The Game with Alex Hormozi - Why Gyms Fail...☠️❌ ...and Why Your Classes Dont Matter | Ep 102

Episode Date: February 5, 2019

Micro gyms must be aware of their competition and realize they cannot offer the same amenities as larger gyms. Today, Alex (@AlexHormozi) shares the challenges of running micro gyms and the importance of understanding the fitness industry. He highlights the need for businesses to offer more than just fitness classes, such as nutrition and accountability, and to provide premium services to succeed.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:(0:26) - Challenges of running a micro gym during recession(2:07) - The business you're actually in: fitness, nutrition, accountability(3:53) - Adapting to changing fitness industry(5:34) - Competitive advantage of word-of-mouth marketing and member retention(8:55) - Going above and beyond to provide premium service for gym membersFollow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition

What is going on, everyone? I wanted to make a quick video for you guys, depending on how you guys are consuming this or a podcast, about why gyms fail. And so I've been doing a lot of looking into this recently because I've been looking into what gyms did and changed during the recession of 2007, 8,9, to adjust.

And oftentimes the things that happened during those periods are the things that really boost profitability. Because it's like only when there's lots of constraint, do we get to see like massive changes in how they how we conduct business right and so the number one reason that microjims fail is because they don't know what business they're actually in and that's because they lack context and so some of you guys may know just from the industry data that that that I've pointed out that like lifetime fitness is is like 99 dollars a month equinox starts at 99 dollars a month and a lot of these nicer gyms are at 99 dollars a month which means

They're in a shooting distance of the industry average price point for cross-fits book camps, semi-private facilities, et cetera, which is $118 a month, right? That's the actual average, not what people say, but that's the actual average. And what's interesting is that if you look at what those types of facilities offer, so most of them have high intensity training classes, cross-fit classes, or they call them like cross-training or whatever they want to call them, but basically it's CrossFit, right? And so they offer comparable services to what we, as,

micro gym owners are offering, except they also have marble bathrooms and beautiful countertops and massive 100,000 square foot facilities with beautiful equipment and daily usage gyms and nice lockers and all of these things that we don't offer, and they're offering it at $20, $30 less per month. So sometimes we think that we're like, well, we offer the best classes. We don't. You know what I mean? Like they have really high pay trainers that do the same things is your trainers do, right? And so, like, I want to be, like, super real about, like, why gyms actually fail. And I think it's lacking context into what business you're actually in.

You're not in the fitness business, despite the fact that you have fitness classes at your facility. I'm going to say it again. You're not in the fitness business despite having fitness classes your facility. Because if people wanted that, they would go to the nicer facility that has equal or better training classes with better ancillary services. juice bar, the nice bathroom, the huge gym that goes with it so that if they want to do extra workouts, they can, the pool, the racquetball court, all of that stuff for less money

than you're charging, right? So what business are you actually in? And so a lot of kind of, for those of you like know our stuff, there's three main things that we sell in the console, right? It's fitness, nutrition, accountability. All right? Those are the three things. Now, some of those places don't offer the nutrition. So that's a plus point that we have, right? That's one other thing that we're doing. We're approaching the person from holistic standpoint. The third thing is accountability, right? And so accountability is the is the overarching umbrella, but it's the main value add that you really offer as a facility. And the reality is that a lot of people are like, yeah, we have a community and that's what people stay for and that's

what they love. And that's true. That is actually why people are coming. But most gyms aren't actively doing anything to actually foster true accountability. And so they're surprised when they consistently have 10% plus month over month turn or they can't get people who go on trials or front-end programs to stay, right? And it's because the actual thing that you're providing is not any better than what those people can get at lifetime or golds who have their own, you know, CrossFit version. Like all these gyms have adapted to that. They've incorporated all of the large group, barball, large group, high intensity, all that stuff's there. Like, it's there. It's done. And so if you want to compete, right? You have to know what game you're competing at, right? And so the things that you're

actually selling, the things that people actually come for are not the, they're not the sessions. That's not why they're coming. That's not why you get to charge $150, $200 a month plus, right? That's not why. It's because if they don't show up, you reach out to them. It's because if they have a birthday or someone dies in their family, you send them flowers. It's because you write them a handwritten card every month. It's because you offer premium service, not premium classes, not premium facility, because you don't. Let's be real.

You don't. You're like, you're like, you're probably not. I'm just being real. Like, you're probably not because you have access to the same trainer pool, except there's more prestige in saying that you're a personal trainer at Lifetime or personal trainer at Equinox than it is saying I'm a personal trainer at, you know, Joe's Fitness. I'm just being super real with you. There's not more prestige there, right?

And they have more opportunity for one-on-one trainers. one-on-arm training clients who are probably higher SES, socioeconomic status, like more income, right? So there is more opportunity for a lot of those trainers there. So why would someone work for you? Why would they be better? They're probably not. And so if the only competitive advantage that you have

is your accountability and your premium service, are you actually offering premium service? Probably not. And for everyone who does not understand that that's actually the game you're in, That's actually the game we're playing. That's what we, that is our competitive advantage. You're going to lose.

Real quick, guys, if you can think about how you found this podcast, somebody probably tweeted it, told you about it, shared it on Instagram or something like that. The only way this grows is through word of mouth. And so I don't run ads. I don't do sponsorships. I don't sell anything. My only ask is that you continue to pay it forward to whoever showed you

or however you found out about this podcast that you do the exact same thing. So if it was a review, if it was a post, if you do that, it'll mean the world to me. and you'll throw some good karma out there for another entrepreneur. And so right now, if you don't have processes in place to make sure you hold your members accountable, to make sure that if they don't show up by Wednesday, you're checking in with them,

to make sure that you're touching base with them at least twice a month outside of the classes just to see, hey, Paul's Check. How you doing? Hey, how's life? How's everything going, right? This is Maggie. I can I say hi to Maggie. If you don't have those processes in place,

then what game are you playing, right? Do you know the game that you're trying to win at and might not actually. be. And so I wanted to just make this because a lot of people aren't sure what game they're playing or they think they're playing a game and they consistently are losing and they're like, why am I losing members? Our classes are so great. Everyone says that our classes are awesome. No one cares. Right. Like no one cares. It doesn't matter. It's about everything that is not in the class. It's everything outside of the fitness. The fitness is what they come for. It's the burger, right?

But everything else is why they stay. Right. That's what separates your facility from lifetime from gold's exfit from you know equinox because if you're just competing on that one level you're going to lose like you are like like we can't compete on a facility basis right if you're like that's why I want guys are like I'm going to go spend all this money in equipment I'm like you're not going to win even if you put 30 grand in equipment you're still not going to win that's not the game right like they spent 10 million on a facility and then they ask for a hundred bucks a month you're not dropping that right like you're not going to beat them at that game so don't play that game You're not going to beat them at the great sessions game.

I mean, you should have absolutely cruel to trainers and they should be knowledgeable and they should be friendly and they should say everyone's name when they come in, which is something that some of the big jams don't do because they don't know who they are. But like you need to take that personalization aspect, that accountability aspect, that community aspect and put it on steroids. Like if you're not running members events, what are you doing? You know what I mean? Like if that's, you're like, we're here for the community, but you don't have a community events. Like we're all about family except you don't have, you don't know everyone's name and you're. your trainers don't know everyone's name, but they don't welcome them my name when they come in. Like, we really care about a members, but when your members actually have life events,

you're not writing them a handwritten card, you're not sending them flowers, you're not, you don't even know, right? So do you, or do you say it? Or do you do it? Is it actually part of your business? Are you doing it on a regular basis? Do you have processes in place so that it's consistent, right? And that's the game.

That's the game we're in. And so if you don't know what game you're playing, it's really hard to win, right? And so I'm just making this video for you, for those of you who might not, who might be into our community, right? Welcome. But that's the game we're playing. And if you are not playing that game, you're going to lose and always wonder what, what's going on? My sessions are so great. I'm such a good trainer. I don't know why people aren't staying. It's because your classes don't matter. That's not why they stay. That's not why

they come. Well, they come a little bit because they don't know, right? But that's not why they stay. Because if you look at the comparisons that they have, every other gym will beat you in virtually other, every category that some people are trying to compete at. So play the right game and optimize your business around the competitive advantage that you actually have. And that is the game that we play. And that is how we have premium services. And that is how you retain members.

And that is how you make a robust business that isn't, that doesn't waver when someone loses a job, when someone gets a decrease in pay, when the economy turns down, whatever, right? Because you're such a high, like, you're so high on the hierarchy of needs for that person that they'll do anything to stay in it. Does that make sense? So if you don't have those things in place, if you're not reaching out your members by Wednesday if they haven't showed up,

if you're not regularly providing value to them outside of the gym, if you're not creating member events, if you're not doing things for charity with them so that they can feel part of something bigger, if you're not recognizing them by name, if you're not writing hand-written carts to them every month to show them that you appreciate,

if you're not celebrating the life events that happen outside of the gym to show that you are more than just a gym, then you're going to lose. And so I would like you to not lose. So that is my recommendation. If you all are on here, thank you. Say some of the things that you guys do to show that you go above and beyond on the

non-fitness side because that is the game we're in. We're in the premium service game. We're not in the fitness game. All right, guys. Lots of love. And I will see you guys soon.