How I became #1 in a "saturated" industry in my 20s...

in this video i'm going to tell you a story about how i solved to churn for the entire gym industry and i think there are a lot of things you can take from this both in the actual outcome itself but also the process that was used to achieve it one of the things i'm going to i'm going to rewind the time clock here so for those who don't know me i had a chain of gyms in california um i was founded in 2013 i had six gyms by by 2016 that i grew uh just using

cash flow from the the growth of the facilities and so i was very good at the marketing and selling process of getting people in the gyms and opening them at full capacity which was kind of my claim to fame over time i then uh pivoted to licensing uh that acquisition system to other gym owners across the u.s right so that was kind of the the path and then jim mulch kind of took off from there there was a two-year stint in between there where i did turnarounds and i'd fill other people's gyms up uh for

a percentage of the revenue that i was bringing in right so that was kind of that's the the long story short now fast forward and uh now we've got thousands of gyms right uh this is still a few years ago but fast forward in the story it's got a few thousand gyms at this time one of the issues is that all these guys are bringing people in the door but they can't retain them for a long time so they can convert them into members because we had a process around that which again was sales but

uh they couldn't keep them for a long time right and this was and this wasn't because of the acquisition system they just couldn't keep any of their customers for a long time and so what's interesting about this is that this is for any type of service based business that has any kind of recurring you know uh revenue model whatsoever and so here's what i did to solve a problem that i did not know the answer to all right so this is the this is the takeaway that you can you can take from this so what

i did was i said hey guys has anyone in this huge community uh achieved three percent monthly churn or less for six straight months all right so three percent monthly turn if you do the math on it let's actually look together shall we so if we want to see how much what percentage of your customers are staying and if you have let's say three percent monthly churns that's 0.97 right and let's say that this is for 12 months all right so we're going to go x to the y for 12 months that means that i'm

going to keep 69 of my customers i'm going to lose 31 of my customers year over year if i have 3 monthly churn that's still a decent amount of customers that we're losing right just being real with you now 3 is like the top 1 percent of gyms i'll be real with you like most gyms do not do that the industry average is about nine percent now if you want us to have something that freaks you out let's just do this one together so nine percent means we're retaining 91 per month now we're going to

do our little twisty twistiness so that we can do our fancy math we go x to the y and we'll do 12 months again right right look at the difference there 32 of your clients are still there meaning you lose 68 of your of your recurring clients if your monthly churn is nine percent this is why people don't want to buy these types of businesses this is what makes your business unsellable and so i had this problem right i was like all these gyms are acquiring customers and their industry average is that they're going to

lose uh three quarters you know of their customers by the end of the year right right this is a problem because i'm going to have to keep showing them all these new tips and tricks to get new people in because literally by the end of the year they're going to have already turned over three-quarters of the customers right this is a problem so this is what i did i put a poll in the group and i said hey if you've had less than three percent monthly churn for six straight months i'd like to invite you

to a round table so 20 people out of the you know thousands or so they were in the community at the time 20 all right it's a very small percentage said hey i i meet this qualification so i said okay so if you think about this math wise right i've already got the top one percent um i guess this is the top two percent but top two percent of the entire entire gym world and so i had them all together on a call and i said i need you to tell me every single thing that

you do to provide uh excellent value or a customer surplus uh to your members right and so i went person by person by person and i would sit there and i was like and then what do you do and then how does that work and then why do you do that and xyz right and i wrote down every single thing that every one of them had and so by the end of this i had like four pages of notes right so this is what i did next so that you know we ended the call and

so i looked through all the notes and then i re-categorized them because a lot of them were repetitive some of them were you know different you know one-off weird things and so i said okay it's clear that all of them do lots of things and the first one being they actually track it and focus on the metric which 95 of people don't even do which is why most people are poor number one second thing that all of them did is that they had lots of different strategies to to combat churn because they know uh that

and you guys want to know something crazy of course you do we're watching the the world's coolest youtuber all right so uh if you let's say let's say you have a service that's 100 a month okay 100 bucks a month and let's say that your churn is three percent right because that was the that was the goal of these people right so three percent churn all right and so what i did was i did a hundred divided by three percent that's thirty three hundred dollars of ltv right lifetime value right lifetime amount of revenue they're

gonna be able to collect over this customer if they pay a hundred dollars a month you're gonna get 33 months out of this person because it's 100 divided by 0.03 watch this same 100 price point remember i said the industry average was nine divided by point zero nine eleven eleven all right eleven hundred bucks is what the ltv of those gyms are so the people who had conquered their churn made three times more revenue per customer than everyone else but here's what's even crazier about that if you make three times more revenue per customer think

about how much more profit you're making a lot more all right and this is why this is such an important thing so a lot of them were doing lots of things i consolidated all of the things into buckets and then i said what are the things that every single one of them is doing and you can think about this like a voting system if if if all of them are doing one thing then that's probably an important thing if i've got 20 guys and there's something that only one of them is doing it's probably not

important because the other 19 are accomplishing the objective without doing it and so the goal is how little how few of these things are the things that are actually driving the outcome okay and so what i ended up figuring out uh after doing this entire process is that there were five things that they were all doing to maintaining their members now you can either say oh okay alex well the next five things that he's going to share are probably only for gyms yeah because humans are totally different in your business but anyways so let's rock

and roll first thing that they were all doing all of them is that if someone missed uh and uh they're they're not showing up at the gym by wednesday of that week so they missed monday miss tuesday they escalated them and they had all of them had different processes around this some of them did it by friday some of them did it by tuesday but the end point was if someone was not consuming the service they immediately escalated it and would repeatedly try and contact them to get them scheduled for time to come in which

means they had accountability around consumption number one number two the vast majority of them had exit interviews meaning if someone wanted to leave they would have to come in and talk to somebody and there's two benefits to this one is you get to identify the things that are wrong with your business because these people will tell you why they are leaving this gives you the opportunity to fix things that are not good which is great which is incredibly valuable data right number one number two is a lot of times people just need to vent and

the things that they're venting about it sounds like pain means it can be solved which means a lot of times over half those people get resold into a higher level package it's like no one ever contact me is like well you're not in the contact me plan you're in the you know do-it-yourself plan you should get into the into the coaching level where we actually hold you accountable oh i didn't know you guys had that yeah we just didn't know that you needed that ah that's our fault we should have asked you better questions on

the front end right right cool and then all of a sudden this person goes from being a loss and a cancel to being an ascension so number one they make sure people are consuming number two they save exit interviews so they can collect data and to send existing customers number three they all did member events all right so they had some sort of community component that happened on a regular basis the the extent to which they had it uh was different the cadence was different but i'll tell you right now that if you do it

on a quarterly basis uh that usually works you know for in terms of bringing the community together you're usually in good hands number four is that they had handwritten cards that they would send out on a regular basis to each of the people in their community and some of them would send it out with gift cards to bring friends which is a great way to generate referrals as well some of them would just have it as appreciation some of them would give them some sort of kudos or or whatever and here's the key point about

how these cards had to be written they had to be personalized all right so it can't just be hey thanks for being a member love you lots send er doesn't work it has to be hey charlotte you've really been advancing on your pull-ups and if you're like well this only works for gyms i'm not even going to comment on that use your brain can you personalize something to any kind of improvement that someone has had in your business probably hopefully but it's like hey charlotte you've made a lot of progress in your pull-ups when you

got here you had to use the big thick black band and now you're using the yellow band which is you know twice is twice as uh hard in terms of the resistance level for you keep you know keep it up you're doing a great job and you're already down 10 pounds so they're also reminding them of the victories that are happening right on a recurring basis and the fifth one i honestly cannot remember what the fifth one was but the point of this story is the process of solving the problem right that was the point

all right the process of solving the problem and that you can use this for any type of complex problem that you have and so the way that this is done this is called a consultative method but you go and you talk to experts in the space so if you sit on top of a community all of the solutions to all of the problems that you have already exist in that community someone has solved it and so all you have to do is get all the smartest people in one room and then interview them tabulate the

answers use a weighing system of which of these answers comes up most frequently and then consolidate to what are the fewest number of these things that everyone is doing to solve this complex problem and a lot of times when you use that type of process and that type of thinking you will be able to solve the more complicated issues that come up in business and a lot of times the payouts can be rich and very rewarding all right oh remember the fifth thing every two weeks they were able to contact them on a personal basis

independent of uh the service based stuff so it's just checking in on them as humans every other week or so so it's like hey you know imagine your phone buzzes with a text every 14 days every 21 days or so and it says hey uh just checking in how's life how's you know how's things how you doing um just just making sure everything's great and uh you know just want to help you you know accomplish your goals whatever right and so uh you get that text from your service provider you're like wow it almost appears

as though they care isn't that wild of course it is and that is why people pay you to pay attention that is what they are literally paying for all right people want your attention and so do not automate what you should systematize it's one of the things i have when it comes to service as soon as someone finds out that communications are automated they stop paying attention because you stop paying attention to the communication that's a little a little nugget little little tidbit for you as well is that do not automate what you should systematize

okay you can have a system around something just do not automate it because as soon as human touch is gone people stop caring about it all together and it actually withdraws goodwill from the goodwill bank account of your customers rather than depositing it's better to say nothing at all than to automate things for the most part many times i have found when it comes to customer success and getting people to believe that you give a which is kind of the point of most services okay so um the best way as a total side note of

getting people to think you give a is to actually give a so with that i will leave you mosey nation keeping awesome if you're new to mozy nation welcome we love you we appreciate you keep being uh awesome we make these videos because there's a lot of broke people and i don't should be one of them um if i didn't say this at the beginning because i always forget my name is alex mosey i own acquisition.com and about 85 million a year keep being awesome see you next video bye