Will Gyms pay premium fees for FB ad services?

by kevd10
13 replies
Hi guys.

So I have been going round and round with which niche to offer my FB ad services to. I tested home improvement for a short period, but it does not perform well and I feel it would be more difficult to fulfill clients targeting wise for their audience.

Now I have been watching a few videos from a guy named Cody Butler, who seems to be pretty knowledgeable on this subject.

He lists gyms as one of the best niches to go after. However, he also advocates charging high prices.

My question is... How would you guys recommend I price my services in a niche like Gyms? If they only make £47/month (i'm in the UK) on average per member, how would they be able to justify paying £1,000+ as a fee to me, plus the ad spend?

Maybe someone in this niche can shed some light, or give a few more suggestions as to possible other niches.

Kevin.
#fees #gyms #pay #premium #services
  • Profile picture of the author Gary Chapple
    Him I'm the UK based as well, I belong to Anytime Fitness, they sort of have their act together being a franchise, buttt!!!
    Gyms generally don't keep tabs of payments, it's one thing getting a client (the hardest), then they don't engage and make sure payments are made - a big clue there. I'm not so sure it's FB ads these guys need but lead generation and software to keep tabs on their clients.

    In regards to home improvement DIY is massive in the UK, there are loads of people destroying their homes on the cheap every weekend, surely a FB blog post type site actively engaging users can make money "look at this Chav destroying his hedge or put a H&S angle on it.
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    • Profile picture of the author kevd10
      Thanks for your reply.

      My skills lie mainly in FB ads and conversion funnels, so looking to do this for a niche. I'm hoping Gyms turns out the way to go because it so easy to keep them happy with regards to over-delivering.
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  • Profile picture of the author savidge4
    Originally Posted by kevd10 View Post

    My question is... How would you guys recommend I price my services in a niche like Gyms? If they only make £47/month (i'm in the UK) on average per member, how would they be able to justify paying £1,000+ as a fee to me, plus the ad spend?
    In the States at least, gym memberships are usually based on a yearly commitment. So you have to consider 12x£47/month or £564 is the actual value of each lead you produce. You could then even factor a average life of customer value. To be exact about this, you can ask the gym owner if they know the number...

    Assuming they don't know the number... a pretty general number in the Gym industry is a 42% attrition rate. ( if they have 100 existing members today, in a years time 42 of the 100 will no longer be members. )

    So per 100 members the gym has you need to introduce 3.5 members per month to keep a constant membership value, and anything above that would be actually increasing profits.

    so based on the average attrition rate at £47 a month or £164.50 a month in LOST revenue, you would have to introduce 25 new members a month ( £1000 / £47 + 3.5 ) just to financially BREAK even. of course this does not include additional purchases made IE supplements, classes, massages, etc )

    As Gary points out... Gym owners in general are not the most organized bunch... They wont generally have any of the numbers I have provided above. they wont know what acquisition costs are. They probably wont know there attrition rate.. they just know they need to bring in more clients, because they want to make more money.

    So basically if you stick with the initial £564 a year per member and you can produce more than 2 members a month.. everything beyond that is gravy and you can easily justify your $1000 a month.


    as an added bonus here is an interesting read on the subject.
    https://www.creditdonkey.com/gym-mem...tatistics.html
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    • Profile picture of the author kevd10
      Awesome post, thanks!

      In the U.K., the niche has been pretty much dominated by big companies opening several clubs in each region.

      Do you think that is a red flag for not going after this industry?

      Big corporations like that will have another big corporation looking after this kind of thing.

      Also, if my fee is $1000, but the ad spend to acquire the desired clients is another $1000, where does that leave the club in their decision?

      I mean even if I bring in 20 clients a month, that's only $1000/month for the club.
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      • Profile picture of the author Claude Whitacre
        Originally Posted by kevd10 View Post

        I mean even if I bring in 20 clients a month, that's only $1000/month for the club.
        No. It's only $1,000 a month...for a year. Every month, you are bringing in a fresh batch of customers, and the gym is still making money from the last month's batch.

        So, at the end of a year, the gym is bringing in $12,000 a month, from your efforts...and paying you $1,000..with an ad cost of $1,000. A phenomenal deal for the gym.

        You need to manage their expectations. Low ball your estimates for new customers.
        Compare it to putting money in the bank...or investing. For example, a 25% return on their money in a year is a phenomenal return. Real wealth can be created that way.

        Pitch it as an annual return on their investment. Take their figures and lower them, make them far worse than they are. Take any projections and lower them to a ridiculous level (the client has to see all this and agree that these are low figures) and then base your projections on these ridiculously low figures. That way it will be real to them, and will be believable.

        Your $1,000 a month fee? (I'm assuming it's by the month), compare it to the lowest level employee. What they get from that employee VS what they would get by paying that employee to do what you are doing. Make it brain dead obvious that they should do this.

        When a gym invests in a new piece of equipment, how long does it take to pay for it, before it generates any profit? Years. It take years, not a month. Get them in that mindset. This will be profitable by the end of the year....not the first month.

        Believe it on not, you lose more sales by giving high estimated results, than by lowering them. And the reason is that low expectations sound real, doable, and are more easily understood.
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        • Profile picture of the author kevd10
          Excellent reply, Claude. Thanks I have a ton of respect for you and have read both of your books.

          At the moment I am in the process of contacting existing agencies (those doing well) and finding out what they do in regards to pricing etc.

          I am really looking for a systematic approach to all of this, so I will need to take what you have put into the above and design a phone pitch based around that.

          Thanks!
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          • Profile picture of the author kevd10
            Also Claude,

            What is your position on the big corporations issue as most of the gyms in the UK by a very large % are.

            The ones that aren't, not many of them have the infrastructure in place to have 12 month contracts drawn up (alot of them are actually cash only).
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            • Profile picture of the author Claude Whitacre
              Originally Posted by kevd10 View Post

              Also Claude,

              What is your position on the big corporations issue as most of the gyms in the UK by a very large % are.

              The ones that aren't, not many of them have the infrastructure in place to have 12 month contracts drawn up (alot of them are actually cash only).
              I know nothing about it.

              But a Franchise is different than company owned. And a Facebook advertising program could be made to comply with any franchise agreement, I'm assuming.

              I've sold local online marketing programs by contacting the company that supplies the dealers, and arranged to give a seminar at the annual convention/meeting. I sell it as a benefit to the dealers/retailers (in increases business) and a benefit to the main company (they get the credit, and it costs them nothing)

              I've even got the core company to agree to allow my service to be part of their "Co_Op' program (where the dealers have some of the program paid for).

              One big benefit of this kind of arrangement is that these businesses are almost clones of each other. And once I created the content for one business...I had it for every business in the chain.

              It doesn't have to be gyms. What about karate studios? What is the connection between these businesses? It can be that they are in the same business...or belong to the same organizations, or are located near each other....don't restrict yourself to gyms.

              Are you doing this in person? by phone? online? Does it make your job easier if they are in the same business?
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        • Profile picture of the author animal44
          Originally Posted by Claude Whitacre View Post

          So, at the end of a year, the gym is bringing in $12,000 a month, from your efforts...and paying you $1,000..with an ad cost of $1,000. A phenomenal deal for the gym.
          I seem to remember that the average lifetime* of a gym member is 4 months, albeit most gyms have annual or 18 month contracts. Always a source of conflict when member realises he/she is committed to paying for something they don't use.

          IMHO if you can up with something that reduced attrition, you'd be onto a winner. No advertising costs for the gym. Think along the lines of weight watchers or AA. i.e. group support and accountability. Build a system and sell it to the gyms... Walk away a gazillionaire...

          * Just re-read that, and what I mean, of course, is customer lifetime...
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          • Profile picture of the author Claude Whitacre
            Originally Posted by savidge4 View Post

            Assuming they don't know the number... a pretty general number in the Gym industry is a 42% attrition rate. ( if they have 100 existing members today, in a years time 42 of the 100 will no longer be members. )
            [/url]

            Originally Posted by animal44 View Post

            I seem to remember that the average lifetime* of a gym member is 4 months, albeit most gyms have annual or 18 month contracts. Always a source of conflict when member realises he/she is committed to paying for something they don't use.

            IMHO if you can up with something that reduced attrition, you'd be onto a winner. No advertising costs for the gym. Think along the lines of weight watchers or AA. i.e. group support and accountability. Build a system and sell it to the gyms... Walk away a gazillionaire...

            * Just re-read that, and what I mean, of course, is customer lifetime...
            I agree that keeping members is easier and more profitable than adding new customers. And efforts should be spent there. I suspect your "4 months average" is for gyms that just charge by the month.

            It isn't just having long contracts, but getting paid up front. For example, pre-paying for a year or two. That would dramatically extend the average customer lifetime.

            What I don't know is how to make these customers active for that long, and then renewing their contract.

            One thing I know is that having a strong referral program will keep members there. They feel much more invested in the membership if they are referring other members.

            For example, for every new member you bring in, the gym knocks off 3 months off your membership fees. Four referrals and your membership is free for the year.

            My local veterinarian told me that if I brought in ten (ten!) new customers that I would get a $100 gift certificate. My guess is that he didn't give out many certificates.

            Make the program really profitable and easily achieved.

            But making someone want to stick with an exercise program?

            One thing I have learned selling sales training and marketing programs....making compliance/accountability part of the package is a way to increase drop outs. People just lose interest in working out.

            But creating a community, building relationships will help keep them. Now, they can come to the gym for the social benefits...and "working out" is just the excuse to meet with your new friends.......in my experience.
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            • Profile picture of the author savidge4
              Originally Posted by Claude Whitacre View Post

              What I don't know is how to make these customers active for that long, and then renewing their contract.
              If you read the link I provided above... you would know that Men are more likely to stick than Woman.. LOCATION or proximity to "home" is a key factor and targeting 40ish is where the most stick is.

              You can read further and really break this down and know that a Male that's 40 close to his house and makes in excess of 75K a year is your PRIME target, not only in terms of having motivation to actually sign up, but those that would actually use the facility.

              The other interesting little piece of data that can be pulled is the fact that 44% of all members work out with a fellow member... they go in PAIRS.

              So now we can seriously start targeting 40 yr old males that make 75k and their best buddy. So maybe a Platinum plan that costs a bit more, but allows a guest for free?

              Here is the thing with Gyms.. its the same as a bar or club... Empty Gyms ( unless you are in the 14% hard core group ) do not attract new members... People want to mingle.. they want eye candy. People don't go to actually work out.. they go to be seen... and to see.
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              • Profile picture of the author eccj
                The Cross Fit people have it figured out.... make it about the socializing.

                I would think a group plan like a family cell phone plan may be an idea worth trying.
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                • Profile picture of the author animal44
                  Originally Posted by savidge4 View Post

                  The other interesting little piece of data that can be pulled is the fact that 44% of all members work out with a fellow member... they go in PAIRS.
                  Agree. In my case it was more like 6-8... needs that many to drag me to a gym
                  Originally Posted by eccj View Post

                  The Cross Fit people have it figured out.... make it about the socializing.
                  That's kind of what I meant...
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