I HAVE 150 MEMBERS, BUT WHERE'S THE PROFIT?
One of the most common reasons gym owners come to us is because they’re “stuck” at 80, 150, or even 300 members, and still aren’t turning a business profit, despite working 40-plus hours a week. And they, of course, think the solution is more members.
If only I could get to 200 members, I’d finally make enough money.
This, however, isn’t true. Not enough members probably isn’t your problem, and adding 50 members under your current business model likely isn’t the solution to your profit challenge.
Have you ever heard of the Dunbar number?
It’s a term coined by evolutionary psychologist Robin Dunbar. His theory is that there’s a limit to the number of stable relationships people are able to maintain at one time. The proposed number is 150.
So I should be able to have 150 members then and service them all well?
No, that 150 is the total number of people in your life, so unless you don’t have family or friends outside the gym, the number of clients you can properly take care of is much less than 150.
You have probably learned this on your own anyway. Back when you were just starting out and had 50 clients, you knew everyone’s children's names. But at 100, it gets tough to keep track of what’s going on in everyone’s lives, right?
This brings us to a better solution than simply trying to pack your gym with more people you no longer have a relationship with and expecting them to stick around long-term and help you build a profitable business…
It comes down to developing coaches.
The reason you’re stuck at a certain number of members and aren’t making a profit might be because:
- Your coaches are compensated by the hour, usually to coach a group class (Thus, their only responsibility is during that one hour when they're coaching the class).
- You’re doing all the heavy lifting, and are the only one focusing on client retention and client acquisition. Essentially you have a terrible responsibility, as you’re the only one doing all the things, so growth becomes really challenging past a certain point.
- Your coaches aren’t able to make enough money so they don’t stick around for years (We consider enough money to be a professional living, a professional living being = > Median Household Income x 1.25).
- You’re getting burnt out because you can only maintain so many relationships, coach so many classes etc to the point that it has become unmanageable and you don’t have any profit to show for it.
- You start trying to plug the holes by turning to the latest and greatest marketing company, hiring a “client success manager”, or introducing a new software solution that promises to nurture leads and retain clients through automations (as well as other stop gap measures allegedly designed to plug the holes to take tasks off your plate).
The solution to all of the above: Train four coaches to handle all of the above.
What it looks like in practice:
1. Coach Compensation: Pay your coach based on their ability to bring on and retain clients (rather than by-the-hour to coach a class) through fostering real relationships with them (aka performance-based pay).
- Your coaches will naturally be more invested in client acquisition and client retention now, as their paycheque depends on it, and this will free you up from doing all the heavy lifting.
- Under this system, coaches are able to make a professional wage (Read more about Coach Tom and Coach T-Bear’s journeys to earn six figures). This provides them the opportunity to pursue a long-term, full-time career at your gym.
- With a team of coaches invested the way you are as the owner, you’re able to avoid burnout and focus on building the business, rather than running around like a chicken with your head cut off trying to just keep things afloat.
2. Coach Development: Teach your coaches how to make money.
- Put your coaches through a coach development process that teaches them how to acquire high paying clients (the sales process largely comes down to teaching coaches how to communicate and enroll people in your service).
- Teach your coaches how to retain clients.
- Teach your coaches how to increase client value (this includes teaching them how to roll out a rate raise).
- Teach your coaches about account management and time management, so they can be as effective as possible.
3. Coach Co-op: (Read more about the Madlab Coach Co-op here): Putting a coach co-op in place means scaling the group class model so coaches can now make $80-$120k per year, as they share the class load (as well as other duties between them) between them and take care of each other’s clients in their classes.
- A coach co-op also means coaches can take five weeks of paid vacation, as they cover for each when another one is away (again, sharing the load so no one coach is overburdened if a another is on vacation).
- A coach co-op also means coaches can take sick days, or go on short term disability if they need to (such as for a major health issue or a death in the family) and still get paid.
Needless to say, under the above system, as the gym owner you no longer need to look for the quick fix to plug the holes, as you and your coaching team are working together to service your clients through real relationships, creating a sustainable business that can service more clients well and ultimately earn a real profit.
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,
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