CrossFit is Raising Their Rates; Is it Worth it to Stay?

CROSSFIT IS RAISING THEIR RATES; IS IT WORTH IT TO STAY?

Three months ago, CrossFit announced they were raising their affiliate fees across the board to $4,500. Gym owners, especially those who had been promised their rates would never go up, may have felt their feathers ruffle as a first reaction.

Chances are your emotions about the rate increase have subsided by now (and you have realized that grandfathering rates was always an unsustainable plan) so now is the time to take a more rational look at the increase and ask yourself if you should stay or if you should go.

Some questions to get you thinking:

Am I getting $4,500 worth of value each year for being a CrossFit affiliate?
Is the CrossFit business model representative of what I’m doing today?
- Low barrier to entry (free class, free week etc)
- Dirt basic client development process - put people straight into a group class and charge them $150 to $200 a month for unlimited group classes
- Dirt basic coach compensation - pay coaches by the hour to run the group classes and a % for personal training
- 2000’s style Coach development - technical courses and shadow classes
Is the CrossFit programming methodology—high intensity, constantly varied workouts—still what I’m doing today?
Is having the name CrossFit improving my business? Could it be hurting my business? Are you getting tons of referrals?
How many great qualified leads come in through my affiliate website each month?

Let’s take a look at how we got here:

We joined in 2004 as the fifth CrossFit affiliate in the world and basically everything was homemade.

At the time, there were no actual gyms, per se. Greg Glassman had a garage that he had moved his personal training business into, Dave Werner had a space in Seattle where you just walked in and “did stuff” and Robb Wolf was struggling to find a business model that could pay his bills.

Fast forward to 2010 and there were 2,500 affiliates worldwide. Then Reebok came on board in 2011 and this number jumped to 5,000 by 2012, and 8,000 by the end of 2013.

During this era, anyone could open a CrossFit gym and 100 people would quickly join.

And what do you need when anyone can open a gym and get 100 people in in the first two months? A business model that anyone can execute!

And so the CrossFit model became: Low barrier to entry for the client, group fundamentals, and pay coaches by the hour to run group classes.

Is there a better—more effective for the client, rewarding for the coaches, and profitable for the business—way to run your gym and keep clients and coaches? Of course there is…

I digress.

During this time, many gym owners started turning to Groupon.

Remember Groupon?

Groupons offered users promotions that basically gave things away for free, offers like $20 for unlimited CrossFit group classes for 30 days.

It was in 2011, during the Groupon craze when we first started to realize that we were better off building our own brand, a brand we could control (which led us to rebrand to Madlab School of Fitness), rather than being part of the CrossFit brand.

Having been established for six years already, we had been charging $750 for 10 personal training sessions for new clients and then $180 to $200 a month for group classes for a number of years already, and there was no way we were going to reduce ourselves to Groupon and give away our services for essentially free. We didn’t need to. We were seeing a constant flow of new members willing to pay a premium for our coaching.

But the general public, of course, didn’t know the difference between us and the new gyms that were popping up left, right and center.

So our phone started ringing off the hook.

“We’re not the Groupon gym,” I found myself saying over and over.

People became downright angry. Irate at the fact that I wasn’t going to honour their Groupon at my gym.

I realized right then and there that I needed to be able to own my own brand, control my own brand and our own message, in order to be successful long-term.

In a nutshell: We needed to be able to represent our brand properly, and we couldn’t do that anymore with CrossFit on our door.

After that, for a few years there we operated under the name Madlab School of Fitness, but we remained a CrossFit affiliate. We were paying just $500 a year for an affiliation fee, and maybe it was still helping us pick up a few clients here and there.

But eventually, the only people we were picking up were people looking for something we weren’t doing: They were looking for a low barrier to entry to get to classes for $150 a month, and wanted to do high intensity, crush yourself, workouts everyday.

We weren’t doing either of those things, but when they thought we were a CrossFit gym, they assumed that’s what they’d get.

So, Circling Back to the Original Question: Should you Stay or Should you Go?

If you’re no longer following the traditional CrossFit model anymore, then you have to figure out if being an affiliate is still helping you? Are you getting $4,500 worth of value from the CrossFit brand?

And if you are still running the CrossFit model, you have to figure out if the CrossFIt business model is working for you.

How do I know if it’s working?

It’s working if:

your clients are sticking around (we’re looking for an annual client retention rate of 80 percent or higher, meaning 98.4% per month),
if your coaches are sticking around because they’re able to make a professional wage ($75,000 +)
and if your business is turning a profit (we consider 15-20 percent EBITDA as the gold standard)

Data shows that when you run what has become the CrossFit model—a low barrier to entry for the client, where coaches are paid by the hour and clients are thrown into group classes for high intensity workouts—the average time a client sticks around is seven months, and the average coach stays for just two years.

Bottom line, if you’re running that model, ask yourself:

What is my annual client retention rate? (If it’s less than 80 percent, 98.6% monthly, you can do better)
Do I have a waiting list of clients generated from my brand via referrals? (Have you ever said, ‘If I could just get 20 more clients I’ll be ok?’ If so, that is a problem)
Do I have a team of professional coaches that handle retention and referrals, so that I can work on my business? (If you can’t keep coaches longer than a couple years, or they’re unable to make a professional living, You have a serious long term problem).
Is my business making a substantial profit and I am living a good life? (If it’s not, you deserve better).

Bottom line: If you’re struggling to retain clients and coaches because you can’t pay them enough money, and you’re not turning much of a profit (or a profit at all), there is another way. Contact us to find out all about it.

If you found this article helpful and would like to see exactly how these types of strategies could improve your sales and dramatically increase your revenue on a consistent basis,

GO HERE

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