Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker (00:02):
How many clients should
you have in your gym?
What should you charge?
When should you run classtimes?
How long should you expect tokeep a client?
All of these are the answersthat will determine how
successful you are in business.
And every year we partner withsoftware companies, especially
Wattify, to get the truth foryou.
We run a survey, and so we getyour opinion, but we want
(00:24):
bedrock truth.
We want actual facts and datathat will help you see how the
industry is doing, what otherpeople are doing, and not just
what they're saying on Facebookand Instagram.
I'm Chris Cooper.
This is Runapprofitable Gym.
And today, Brendan Rice, theCEO of Watify, is joining me to
talk about some of the data andthe insights and the changes
that we've seen in the industryover the last year.
(00:45):
You're going to love thisinterview.
Brendan gives me so many uniqueinsights on what's happening,
some great ideas that'll helpyou plan your gym out better.
And uh, you know, just aperspective that is really rare
in the industry today.
You're gonna love it.
Here we go.
Brendan, welcome back to Run aProfitable Gym.
Speaker 1 (01:06):
Chris, thanks for
having me.
Excited to talk to you.
Speaker (01:09):
Yeah, man.
And before we get into it, Ijust want to acknowledge again,
Wattify has been contributing tothis state of the industry data
now for years.
The information that you giveus is really valuable.
And your analyst on staffalways gives us some really
interesting perspectives.
And on top of all of that, youknow, you're a very quick
(01:30):
thinker and also a deep thinker.
And I thought you'd be able togive our audience a little bit
of extra value on what some ofthese numbers actually mean.
So if you're listening to this,you're gonna get, if this is
your first exposure to Brendan,I think you're gonna be wowed
by, you know, the insights thathe brings to numbers.
Speaker 1 (01:48):
Thank you.
We'll see if I live up to that.
Speaker (01:50):
Yeah, exactly, man.
So um let's start withretention.
So, you know, it it is kind oftough sometimes to track
retention, but retention we allknow is like super duper
important.
It's just hard to nail downwhat's actually working.
And so, you know, this issomething that you and I talk a
lot about.
And now, thanks to this datafrom Whattify, we've got a
(02:11):
pretty good handle on what isreally important for retaining
clients, what's kind of lessimportant, and what really isn't
important.
Let's let's start with like thetrend that you see in the data.
Speaker 1 (02:21):
Yeah, definitely.
And and really quick, just togo back to the beginning and
acknowledge, you know, thankingTuberin on your side.
We've been putting out thisreport with you guys for a few
years, and we're happy and uhproud to be able to provide some
of the data.
But you guys do a lot of thelegwork and the distribution and
you know, starting aroundCOVID, working with you on a lot
of reports and data sharing, Ithink it was really important
(02:43):
for the industry.
And it wasn't always the best,most optimistic data, but it was
really important, especiallycoming out of 2020 and 2021, to
keep sharing that.
And I'm excited to continuedoing it.
Now, having a few years behindus, what's awesome about this
report is there's definitelysome continued momentum,
positive momentum, and optimismin the industry.
So thanks for uh putting ittogether and we're we're really
(03:06):
proud to contribute with you.
It's awesome, man.
Speaker (03:09):
So things do seem to be
getting better, right?
Let's start with retention.
Speaker 1 (03:14):
Yeah, retention.
And the other, the other justcaveat before we dive into the
numbers, and the reason why Iget really excited that you
asked companies like Wattify andwhy I'm excited to share this
data is on top of the value ofsurveying and getting subjective
input from gym owners, lookingat data from software companies
like Wattify is source of truthdata.
(03:35):
So it's it's completelyobjective.
When we talk about retentionand attendance and class
scheduling and demographics, weare really, really confident in
the integrity of that data.
So yeah, let's jump into it.
Retention, what we saw in thisyear's state of the industry are
two uh small but importantpositive trends for retention
and attendance.
(03:55):
And what we know is those twonumbers have an incredibly
strong correlation.
We often talk about drivingattendance up will impact
retention.
There's kind of a magic numberaround 10 uh sorry, 11 or 12
attendances per monthcorrelating with like 99 plus
percent retention.
The data we saw is a across theentire um sample that we
(04:16):
shared, there's a 1% increase inmonthly retention and a 5%
increase in average number ofclasses attended per month.
Speaker (04:25):
That's so that's really
important.
And and some people will say,like, ah, you know, don't worry
too much about your churn ratefor monthly retention.
But 1% is a massive swing.
If you're running a gym with100 clients, like that's 12
clients not lost and that haveto be replaced in a year.
You know, like that's that'sreally big.
(04:46):
And I that's encouraging thatpeople are getting better at
this.
Tell me a little bit about likehow adherent or attendance, I
guess, influences retention.
Speaker 1 (04:56):
Yeah, I mean, I think
what we see in the data is that
it it more attendance, andagain, there's this kind of
magic number around 11 or 12 amonth, uh, has a direct positive
impact on retention.
Why that happens, I think, isum I think there's two reasons.
The first is that numberindicates that the client has
(05:17):
created a habit around going toyour gym.
And so 12, 12 a month, forexample, comes out to about
three classes a week.
And if you're coming to abusiness and engaging in that
programming and that communitythree times a week, you've
likely built it into your habit.
You you maybe commute there onyour way to work, you you know,
(05:38):
you go after work, whatever itis, you've created a habit, and
that's that creates lastingattendance or lasting retention.
The second thing is it justgives people more exposure,
whether it's nine, which is theaverage, nine attendances per
month, 10, 11, 12, the moreattendance they have, just the
more they're engaging with yourproduct.
Like most of your product iswhat they experience when they
(05:58):
walk into your business, whetherit's it's not just the
programming, but it's the it'sthe whole experience.
So how they're greeted, thefriends they interact with, the
actual programming itself, howthey feel afterwards, any
amenities you have.
And if you only experience thatthree or four times a month,
the value, you you just areexperiencing less value.
So I think that's the you know,just the summary on attendance
(06:20):
is it's just it's just usage andadoption of your product.
And that that's why it has sucha strong correlation to
retendance, to retention.
Speaker (06:27):
So now at some point,
there must be a bit of a
drop-off or at least a levelingout there, right?
Like, you know, so coming threetimes a week seems to build the
best attendance, but what if Icame seven times a week?
If I jumped to the extreme endof the scale, like would I have
better retention than if I camesix times a week, that kind of
thing.
Speaker 1 (06:45):
It really, no, it
really does level out around 11
and 12.
Uh it's it is very, very high,it levels out.
And at that point, those peopleare probably uh when just
talking about retention, they'reprobably going to cancel if
they have some life event likethey, that kind of unavoidable
retention where you doeverything, everything right and
they move across the country.
(07:06):
Or you keep an eye on them andthey have huge attendance uh
changes.
So for someone who comes fiveor six times a week, if they
start coming two or three timesa week, you have to know that
for that specific client, thereis a habit change.
And it might not come out in anaggregate report where you're
just looking at averageattendance, you're just looking
(07:26):
at any clients who don't come acertain number per week.
They might not get flagged inthat report.
It was actually one of thereasons a few years ago we built
a feature in Wadify calledWadify Retain, which predicts
churn at a client level.
So we actually look at theattendance trends of an
individual client.
But that's um, but to answeryour question, the retention
(07:47):
kind of plateau happens arounduh 11 or 12 classes a month.
Speaker (07:51):
See, that's interesting
too, because quite often you
might not even realize as aclient that you're coming less
often and that life is startingto get in the way.
And eventually you just wake upone day and you say, Well, you
know, I haven't even been tothat gym in two and a half
weeks.
Geez, maybe I should put thison hold until January, and then
you and I know what happens fromthere, right?
They never come back.
(08:12):
Yeah.
So if the gym is aware of itand paying closer attention to
it than maybe the client evenis, that's a massive coaching
opportunity.
I I'd like to talk about classtimes a little bit because you
shared some really interestingdata with me before we started
recording here.
Speaker 1 (08:27):
Yeah.
So class times um are that'salways part of the study we do.
We look at attendance per classtime to create kind of a heat
map of the most popular andleast popular class times.
And I think one of the reasonsI like doing that specifically
is this report is valuable, Ithink, for gym owners in two
categories.
It gives them data they canbenchmark themselves against and
(08:49):
maybe know where theirstrongest and weakest and set
goals.
The other thing, it gives themdata to make decisions about
operational changes in theirbusiness.
And the class times one is agood example of that.
It might help them makeschedule changes.
And so often gym owners arekind of operating in a silo with
just their own data.
So we sharing the class timedata gives them perspective on
broader industry trends.
(09:09):
The just in terms of thepopularity, and then we'll we'll
jump into uh the supply-demandthing, most popular class time.
It's the the class time heatmap in general has been
extremely consistent the pastfour years, which is kind of
interesting too.
Like some human habits justdon't change.
It's not like suddenly weekendshave become super popular.
So over 90% of all attendancehappens during the week.
(09:33):
That is uh 91 point something.
And the most popular class timeuh standardized across time
zones and everything is Mondayat 5 p.m., which is actually
actually interesting to me.
I would have thought it wouldhave been either one of the the
morning, Monday morning andTuesday morning are just behind
that.
But Monday at 5 p.m., maybeit's a little bit more of a
remote work thing, like peoplecan quickly get to their gym and
(09:54):
they're not you know leaving anoffice at 5 p.m.
But yeah, Monday at 5 p.m.,most popular class time, and
then kind of follows thedistribution after that of
mornings early in the week, andthen the weekends are uh are
definitely less attendance.
Speaker (10:08):
And this is why I think
it's so important to have
objective data because the restof the service industry will
say, you need to be open on theweekends, close Monday if you
have to, you need to beavailable when your customers
are available.
So you're better off to closefor two hours at noon and stay
open later.
But we don't actually see thatin the coaching gym business.
(10:30):
And it would be very easy tomake a really costly mistake of
opening Saturdays and Sundaysand closing Mondays when the
truth is that most of yourclients want to come Mondays and
not the weekends.
Speaker 1 (10:40):
Yeah.
Yeah.
And there's um, there's a lotof different ways to interpret
this data too.
One is make sure that you'reoptimized for the most popular
times.
Yeah.
The second is maybe you can runinitiatives to drive attendance
on lower popular times.
So I see a lot of gyms doingtheir bring a friend or event or
outdoor classes on theweekends.
And that's a great way to, ifyou just run a standard class on
(11:02):
the weekend with nothing elsehappening, you're probably going
to get the lowest attendance.
But on the on the inverse side,it is a time when a lot of
people have free time andthey're trying to do stuff with
friends.
And I've I've been to a numberof gyms that have massive
Saturday classes.
Yeah.
But they're not, they're notthe same as their Monday
classes.
They're bring a friend, they'resome, you know, maybe it's a
maybe it's a hybrid class orthey're doing some running.
(11:23):
So I think you could thinkabout the lower attendance
times, not just as, oh, I shouldcancel those classes, but maybe
um I should run those classesdifferently, or I should tie it
into a bring a friend initiativeuh or something like that.
Speaker (11:37):
That that makes sense
in my personal experience.
You know, at our peak, ourbiggest classes were Saturday
morning at 9 a.m.
You'd get 30 to 34 peoplethere.
But what's interesting is whenwe said that's too many, we
can't coach everybody.
Let's have a nine and a 10option, then both classes dipped
down to like, you know, eight,nine people.
(11:58):
Yeah, interesting.
The whole is more than the sumof its parts.
And a lot of that was justbecause there was only one
option on Saturday, and so youknew everybody was going to be
there, and so you came.
Um, and that was also a partnerworkout, too.
So it is interesting, like howyou can kind of fill classes,
but I think like the theoverarching lesson here is that
your class schedule should befluid and you should never
(12:21):
announce it as a permanentthing.
We tell people like you shouldsay, here's our winter schedule
2025, and you have your classtimes, and then you know, your
spring schedule might beslightly different instead of
we're changing our classschedule as if you're taking
something away from them.
But but what you just sharedwith with me before the call,
too, about like, you know,distribution of when people come
(12:43):
and what the best time shouldbe.
I think that was superinteresting, man.
Do you want to talk about that?
Speaker 1 (12:48):
Yeah.
So we did this analysis on uhhow to think about classes as a
supply and demand function.
And the the first, the reasonwe did this is we noticed
there's an average of 15 moreclasses scheduled every month
than last year.
So so gyms are adding moreclasses.
And so that was an interestingdata point.
We were like, oh, they'rethey're we're we're adding more.
(13:09):
And as we dug into that, themath we looked at was in the
supply and demand equation wasbased on how many classes you
have, what percent of yourclasses fall at a certain time
and day?
So to use a really simpleexample, if you only did 10
classes in a week, your Mondayclass at 5 a.m.
would be 10% of your classes,because it's one out of 10.
(13:30):
So we looked at the percent ofclasses and then the percent of
attendance that happens for thatclass.
So if you had 100 attendancesper week and you had 10
attendances on that Mondayclass, you'd be at perfect
balance of supply and demand.
10% of your attendance happensat 10% of that class.
And what we found was there'sabout there, there are six class
(13:50):
times where supply is greaterthan demand, meaning they're
overrepresented as a percentageof your class times versus the
attendance.
And so those class times are 8a.m., 11 a.m., 1 p.m., 2 p.m., 3
p.m., and 8 p.m.
And so going back to this ideaof what could a gym owner do
(14:11):
with this information, well, tostart, you could do your own
kind of supply and demandanalysis.
But I would look at thosetimes, and if you have any
classes in those times, considerwhether you should cancel,
combine, or otherwise adjust.
Because what we're seeing isjust this growth in number of
classes, but not necessarily thesame growth in client count or
attendance or you know, some ofthe other stats.
Speaker (14:34):
Yeah, that's
interesting and super helpful
for when you are testing out newclass times.
There was a time when our wehad a 9 a.m.
group that was extremelypopular, and it was because the
local hospital, which was aboutthree blocks away, they used to
run in 12-hour shifts.
And at 9 a.m.
or 8:30 or whatever, hundredsof nurses would end their shift
(14:56):
and then they would come to thegym and then go home and sleep.
When that hospital changedtheir shifts to like 10-hour
shifts or eight-hour shifts orwhatever it was, suddenly nobody
wanted to come at 9 a.m.
anymore.
And and so, you know, these thenumbers that Brennan's sharing,
they give you an educated bestpossible guess, and you should
(15:17):
be adjusting every three monthsbased on supply and demand, too.
Yeah.
Speaker 1 (15:22):
And the um the other
related note to kind of shift to
another one of those stats fromthe report is average class
size.
We see the average class sizeat six to seven people.
And that number is a little bitof that, like thinking about
any any average, you have to askyourself, like, what does that
(15:42):
represent?
And my guess is for most gyms,the average represents not a
single class.
I I my guess would be mostclasses are above the average
and a few are below the average.
But the analogy we were we weretalking through was obviously
depending on your trainingstructure and and the way you
run, like if you're runningintentional small group classes,
(16:03):
great.
Five might be your class cap.
That might be your ideal classsize.
If you have a bigger room andyou and your class can
accommodate 22 people and youraverage size and your class size
for that class is six or seven,I think there's there's a
potential risk to that,especially with lead new clients
and lead generation.
Because if you walk in to aclass that feels empty, you
(16:27):
might be second guessingyourself.
And if you walk into a classthat is completely packed,
you're there's probably somesocial validation happening.
There's higher energy, there'ssome really great community
building that's happening.
And there's, I think, a muchhigher likelihood that you're
going to come try a second classand then end up signing up.
Speaker (16:45):
It is true.
And, you know, there's there'scertainly a sweet spot there.
What a lot of gyms seem to bedoing is running small group
training at big group prices.
So their average class size isfive or six anyway, but they're
pricing their service as if theyexpected 12 to 15 in a class.
And that's why they're notmaking any money.
(17:06):
I mean, if if you're making $10per person attending this class
and you're paying the coach $30for $32 to run the class, I
mean, you know, your net on thatclass is like $16.
It's so much important.
Yeah.
Yeah.
Speaker 1 (17:24):
Yeah, I think it's a
pricing and a delivery.
You can deliver a class, youcan deliver the class experience
for five people in two ways.
You can deliver it like a VIPsmall group class, or you can
deliver it like a big groupclass.
And I I've gone to probably twoin the last six months where
I've had those two experiences,and they felt so different.
(17:45):
And one, I dropped in at a gym,I was traveling, and there
were, I think, five, five or sixof us in the class, and it was
awesome.
And I got the VIP.
The coach was so great, and Ifelt like a VIP.
And I was like, that was agreat class.
Now, obviously, like you said,the pricing structure has to has
to uh match that businessmodel.
But I left feeling like thatwas an awesome class.
(18:06):
I went to another one and therewere probably only three or
four people in this class.
So, even more of an opportunityfor it to have been a VIP
experience.
The coach led the class as ifthere were like 40 people.
It was just like very littleattention, you know, really,
really kind of loud music spreadout, just kind of a confusing
experience.
So I think you you mentioned areally important point around
(18:28):
pricing, but also just theexperience should feel high
touch VIP versus high-energycommunity, really excite,
exciting bigger group classes.
I think that's where you canget kind of the best value from
both of those extremes.
Speaker (18:43):
I'm gonna ask you about
the number of small group
personal training studios thatwere in the report this year
because it's so much higher.
But first, maybe let's justdive into that a bit deeper.
What does small group personaltraining look like from a client
perspective versus you know biggroup training?
Speaker 1 (19:01):
Uh that's a great
question.
I think we're watching theindustry evolve right now into
so many different forms of that.
So like two brains put out aton of great content this year
around what small group, and youyou guys have helped define
some of these terms.
So apologies if I misuse themsmall group versus semi-private,
but at a simple, you start witha coach-to-client ratio.
(19:24):
And there uh what we see inthat like small group area is
three to five clients per coach.
And then the next decision iswhether or not the programming
is unique to the individual, orwhether it's a standard program
that's delivered withmodifications and uh adjustments
to the individual.
(19:44):
Even within that, I've seen alot of variety.
I've seen like, okay, well,there's gonna be three to so
there's so many different reallycool examples of gyms that we
work with and that I've visitedthat are doing this version of
higher value smaller grouptraining.
So I don't know that there's asilver bullet approach to it.
I think the common theme forall of them is it's more
(20:07):
prescriptive.
You have to understand what theclient's trying to get out of
it, you, the programming, youhave to understand their goals,
uh, and you have to have reallygood coaches.
The coaches have to know whatthey're doing.
If you have those three things,then the all that spectrum of
how personalized is theprogramming, how generized is it
(20:27):
with modifications, what doesthe floor plan look like?
How do you manage scheduling?
There's a lot of different waysuh like that can actually be
successful.
I've seen, you know, of all theones I just mentioned working,
they were all brushing it.
So I'm like, you know, I Ithink yeah, there's a lot of
opportunity out there for smallgroup high value training.
Speaker (20:48):
Okay.
Just turning, you know,specifically to CrossFit gyms.
And if you're listening to thispodcast, you know, like about
half of the gyms that we workwith in Tubrain out of a
thousand gyms are CrossFit.
And, you know, what whatpercentage of Watafi clients are
CrossFit gyms, Brennan?
Speaker 1 (21:04):
I would say now
probably 60%.
Speaker (21:08):
Okay.
So this is a big part of bothof our sample sizes.
And the where this shift frombig group to small group or big
group to semi-private ishappening is is most commonly in
the CrossFit space.
I think a lot of people havewho own CrossFit gyms have
realized that like the big groupmodel, while it was popular
2018 to 2012, and while theycould get leads on Facebook
(21:31):
cheap for a couple more years,like it's really not the most
prevalent successful modelanymore.
And so a lot of these gyms areshifting to small group or
semi-private now.
There are some challenges inthat, obviously, too.
But one of them is you need adifferent coaching style.
And that's why I wanted to askyou about like the client
experience in a big group versussmall group.
(21:53):
But let's just quickly turn tothe data.
Like you are seeing more gymsin the small group space, right?
Yeah.
Do you get the impression thatthese are gyms that are
converting to small group orthey started as small group or
they started as studios?
They went one-on-one to one toa few, or which direction are
they going?
Speaker 1 (22:13):
I think there's two
categories.
The first is gyms that sign up,that switch to Watify or start,
and they've figured out that'sthe model that like that's their
model.
It's they're not reallyswitching from anything.
The ones transitioning seem tobe struggling to struggling to
kind of pin their goals withgroup training.
(22:34):
And they're not like flipping aswitch and just converting,
they're introducing newofferings to their clientele,
changing their lead intakeprocess and trying to grow that,
grow that kind of area of theirbusiness.
unknown (22:48):
Okay.
Speaker (22:49):
I think actually that
leads us into the client
headcount section.
So it overall, gyms showed thatthey were a lot more profitable
this year, which is fantastic.
But when I turn to clientheadcount, while that forms part
of the reason, it's not thebiggest reason.
Like big group gyms went from,I think it was 122 last year to
129 this year.
(23:10):
Let's start there.
Why do you think that gyms arecarrying a slightly larger
clientele than they were maybe ayear ago?
Speaker 1 (23:18):
That's a good
question.
From our data, what we can seeis that the general fitness
industry continues to grow.
And our like our retention rateand our tenants going back to
the beginning, it are up, areup.
So that number, the differenceyou mentioned correlates pretty
closely to that retention.
They're hanging on to moremembers and they're probably
(23:39):
adding the same or slightlymore, and then you end up with
about 10 more, uh, 10 moreclients at the end of the year.
Speaker (23:45):
Which is massive.
And I'm I'm glad for it.
I do want to point out thatespecially even with these big
group style gyms, you're notseeing people get to 400
members.
They're still under 150.
Yeah.
There are some models wherethat works, but in general, gym
gyms that are based on the ideaof getting 300 members or more
(24:07):
really struggle to duplicatethemselves and have like a
working model.
Now, you know, one model that Iknow you absolutely love is
Alchemy.
What is that model?
Speaker 1 (24:17):
Yeah, the the I think
where you see a lot of the
success is happening on theedges of what we're talking
about.
There's there's a group modelwhere you have pretty big
classes, and some of them arestill high value, like alchemy,
and there is a model of highvalue gyms that are still
running pretty big groupclasses.
You're never gonna, or you'reprobably not gonna be able to
(24:39):
charge $400, $300, $400 a monthfor that.
But you know, alchemy is $180or something like that.
So you see if if you can fill a25 or 30 person class
consistently, then you canprobably have a successful gym
running a bigger group model.
Uh, and then the other end is,you know, filling a high value
small group model consistently.
(25:00):
But the but the six whateveryour model is, you should kind
of understand your capacity.
And, you know, you're you'renever gonna be at 100%, but your
business model should, yourgoals should align with the
business model where if you canfill that capacity, you should
be, you know, growing and doingwell.
And then the the other, youknow, thing we see in the data
is most of what we share withtwo brain are averages.
(25:23):
So we have these like clearbenchmarks.
The other thing we've done thisyear is we've looked at kind of
inspired by your series whereyou look at the leaderboards for
two brain clients, we have likethe top 10.
So we for the CrossFit gamesand the CrossFit affiliate
summit, we did an analysis ofthe top 10% of affiliates.
So we took a sample of I thinkit was a thousand US affiliates
(25:44):
and just looked at the top 10%metrics.
And so across ARM, leg,retention, attendance, all these
stats we're talking about.
There was a pretty significantgap.
Like just in ARM, we saw uh forthis, for this study, the
median was 112 a month and thetop 10% was over 170.
So that's a huge difference.
So yeah, there were that thatwas really interesting to look
(26:06):
at that like top 10% to show,really, if anything, it's just
to show like this is possible.
These averages aren't likethere's a pretty wide range on
both sides to grow into as a gymowner.
Speaker (26:19):
So I find that
particularly interesting, and I
hadn't heard that before.
And I was gonna even bring thisup like gyms are up a little
bit in headcount, but they seemto be up a lot in ARM.
And if we look at like where isthis revenue coming from, an
earlier chart, there's fewercategories.
You know, if we had said whereis your revenue coming from
three years ago, we would havehad to list 10 different things.
(26:41):
There was retail, there was akids program, there was a
legends program, there was aweightlifting program, right?
Now it's like, well, there'sfour or five things.
One is retail, one might besupplements.
Yeah.
But ARM is still up.
Is it are gym owners justgetting better at business?
Are they getting better atpricing?
Like, what do you attributethat to?
Speaker 1 (26:59):
Well, there's there's
two things we saw actually that
if you're listening to this, uhgreat, because this isn't in
the state of the industry datawhen you when you think about
what's behind R discounts andbilling structure.
So the first is that top 10%,they have a little bit less than
5% of their total revenuediscounted.
(27:20):
So if you if you build all ofyour memberships and invoices at
100%, uh that group onlydiscounts five a little bit less
than 5%.
So they're collecting 95% ofthe revenue they intend on
collecting.
And the rest is over 10%.
So just like right there, youhave a massive difference.
Um and then the the otherthing, just on the billing
(27:43):
structure side, is, and I'mcurious to hear your opinion on
this because it's notoverwhelming, but the top 10%, a
quarter of them, 25%, have somestructured weekly billing,
either every other week, everyfour weeks, or every week.
And only 10% of the rest ofpeople do that.
So the obvious math there isyou get an extra billing cycle
(28:04):
in.
But there's more than one wayto do it.
And that's what we see.
If we're driving arm up, thatis not we do see data around
revenue diversification.
Like there's also a higherpercentage of their revenue
coming from appointments.
A lot of them are doing retail,but those were kind of some of
the interesting, likenon-obvious operational ones.
Speaker (28:21):
Tell me if I've got
this wrong.
So they're selling a fewthings, but not 12 things.
Their pricing is higher andthey discount fewer people.
And they all seem to be on somekind of weekly type billing
cycle instead of monthly.
Speaker 1 (28:41):
Correct, except for
not all on weekly.
75% still are billing monthly,but proportionally 25% much
higher than the average.
And yeah, so it's it'ssomething worth considering for
sure.
Speaker (28:54):
Okay.
Yeah, I misspoke there.
So not all the best gyms aredoing that, but more of the best
gyms do that than that.
Really important.
I mean, if if people listen tothis and they they want to get
one takeaway, like that's it.
Like, look at what the bestgyms in the world are doing and
just copy them.
They have a billing cycle thatrecurs either every four weeks
(29:16):
or every week or whatever.
They are giving fewer discountsthan anybody else.
You know, they sell two orthings, three things that are
high value and they sell themreally, really well.
Like, I think that right therefor me is is reason enough to
spend all this time and energyand money publishing this data
set every year, just thatknowledge alone.
(29:38):
Brendan, that is super good.
Speaker 1 (29:40):
Well, and on the just
one more comment on the
discounting side, because Ithink some people hear that and
they think, okay, I'm going todo 100% list price for
everything.
And there is a caveat there,and and you two brands probably
got a perspective on this too,but just from a data data
perspective, and we see this inour own business too.
What adds up are in Indefinitelifetime discounts.
(30:01):
And so when we looked at thisdata, we look at all the revenue
they're going to collect.
So if you have an opportunityand it's right for your business
to do, and you have want to runa promotion and you're like,
we're going to do someshort-term discount.
We think it'll impact our leadconversion.
We're doing a summerinitiative.
That we could debate whether ornot that's a good business
strategy, but that's not reallywhat's impacting your arm and
(30:24):
your overall revenue.
What's impacting it is the 20%discount you gave to someone two
years ago and you just appliedit forever and you don't even
think about it anymore.
And so our recommendation whenI talk to Jim Warren's about
this is start, just look at areport, look at a discount
report and hide all of the onesthat have an expiration date.
Like start there.
Just look at that list becausethat is where there's an
(30:47):
opportunity to over time.
If you if you work down thatlist, then six months, nine
months, a year from now, twoyears from now, your business
will just grow into a healthier,more sustainable business in
the long run.
Speaker (31:01):
Yeah.
I mean, if your gym hasgrandfathered rates, start
there.
I mean, your business hasimproved so much, I'm sure, in
the last five years.
Your what you're offering iscompletely different and twice
as good as it was back then.
Why are people paying for your2010 level of service when
(31:22):
you're delivering at a 2025level now?
Yeah.
Yeah, it's I don't know.
And it's just, you know, itreally comes down to like the
leadership skills of the ownerand doing the uncomfortable
things because it's right, notbecause it's, you know, easy.
Uh yeah.
Speaker 1 (31:38):
It's similar to price
increases, but in a lot of
cases, even more personalbecause like an individual might
have a unique discount and yougot to go have a one-on-one
conversation with them, whichcan be more challenging than
sending an email to everyone andexplaining a price increase.
Speaker (31:50):
And quite quite often,
those people have been promised
a lifetime rate, haven't they?
Speaker 1 (31:55):
Yeah.
Yeah.
Speaker (31:56):
I'm sure you see that
too.
So one interesting thing that Ireally wanted to mention to you
here is that gym profitabilityis up even more than like gym
membership, which is fantastic.
Uh gym expenses went down onaverage by about $1,000 a month,
which is great too.
And all these things, slightlymore clients, higher ARM, lower
expenses, these all contributeto profit.
(32:18):
But one thing that didn't go upwas coach pay.
What are you seeing there?
Speaker 1 (32:24):
Well, that's a good
question.
We're we're launching next yeara completely revamped payroll
feature.
Right now, WattFly probablydoesn't have the best data on
coach pay.
So I don't have a great answerfor you, other than my kind of
perspective on the industry ingeneral has been there there's
(32:45):
the supply and demand for coachpay.
And if gym owners are beingreally conscious about their
expenses and not letting themrise, they probably have in
their mind a fixed amount forhow much they're going to pay
their coaches.
And as long as they can keepgetting coaches for that amount,
they might think like that'sokay, then I don't have to raise
(33:05):
that pay.
And so I think the question isdo you have the right coaches
and what's your coach retentionlike?
Because that's where when I'vetalked to Jim, like I was
talking to one of our customersin Arizona, and we were talking
about coaches, and he's he'sawesome coaches, awesome
retention.
And I was like, Well, what areyou doing differently?
Or actually, this might havebeen um, I don't know if you
(33:28):
know Joe TP from the stripcrossfit.
This might have been Joe.
Yeah, it was someone, but hisis his answer with like one
sentence.
He was like, Oh, I pay themmore.
Like it was so simple.
But my point is that um withsome expenses, minimizing them
is actually kind of like uh thegoal or a good thing.
And with coach pay, it'sprobably not right because even
(33:51):
if you could go get anothercoach if that one leaves for the
same pay, there's huge benefitsto long-term coach retention,
to getting better coaches, themap, the impact that will have
on your retention and yourclient experience and your
ability to charge a higher armor launch some of these
services.
So coach pay is like aninvestment in your business.
(34:11):
And you obviously have tounderstand how it makes sense
for your PL.
But if gym profits are up, Ithink one category of
reinvestment that would be areally smart is in Coach Pay.
Speaker (34:21):
Yeah, I agree.
Like, you know, when we're whenwe're telling gym owners your
salary cap is 44% of yourrevenue.
As your revenue goes up, thatsalary cap should go up too.
And I, you know, I think it itprobably will go up by next this
time next year.
You know, now the gym ownersare more profitable, they're
gonna turn around and give thatto coaches.
(34:42):
I I often see the inverseproblem, which is gym owners
making no money and and theircoaches are actually doing
better than they are.
So I'm confident it willhappen.
It's just kind of happy to seegym owners making more first and
paying themselves first becausethat's what's gonna keep them
in business.
Yeah, that's great.
Yeah.
I I will say, like, you know, Isometimes time goes by so
(35:05):
quickly for me that in a recentvideo, I said, Oh, yeah, you
hire a cleaner for 12 bucks anhour.
Well, when I first hired acleaner, that was the minimum
wage in Ontario.
Now that minimum wage is 18.
And so I sometimes forget likeeverything's gone up.
Speaker 1 (35:22):
Yeah, yeah.
They're uh they're, you know,it it gets it gets more
expensive, which is why keepinga really close eye on your arm
is uh equally important.
Like if your arm isn't goingup, the rest of the world is,
and and the rest of the world,it's not just inflation.
Like I do think you have tothink about delivering more and
(35:42):
more value so you can continueearning more profit because
nothing's gonna, your yourexpenses aren't gonna freeze
ever.
Like they're just not.
Speaker (35:52):
I think that's really
important too.
And also it's important to keepyour arm going up because if
you're just paying your coachesmore because you've got 20 more
clients than you did this timelast year, that's a more
volatile number.
And and that can go down, butarm never goes down.
Speaker 1 (36:08):
Yeah.
Speaker (36:09):
Or almost never.
Brennan, I'd love for you togive us like one more, you know,
smart guy insight here that wecan share with people.
Speaker 1 (36:18):
Smart guy insight.
So on the demographic side ofour data, we have a lot of
demographic data.
So we look at um age as one ofthe characteristics we look at.
And we look at distributionover a uh a few different age
groups.
And what we saw this year,which was actually, I think, as
a percentage, the biggest changefrom last year's state of the
industry, was a 10% increase inthe group of clients that are 21
(36:43):
years or younger, and a 5%increase in the clients that are
50 or older.
And on the 21 or younger side,that really stuck out to me as
another optimistic data point.
Like that's awesome, first ofall.
And as a gym owner, positionyourself for long-term growth.
I think a lot of gym ownerstalk about their ideal customer
(37:06):
profile and their avatar.
And they might think of it as afixed, like they might have a
persona, it might be like,Jason, he's 22 years old.
And he, and what's interestingis the marketing and the
business you built a few yearsago, you kind of have to decide
whether you're going to evolveyour business to serve the same
(37:26):
clients for 10 or 15 years,meaning you actually kind of try
to grow and change your avatarwith the cohort of clients that
you have that you serve mostlyright now, or you stay kind of
fixed on an avatar, but justknow like that person's
changing.
Like the the growth in clientson the younger end of the
(37:48):
spectrum.
There's a lot of reallyinteresting studies and and
information out there aboutthose people are looking for
something different.
They're they're really lookingfor a a lot, a lot more than
just I want to look good nakedor I want to lose weight.
They're looking for place, acommunity.
They're looking for morewell-rounded fitness and
(38:10):
wellness.
They're looking for amenitiesoutside of just classes.
Like there's a lot of reallyinteresting demographic trends
that gym owners need to getahead of if they're going to
capitalize on the growth inthat.
I think it's Gen Z.
I would get my Gen mixed up.
But yeah, Gen Z, Gen Z.
That's it.
I mean, you know, it's Gen Z.
If you're going to capitalizeon that demographic, they are
(38:32):
looking for something differentthan those people 10 years ago.
So it's really, I think thatcan help them form a lot of kind
of medium-term, you know, one,two, three-year decisions gym
owners are making.
Speaker (38:44):
That's very
interesting.
And just what you said, I wasnodding along because I was
like, okay, yeah, actually, mygym has evolved with the clients
that we have.
Like, you know, I have a thisclient named Neil who comes to
the morning classes.
He's been with us for I think16 years now.
The gym is perfect for him.
Wow, that's awesome.
But, you know, my my daughter,she's away at school, she's 21.
(39:06):
You know, she's at a differenttype of gym than mine.
And it's all young people, andshe loves it.
You know, and so this issomething that just gym owners
need to be more aware of.
Speaker 1 (39:16):
Yeah, it's a
decision.
And I think you you what'simportant is you kind of pick a
path and you don't try to keepserving everyone knowing that
the needs are changing.
Uh, I went to a, there was a, Ididn't go.
There was a there was a classat my gym that was like a
special, it was like one ofthose social bring a friend type
of classes, and it was forsingles.
And I was like, what a greatidea.
(39:36):
As long as it's a great ideafor your gym.
Like that that class wouldwould fail if that's not the
market you're serving.
But I think they they had await list of like 20 people or
something.
And it was such a interestingidea.
It was like a lot of peoplemeet their partners at, you
know, the the business.
And why not host a singlesclass if you are serving clients
(39:56):
in that demographic?
Uh so is just one example ofknowing who your market is and
and providing some offeringsthat would resonate with them.
Speaker (40:05):
It makes sense because
if you're under 21, you're
probably single.
Yeah.
And this is something thatyou're you're doing, right?
Yeah, that's awesome, man.
Well, Brendan, thanks again.
We're gonna do this again realsoon because I always learn so
much from talking to you.
And it's energizing to get thisunique perspective on things.
Like every time we have aconversation, I'm like, oh, I
(40:25):
never thought of that before,you know.
And um, I can name specificexamples of times when you've
come up with an idea that I'vethought, yeah, that's brilliant,
but it's it's so smart that itjust makes absolute, you know,
obvious sense.
So thanks again for being partof this, man.
And uh we're you really arehelping a lot of GMOers by
sharing this data, sharing thisanalysis and your own insights
(40:48):
and helping them make betterdecisions.
Speaker 1 (40:51):
Yeah, thank you guys
for all the work and putting it
out.
And we're happy to be part ofit, looking forward to all the
years to come.