Group OnRamp and 6-week challenge versus One-on-one: The financials over the course of a year
By: Craig Patterson
People who are dead set on bringing in new clients into a group fundamentals environment always like to argue with me when I tell them they’d be better off doing personal training with new clients. … As if it’s some sort of subjective debate of morality, and I happen to have sentimental feelings toward personal training and they happen to love the group.
I have no sentimental feelings about personal training versus the group.
My position is purely economical.
The first major problem: Group OnRamps CHURN a lot of clients. That is a big big problem as client retention is your bread and butter. Read more about how we collected the data about this here.
The second is the financial impact of all this churn: Let’s take a look at what it looks like financially to bring in 100 + new group OnRamp clients in one year versus 60 high-value personal training clients.
One of the most common group fundamentals practices today is to run 6-week group fundamentals/OnRamps/challenges. Gyms charge different rates, of course, but somewhere between $200 and $600 is the norm.
Typically it looks like this over the course of one year:
- You spend 4 weeks marketing a 6-week challenge.
- The first challenge—let’s call it D-Day—does well in terms of generating new clients and brings in a whopping 40 new 6-week challenge members! You are stoked!
- Another 4 weeks spent to market a new challenge.
- The second one brings in just 30 people. Not bad, not bad. You can live with that.
- 4 weeks to market another challenge.
- The third around, the number drops to 20. Hmmm. Half the number from D-Day? Is this trend going to continue?
- 4 weeks to market another challenge.
- The fourth challenge brings in only 10 members. Panic starts kicking in.
- 4 weeks to market another challenge (because you’re a glutton for punishment and desperate and don’t know what else to do).
- The fifth and final challenge of the year, you get just 4. You are fucked.
Total new members brought in over the course of the year = 104
Though the above is hypothetical, it’s based off of what many gym owners have experienced when they run 6-week challenges throughout the year. And it’s pretty much exactly what happened to Jason Caryl in Yakima, Washington, a city of around 100,000, at his gym Elite Functional Fitness.
He ran a number of 6-week challenges in 2018 that cost $400 a pop, although the money would be refunded to the client should they meet specific weight loss or body composition goals.
The result for Caryl:
His first challenge brought in 40 to 50 people, Caryl said, but the next one only brought in 15, and by the end of the year he was lucky to get 5 or 6. Though his retention converting challenge members into regular members after the first challenge was pretty good (70 percent), retention got worse and worse as the challenges progressed.
Today, a year later, only a handful of people who came in via the 6-week challenges remain at his gym.
On top of this, his gym’s reputation was tarnished because people felt like they had been tricked because the advertisement Caryl used said it was a FREE challenge, but in reality it was only free if you met your weight loss goals. Many people complained when they didn’t get refunds, so Caryl handed out many more refunds than he should have because he didn’t want bad blood.
“We poured our hearts and souls into these people, and they just left the minute the challenge was over,” Caryl said.
But all of this is the topic of a future article. For now, we’re sticking with the economics…
Of the 104 people brought in over the course of a year, only 10 percent will still be there a year later. This is consistent with the data we have collected, and also consistent with what we’re hearing from the approximately 50 gyms we have worked with who put themselves through the 6-week challenge game for a year or more. Of course there could be some outliers, but we haven’t come across any.
This is also exactly what Caryl experienced in Washington.
Revenue generated in Year 1:
6-week challenge: $400 x 104 = $41,600
Post-6 week challenge membership revenue: $175 (the average rate for most affiliate type of gyms): $11,025
Total Revenue from bringing in 104 6-week challenge members in one year: $52,625 And at the end of the year all you’re left with is 10 to 15 of those members paying $175 a month for group classes.
Check out breakdown below with all the numbers how we came up with that number based on the gyms we have spoken with:
This shows you what running five challenges looks like, where you bring in 40 people on the first challenge, 30 on the second, 20 on the third, 10 on the 4th and 4 on the last one, and how many ongoing members at $175 a month for your regular membership you get after each challenge. You can see this number under the “upsells” column.
Below you can see the revenue for the year of challenges plus post-challenge memberships:
A lot of work to generate $52,625 and all you have to show for it is just 10-15 clients at the end of the year paying $175 a month….
Not only that, but this number will only get worse heading into year two, because you have exhausted your 6-week challenge market, and more and more people from the first year will continue to fall off.
Let’s compare this to the MadLab model:
One-on-one Fundamentals a la MadLab:
Let’s say you bring in an average of 5 new clients for 12 months, all of whom do 15 personal training sessions at $80 an hour (MadLab School of Fitness charges $89 an hour) with a personal coach they have a relationship with to prepare them properly for handling a hybrid membership (read more about hybrid memberships here).
60 clients x 15 sessions at $80 = $72,000
Once they’re finished their initial one-on-one fundamentals, they graduate to a hybrid membership, where they do a combination of group classes and personal training (most continue to meet their coach once every 6 weeks at the start of a new programming cycle to prepare them to be successful in the next cycle, or to sit down for a lifestyle consult to tackle other areas of their lives that can’t be tackled in the group environment). They pay between $230 and $300 for their hybrid gym membership. The average sits around $260, so let’s use that number.
Churn rates are around 10 percent when you do one-on-one personal training with new clients. Again, this comes from 15 years of collecting data from more than 1,600 gyms. This means 90 percent of clients are still around and going strong at the end of one year.
Thus, 54 out of the 60 clients are still around paying an average of $260 a month at the end of the first year. (These people spent the first two months doing personal training and paid $260 for 10 months).
54 client x $260 (hybrid gym membership) x 10 months = $140,400 (this doesn’t even include the revenue from the 6 clients who didn’t make it the entire year, but who possibly still lasted 6 to 8 months etc…)
Total revenue: $72,000 from fundamentals + $140,400 from hybrid memberships = $212,400
…And after a year-and-a-half, you still have 50-plus of those clients from year one all paying $260 a month ($14,040 a month in recurring revenue).
Not only is your revenue dramatically higher at the end of the year, it will continue to be higher at the year-and-a-half and two year mark and beyond without having to do any additional work. You’re also likely to start bringing in more clients via referrals in year two, as opposed to the 6-week challenge model, where your pool of prospects has completely dried up heading into the next year.
Which one sounds more appealing? A life of a never-ending cycle of hustling to find new clients all the time, or the one-on-one model, where you work hard off the top, but create a sustainable client culture, where you’re properly servicing your clients and aren’t burning out in the process.
…Because, if you have coached for any period of time, you know that working with a veteran client of five years is much less drain on the old energy levels than working with new people fresh through the doors week after week, month after month, year after year.
Gymmin ain’t easy, but it’s a hell of a lot easier if you on board your clients via one-on-one training.
To learn more about what the top 1 percent of gyms do to maximize revenue, keep clients for life and pay coaches a professional wage, DM MadLab Group on Facebook the code BEERS for a completely free video training series. (https://m.me/MadLabGroup)