What are the key drivers of all fitness businesses?
What are the 15 key metrics that every operator of a personal training studio and personal trainer should know in order to turn a profit? From our experience in working with professionals in this field, we have found that most personal trainers and studio owners are running their businesses without knowing the numbers. Not knowing the numbers leaves any business owner in the dark, unable to maximize their profits.
Sure, the day-to-day operations of your business take up much of your time. And yes, you would rather leave the numbers to an accountant. They are an afterthought and not the bread and butter of the work that you do. But is flying in the dark the best way to outperform your competitors and improve upon your own work? After years of coaching clients and creating our own multiple six-figure personal training studios, we know that throwing shit against the wall and hoping it sticks is definitely the wrong way to earn more success. So what I want to do in this training is teach you the 15 key metrics that we teach in our Kaizen Mastermind Group and utilize in our own personal training studios.
5 Pillars Of A Successful Gym Or Studio
The 15 key metrics are broken down into five different categories: marketing, sales, customer service, finance, and management. These five pillars hold within them the entire magic 15 key metrics.
- MARKETING. The first pillar, marketing, is where most of us put our money, and yet so few of us think about the true cost of that expense. For every dollar you spend, it’s like saying, “I don’t know how much my leads cost, and I don’t know if the campaign was actually profitable.” But would you treat every expense this way? Would you say, “Okay, I want to buy some new equipment next month, but I’ll just wing it. If I have money in the account, I’ll do it.” No, you likely plan when it comes to buying equipment. So why should marketing be different?
KEY METRIC ONE: COST PER LEAD
Key metrics number one is CPL: Cost per lead. And that’s going to go right here. Cost per lead. In a nutshell, you need to know how much it is costing you to actually get a client to raise their hand and say, “I want to learn more about your service.” Right?
KEY METRIC TWO: COST PER ACQUISITION
The second one is called cost per acquisition, CPA. That is actually how much it costs you to acquire a new client from the lead that you attracted. Attract a lead, convert them into a client, Boom!!! Very simple, right? You need to understand how much it costs you to attract the lead (CPL), and then how much total it cost your to get them to signup for your service (CPA).
KEY METRIC THREE: TOTAL CAMPAIGN COST
The last one here we’re going to talk about is total campaign costs. Now, that’s the one that you want to know because if the campaign costs you $100 and you got 10 leads, that’s $10 a lead and you got three clients. So what’d you pay for that? About $33 a client overall, that’s what you want to know. Your closing percentage was 30%. Knowing this information allows you to scale your business and out-market your competition.
Knowing these metrics you can market, get an ROI on your marketing, and then know exactly what it costs to get a client and what you can pay to acquire that client. So if it costs you $150 to acquire a client and your program is only a $100, then it’s probably not the right marketing campaign for you, right? You want to make back about $3 dollars for every $1 you invest in for your marketing. I’ve had it as high as $7 to $1 but we aim for at least a 3-to-1 ratio.
- SALES. The second pillar is sales. This is probably the pillar that creates the most angst for business owners because without sales, there is no thriving business. So what are the key performance indicators to understand within this concept?
KEY METRIC FOUR: SET/SHOW/CLOSE
Once you have leads coming in, you need to know how many consultation appointments are set and then how many show up for consultations. We call this set, show, close, a concept I borrowed from one of my previous mentors.
Now this is key because you want to make sure you know how many appointments you set from these leads, how many of those appointments actually showed up, and then how many of those actually became clients. You closed them. Now whether you’re closing them or someone on your team, this is a key metric because this is going to know your close rate. For example, if you got, say, 12 leads, from which you set 10 appointments, and four people show up, then you closed two clients, you’ve got a 50% close rate from your number of potential clients.
Following the same example, four out of ten potential clients showed up, which is 40% of your leads. Knowing this, you can tweak your sales process and make sure that you can consistently every quarter optimize your business for performance. We know many ways in which you could do this, which I can’t go into in this article, but it’s important to understand that you need to know this metric so that you can bring in more clients through sales.
KEY METRIC FIVE: MONTHLY REVENUE
Monthly revenue is what you earn from sales after you pay your expenses. Why is this important to understand, and when should you be concerned about this?
Most businesses look at their revenue on the 30th or the 31st of every month. But you should be projecting your monthly revenue long before that. You should know by the end of the first week of every month what your monthly revenue looks to be, specifically when your electronic transfer drops. So if by, say, the third of the month you expected $25,000 but only $22,000 came in, then you have $3,000 of outstanding EFT that you need to collect. How would this shortfall occur? This can happen mainly through expired credit cards or missing credit cards.
So it is imperative to track, go over your reports, and follow through. The business’s health is determined by numbers afterall.
KEY METRIC SIX: EFT – 6 & 12 Month Agreements
This metric is closely tied to the last one, with a slight tweak: While Metric Five discussed the importance of understanding your monthly revenue as early as the first week of each month, this metric is meant to target where you want the EFT to be.
So say your goal for the month is to do $25,000 in EFT transactions, but your EFT is projected to be $18,000. What do you need to do in new sales in order to actually hit your $25,000 goal for that month? Maybe it’s by selling seven $1,000 packages. If by the 15th of the month you have five, then you’re two off, so you need to intensify or change your sales tactics to close that gap.
- CUSTOMER SERVICE. The next pillar is customer service. Once you have gained clients, how do you service them? Your active clients are very important, so you need metrics in order to keep their business and tell others about you.
KEY METRIC SEVEN: KNOW YOUR ACTIVE CLIENTS
This metric is very simple: you should know at all times exactly how many clients you have, and you should maintain lists of information about those clients so that you could reward them for their continued support. For example, you should keep track of birthdays and send monthly birthday cards. Also, you should create a system for tracking referrals and reward existing clients for new clients that are referred by them. These are just two simple examples of why metrics for existing clients is important.
KEY METRIC EIGHT: KNOW YOUR CLIENTS LOST
Each month, you should look at your rate of retainage. For example, do you retain 80% of your clients? If so, what happened to the 20% who left? And why did they leave? Creating systems for analyzing these metrics allows you to therefore create better campaigns to keep the clients you have.
KEY METRIC NINE: FEO CONVERSIONS
FEO are Front End Offers This is an example of a front end offer: When can say, “Okay, I ran two campaigns for $69 and I know that I brought in how many leads on that campaign? I brought in 20 leads on that campaign and I got five clients.” So what’s that? A 25% conversion rate. That is a simple way of explaining front end offers and in understanding which campaigns work the best- which have the highest conversion rate.
- FINANCE. The next pillar is one that gives many people anxiety: finance. To examine finance properly, we like to look at three key metrics: Monthly Revenue; Monthly Expenses; and Net Income.
KEY METRIC TEN: MONTHLY REVENUE
We touched upon monthly revenue above, but to expand here, when looking at monthly revenue, it is important to look at all of your profit centers. Profit centers are all areas of business that generate income. For example, the following are different profit centers within the business: personal training, group classes, supplementation, nutritional counseling, etc. Understanding the revenue from each of your profit centers allows you to diversify and tailor campaigns to bring your revenue up.
This is 12 Consecutive Months Of Growth: Kaizen Client Sumair Bhasin
KEY METRIC ELEVEN: MONTHLY EXPENSES
What is an expense? Most people look at expenses as a negative, but they aren’t. They are simply just costs of doing business. Sometimes business owners run too much through expenses or spend frivolously, so it;s important to understand where you are spending your money and where you can pare back to bring in extra income. Sometimes that means taking a hard loo on your beliefs about what is necessary and what is not. For example, is that expensive piece of equipment truly necessary, or will it only serve to create more debt or drain your bank account, when you could train without it? These are questions that need to be addressed monthly.
KEY METRIC TWELVE: NET INCOME
Net income is profit minus gross revenue. Your net income will determine whether you can take a draw or invest more into your company, so this is an important number to understand. It also helps you to create a budget and determine where you should be spending less or earning more. It is an overall barometer of your company’s health that helps you make management decisions.
- MANAGEMENT. Speaking of making management decisions, the last pillar to go over is Management. What are the key metrics here?
KEY METRIC THIRTEEN: PAYROLL
Here is an example of the payroll metric…If one of your sessions costs $100 for a 60-minute one-on-one personal training session, and you pay your trainer $30, then 30% of the revenue goes to that trainer. If you have several trainers, wouldn’t it be important to understand what percentage of your revenue is going to that expense? From a management perspective, this may be important to understand your pricing model or how many sessions you need to book in order to turn a particular profit.
KEY METRIC FOURTEEN: TOTAL CLIENT SESSIONS TRAINED
If you sell, say, a 24-training sessions package, how much of this is actually utilized? Let’s say we sold a 24-pack for $2,400, and the client comes in two times. There are then 22 sessions left next month. How many sessions a client is using is called the usage or burn-through rate. These clients may eventually come back and request a refund or. Ideally, you want clients to come in and use the service. If they use the service, they will get results. If they get results, they will refer your services.
KEY METRIC FIFTEEN: STAFF PERFORMANCE
Tracking the performance level of your staff and giving them incentives for positive performance allows them to grow as leaders and enhance your business and reputation as a studio. For example, quarterly reviews that provides feedback on qualities such as cleanliness, enthusiasm, sales quotas, etc and then, through incentives, alows them to perform batter (like with bonuses or gift cards) would enable your trainers to shine on the job and aid in the overall happiness of your clients. Isn’t that good for business?
Overall, we have given you a glimpse into what we teach at Kaizen Mastermind. Through our guidance, we go a lot deeper with these, tailored to your specific business, so you can make better decisions. If you want to learn more, please join us at fbmnation.com, our private Facebook group. There, you will find exclusive information that will help you improve your business.
Making an impact, earning an income and creating independence for ourselves and our families: that is what we strive to do for ourselves and help you do for yourselves as well. Understanding this information allowed us to go from making a few thousand dollars a month as independent contractors to owning multiple personal training studios and having the ability to create the lifestyle that we want. And now this is also totally within your reach too. If you would like a free custom business audit, please follow the link below and book a call. It worked for Sumair, who went from $6,000 a month to over $31,000 a month mastering this information and knowing his numbers.