https://www.youtube.com/watch?v=y3T4GqoH0Us

1 00:00:00.000 --\> 00:01:00.000 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

2 00:01:00.000 --\> 00:02:00.000 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

3 00:02:00.000 --\> 00:03:00.000 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

4 00:03:00.000 --\> 00:04:00.000 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

5 00:04:00.000 --\> 00:05:00.000 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

6 00:05:00.000 --\> 00:06:00.000 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

7 00:06:00.000 --\> 00:07:00.000 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

8 00:07:00.000 --\> 00:08:00.000 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

9 00:08:00.000 --\> 00:09:00.000 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

10 00:09:00.000 --\> 00:10:00.000 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

11 00:10:00.000 --\> 00:11:00.000 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

12 00:11:00.000 --\> 00:12:00.000 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

13 00:12:00.000 --\> 00:13:00.000 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 and say with me i have nothing to sell you keep being awesome see
you next video bye
