The Game with Alex Hormozi - The *Oh Shit* Moment | Ep 199

Episode Date: April 21, 2020

"People will always choose their convenience." Today, Alex (@AlexHormozi) discusses how the COVID-19 pandemic has accelerated the adoption of remote fitness services and how gym owners need to adapt to this new reality. He encourages gym owners to learn new skills such as selling over the phone and take advantage of the opportunity to build a successful online fitness business.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:(1:31) - "Oh sh*t moment" - fewer people will come back(2:46) - People choose convenience, slow recovery(5:08) - ROI on remote vs in-person, operators can build million-dollar businesses(9:30) - Online business opportunity, guaranteed outcome with math(11:10) - Opportunity is there, build six-figure online income now(12:15) - Don't let emotions/fear stop you from learning new skillFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

When they let us go back to business and open our doors, you're going to open your doors. And I think a lot fewer people are going to come back than you think. Welcome to the Jim Secrets podcast where you talk about how to get more customers, how to make more per customer, and how to keep them longer. And the many failures and lessons that we have learned along the way. I hope you enjoy and subscribe. Good morning, everyone. Happy Monday. I hope you guys had a good, restful weekend or maybe not.

Hope you were not resting at all into selling tons of people on remote fitness over the weekend. And hopefully you were. But if you were not, then this message is for you. So I'm calling this the oh shit moment. I was having a conversation with a friend of mine who's in the same space as us. And he was talking to me about some of the beliefs that he's getting over the phone, some of the gym owners that he's talking to, et cetera. And it was kind of interesting because he was saying that, you know,

these things change week to week. But he said right now everyone's in denial phase. He said right now they're in the phase of I'm going to hold out. I think I can wait a couple more. weeks for this to be over and I guess I'm here to say that I don't think that's going to work out for you and here's here's why I don't think sitting and waiting is going to work out for you and hoping that when you open your gym it's going to work out I'm calling this the oh shit moment because right now I think that

there's still a certain sense of hope right I think that when they turn the lights back on when they turn the economy back on when they let gyms back which by the way will be last but when they let us go back to business and open our doors you're going to open your doors and i think a lot a lot fewer people are going to come back than you think um and i think that what's going to happen is going to be a slower recovery than most people anticipate because people are still weary etc um and i think some people will just like always uh like there's a reason the on-demand economy is the on-demand economy right everyone thought that people i was literally it's so funny i had an internet troll yesterday

day or two days ago who comments on an ad and literally just saying stupid things like stupid like trying to be smart but saying stupid things and he was like as soon as online fitness as soon as the gyms went back up all this online fitness stuff is going to go away and I was like really you think that people are just going to choose a less convenient option after they come back he's like well people really value the in-person you know blah blah blah blah right people said the exact same thing about Blockbuster against Netflix They're like the CEOs of Blockbuster because it's so easy to rationalize our like human beings don't want to think of bad case scenarios and so we rationalize that we don't need to change right and so

Blockbuster executives when they were like hey are you concerned about this online streaming stuff they were like no people always value making a night making an evening going and picking up you know picking out their movie walking inside and getting their candy like it's become an experience and so we think that people will continue to value this experience. Guess what? They were fucking wrong. People would rather just click on the couch and do nothing, right? Is the experience of being at your couch better than the experience of shopping at Blockbuster? I would say no. I really miss Blockbuster a lot of times, but I didn't miss enough to not use Netflix or use Netflix way more, right? And so the reality is that people will always choose their convenience. And I think what happened very like recently or currently right now is that a huge piece of the marketplace that never otherwise would have tried online training

or maybe would have in the next decade it took all of the remote services and dragged it 10 years into the future in terms of mass adoption it was forced adoption all right and so i think a large percentage of people are going to say a larger than most gym owners anticipate are going to stay in a remote setting right i think a lot of people are still like their jobs here's the other's oh shit moment is that people some of the companies that did layoffs may not rehire everyone right because the demand is not going to be what it was at the single greatest moment in economic history, you know what I mean, like the best economy ever that happened before this. And so just like the oh shit moment is going to be when you turn the lights on and people don't show up,

right, which transparently will be great for me because I'm just going to market the shit out of the gyms that want to work with us because like that will be when marketing is more important than ever because you're going to have to differentiate and get your name out there more than anyone else is. Right. Um, but let's rewind the clock real quick. What do you need to do now? What do you need to do now because the OShip moment will come. Now, some people have stronger communities than others, right? And I always want to put my disclaimer for good operators, right? If you're an amazing operator and you haven't lost anyone,

then you'll probably recover better than people who have lost people, right? Because you have a stronger community, you have more bonding coaches, you have better culture, et cetera, right? But what should you do now? So it is my belief and just looking at the math. I'm going to do this big presentation for Jim Lawrence. Don't worry. I did a huge statistical model looking at the difference between ROI,

on remote versus ROI in person. And the question is whether or not you want to be a business owner or a gym owner. And that's a very real question. Like super, super real. That's a personal question, right? But if you're in this to maximize making money, because I've had tons of gyms who flew out during our VIP days and said, Alex, I want to make a million dollars a year.

And I said, it's not going to happen in one gym. Right. Now, talking heads of gurus would be like, you can totally like, show me the fucking bank statement. All right. And then I'll believe you. Right. But no, it's not from one facility unless you have a massive, massive facility. And typically group training, personal training said, will be only a part of that.

Like, if you have 6,000 members paying $100 a month lifetime, then sure, you can make a million year. Right. But most people didn't invest $5 million into their buildout. So it's understanding relative scope. Okay. So in my belief, there is no way better than right now for the best operators to be able to build a million-dollar income business two three four million dollar top line business

because one we're we're marketing a 25 mile radius and seeing zero decrease in sales percentages all right number one number two our remote gyms right now are closing a higher percentage of leads than they did in person that's a function of one major thing is that they're getting 40% of their leads onto it into a sales conversation compared to 20% you know whatever they were doing before all right So they have twice as many at bats. And so even if they're not as good on the phone, they're not twice as bad over the phone, right?

And so they're a little, if you look at right now, the average closing percentage to 29%. So they're closing 29% over the phone. They were closing 42% in person. All right, but if you get twice as many at bats, you actually still net more sales. And so number one, you can have a bigger geographic radius.

So the many people that I've talked to is like, I want to have a bigger impact. Here's how you have a bigger impact. You can go remote and help people are not in your neighborhood. Number two, lead costs are achieved. cheaper not because of the ads, the ad impressions and stuff, because that's temporary, right? We've already seen it go back to normal. So the cost per impression has gone 100% back to more normal since two or three weeks ago. All right, people are advertising you. But it's because when

you draw from bigger radius, you get cheaper leads. That's just period. If you run an ad nationally, it says like challenge or whatever, you'll get, you know, 25 cent leads. The issue is how do you create trust? How do you create a sale or trustworthy environment? for a lead to opt in and then buy something in the first phone call, right? And that's where having, I would consider like the semi-local appeal automatically gives you, gives you one or two trust points in your direction, which is allowing us to make sales in these first calls. But if we're looking at it purely from a math perspective, which I would urge you to be

a business owner or not a gym owner for the moment, right now, our guys are essentially breaking even on the first transaction, right? Now, they're used to making two to one, three to one, four to one, et cetera, on. their first transaction, right? But you're limited by your capacity to fulfill in terms of how many people you can have at each time. You're limited by your lead flow because, let's be real, like lead flow of a 25 mile radius is always going to be higher and cheaper than in a 5 mile radius because it's quadratic, right? So if you have a 5 mile radius and then you go from 5 to 10, you didn't double the amount of people that you saw. You pied it, right? So 3.14, whatever the

math is. But it's basically like, let me put in the layman's terms, if you have a 12 inch pizza, and you have a 24 inch pizza. A 24 inch pizza is not twice as big as a 12 inch pizza. You can fit like four 12 inch pieces inside of a 24 inch pizza because that's how circles work with, it's called quadratic expansion. But anyways.

Hey, if you're a return listener and you have not rated or reviewed the show, I want you to know that you should feel absolutely terrible about yourself and everything else in the world. I'm kidding. But it would mean the absolute word to me if you guys would go ahead and do that. You don't even have to pause the show.

You can keep listening and you can just do it with your thumb right now. It'll take you less than 60 seconds. And like I said, the only way that podcast grows through word of mouth and this is you joining hands with me and helping as many entrepreneurs as as we possibly can because no one is coming to save us it's just us all right so please go do that now and let's get back to the show um and so when you go to a 25 minority is you're talking 10 times

you know what i mean the amount of people that you would be reaching otherwise or 20 or 50 or whatever the math is and so because of that you can have a much bigger reach help more people can like anybody who's ever struggle with lead flow that doesn't have to happen anymore like you don't have to struggle with lead flow anymore because it's literally enormous and you pretty much can always get lead flow if your target is big enough all right and so putting all these things together cheaper leads bigger geographic radius consistent lead generation a consistent 11% of leads close which is what we're seeing right now which is higher than most people do in person breaking even on the front end and having an 80% gross margin on the back end like you're talking about spending you know right now

if you spend $1,500 you'll make $6,000 in front end revenue in 30 days That's what the math is, right? That's the average. That's the average. $1,500, $6,600 is the actual number of upfront cash in the first 30 days. For an online business. You know how many people have tried to start an online business? Do you know many online business gurus there are?

And the reason they don't have an agency set up or whatever is because they can't guarantee an outcome. They only tow the one or two testimonials that they have of the hundreds of students they have. All right. I'm giving you the average numbers. average average for online so if you wanted to make a six figure income all right it would take you 30 days

to build a recurring revenue stream if you spent $1,500 it would take if you spent $1,500 and you close 39% so let's just bump it to make it conservative so if you spent $2,200 in ad spend over the first 30 days you'd be able

to have 50 people in your online remote business after you lost 40% for not going into continuity all right so i'm accounting for that that you only convert 60 percent into continuity at 200 bucks a month right that's a 10 000 a month business remote and you can do it in 30 days like averages if you're average you can do it in 30 days right now and so the big question that you have to ask is one am i holding out for what's going to happen that i don't know about because you don't know what's going to have i don't either that's just my guess but like you don't know

what's going to happen but what i can tell you is the opportunity is there and And so in the next 30 days, in the next 60 days, if you wanted to build yourself a six-figure or multi-six figure online income, you could do it. I know that a lot of my gymlers won't do that. They're going to go back to the gyms. And that's fine. I'm here to serve. I'm here to provide whatever value, the community that I have asked for. But if I were an enterprising motherfucker, which I am, I would be strongly considering this.

It has been very difficult for me to not throw my hat back into the ring and start selling fitness at large. because when I see those types of numbers in terms of acquisition, I was like, hmm, how many sales guys we got? I was like, I wonder if I, I was like, I wonder if there's a bunch of gym owners who went out of business so I could just hire to become salespeople. Because when I see that kind of stuff, three to one, four to one up front, you know what I mean?

10 to 1 at 30 days, 10 to 1 at 60 days, 60 days. Like in gym launch, I lose money the first 30 to 60 days, right? And like, I just know the math game, right? and just willing to make decisions with math. If you are able to make decisions with math right now and not let your emotions and not let your fear and not let your discomfort around learning a new skill, which is selling over the phone,

because it's the only thing you have to do. That's it. As long as you require that skill set, which, by the way, will set you up better for when you get back to the gym, because if you can sell over the phone, you convert a high percentage of leads always, right? If you can just learn that skill,

you can have a run of business. Simple as that, right now. And I hope, and I think my hunch is, that that buying behavior will not change. People will be now, the mass market has been introduced to what online training is. Like, most people don't even know what it was. Now they know what it is.

And so you're underestimating how big of a deal it is for them to even recognize that industry. All right. And so one, people will now know what online training is. Number two, they will be comfortable, more comfortable buying in a remote setting. Here you say it over the phone. Yeah, this is after the lights get turned back on.

Because you're like, well, I don't want to change things, you know, temporarily because something, you know, when what happens when you go? go later? What if you have a business that just cash flows later and then you have your gym? Because many people like, I won't even get into it. But over the phone, you would just say, yeah, you know, when COVID happened, we started doing our first consults over the phone and it ended up just being more convenient for people. So we just stuck with it. Anyways, so what's your name? Why did you click on the ad? Right. Like you can just preface the sale and that everything else

flows like normal, right? Because this has given us the biggest reason of all time, the biggest, why am I remote? Why are you doing this over the phone? Why are we doing this online? It has now given everyone permission to have that reason that we never had before right and educated like thank you to the government for educating all consumers on online and remote setting fitness right thank you to the news thank you to everybody for helping us out all right so I sell this to say I think that for everyone who's holding out and waiting I don't think that's a smart decision I don't want to be right but I think I probably will be I think a lot of people turn the lights

back on and a lot of people aren't going to come back right think of this like a It's like all these people are like, you know what, actually I'm gonna keep doing things at home or you know, it's actually kind of more convenient for me to just kind of do it on my own schedule Instead of having to go there come back shower all that stuff. It was just kind of easier for me because convenience and speed Always win with humans always you have to always bet on convenience because we are lazy right and especially when it comes to fitness All right and so it's like well that's why and that's why many people can't market outside of five-mile radius because people are too lazy to drive further right? They're too lazy. You're like, but our gym's so great. It's like, yeah, but they're going to choose a shudier gym that's closer to them.

Just being real, right? And so if you can take the service to them, which we now have the opportunity to learn the skill set to do that, you can, by the time this thing turns back on, probably have more recurring profit income than you did before this. But it's for the people who want to win and who want to take action. Otherwise, if you're just going to wait, totally cool will help you when we want to come back because we do that too. But that's just my two cents right now. And I know that whenever I talk about online, it's always polarizing. But I have a really hard time not speaking my mind about something that I think is more profitable and I think is lower risk.

And I think in the post-corona economy, the businesses that will win are the ones that have lower overhead and have higher margins and have a higher ability to reach customers where they're at. And all of those boxes get checked. And then you get all the added benefits benefits that I said earlier. Virtually unlimited lead flow, cheaper leads, bigger radius, higher profit margin. you get all of those things on top of everything i said so anyways don't let the oh shit moment happen to you take action now uh start selling remote i think it is it is incredibly incredibly incredibly awesome right now um and you should get it all right keep being great catch you soon