The Game with Alex Hormozi - How do you make 6WC work with PT first? How to make it work with online? How to make 6WC work in a small studio w Muay Thai? What about market saturation? | Ep 63

Episode Date: June 25, 2018

"There will always be something that brings people in the door." Today, Alex (@AlexHormozi) addresses various user questions related to running a six-week challenge in different types of fitness studios and the potential market saturation. He emphasizes the importance of over-delivering, having a great fulfillment mechanism, and testing different acquisition processes to grow a gym business successfully.Welcome to The Game w/Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned on his path from $100M to $1B in net worth.Timestamps:(2:14) - Limit participants, charge more(4:10) - Avoid valley of despair, focus locally(7:27) - Great service, succeed in the market(11:45) - Fitness market larger than realized(14:24) - Large customer pool, no saturation concern(15:42) - Be adaptive, adjust as neededFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

Guys, happy Tuesday one day after I asked you guys for some questions. And so thank you so much for giving me the amount of time that it took you to write the questions. I would try to honor you by giving you good answers. So there were a few different lines of questioning that appeared on the video that I made yesterday. And so I'll probably answer three or four at a time per video, just depending on what kind of line or bucket it kind of fit into. the first one that I wanted to, or the first four that I wanted to kind of address were from Will Hamilton, Mani Laris, Jesse Catalano, and Alex Morningstar, because they kind of fell into the same bucket under my, you know, understanding of it. And so, Will Hamilton asked, how would you

make this work for, how did you make challenges work for a PT-first cross-fits studio? Jesse asked how you do this if you wanted to run this online and sell online. And then Alex Morningstar asked how you can do this if you had a Muay Thai studio. So I'll just address your three first and then I'll address panties. For Will Hamilton and those of you who have a PT first, a box, right? What's up, Tyler? That's actually really, like, I don't really know why there's even a hang up with it. Like a six-week challenge is literally just a front end. Whatever you want to do on the fulfillment side is up to you. So, I mean, we've had semi-private studios that just run, you know, two times a week, semi-private sessions for six weeks. So they get 12 sessions

for 600 or $800 or $1,000 that they run on the front end. So it's entirely up to you in terms of what you want to use for your fulfillment mechanism. The point is that we're just getting them in the door so that we can provide great service. And that would work, I mean, I don't even see an issue. The main, I guess, constraint for you is just that you're not going to be able to take as many on, but you've already said that that's kind of what you want to do anyways, is not take too many people on it once. So don't take too many people on at once. You know what I mean?

Like that's entirely your prerogative and it would work seamlessly just the same way. So if you're if you're just comfortable starting with two or four new PT people a week, can start with two or four new people a week. If you're selling it at 800 bucks a pop, you know, and you do four of them, it adds an extra $3,000 a week. So it's an extra $12,000 a month. You know what I mean? Just on the front end.

And then you can transition back to CrossFit on the back end the exact same way we transition everyone else to CrossFit or large group, whatever, on the back end. I mean, there's really no difference. It's just a question of whether, like, you have the capacity, but that's always going to be your business problem no matter what if you want to lead with PT, which is fine. It's just you're limiting your inflow, which is cool. So, but that's your choice and really doesn't have any effect on the acquisition process. That's just a fulfillment thing.

So, Will, hopefully that answers your question. If you have any more, drop them below. happy to talk more about it because I love talking about this stuff. So Jesse Catalano, you said, could this work with online? It probably could, but that's not my wheelhouse. Not that I couldn't do it. We obviously have an online business. It's just that I don't recommend people have two things.

I speak out pretty adamantly against the whole hybrid model because I think what ends up happening is that you chase two rabbits and you catch neither. I don't think split focus makes any. anyone any money, ever. The only people that I see who actually run multiple businesses successfully are usually doing $100 million more or more in revenue where they've actually gotten to the point where they have an executive team and then underneath them they have managers and underneath them they have frontline employees.

But if you're like, I'm trying to start two things at once, one of them is going to work, it never works. So let me like hopefully save you that time. You should just use it in your local market, crush it because it already works. You know, like the system's end to end. and it just flat out works. So I would just do that rather than try and do it online and then introduce more variables because everything seems attractive until you get into it.

So you get it, there's a beautiful like curve of uninformed optimism first. So right now you're uninformed and optimistic and then becomes informed pessimism. And then you have the value of despair and then you have informed optimism and then you have the realization of the goal. But most people don't make it past informed pessimism or value of despair. So my recommendation is to not do that is to just focus on the local market that you're in and crush it that way. Alex Morning Story, you have a 1,200 square foot facility from Wai, and the question was just how do you get, how do you start a challenge without disrupting your current member experience? It really depends on, so first off, it's a big strategic question in terms of whether you want to introduce a fitness component to your facility.

And that is a you question. I like fitness and transformation aspects because it's easy to sell. There's a huge demand for it in the marketplace, and it's high value. A lot of people value changing the way they look in a very short period of time, especially initially, and then they get bought into the process, et cetera, and the community. So that's really a you question. Now, if you said, okay, I would like to do that. I do want to introduce a fitness component to my facility so I can satisfy two needs,

then I get two different front ends. Some people want self-defense and confidence, and other people who want weight loss, and then we can cross-sell, which we have tons of facilities that do that. That's just a choice that you have to make. But in terms of if you have a 1,200-4 facility, there's two alternatives.

One is that you introduce a fitness component to your Wai sessions. So like maybe the first 30 minutes or so is kind of conditioning work, and then the second 30 minutes is skill work, which is fine. A lot of people would just see that as an added benefit. or the alternative would be that you have like conditioning sessions that only the people who are in the challenge would have access to but I see that as sort of a more limited model the people who are going to have the most access to the ones who really like incorporate into how they do their fulfillment on a larger scale and especially since you're limited by space that would have to be because like you're not going to really start another like in my opinion because what would happen is this if you started it you'd start one session and then you'd start one session a day it'd be kind of a pain in the butt to fill

But you could do two, one in the morning, one at night. But the thing is, like, you're going to make more in the first week running our thing than you've done from your entire Maitai studio. And then you're going to be like, holy shit, I'm going to be doing this like now. And so then you're going to confront the fact that you want to change the strategy because make way more money. So that's what's going to happen if you do choose to do that. But again, it's your call.

It's your business and it's whatever you want it to be. So I hope that that kind of answered the question, but from a logistic standpoint, starting with one of the morning, one at night. You only have enough room for one session. So it's like for me, if I really wanted to do it appropriate it, I would just do a specific amount of time during the session. That would be for fitness and then followed up with conditioning. And that could be a nice added bonus of a nice sales point.

The last question was from Mandy Lars, who asked, what happens when, like, if there's other people in that area who were doing gym launch, which is like a common obstacle overcome that we have in our sales script. So I will tell you what our guys tell everyone. We've got some markets that we've got 20 gyms running. And yet they all get fed. And so the reality is that if you look at a marketplace, it's not like there's one pie like this. And then now there's two gyms, now there's four gyms, and there's whatever, eight gyms.

And you're cutting this one pie like less and less and less. The route is that there's 400 gyms in your market. And now you're just going to be one of the eight or one of the ten that's actually crushing it. And the reality is that if you over deliver, have amazing service. having a decent fulfillment, really care about your customers, follow up with them, have events early on to engage members, get them into the community, then you're going to be a gym that's going to succeed, and you're going to be a gym that's going to maintain the customers, get referrals, and then grow from there.

And so the question that I think you had as a secondary question is, what happens if the market gets tired of six-week challenges, right? And, A, it's a fair question. but I think that if you look at history from fitness, like LA Fitness has run a free month for like 40 years. And so you're, as long as you have a mechanism that converts eyeballs into customers walking in the door, then you're going to be okay. Thanks, Derek. Appreciate it. You're going to be okay.

And the moment it stops working, there will be something that works because there will always be something that brings people in the door. Now, my personal opinion is that for the 40 years that LA Fitness was dominating and 24R Fitness was dominating is because they were the only ones who were big enough to afford radio buys, TV buys, big direct mailplays. And so they were the only ones who even had any promotions that were working on a large scale. The advent of internet advertising allowed people to start with a $5 a day budget. And so lots of more fish could enter the marketplace. The other thing that happens is that you could test a lot faster. And so the front end promotions that they usually had was for one month free, stuff like, you know, no initiation fee, things like that that they would use to get people in the door.

But the reality is that they probably just never tested a six-week challenge on the front end because if they had, my opinion, is that it would have converted better. It's just that they didn't know because that was not one of the tests that ran. Now, we started running challenges, six-week challenges in 2013 at my facility. So that's five, six years ago that we started running those. and my opinion is that we're just able to test things so much faster that we can run 100 tests within two weeks rather than do an AB split test if you're a really savvy marketer back in the day and then have to wait four months to get all the data from your direct mail piece or your radio split test right and so if you're looking historically at how people how jim's market to get people in the door one the average woman diets five times a year you're going to be getting different eyeballs every single time you run a campaign because a different person's light is on at that moment to respond to an advertisement.

The second thing is we want to craft the offer that is going to be the one that converts best. And so right now I'm a big advocate of have one front end that works the best. Right. Like right now, we haven't changed our free case study for 19 months. If we need to change it, we will. But even so, it's still going to push straight to a strategy call because that's what's worked. That's our acquisition system.

That's worked. If we need to change the widget, we can. But at the end of the day, if you're a gym, you're going to be giving a certain amount of time for free, right? Like, it's going to be a, I mean, it's going to be a promotion of, it's time, right? It's 28 days. It's 42 days. It's 12. I mean, like, there's just so much, like, you're going to be giving, hey, try our service. At the bit, like, if it all boils down to it, that's what it is. And so if you want to have a way of liquidating that attention, right, liquidating the amount of time, then I would suggest that you sell something on the front end,

that's $500 to $700, right? When, you're a lot of, right? When they come in the door. Will Hamilton earlier said he's got the PT first model. Cool. Those guys do PT first. That's fine. You know what I mean? If you want to run more volume through your door and have a more, you know, a structured

process where you can take on 10, 15 new customers a week, then you can run a challenge model the way that we have it. Either way, it doesn't really matter. It's just an acquisition process. So, um, hey, Mosin, Nation, quick break just to let you know that we've been starting to post on LinkedIn and want to connect with you. All right. So send me a connection request and note letting me know that you listen to the show and I will

accept it. there's anyone you think that we should be connected with, tag them in one of my or layless posts, and I will give you all the love in the world. All right, so let's get back to the show. All that to say, if there ever does get to, like, one, the market is big enough because every single day, right, every single day, there's 400 gyms in the market. Every single day, each one of those gyms has new people who walk in the door, and people walk in the door off of word of mount. They walk in the door because they Googled it and they showed up on Google Maps. They walked in the door because is they Googled it and it was a blog post

that someone wrote and wrote for SEO. It was something they heard on the radio. It was a direct mail piece. It was something they saw on Instagram. It was something that saw on Facebook. It was something they saw on YouTube. The amount of traffic that is out there is so much bigger than people are giving credit for it.

Like I just got a message this morning. Someone's like, hey, someone's like trying to copy yourself. I'm like, dude, we signed up 13 gyms yesterday. We are much bigger. And the point is that there's still, still enough market in my tiny little sliver of gym owners who are like, who are, Crossfoot owners, boot camp owners, or similar private facilities, like, I'm in a niche of a niche, and we're still able to grow to the size that we are.

If you're talking about weight loss, like women who would like to lose weight, how many women do you know who would like to lose weight? All of them, right? And so if you have 400 gyms in each one of the gyms, on average, signs that 10 new customers a month. You're talking 4,000 new people a month who are signing up for gym memberships, like across a city. And our concern is what happens if another gym is marketing? So what? Like one more gym is like is going to be a little bit better than the other 400. You know what I mean? But still at the end of the day, that's just going to be something to get someone to try your food.

And unless your food is good, they will not tell your friends, their friends, and they will not get more people in the door for you. So, and I mean, but the sad, the sad news is that no gym, no microjim is really even big enough most of the time, even in the market aggressively for 10 years. You know what I mean? like for five years for anyone to even know who you are, right? Like I remember thinking when I walked, when I, because I had United Fitness in, in Southern California.

And I wanted to be like, like on the street like, hey, do you know United, like, I'm the owner of United Fitness. And people were like, I don't even know what that is. And like a telling tale of this, and I said this before is that a friend of mine used to launch Orange Theory's. And I said, oh, that must be really easy. Everyone knows who, you know, Orange Theory is. And he was like, no, not really.

And I was like, what? And he said, nine out of ten, that we get off of online advertising and get never heard of orange theory. Orange theory. And so if you're worried about like how, like, I hope that gives you an idea of how big the market is and how big the pie is. And if you're like, there's two gyms in my area marketing on Facebook, so what? You'll both get fed or all three of you will get fed or all 10 of you get fed.

And it doesn't like, that should just stretch your mind in terms of how big the pie is. If every single, like I told you, there's 4,000 people. If there's 400 gyms, each gym gets 10 people a month. There's 4,000 people every single month who are signing up for gyms. It's just, can you, do you think that you can get 20 of them? Do you think you can get 40 of them? Of course you can, right? You just have to know how to market, know how to sell,

know how to have an acquisitive process, and then put this process in place for each different traffic vehicle that you're using. So, okay, hopefully that answered. Will hand some questions about PT first. Yes, I think you can use that as a phone-in mechanism for the six-week challenge. Jesse Catalano, I would not recommend that you do this as an online program because I think it will be a distraction for you. I would just focus on the fundamentals

and doing what you do because you can make tons of money with Jim if you're doing it, right? Alex Morningstar, about Muay Thai. That is a fundamental strategic decision for you in terms of what you want your facility to be about. What will likely happen, though, is if you adopt our model, you will make a lot more money,

and then all of a sudden you'll see your perspective will change. But I'll let you go through that experience on your own. And then, Mani, I hope that kind of size of the pie explanation give you a little bit of, idea in terms of how big Viatra Pi is, what I think about market saturation, and the longevity of an offer. And at the end of the day, like, what offer is going to beat, at least for ours, a free six-week challenge?

There aren't many. And I think that it wouldn't even be giving, like, well, what about a free eight-week challenge? I think that there's magic with six weeks. And the reason that I think that is six weeks is just long enough that people believe that they can have a huge outcome, but short enough that they believe that they can achieve it. And so I think that's really the balance point with the six weeks free just makes it irresistible. And challenges are just kind of what seem to be converting right now.

If it turns into something else, we'll change it. You know what I mean? But like it's flexible. For the guys who know me, like, I'm in no way romantic about a six week challenge. It just happens to be the vehicle that works, like, or at least has worked for the last five years and doesn't seem to be slowing down. So, I mean, and for anyone who's like, well, I'm concerned of what happens when it stops working. It's like, well, there's something that's working right now. I don't want to use it because it could stop working.

It's like, well, dude, just use it now. It's working. And then when it stopped working, we'll move to the next thing. You know what I mean? It's just called being adaptive, which is just part of the game. And if you think that your business is ever going to just going to have one offer like forever, then that's silly because business is dynamic. So don't think that way because it's not reality.

It's just like a dream world that we want to have. And it's just not true. But for the while, it works. And it has worked for the last five years, so I don't think it's going to change, like, abruptly in the next six months. But anyways, guys, have an amazing Tuesday. I hope that answered your four questions. And for those of you, you tuned in, I appreciate it.

Thank you much. Talk to you soon. All right.