The Game with Alex Hormozi - The "Oh Sh*t" Moment | Ep 209

Episode Date: May 26, 2020

Sometimes, change is not for the better. Today, Alex (@AlexHormozi) tells those who have been thinking about opening a gym during this pandemic on why you should strike while the iron’s hot and the reasons why you should be opening a gym all stem back to the topic of human convenience.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:(1:07) - "Sitting and waiting won't work, expect fewer gym-goers due to pandemic"(3:20) - People choose convenience, lights on but no show(5:47) - Reasons to open a gym now: bigger radius, cheaper leads, consistent generation(11:19) - Opportunity to start, uncertain future, reassurance from Alex(12:28) - Don't let fear hinder sales skill learning, buying behavior won't change(14:10) - Holding out and waiting not smart, convenience and speed winFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

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 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 and just 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, with 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 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 Jim's 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. I think a lot fewer people are going to come back than you think. 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, et cetera. And I think some people will, just like always, 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 was really, it's so funny,

I had an internet troll yesterday or two days ago who commented 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 gym's open 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, 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 will always value making a night, making an evening, going and picking out, 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 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 ten 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 homeowners anticipate are

going to stay in a remote setting right I think a lot of people are still like their jobs here's the others 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? But let's rewind the clock real quick. What do you need to do now? What do you need to do now because the O-Ship 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 body and 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 and then I'll believe you right but no I like it's not from one facility unless you have a massive massive facility and typically group training personal training set will be only a part of that right like if you have 6,000 members paying $100 a month like lifetime then sure you can make a million dollars here right but most people didn't invest $5 million into their build out right so it's understanding relative scope

okay so in my belief there is no way better than right now to for the best operators to be able to build a million dollar income business to 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 is 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 says 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 neighbor.

Number two, lead costs are 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 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 on 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 2 to 1, 3, 1, 4 to 1, 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 3.1,4, whatever the math is. But it's basically, like, let me put in layman's terms,

if you have a 12-inch pizza and you have a 24-inch pizza, 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 piece, because that's how circles work with, it's called quadratic expansion. But anyways, and so when you go to a 25-mile-dise, 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 see 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 real quick guys you guys already know that I don't run any ads on this and I don't sell anything and so the only ask that I can ever have of you guys that you help me spread the words we can out more entrepreneurs make more money feed their families make better products and have better experiences for their employees and customers and the only way we do that is if you can rate and review and share this podcast.

So the single thing that I ask to do is you can just leave a review. It'll take you 10 seconds or one type of the thumb. It would mean the absolute world to me. And more importantly, it may change the world for someone else. 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 of the, the back end like you're talking about spending you know right now if if you spend fifteen hundred dollars you'll make six thousand dollars in front-in revenue in 30 days that's what the math is right that's the average all right that's the average okay 1500 it's 6600 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 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 right

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, 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. So I'm accounting for that. That you only convert 60% into continuity at 200 bucks a month. 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 happen. 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 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 gym lords 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 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've just i just the math game right i'm 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 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 long business simple as that right now and i hope and i 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 all right and so that that like 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 a remote setting here you're said 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're You know, what happens when you 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 aren't turn the lights back on and a lot of people aren't going to come back, right? Think of this like a vacation. It's like all these people are like, you know what, actually I'm going to 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 a 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 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, that's 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 out. And all of those boxes get checked. And then you get all the added 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 um 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