sure. They want to like our avatar wants to actually lose some weight and feel sexy and hot to have sex on fire Island every summer, right? But also they want a place where they can feel comfortable being themselves. And we also have a big LGBTQIA plus community at MFF. They also care about having a place where they can feel like this is my fitness home and I belong here.
And we both know, you know, growing up, I’ll say my mom worked in gyms growing up. She worked in Gold’s gyms growing up. Those were not places I ever felt comfortable going. I was like, come hang out with me at work. I’d be like a hard pass mom. Like that space just makes me feel. So uncomfortable. And I think that’s a lot of experience of, of queer folks growing up or just folks who weren’t bodybuilders felt uncomfortable going to a lot of gyms.
So for us, I think, and this is true for a lot of gyms that might be listening. You also can sell your community, even though John might not like it. If your avatar. Is someone [00:18:00] who really struggles with a sense of feeling like they belong anywhere in a fitness space. That’s part of the result they’re looking for.
You’ll help them lose the weight or get stronger, but you have to first help them feel comfortable walking in the damn door. So even if you’re not going to sell how cool your community is, you’ve got to sell inclusion. You’ve got to sell them feeling welcomed. I think that’s part of the UVP. If your avatar is that, right?
If your avatar is people who already love fitness, that doesn’t matter as much. So I agree with you. A hundred percent that like you guys can sell community, right? You’re the, you are the go to spot. If you are someone on Broadway and you want to work out with other people on Broadway. And we’ve talked about other examples of people who do have like unique positioning and therefore unique community.
Like everybody in LA is one. Mateo has brought up before, but yes, Cassie day. Cassie Day, who’s one of your clients, has like very strong positioning to represent underrepresented bodies in fitness. And [00:19:00] then Lindsey Van Shoik, who’s someone we’d had on the podcast, she’s dealing with women going through menopause.
And so that’s obviously going to have a very strong pull for those type of people because the avatar so clearly defined. But what if you’re like a guy like. James Pratt or Dan Trink, these guys who run very successful gyms, but their avatar is like someone who just wants to look good naked, which is probably something that more of the rest of the gym owners listening can relate to.
I think that’s huge. And I think that’s, but still those folks, I think the thing that they want from community is a place where they can feel challenged, right? I think, and again, I’ve never belonged to a gym like that. So I don’t have any firsthand experience, but from the clients I’ve worked with and the stories I hear a lot of folks that are sports performance oriented.
just appeal to kind of a gen pop audience that are not in like a New York city, very queer space, right? They want a community where they feel like they can go and be challenged and pushed, but in a friendly, competitive way, like they want some friendly competition, [00:20:00] right? Which is why there’s leaderboards and why there’s 30 day challenges and why there’s right.
They want a community where who’s going to challenge me to be my best frigging self, who’s going to push me to get hit that next PR, right? So they still care about community, but they care about different version of community. They’re less worried about feeling welcome. They’re walking in with their chest puffed out on day one.
They want someplace who’s going to push me. And I think that’s also useful to sell this community. But I’ll also say the majority of Americans have never had a gym membership. The vast majority of the people out there that we have to sell to are people who are probably closer to the MFF avatar than the one I just mentioned.
There’s a reason why CrossFits call clients athletes. They’re attracting people who are comfortable thinking of themselves as a performance driven athlete. I’m someone who, even though I was a dancer, I’ve never really resonated with that label, right? I never thought about myself or even still would think of myself as an athlete.
That’s not going to resonate with me. And there’s more Americans, I think, in my boat. [00:21:00] Then in the boat of people who like think of themselves and want to be an athlete. So I think all of this is, as we’re pointing out repeatedly here is driven by who’s your avatar, who are the people you want to attract.
And I think I want to encourage more listeners to go attract general population Americans who’ve never had a gym membership. There’s a lot more of them than the other kind. Yes, I think that’s true. But then on the flip side, those people, because they’ve never been in the gym, don’t even know that it’s, they can know it’s a scary place, but don’t even know a good gym community from a bad gym community.
Yeah, I think it does depend, right? If you’re going after people who weight loss is their goal, you’re going to, you’re going to, you’re going to start with weight loss, right? You’re going to start with, these are the results, right? You’re going to get, go from point A to point B. This is our front end offer about that.
Come on in. If that’s what you’re really good at doing, if you’re really good at getting people skinny in a short amount of time, that’s the thing you lead with. But then yes, to your point, if you’re really good at creating a space that makes people feel a certain way [00:22:00] and want to come back to because they never felt that before at a gym or working out, then yeah, that’s your thing.
You can lean into that a bit more. So yeah, I think to your point though, it just depends on what you’re really good at and who you’re really good at servicing. I’ll say one more thing about this is that I think sometimes we as entrepreneurs and marketers, I think we give people too much credit for thinking that they know what they want.
I think a lot of consumers don’t actually sign up for the gym or for the whatever the hell, because they have a very specific goal in mind. Sure. Sometimes I do. And if you ask them during a strategy session, they’ll come up with something, but a lot of people. As we, as all the consumer psychology research shows, they buy based on a feeling they buy based on a feeling, right?
And part of the, part of your marketing is giving them a feeling that they could belong there. They can see themselves there. They can fit in there. And sometimes it’s driven by a goal, but sometimes they don’t fucking know what they want. And so they’re [00:23:00] responding to an emotion that they get from interacting with your brand.
And that’s not always driven by very clear. I want to lose 15 pounds. So I just want to add that to the equation. I think that’s a really good point. So what I’m hearing you say is it’s vibes. Vibes. It’s all vibes. That’s it. It’s just vibes. That’s it. Great. Sometimes it is vibes. That’s, I think that’s the headline is sometimes it’s just vibes.
Sometimes it’s vibes. I like that. I love it. And I’m, I don’t want to, I don’t want to get hate from your group. They probably all have the best, most unique community. It’s just hard to convey that to someone who’s not in it. And I 100 be clear, I’m agreeing with you, right? I think that’s probably not for most of them, their first and most important marketing message always.
And depending on your avatar, it should be on the list. It should be part of the marketing mix at some point, if your avatar is someone who cares about belonging. Something else I thought was interesting from that section was, [00:24:00] I think it was on page, uh, 17, was friendliness. Everyone thought that friendliness was the thing that they were, like, Best at and what kept people coming back.
How was that measured? Was it just based on all the reviews? Everyone says I’m really friendly. So that’s the thing I’m best at. Yeah. Like I’ll call self reported surveys, like all self reported data. They all had different interpretations of this. The question was really like, what keeps your clients coming back?
What’s your impression of why your clients come back and back again? And my interpretation of this, and they said overwhelmingly 93 percent said friendliness is one of the most important metrics. My interpretation of this is that. Retention is often driven by relationships. And we see this time and time again.
It’s a reason why people are afraid to do a one on one personal training only because the minute the trainer leaves, the clients are going with them, right? There’s such a strong bond that gets formed between trainer and clients that is both valuable for retention. [00:25:00] And a liability when those trainers leave.
And so I think they’re, that’s part of what I’m assuming they’re responding to here is that the relationship our clients form with our team is key to part of what makes them stay and why they keep coming and why they’re talking about us is because the bond they have with Mateo, and I’m sure that was true.
When Mateo was on the floor, people came back because they just love that hour they spent with Mateo. And so I think that’s how I’m interpreting this. Mateo was there every hour. Just to be clear, so it’s whatever hour they came, they had that bond with Matteo. Every hour. I do think you have, because Kilo sponsors multiple business groups and masterminds like this, and We’re poly when it comes to business gurus and masterminds.
And so, I do think it, you’re, you have one of the friendliest and most welcoming ones, which may just be like That’s the type of, the type of people who will be attracted to the content you and Mark put out. Sure. Yeah. I think, I think the [00:26:00] friendliness part is useful. And I want to make sure that friendliness doesn’t get turned into some sort of like, Pollyanna idea of just people smiling at each other.
Because the way I think this really Generates results is we could replace that with connection, right? The thing that drives people to stay is they feel connected to other people. It’s not just that we have a friendly relationship. It’s that I feel like you care about me a little bit. Like maybe we’re actually friends.
Maybe you notice when I’m not there. And my text me like I didn’t see at the gym today. Maybe you cheer me on when I hit a PR and you support me when I’m feeling like shit, right? Like we have a connection that keeps me coming back and it’s not just the connection to the trainers, which I think is critical, but it’s the connection to other people.
And that’s something that’s true. Small tangent, and you can certainly edit this out if you want me to say it, but I was just digging in some research on happiness and you all know the long term Harvard study on happiness, the longest, longest study on the planet on happiness and human wellbeing. And one of the things that they were, they, one of the takeaways from this [00:27:00] research has been going on since the thirties was the things that make people happy aside from a healthy body are healthy relationships.
Not rocket science, not something like, oh, wow, I never thought of that before, but it’s healthy relationships. So it’s not surprising to me that in a business that’s driven by people, it’s a people business, that the relationships they form are part of what makes people come back, right? It’s that someone’s there that cares about me, that knows my name, that’s looking out for me.
That’s part of what drives a connection. This was true when I worked in hospitality, too. People came back to the, I worked at the Four Seasons Hotels. People came back to the Four Seasons Hotels. Yes, it had nice bedding, had nice china. But they came back because they connected with the staff. And when I worked in hotels, the staff of those hotels was some of the longest running.
People in jobs these days, like their people have been there for 20, 30, 40 years and guests have been coming back year after year to come see that doorman, to come talk to that server to come because they know that the maitre d knows our whole family [00:28:00] by name. So there’s something about that is in short supply these days in our very modern world and gyms do really well as our new community centers.
Yeah, there’s two. There’s. The friendliness, the friendliness part, I think there’s concrete actions for this too. John just did an interview with Curtis Christofferson, is that the last name? And one of the things he said was, when someone walks in, like everyone greets the person. It’s like everyone in the room just like greets that person as they walk in.
I’m dating myself with a cheers reference. That’s what I’m picturing. He mentioned cheers in the episode. And then I think also at one of your more recent meetups, someone, maybe it was when someone was talking about Repeating a prospect’s name like five times in the first moment of meeting them. One, so you remember the name, but also it helps to reinforce that like bond if you’re just hearing your name over and over.
Oh, I belong here. So yeah, these are things that I think people can forget when they’re getting lost in, lost in [00:29:00] the sauce of gym ownership. But yeah, it’s the, it’s going back to the basics, right? It’s like, yeah. Greet people by name, make sure they’re like addressed, especially if you’re doing large group classes at least once during the class.
Right. And, and yeah, just greeting people. It can go a long way. That’s it. And MFF every group class and smoker personal training, we do, we play a kind of a name game to start the day before we do a single exercise, we connect as people in a room and our standard for even group classes at the trainer says everyone’s name in the room, at least five times during the hour.
Every person, we have up to 15 people in a room. That’s a lot of saying someone’s name. But it’s because we put a lot of value on exactly that. That was like the hardest part of the Jimin game, is trying to keep track of 200 names at any given time. Yeah. For sure. Speaking of number of members, right? I thought it was really interesting how in, in your survey respondents, like most of these gyms had less than a hundred members, which again, and this is something Chris spoke a lot about when [00:30:00] we had him on talking about, say the industry is just, yeah, a lot of your gyms are generating more revenue and the gym owners are taking home more than a lot of the gyms that we work with, particularly in the CrossFit space.
And most people had less than a hundred members. I guess one. It’s easier to remember names when you have less people to remember. You can maintain more in depth relationships, interpersonal relationships with those less people to interact with. And then yeah, you can also make more money, apparently, which I think is we’ve it’s been overarching thing in the last.
Years worth of episodes, but I think it’s just putting a finer point on it. ’cause now there’s data and data. It really was, even like, I, I listed this as kind of, one of the surprises for me in the, in this data is we looked at the kind of top 10% of performing gyms by profit. Like who was the most profitable of these 117 gyms?
And the surprise for me was the ones who most profitable were smaller. They had less clients, less revenue. They were charging higher rates. They had better [00:31:00] margins because of that. They paid their staff a little bit less on average and they crushed the retention because they could really take care of the people that that were there.
And so I was surprised by that. I expected some of the bigger players to be the ones that were really crushing in the most profitable. But in terms of actual profit margin, um, I have to go back and look at the numbers for the kind of gross Profit like in terms of dollars, but in terms of percentage, the margins were way higher with some of the smaller places that kind of kept things lean and simple, which is easier said than done.
It makes sense. If you look at, if we switch back over to the two brain report, we asked gym owners what they were paying for leads. And that number’s gone up. Like you guys were huge beneficiaries. You were operating during the, the Facebook ad booms and running ads pretty hard. Like we were, that’s actually how part of the reason Mark and I hit it off.
Initially, it’s how we look at from 2022 to 2023, you went from 27 average lead to 4591. [00:32:00] So Every time you lose one of those, if you have that group class, if you have that revolving door, if you have churn above 5 percent a month, it just becomes more and more expensive to backfill those memberships. Who are these guys who had over 15%?
Monthly attrition, you’ve got to talk to them, make sure they’re okay. You know what? Uh, some of that is driven by, and this is something we’re learning to adapt to. And maybe I’ll do a better job on the survey next time is a lot of sports performance folks are very seasonal. So they have certain times of the year where.
Half the gym leaves and then half it comes back three, three months later, or as I’m not a big sports person, but I’m learning to more about this part of the world for my job is that different sports obviously have different cycles. So they’ll just cycle through whole groups of people. And because of that’s where I get, I bet that number comes from is some of their attrition looks very high when you just do a plain average.
So we’re trying to find new and creative ways to, for them to track their metrics, considering they [00:33:00] don’t, doesn’t work for them to do a regular weekly, monthly, quarterly. I imagine, too, if these people focus on youth athletics, too, like at a certain point they just age out. They go away. So they’re gone forever.
Yeah, that, I can imagine that cohort can make the, the data a little screwy. It does. It’s definitely been a learning curve for us and we’re still wrapping arms around what’s the best tools for them because it’s just they defy a lot of the most common ways we think about metrics. Let’s talk tools because that was one of the most jarring.
Stats and the entire thing. So you asked them what the revenue was. The average revenue across the system was about 30, 000 a month. And seeing some of these gyms here that have 600 plus members, I’m guessing there’s a couple of outliers that push that number a little higher, but looking at your management software question, I was surprised that like almost 15 percent of Okay.
You’re of the people that responded weren’t [00:34:00] running any type of like actual management software. So Google 4 percent none 5 percent square 5 percent Yeah, I was gonna ask what are the names phone numbers and addresses of those gyms that are not using Software or billing management or scheduling. If you could give me those, that would be really helpful.
I will personally connect you. Yeah, I was surprised. I mean, there’s a few things that were surprising. That was definitely one of them. I was like, what are you doing? Instead of, unfortunately, I didn’t ask the question. I was like, you’re not doing any of these. What the fuck are you doing? But I wish I would have.
I don’t know. I imagine some of them are just using some sort of credit card processor. And they’re just literally processing credit cards once a month, but I don’t know why, and I’m pretty sure it’s none of the 65 percent that work with us as Unicorn Society members, because I would have already yelled to them for that.
If you’re listening, if you’re listening, if you’re one of the 15 percent Mateo at use kilo. com, hit him up [00:35:00] anytime. Let me help you. Let me help you with that. Yeah, please help you. He can be of service. So we talked about retention. We talked about people leaving and with a larger model, you have to find more bodies.
One of the things that I thought was interesting was, uh, so few of your. Clients ran ads percent, and they’re only getting about 18 leads a month. But is it just that everyone is like a referral and word of mouth or just toasty warm leads, they get 18 and sell 18 or something. What, uh, how does that work?
I mean, you, you’re, you’re crystal ball set at all. That’s it. We see with so many of them because they, you know, because they don’t need that many, cause there’d be many of them are around a hundred members. They don’t have a huge churn with their, with their, uh, attrition being only 3%. Alright, so it’s not a huge turn.
They’re getting super warm leads, mostly word of mouth referrals. Um, some like friend of a friend, texting through social [00:36:00] media kind of stuff. So a lot of them are not consistently running paid ads. I know this was also in the Two Brain Support and the big reasons for that are, are one, they don’t feel like they need it.
And, and the two is they, they fear that they don’t know how. So they don’t know how to get started. Or they’ve tried and gotten burned. I know that I have a lot of those stories from Unicorn Society members where I did. I hired a marketing person. I paid all this money for an agency and this and that, and it just went belly up.
We’ve had that experience at MFF. Multiple times. And so I get hesitation for digital ads and given how much that those costs have gone up, the complexity of those platforms and algorithms have gotten more intense that like I get a hesitation. And honestly, I think in this might be controversial. I’ll reserve the right to take this back in five years.
If we, if people are still hearing this podcast, but I think there are more gyms that should stop doing digital advertising. I think there are more gyms that should do more grassroots community, organizing business to business partnerships, et cetera, [00:37:00] then digital hours. I think there’s some gym owners out there that are going to be very happy running their a hundred person gym are never going to be stoked to learn how to run Facebook, Google ads, and I remember the budget to hire someone else to do it and they should just do other shit.
They should just find people through other means, get really good referrals, get really good at bringing back past members, get really good at being the mayor of your town, shaking hands and kissing babies, being in every farmer’s market and 5k that you can get your hands on. And for some gym owners, that’ll be enough.
You don’t ever have to touch a Google ad. And for others, you should learn how to do it. But there’s some subset out there that I really, truly think belongs in that lane. We, referrals always felt like one of those things that we should be doing more of like referral marketing, but like the juice never felt worth the squeeze.
And again, the environment was very different back then. So it may be different now, but like, how do you get more referrals? What, what, you got some secret tips for us? How do I drive some toasty warm leads into my business? Yeah. We have a whole playbook for driving referrals for Unicorn [00:38:00] Study members.
Come join and I’ll give you the whole playbook. Wow. But just if it is, is that, look at me, we can all sell. Always sell on this podcast, if you’re going to, but here’s the thing is that I’ll use a how dare, I’m going to use a fishing analogy, right? That I’m catching different fish requires different bait.
And, and the same thing is true with referrals. The thing that motivates me to go tell a friend about my gym is going to be different than what motivates you. And some people are motivated by money. Some people are motivated by recognition, some people are motivated by fun. And so our, the most important part of referrals is to use different bait.
If you’re always using the same bait, if your referral incentive is refer a friend and you both get 50, you’re losing all the people who don’t give a shit about your 50. If your referral is always, if your referral incentive is refer three friends and we put your name up on this board and celebrate you, you’re going to lose all the people who don’t want their face up on a damn board.
Like I could keep going, but no matter what the strategy is, the most important thing about referrals is that you have a strategy. [00:39:00] You pick a way that you’re asking for referrals and you’re rotating those strategies over time. So it’s not just the same old static, boring, evergreen offer that has just become like wallpaper because they’ve heard you talk about it for the last three years.
Like you have to, as you all know, the most exciting language and marketing is new. Brand new, never before first time. And the same thing is true with your referral offers. It’s gotta feel like this is a brand new opportunity for me. Yeah, that’s a great tip. I wish you had told me that years ago, because I think to John’s point, it was.
It’s tricky for us, it was like, Hey, you’re doing great at the gym. You’re enjoying it. Yeah. I’m loving it. Oh, do you have a friend? Oh no. I don’t want any of my friends to know about this. This is like my sacred space. Please. No. And so I was like, Oh, I guess I can’t do referrals anymore. Better just go keep doing Facebook ads and then you just give up.
But yeah, I think that’s a really good tip is if you try a method. And people aren’t responding to your feed. Try a different method. [00:40:00] If people aren’t responding to your free t shirt thing, maybe there’s another thing that will motivate your cohort, your clientele to, to talk to them. What we recommend specifically in our playbook is that at least once a quarter, you should be trying something different.
If you’re not switching it up every three months, people are tired of hearing the same shit. And here’s the thing is, referral asks are not just give me your friend’s contact information. That’s just one kind of ask. And that’s a valuable ask to get good at and practice. But another ask is like, Hey, we’re doing a professional networking event this Friday.
Who’s everyone at work that you can bring? To this professional networking event, we’re doing, we’re hosting a wine tasting this Saturday afternoon. We’re doing a kid’s program, just a free field day for kids this Saturday. Bring your whole family and your neighbor’s family, right? So referral ask doesn’t have to just be give me a phone number and an email, which can feel cold and difficult.
It can be, we’re going to do some fun stuff. Come bring people who like fun stuff. And that in and of itself is also a referral ask. For a while, [00:41:00] like the primary. Like referral marketing campaign for CrossFit. So it was literally just one workout a week was bring a friend. So you would just do a partner workout with someone who.
Wasn’t, wasn’t a custom at CrossFit, which just always went really well. When you had 40. Dude, it still is. I was, I’ve been onboarding these gyms at Kiel. It still is one of the primary drivers for referrals. I think that’s a one good option to do once in a while. And then you also need to do maybe bring a friend week or bring a friend to this workshop about low back pain, or bring a friend to this panel we have of a chiropractor and a surgeon.
And I just had a P2P on the business of Unicorns podcast just recently. And he talked about what they do at Cressy, which is they do something called a night with the pros. Cause they do mostly baseball at Christy sports performance and they just get a few recruiter, minor league baseball player and up on a panel and they invite everyone that they’ve ever met in their entire lives to come and just ask questions of this [00:42:00] panel of fitness professionals.
That’s referral event. Let’s tell everyone, you know, to come and bring their friends. And if you want to know anything about becoming a professional baseball player, you’re going to be there. And they have, by the time I talked to him, the event was still like two weeks away and they have 125 people who RSVP that they were coming.
That’s a lot of new, if most of them are not current members, that’s a lot of new leads for a single event. That’s the power of referrals when you do it right. Wow. It makes me want to go start a gym, get some referrals. Makes me, it makes me want to start a gym. I’m going to, I, my next concept would just be catering to people on Ozempic.
That’s the concept I wish existed. If you are working on that gym owners, give me a call. Keela, we’d love to partner with you. Keela would love to partner with you on this endeavor. All right. So we talked about telling everyone how unique your community is. And you loved it. I didn’t like it. There’s another practice in [00:43:00] here, in your marketing sales thing that I don’t love, but that works really well for a lot of your gyms.
And that is leading and pitching a low barrier offer. Maybe you can walk us through why this is like the, and I, this is pretty universal in the small group world is like offering one of these to start the journey off with one of these type of gyms. You can walk me through why you pitched that way and why, why it’s effective.
Yeah. I will say there are some exceptions, right? There are some people who, um, either because they’re brand new and hot and they got. Leads strolling all day, or because they’re already very pre-qualified. There’s some people who don’t do a low bear offer, but I think you’re right. There are the majority do and need to.
Um, you know, and I guess the kind of justification I give for the logic, I think that supports this as being a really great thing to consider is there is nothing I can buy these days that I can’t try first. [00:44:00] There’s nothing that I can’t try and send back. If I don’t like it, try if I don’t like it, uh, like there’s no app that doesn’t have a seven day free trial.
There’s no car. I can’t test drive. There’s no house. I can’t walk through. There’s nothing I can really buy that I’m not allowed to try before I buy. And this is just a way to try before you buy in a low barrier offer. In 30 day money back guarantee are two pieces that make a sale. Almost guaranteed because there is zero risk.
You’re going to try us out two weeks for 49. It’s only 49. And at the end of that two weeks, you didn’t like it. I’ll just give you your money back. Like it makes it such an easy. Yes. I’m the other thing I’d like about a low buyer offer and. Again, I’m not trying to convince anyone if this is, if they’re strictly against it, is it gives you a chance also to see if they’re the right client for you, which is not always like the most important thing on your radar, but there’s some been some people we haven’t tried that hard to convert because [00:45:00] we are not a good fit.
You’ve only been here for two weeks and has not been fun for any of us. I think that’s a meaningful piece of the equation, but the most important part is people got to try before they buy. Especially in small group training, personal training, where on average, you’re paying nearly 50 every time you walk in the door.
Committing to that without ever experiencing it is a big ask. That’s a big ask. And especially if they’re coming three times a week, that’s not a small amount of money, right? And so to try before you buy makes sense when you’re selling higher priced items. I do think it’s a little tricky. Yes, I totally hear all that.
But I think for some of these other things where you can try it before you buy it, like it’s not as labor intensive to fulfill the trial thing. I’m thinking about software, but if you think about a restaurant, like a lawyer, an accountant, you can’t try a lawyer before you buy. You don’t want the lawyer with a free trial.
A doctor, same thing. Even a restaurant, right? Thank you for this delicious [00:46:00] steak. It’s like, no, I made you this steak. You’re buying it. This is a Wendy’s. You’re right. Like even a Wendy’s, we can’t really trust. Other ones, like mattress companies. It’s like they’re shipping you the product and you can send it back like a hundred days later.
In most of these cases, right? There is a cost. To having this be an option. And in most cases, what we recommend is that people’s low buyer offer, they break even on, or even lose a little bit of money, but we can, they consider it part of their lead acquisition costs, right? Part of acquiring a client is letting them try it out.
And hopefully you make up for that by getting them to make a long term commitment. But, but there is a risk 100%. So where I can see it working is in this model, right? So you got a 80 members, you do no marketing and Tim’s going to refer as his brother. Obviously Tim’s brother knows that it costs 400 a month and that’s a warm lead where this tends to blow up as you’re offering some type of LBO and running ads [00:47:00] and have no system behind it.
And so that is a marketing expense. Having an LBO is a marketing expense. So if someone, if your membership costs 400 bucks a month and you give it away for 200 in the first month, that’s a 200. You’re paying 200 for that lead when we know you can go on Facebook and get it for 45. Obviously it’s like a very warm lead and yeah, maybe it works in that context.
I do agree with you that the trial is definitely critical for a lot of these gyms. Like I want to do the type of, I want to join a gym that does the type of training that you guys teach, like small group training. And one, there are very few near me. And two, every time I go on their website, I have no clue, like what type of training they do whatsoever, like none.
And I talk about gym stuff all day, every day. It’s like. What I am passionate about and I can’t figure it out if I can’t like My mom can’t. And so I understand the trial thing. The best implementation of this, I think of the people that we’ve spoken with is Dan [00:48:00] shrink. So he does a trial, but the trial is a full price.
You can come do it for two weeks, but Hey, this is their whole positioning is this is a commitment. And so you need to make a commitment to come here. And again, they’re hot. Like they got that hot hand, so they can probably pull this off. And I think that’s honestly my first choice, right? If people can do it, I absolutely recommend doing exactly that.
Have a low barrier offer, but the lowness is not the price. The lowness is the length of commitment, right? You can come for a week or two, but it’s the regular cost. We’re just not asking you to commit to three months or 12 months yet. So I think that makes a ton of sense. I love that. And I wish more people.
We’re in a position where they could do that now. We’re seeing eye to eye, Michael Keillor. Finally, you like me. The other thing I saw in here is it said 55 percent of the people that took the survey aren’t even using like a standard systematized sales process. So again, If you’re selling toasty warm leads, like word of mouth referrals, like you [00:49:00] don’t really need to have a regimented sales process, but if you’re someone who has to train, like training someone for free for a month and doing what is that if they’re coming three times a week, that’s 12 hours, you probably just.
Spend that 12 hours to learn how to sell a little bit better. And you cut that, you can cut that down and buy yourself some time back. Yeah. 100, 100%. There’s a handful of things in this report that were surprising, but in like in a disappointing kind of way where I felt like I was reading the results of the survey.
Dad was upset at his kids. Like y’all are really disappointing me with this shit. And that was one of them that about half had a sales script that they followed consistently. The question really was, do you have one? And as it followed consistently, so around half, and I think a lot of them have it just don’t follow it consistently.
They think, Oh no, I’ve been doing this so long. I don’t need to follow my sales script. I like to look at those talking points and we all know that’s just a recipe for disaster. Another one that came up was about only 27 percent of people who responded to the survey had a written marketing plan. [00:50:00] I was like, what the fuck are you people?
That was a moment where I was like, God. And the fact that a handful of them are people who were clients of ours. I was like, what am I doing wrong? What is wrong with? And so many of them, I think that’s the way I interpret that. If I’m trying to give a little grace, the way I interpret that is we all know gym owners wear a million and one hats.
And often what they’re doing with marketing is just doing what they can with what they have when they can, and they’re shooting from the hip and they’re not taking that time to sit down and be strategic and write a plan and hold themselves accountable with real clear deadlines. And for me, we really on the business unicorn team took this as like a real kind of call to action for us.
It’s like, how do we shift that? How do we go from a third of people with a systemized written down marketing plan to. A hundred percent of at least the people we’re working with because it’s really key. It’s really key. A lot of them are probably spending a lot of time tracking down all their leads. [00:51:00] And so what they could do is they could use a tool like Jim lead machine or kilo.
And if you are one of the 20 percent of gyms that do not have a system for tracking leads, Matteo, I use kilo. com available all day, any day, email them on Sunday. He’ll be there for you. He’s got your back now. I want to talk mostly. I don’t know if you saw this statue, but most of the things you can ever do.
I know that’s so mean. One last thing I’ll say about that is that most gyms when asked, we said that if they don’t have the software they’re using, they’re just using a spreadsheet. And here’s the thing. I don’t know. That’s terrible. If you’re only getting five leads a week, that might not be an issue.
Right. But for those of you who really want to grow and really want to scale and really want to level up your ability to convert as many as possible, you absolutely need to be using some software to make that easier for you. So yeah, go email. Matteo on a Sunday only. Thanksgiving free all day. Doesn’t watch football.
[00:52:00] Not going to be busy. It’s a special discount on New Year’s day. You might actually catch me on Thanksgiving. You might, I just wanted to talk about this page, Mr. Michael Keeler, that you had gym owners, biggest problems. Top three challenges, it wasn’t money, or leads, or clients, or marketing, which is the one that we hear.
John can correct me if I’m wrong, but that’s the one we hear the most is, I need more leads, I need more members, I need more money. And that was not top of mind for your cohort, it was actually hiring. Which I think is totally valid. Like hiring is really hard. Retaining staff is hard, especially in the gym space.
So, I think it’s totally valid. But I’m curious, why do you think hiring was the number one challenge and not money problems? I have a guess. But maybe I’ll guess first. So I think that my guess is the reason this came out this way is because your, your program is pretty expensive from what I remember. And so the people can [00:53:00] afford a few there, they have some money.
So if they have some money, maybe that’s not their biggest problem. And so that you’re self selecting out the people who are really struggling. That’s just my guess. The flip side to that is I remember things like gym launch was. Really expensive at the time and probably still is. And that’s for people who are like, I need members now.
So maybe that’s not the reason, but that’s the only thing I could think of. I think it’s a great hypothesis. And honestly, I didn’t, we don’t have, I don’t have the actual data on the reason, but I’ll tell you anecdotally what my conversations with our clients tell, tell me. And I also want to reiterate that only about 65 percent of.
The 117 people were Unicorn Society members, meaning clients of Business for Unicorns. There’s a whole group of people who fell to the survey. I don’t know shit about aside from what they told me in the survey, but for the folks that I talked to that about, yeah, they like our emails and listen to the podcast.
I hope, but, but the, from the folks that I talked to, one of the major factors driving their challenge with staff is certainly been, this has been a [00:54:00] rising concern post COVID. In a world where everyone wants a work at home remote job, no one wants to get up at 5 or 6 a. m. to come train people and then have a break and work a split shift and come train them again until 8 or 9 o’clock at night.
So just finding staff is hard, and I think particularly for a small group personal training model, the thing I hear all the time is finding qualified, Trainers who are really good coaches is hard, right? It’s not that you can’t find, I say this with all love to humans, a warm body to teach a class and just follow a preexisting program, but to find a coach who can give what is almost a one on one personal training experience to six people in a room requires a kind of competence that is sometimes hard to find.
And in some markets nearly impossible. It’s interesting. You’re saying that because we’ve had guests on here who were like. Yeah, we actually don’t like they just go through an onboarding program. I can teach him how to coach. That’s not the issue It’s the I’m [00:55:00] looking for the personality or I’m looking for the driver I’m looking for the it factor the coaching the programming that’s easy.
I can teach them that but you’re saying Maybe that’s not the case as much, or it’s not the, it’s not the knowledge, it’s the management of the small group. Yeah, because also we pointed out in this conversation before, which is this small group personal training model has not been around that long. This hasn’t been a very popular model for long.
There’s not a ton of trainers out there in the world who have lots of experience training six people at once. Sometimes doing all individualized programs, it’s a special kind of skill set that even as we moved from three on one to six on one at MFF, we had to go through this kind of growth period where our trainers had to learn how to really do that well.
But I agree with you also, Matteo, it’s not that charisma and personality aren’t important. Important factors as well. And I hear from time to time, that’s the sticking point, but I honestly hear more often from our clients that it’s, it’s about these trainers just don’t have any qualifications. Like they just are not good enough as coaches.
It’s going to take [00:56:00] me so long to be able to put them on the floor that I can’t just onboard them in a few weeks. It’s going to take me a few months, which many of them just have to do. They just have to level up their onboarding system and learn how to train people from. From scratch, because they’re in a market where they’re not going to have any other choices, but some folks have choice and it’s just hard to find those folks.
It’s also just hard to retain this upcoming generation of workers, right? They don’t have, or have any examples in their life of employment. Loyalty. It’s like not a thing anymore. It was, it was like the last time there was a generation of people who stayed in jobs for a lifetime was like my grandfather and the people entering the workforce now are not likely to stay in jobs beyond.
Two or three years, even if they’re having a great experience and there’s plenty of research to back that up. That’s just not my opinion. And so I think that’s another piece that’s weighing on us. So all that to say, I think all of these are factors. I don’t know. There’s any one single factor that made people rate this as one of the biggest concerns.
But I think it’s a combination of all of those things [00:57:00] that makes staffing for in person service businesses, fucking hard. These days, hear it from restaurants, hear it from hotels. Like they’re, they’re all having this pain point. And in this report, a close number two is lead acquisition. I do think part of the thing is of your, your report, the average person had four full time coaches for part time coaches.
If you look at the two brain one, it was like one in one. So they’re doing like four times as much hiring, which sounds awful. Maybe it’s fun for you. I know that’s a, you’re a professional and an expert at human resources and organizational psychology, but not my cup of tea. Let’s talk about money. Owner’s compensation.
Uh, you referenced the big five foundations of financially fit gyms trademark. Have you had to enforce that trademark yet? Not yet, but maybe after this podcast. All right. So walk us through the big five foundations of. Oh, [00:58:00] good question. Um, let me pull it up. I don’t know if I can walk you through all of them as meticulously as you want.
But, um, there’s a few of them referenced in this report. Let me just start with those because those are already in here and you can pull them up on your little screen. So, the most important one here is, uh, for Totals Owners Comp. As we break down that we think Total Owners Comp here should be about somewhere between 20 and 40 percent of total revenue.
For, uh, Training gyms, and we break it down like this. I know, I think, uh, the two brains does this as slightly differently, but, but I think we all get actually to the similar place. We just might have a different breakdown. Um, but we think 10 to 15 percent of that should be basically the salary that the owner owns with the earns for their operational role.
So if an owner is serving as part coach and part CEO or part, whatever you want to call it, GM or part, whatever the hell the title is they give themselves or don’t, that they get some money in the payroll. And we think that number should be somewhere between 10 and 15 percent of total revenue. And then there’s Total [00:59:00] profit from your profit and loss that you pull as usually monthly or quarterly distributions is about 20 percent of that number profit distributions, about 50 percent of your total revenue.
And that means your total income adds up to somewhere around toward 20 to 40%, which includes both your pay from payroll, any perks. Things like the company pays for your cell phone, or a portion of your car, or some of your rent for your office, uh, and profit distribution. So there’s really three ways that owners get paid.
The payroll, perks, and profit. Um, and so all in all, we think that number should be right around there. That’s one of the five big benchmarks that we point to. Do you want me to pause there? No. Great. Yeah. So that’s one. I think that right off the bat, this is one that we see. Is easier said than done, right?
There’s a, you both know there’s a lot of training gym members out there that haven’t really been very strategic about how they pay themselves. Some of them, them use their [01:00:00] business checking account like it’s their own personal checking account, and some of them are afraid to take a single penny out of the business and pay themselves.
And so this is something that we, we work on a lot. The other three that are listed here. That you have pulled up one is about rent. So this one is really related to total expenses, but this one specifically we think rent should be around 15 percent of people’s total revenue, maybe up to 20 percent in urban markets, marketing expense we point to here in the survey, people on average, we’re spending around 3 percent of their total revenue on marketing.
We think that’s probably as low as it should be. For most people, we think should be somewhere between three and 10%. And then in terms of people costs, this is where a lot of training gyms are way overspending. And even I mentioned earlier, the top prof, most profitable gyms in our survey are ones who kept this under control, you know, they didn’t overpay their people and listen, I want to.
Advocate here that people should get a fair living wage for the work they do. I’m not suggesting that the gym owners need to be Scrooge [01:01:00] McDucks hoarding all this money and not paying their staff at all. And some people go overboard. Some people overpay their staff more than they need to. And MFF has been one of them for many points in our career.
And we think that people’s total people expenses. Should be around 25 to 40 percent of total revenue. So that means the way we break that down for, in a lot of conversations that for every hour of revenue you generate in your gym, let’s just say you can do a one on one training session that brings in a hundred dollars.
We say that the trainer should get paid at starting point somewhere around 30 percent of that revenue and no more than 30, 40%. Of that revenues when you’re thinking about how much to pay your trainers to be able to get to this final payroll of being no more than 40%. That means what you pay them per hour also should be no more than 40%.
And if you have a lot of extra perks and benefits like health insurance for one K, you really probably should never go over 35%. Yeah. And so all of these kind of benchmarks roll up and down to other recommendations, but [01:02:00] those are the ones in this report. So I’ll stop there. So basically what you’re saying, if a session is 100 bucks, starting pay should be somewhere around 30 and top end should be around 40.
Exactly. And you want to consider all other things that you spend on employees when figuring out that number. In MFF, our full time employees do have healthcare and 401k, and they have a continuing education stipend, and we do retreats for our staff. There’s so many other things we spend money on. So, I almost never want to get up to 40 for every 100 because, I have to then add on all the other things we spend on that employee, right?
That’s where I think a lot of folks go wrong. Is there overpaying per hour, which means they’re at the end of the day, overpaying on the total payroll that could creep up to 20 plus percent of every dollar you pay an employee to, if you go 100 percent do it. Yeah. When you talk about workers, that’s it. If you’re doing all the extra benefits, it can be 30 percent on top of their take home pay or top of [01:03:00] their.
I had one thing about money, actually. I noticed something just, it’s a very small thing. Just, I wanted to bring it up, was that if you go to page 10 earlier, I noticed that the mid sized cities were the ones charging the most for not just personal training, but also Large group. You’re actually better off being in the mid size than being in the large city, if you want to charge more, not just for group, but for one on one.
So, yeah, that was an interesting little note. What counts as mid size for you guys? You know what? I have those numbers somewhere on here. Let me see if I can pull it up for you. Oh, it’s on page six. Mid size, a mid size city was a half a million residents or bigger. And large was a million or bigger. So, yeah, I think it’s in those midsize markets where there’s just a little less competition than in the big cities, right?
As you both know, place like New York city is just gyms and [01:04:00] gyms on top of gyms on every block. There’s new gyms and some of the kind of those midsize markets. Just don’t have that much competition yet, and so they can they can push the rates Maybe a little bit more because they have to be they can don’t be as competitive So if you’re working on an ozempic gym in a mid sized market Mateo at use kilo.
com Available all Thanksgiving hit them up. Yeah, that’s the only day next week though that if you wanted to hear from me
I won’t respond Let’s let’s sum this all up because we’re we’ve been going we’ve been going Many minutes, you got some takeaways here for people who don’t want to read the 27 page report, even though they just listened to an hour of us discussing it, maybe you run through what a gym owner can learn or an aspiring gym owner can learn from this report.
Yeah, I can, I think I can summarize it pretty quickly. I probably said pieces of this throughout the last hour, which [01:05:00] is the top 10 percent of profitable gyms in the survey or smaller, bigger is not always better. You can have fewer clients. With less revenue, but in making just as much, if not more profit as an owner, I think the most important piece of that is keeping your rates high, making sure you’re raising your rates every single year, like clockwork, keeping your staff pay competitive, and maybe on the middle lower end of your market, not always being maybe the best Best paying place in town, though, if that’s a value that’s important to you as a person, by all means, go for it and just make that conscious choice that your margins will suffer as a result.
That’s a choice you can make. In fact, we’ve made that choice many times at MFF and we chose it. So keeping the staff pay down rates high and then. Keeping your clients around retention is just a big piece of this. You can be the best marketers and sellers on the planet. And it doesn’t matter if you’re having thousands of people run through your front door, if the back door is wide open.
So if your [01:06:00] attention stinks, you got to wrap your arms around that and find out why people are leaving. And, and that’s a whole nother podcast to talk about what. What makes great retention, but that’s another piece of this is that these top performing gyms are profitable because they didn’t have to spend a ton of time and energy constantly replacing people leaving.
And that really helps them focus on the people who are there and getting new ones in the door. The only thing else on here that I thought was worth calling out is that when it comes to a gym business, so many times I talked to gym owners who are lost in the weeds of things that don’t fucking matter.
About their operations. And just like what makes a good fitness routine, a good gym owner routine is about being excellent at the basics. And all these top performing gyms point that out time and time again, they’re just, the gyms are clean. They’re friendly and good at customer service. They have a.
Decent process for, uh, for attracting and converting leads. It’s not over complicated and [01:07:00] they do it consistently and they regularly pay attention to their clients and set goals and make sure they’re having a good time getting that regular feedback. It’s just about, and I’m not saying all of that to make it sound like, Oh, look, it’s so easy.
It’s not easy, but it should be simple and being excellent at the basics is what made these top 10 percentage of gyms be profitable. This has been wonderful. Mr. Keeler. Where do people go if they want to find out more about you? Mateo at usekeelo. com and I’ll tell you all about Michael Keeler. He will. He will.
He certainly can email me Michael at business for unicorns. com. And if you want to learn more about working with us, let’s go to business for unicorns. com. We have a group called the unicorn society. You can apply at any time. It’s a simple application process. It’s really a kind of a no hassle application process.
We’re going to be vetting you as much as you’re vetting us. Come and click that apply button on our website and we’ll see if we’re a good fit. We’d love to help you. He might be one of the people on that two week free trial for BFU that, they’re [01:08:00] like, Oh, I don’t know about this guy. I don’t know. Yeah, you get two weeks free or 30 days for half off, no commitment, money back guarantee.
Right. Until next week, I’m Jim World, The World Wide. In the meantime, just tap that, leave a comment. We love to see them. We read everyone. And, uh, we love you, Jim World.