Recurring Revenue and the Importance of Predictable Income for the Coach

RECURRING REVENUE AND THE IMPORTANCE OF PREDICTABLE INCOME FOR THE COACH.

The topic of coach compensation is a contested one, especially when it comes to commission-based sales.

There’s an assumption that paying coaches a percentage of revenue for selling ten personal training sessions isn’t an excellent idea for long-term, predictable income, as often people do their ten sessions and move on, and what coaches need is reliable income. So the thinking is don’t pay coaches a percentage of revenue.

The problem, however, isn’t the percentage of revenue: It’s the lack of recurring, predictable income.

And THIS is what the Madlab system seeks to remedy.

Yes, coaches in the Madlab model are paid a percentage of revenue, but it’s not a one-time sale, as is the case in other systems. They are paid a percentage of revenue from each client in their state of clients for the lifetime of that client.

In this sense, the Madlab coach doesn’t sell a pack of personal training sessions, so to speak, where when the client finishes them, it’s anyone’s best guess what they’ll do.

Instead, the Madlab coach sells a long-term journey in fitness that will likely include some personal training (especially at the start as they’re learning). Still, this personal training is simply part of a larger, recurring month-to-month membership in the form of a hybrid membership (a membership that combines whatever the individual needs, be it one-on-one training, group classes, individual design, lifestyle consults, nutrition coaching etc.).

And this month-to-month recurring membership can and likely will change every few months to meet the client’s needs as they progress on their journey and as their goals and priorities change. In this sense, the membership is designed specifically to help the client solve a problem, and the membership adapts and changes with the client.

Here’s how it works for the coach:

The client comes into the gym and begins one-on-one fundamentals. The number of sessions they do depends on their needs, wants, goals, and to a certain degree, budget. The coach earns 40 percent of the revenue the client pays for fundamentals and 50 percent if the new client was a referral from an existing client (or if the coach brought the client into the gym).

Once the client is ready to be more autonomous, the client moves into either a hybrid membership, meaning group classes with periodic check-ins with the coach. Some meet their coach for a one-on-one session every six weeks, others every other week. Again, this depends on the individual.

Note: Some clients aren’t interested in doing group classes, but individual program design is right for them. Usually, these clients do a combination of unique design, and continue to meet with their coach once every six weeks to check in, provide feedback, and ensure they’re moving forward in their development.

Others still do all three: For example, someone might do two classes a week, two days of individual design where they’re working on more specific goals, and also meet their coach once every six weeks.

Depending on what a la carte, custom-built membership they do, clients at Madlab School of Fitness pay anywhere from $235 a month to $500-plus a month. These clients stick around and pay month after month because a lot of thought has gone into what type of membership will best get them what they need and what type of membership is sustainable for them financially.

And in each case, the coach receives a recurring, predictable percentage of revenue off their clients.

Let’s take a look at the math for a coach with 30 clients:

Let’s say 15 of those clients were given to them by the business (came in through the website, walk-ins etc.). They receive 40% off each of them. And let’s say the other 15 are referrals, meaning they receive 50%. This means an average of 45% of revenue will be paid to the coach.

And let’s say the average client of the 30 pays $300 a month (most sit in the $250 range, but each coach generally has a handful of high-paying clients to bring the average up).

40 clients x $300 = $12,000 ($5,400 to the coach) = $64,8000 annual income.

At 50 clients, this is $6,750, or $81,000

Less hypothetically speaking, let’s talk real life: The top coach at Madlab School of Fitness has 63 clients, earns more than $100,000 a year, and has for the last five years (even through the pandemic).