Category Archives for "Sales"

How to Talk to Your Clients About Raising Your Prices

You’ve determined that it’s time to raise your prices. How do you communicate this to your clients and customers?

First of all, don’t make it sound like you’re breaking bad news. Raising prices is a natural and recurring step in the life of a service-based business. Know your worth. Get confident and comfortable in your own head of the value that your business provides. If you can’t convince yourself that a price increase is warranted, then you won’t be able to sell it to anyone else.

Obviously, you don’t want to alienate your clients. You want to keep them happy. And believe it not, your clients don’t just want you to survive—they actually want you to be profitable. So this can absolutely be a win-win situation if you play it right.

You especially want to get your long-term clients on board with a price increase. If they’re unhappy, they have the potential to spread their discontent throughout your culture and community of members. This is the kind of water fountain talk you want to avoid happening at your place of business or on social media.

In this post, we offer some suggestions and thoughts on informing your clients about pricing changes. At the end of this post, you can find a link to our pricing increase template letter to help make this task easier for you.

  • For starters, always give 30 days notice when raising rates. You don’t want clients to feel like they’ve been rushed or ambushed into a new commitment. 

  • Put it in writing—at the very least, you should send them an email.

Keep in mind, your clients will view a rate increase relative to the price they’re currently paying. A $6 per month bump might seem like no big deal, but if their membership fee is already $80 per month, that’s a 7.5% increase in price, which may not go unnoticed—especially if they’re currently paying a higher-than-market price for your service.

  • Transparency in general can go a long way toward sweetening the news. Explain exactly what you’re doing, why you need to do it, and make it relevant to them. If you made a guarantee to provide a certain level of service as part of their membership agreement and now you need to increase pricing in order to maintain that level? Explain that. 

People get attached to their service providers especially in fitness and wellness. They care that they are compensated fairly and have good working conditions and opportunities. So your clients will usually get behind an argument for increasing rates that involves paying their service providers more, or investing in your team in some way. It’s more than fine to get a little personal about this in your email.

As I’ve said recently, I’m in favor of increasing prices regularly by small amounts rather than by large amounts less frequently. Clients are more accepting because they’re likely to see that you’re just keeping up with the rising cost of doing business. But there are times when a large price increase is justified—to you, at least.

  • If you’re implementing a small increase for the cost of doing business, say 2 to 3%, amounting to a few dollars more per month, it’s okay to simply inform your clients of this and invite them to contact you with any questions or concerns.

  • If it’s a bigger increase, however, it might be a good idea to sit down with your clients one-on-one, or give them a call, in addition to sending an email. 

The important thing here is to demonstrate how they’ll benefit from the improved services you’ll be providing with more funds in hand. Even better if you can tie it in directly to how this will help them reach their goals or soothe their pain point.

Maybe you’re going to improve the temperature control in your building so they won’t be chilly anymore while getting a massage. Or maybe you’re adding new equipment so they won’t have to wait in line to use the weight machines, and they can get home faster to their kids on gym night.

  • If you’ve been seriously underpriced in the past and now need to get in line with the market, you probably need to be adding more services to justify a very steep increase. I’ve seen a gym membership cost jump from $59 to $100, but they changed their business model to do that by adding new equipment and more programming at the same time, like additional access to coaches and classes. 

In general, if you’re not comfortable asking your clients to ride the increase with you, ask yourself if there’s something you need to add in to your services so that you ARE comfortable charging an increase. 

And because we know it’s hard to ask for money, sign up below to get a free pricing increase template letter you can use.

Your Black Friday Deal Probably Needs a Drip Account

Did your business promote a Black Friday deal this year? If so, now’s the time to set up a Drip account within your Profit First system—before you spend the revenue that you made.

What’s a Drip account?

It’s an account you create to help you manage the cash flow when you receive a lump sum payment instead of installments for a service or offering that you’ll be providing to your clients over a long period of time.

Maybe you’re selling a discounted annual gym membership to customers who pay upfront for the year in full. They’ll be using your facilities and your resources over the course of 12 months and your expenses to service them will be accruing over that same period of time. So it doesn’t make sense to treat their full payment as money in your pocket now.

Instead, stretch their payment out over 12 months even though you’ve received it all at once. The sensible thing to do is to place the revenue in a Drip account, then take a proportional amount of the money and “drip it out” each month. So you’re matching revenue with expenses on the same timeline.

If you don’t allocate this money correctly, then it’s just money without a plan, and you’re in danger of spending it. We see this a lot: businesses in year-round “Black Friday mode,” trying to sell annual memberships, or offering other long-term, one-time payment deals, because they’re always needing a large influx of funds—to pay for services they sold months ago but don’t have the resources to cover now.

As one of the biggest spending days of the year, Black Friday is a classic time to offer special membership or subscription deals. But your business should use a Drip account for any similar payment structure regardless of the time of year. Retainer fees, sales of packages and bundles, pre-payments—these all might warrant the use of a Drip account. 

Here’s an example of how to use your Drip account for annual membership fees paid in full up front.

  • Put each lump sum payment into the Drip account.
  • Automatically transfer 1/12 of the amount to your Income account every month as if you just received the revenue (in two payments on the 10th and 25th as per the suggested Profit First schedule would be great).
  • Proceed as you normally would to allocate the funds by percentages—into OPEX, Owner’s Pay, Profit, Tax, Payroll, and any other advanced accounts you’ve created within your Profit First system (the Drip account is considered an advanced account as well!).

Of course, if the membership deal is six months instead of 12, or if it’s an unlimited package deal for three months, then you’d prorate the funds accordingly. You might need to create multiple Drip accounts if you have multiple levels of deals on offer. You can also book a call with a professional to help you determine how much to drip each month.

Trust the Drip account system. 

Don’t be tempted to move more than 1/12 of the Drip account funds into Income every month. Can you see how you will end up overinflating your Profit First accounts? OPEX will definitely be too high, and you will mistakenly think that you can spend more on expenses—which could topple your whole Profit First system.

With Owner’s Pay, this inflation can be especially dangerous. If you’re an owner who withdraws the full amount from your Owner’s Pay each pay period, you’ll be paying yourself prematurely for services not yet rendered. (And you know we advocate for building a buffer in Owner’s Pay. Determine a living wage for yourself and withdraw that every month, leaving the extra for when tough times hit. True, Owner’s Pay will grow as your revenue increases, but you should be making calculated decisions to increase your Owner’s Pay allocation percentage using accurate earned income figures from previous periods.)

Similarly, you might think the Drip account should only be for setting aside some OPEX monies, and you can do what you want with the rest. Which would be…? Putting it in Owner’s Pay? Or Profit? You can see how you run into the same problem.

Black Friday shouldn’t put you in the red.

When you do offer long-term, prepaid deals, you need to price them appropriately to cover your expenses that will accrue over time. You’ll probably need to pay yourself or a team member to work with the client, so factor in payroll expenses. Don’t forget rent, utilities, insurance, and anything else that falls under OPEX.

You may think of offering deep discounts for existing services to get people to sign up. But consider how you can add value to your product offering instead of discounting the price. Throw in a free month of a nutrition app with the purchase of a gym membership, or add a free massage for buying a bundle of ten at full price. We’ve encouraged you to get creative to incentivize your clients in an earlier post.

We caution you against relying too heavily on “paid in fulls” to sustain income. Monthly recurring revenue models are much easier to manage in terms of cash flow. As you head into the new year, what are some ways your business can create excitement around a monthly subscription rather than waiting for the next Black Friday to roll around?

Top 10 Tips to Increase Profits for Fitness Business Owners

As we approach Q4 now is the time to push to end the year strong.  It’s the perfect time to revisit old business strategies from last year so that you can increase your profits for 2020. If your financial numbers were fantastic last year, that’s great! Keep the strategies that worked for you and cut the ones that didn’t.

If your financial numbers weren’t amazing last year, or maybe you’re just interested to see how you can increase your profits even more, we have you covered.  Every business has a gold mine in its current customer base. But not all business owners remember to mine this gold, because they are too busy trying to attract new customers or developing new products or services. This is the perfect time of year to step back and remember the easiest ways to increase your profits is using your existing customer base.

Top 10 Tips to Increase Profits for Fitness Business Owners

As an entrepreneur, you are responsible for shaping your business success, so here are 10 tips you can use to increase your profits this year:

  1. Revisit Your Current Prices and Make Adjustments as Necessary

Many people will tell you that increasing your prices will increase your profits, but that’s not necessarily true.  Increasing your prices by a small amount might increase your profits without turning away existing customers, but make sure you research your competitor’s prices and adjust based on what makes sense in your market.  

Keep in mind that if it has been awhile since you have raised your prices, it is definitely time to do a little research and make the adjustments that are best for your business.  Review the price list for your services and products to determine what you need to do to bring all of your numbers back in balance.  

It is important to note that customers do expect periodic price adjustments, so don’t let procrastination or fear hold you back from making a good solid business decision here.  

  1. Bundle Your Services or Products Together

Make your products or services more attractive by bundling them together and pricing them at a better deal than purchasing the services or products separately. Customers that only want one particular product or service should still be able to purchase the product or service à la carte, but offering different packages of increasing value makes it much easier to upsell to clients and increase your profits.

  1. Make Your Online Presence Known and Manage Your Online Reputation

Everyone uses search engines and social media to find the right business to serve their needs, so make sure you can be found online. Create a website for your business and make sure you have business pages on social media platforms like Facebook, LinkedIn, and Twitter. You’ll have to develop some marketing strategies and optimize your site to rank high, but, when done right, these channels can dramatically impact your profits for the better.

When you have many good reviews, your credibility goes up and your business is more appealing to potential clients and customers. If your clients leave you an amazing testimonial, it’s a good idea to ask them to post it online as well—especially on Yelp, your Facebook Business Page, and Google Reviews. On the other hand, negative reviews will look bad to potential clients and can negatively impact your profits, so make sure you respond appropriately to the review and show potential clients that you care about getting things right.

  1. Encourage Customer Referrals by Building and Nurturing Customer Relationships

Connect with clients and build strong relationships through effective communication, providing exceptional service, getting feedback, addressing concerns, and showing appreciation. Doing so can increase repeat customers, customer referrals and your profits.

  1. Cross-Sell Current Customers

Restaurants practice this the most, asking us if we want appetizers, dessert, or fries with our entrée, and you can apply this to your business too. If you offer two services and a client is only participating in one service, make sure they know about the other service you offer, and find out if they have a need for it.

This is called cross-selling, where you offer a current customer a service or product that they don’t already purchase from you. For example, a salon will want to offer waxing services along with haircuts. A gym who also offers nutrition coaching will want to follow up with the newer members to encourage nutrition after the gym habit has been established. An online business who sells a DIY course and also has a group accountability program will want to offer customers that program as well.

  1. Upsell Current Clients

Offer steady customers a product or service with more features than they usually purchase. Examples include moving a client from coach to first class, from a budget vacation to a luxury one, from a standard model car to a luxury version, from group classes to private training, from an off-the-rack suit to a designer suit, from the standard service to an all-you-can-eat version, and from a regular meal to a super-sized one.

Some customers simply need to be given permission to splurge on themselves, so why not by you? Others have outgrown the standard package but find it hard to break routine. With a gentle nudge from you, a percentage of your clients will purchase the upgrade, therefore boosting your sales with little effort on your part.

  1. Start a New Product or Service Line

If you’re limited to just a few products or services, it might be time to expand. Be sure you’ve analyzed the profitability of these moves first and have the first service line operating profitably on its own. Then it might be time to add nutrition coaching if you don’t already offer it, or child care for some classes, or a smoothie bar to your reception area. Expanding the scope of what you’re selling will provide you with additional revenue and if priced appropriately will lead to added profit as well.

This is a great way to then start upselling or bundling products and services to your customers!  

  1. Expand Your Geographic Reach

If you’re still only offering services and products locally, consider expanding your reach, especially because the internet is so readily available nowadays. Think about which services you can offer virtually; some may require you to invest in cloud-based delivery systems. If you only sell products at a physical location, e-commerce is a huge industry and you could definitely increase profits by having a storefront online.

  1. Curb Irrational Spending

Invest in things that will last, such as your own education, great systems, team training, and assets that you really need. Avoid spending on items that are used up quickly, such as elaborate entertainment expenses that don’t generate significant revenue, excessive utilities, and stopgap equipment.

This area can be a tough one to evaluate objectively because there can be emotion and attachment involved in the spending. Let us know if you need help in this area; we can help you look at your spending with fresh eyes and provide a new perspective using the Profit First system.  

  1. Maintain Your Focus

Great entrepreneurs have clear focus. If you have too many projects going on at once, you end up delaying all of your project completion dates, and nothing gets finished. Ask yourself, what’s the most important thing I can do today? And work on that until it’s done. Then ask yourself the same question again, and wash, rinse, repeat your way to success.

All ten of these tips will help to raise your average profits per customer and boost your overall profits without a lot of additional work on your part. Try these tips today, so you can enjoy a more prosperous 2020!

Connect with Shannon:

If you are interested in learning more or joining a community of like-minded fitness business owners, check out my free Facebook Group: https://www.facebook.com/groups/PFforfitness

Shannon Simmons, a 10-year business owner, and 5-year Profit First Coach is the owner of Netbooks Accounting Services, LLC.  She is one of the original Profit First Professionals when the concept was created by Mike Michalowicz.  

NetBooks is your gym and fitness center’s business partner in achieving levels of profitability, accounting integrity, and financial reporting that will allow your business to do more than just thrive but to achieve the highest levels of profitability.

Our professionals are intimate with the fitness market and will guide you through creating the right plans, managing your operations and accomplishing your goals.  Think we might be a good fit?  Click Here to find out!

How to Pay Your Team a % of Revenue and Why You Might Want to

It’s the end of August and it is super hot outside! I have been starting to spend more time inside, due to the incredible heat. Plus, I am getting back into a normal routine, because my kids are back in school. I’m not sure how long they will be there, but they are there and I will take the normal routine feeling for now. 

In this week’s blog post, I want to address how to pay your team. I am not talking about all of those details like direct deposit. I am talking about considering hourly and salary pay rates. Basically, how to determine how much to pay your team. 

how to pay your team

How to Pay Your Team a % of Revenue and Why You Might Want to

I am focusing on this topic this week, because so many of you have been reducing your teams over the last few months and are starting to bring them back. Everyone seems to be asking about how to do this the right way with our new normal. 

Where to Begin When Determining What to Pay Your Team

Before you can even start paying your team, you must have a client to service. That means you must have made a sale and you must be aware of your pricing. Some people will say pricing and how much you are paying your team is like a chicken or an egg thing. Which one comes first??!! 

Pricing has to come first, because as I said, you must have a sale before you can really start thinking about how much to pay your team and your coaches.

It’s not as easy as looking at what’s going on in the world around you and saying $99 a month. While that sounds good, you need to make a few calculations to see if that pricing really works for your business. I’m not going to use too many specific numbers right now, because that can open a whole other issue. After all, I am an accountant and I do have a habit of geeking out with numbers and trying to solve what appears to be a puzzle in front of me. 

Determining Your Pricing – The Short Version

You should make sure you have your pricing right before you do anything else in your business, including paying your team. I am going to give you the short version here with a little reverse engineering. As you are determining your pricing, you must know what your expenses are and what you need your revenue to cover. 

A little hint, your team payroll is one of those expenses that your revenue must cover. This is when you must make your decision of how much you are paying your team. I say that you must do this now, because you need to make sure your revenue is covering your payroll and all of your other expenses. Once you know that your pricing is right, you can go sell and then pay your team. 

It is important that you are paying yourself as the coach as well. And the amount you are paying yourself must be a market based wage, because you may be the only coach in your business in the beginning. Therefore, you must make sure you are paying yourself the same amount you want to pay all of the coaches you bring on in the future. 

Target Amount for Paying Your Coaches

The target for how much you should be paying your coaches based off of your revenue is 25%. That means 25% of your revenue is going directly into your coach pay account. With the Keep More Money Method, we recommend that you have a separate account for coaches and that you place 25% in there to cover those payments. 

I will remind you that the 25% is a target, or a goal, that many people cannot hit when they are starting out. We do have people who are at the 25% revenue for coaches pay, so we know it can be done. We also have people who are at 44%, because they are paying commission or part of a member’s revenue if the coach is responsible for that member. It basically depends on your business model. 

As with your profit, taxes, and owner’s pay, your team pay should always be in a separate account. 

You can see that I definitely believe in paying your team a livable and professional wage. You may think you can skip this payment, if you are doing all of the coaching. However, if you are not paying yourself that market-based wage, then it is going to be really hard for you to bring in somebody else later and start paying them a livable and professional wage. 

You can also compensate your team by giving them a portion of your profit bonuses. That money will come directly out of your profit account when you take your quarterly profit distributions. That should not be included in their livable wage pay. That money should be considered a bonus to encourage them to help you become more profitable in your business. 

Of course, the only way you can make sure your team understands and is actually helping you be more profitable in your business is to be completely transparent with your numbers. This is also something we strongly encourage. You should be sharing some sort of numbers with your team, at least monthly if not weekly. This will allow them to see where the business is and what they need to do to get on track to receive their bonus. These bonuses also work to get your coaches to reduce expenses wherever they can. 

You can choose to pay your team a livable wage based off of how many hours they work or how many members they have. We do have some clients who base all of their coaches pay off of their “book of business” and how many clients they have in the gym. You can easily do that with software. It works really well for some people and the profit distributions bonuses incentivize the team to keep members there as long as possible.

Hourly or Salary?? – Pros and Cons of Each

As you are determining how much to pay your team, you will need to decide if you are paying them hourly or salary. There are pros and cons to both. I can’t even say there is a right or a wrong answer. I believe it is what you, as the business owner, is most comfortable with. 

When you decide to pay a salary, you know exactly what your payroll cost will be every single week and month. The amount is always going to be the same. However, it is very difficult to change somebody’s salary, especially if you don’t change the responsibilities. 

I have a non-fitness client that does this frequently. He is always changing his employees’ pay from salary to hourly and back again. I told him that his team was probably not very happy with him in that situation, because they wanted to be on salary since it is predictable for them too. They still know they are going to be paid a specific amount, even if they don’t work as much one week. They also know that they will be paid that amount if they work more hours for a few weeks and in the end it should even out.

While switching to hourly helped him reduce his expenses, his team was finding it hard to depend on their paycheck. 

As a business owner, you can control how many hours an hourly person works. That means you should be able to budget and plan what your payroll cost is going to be within a couple hundred dollars for every single pay period. Yes, you need to manage this closely, so you know no one is going over their set hours. 

Our clients that pay their team based on a commission feel like they have this figured out. Those team members might not own the business, but they feel like they do because they take care of their members or clients and your business. They have an incentive to do it too, because if one person leaves, their pay goes down. 

Those team members will reach out to clients they have not seen in a while to make sure everything’s okay. They are like a personal marketing team, because they get even more pay for bringing in new clients. While it all depends on your business model, we have seen it work well, even with group coaching. 

These are all of the different ways to determine how much you can pay your team. You must make sure your pricing is at the point where you can pay your team the amount you should. Everyone working for you should be receiving a livable wage, or market-based wage. The goal for that wage is 25%. That means your pricing must cover 25% payroll, plus all of your other operating expenses at the percentages that they should be at for your targets with Keep More Money. 

Start working on those numbers and then see where you should be when it comes to paying your team. Plus, share this with anyone who is struggling to determine how much to pay their team. Also, feel free to comment with your thoughts or questions. These conversations are the best way to see what is working for other businesses and get ideas on how we can improve on our own businesses.

how to pay your team

 

You’ve Got Profit All Wrong

Do you have a visceral negative reaction to the word “Profit”? Do all the stories of companies who maximize profit at the expense of quality, or people or the environment give you an icky feeling when you think about making profit in your own company?

Let’s get real. You have to get over it. Don’t let the negative stories about what other companies do block your pursuit of owning and running a profitable business. It’s your choice how you are going to run your company. The vast majority of companies are run ethically and responsibly. Be one of them, and feel good about it.

fit for profit - you've got profit all wrong

As we move from the Sales level to the Profit level on the Business Hierarchy of Needs (BHN), it’s important to have a clear understanding of what Profit is, and what it isn’t.

Here’s how Profit First and Fix This Next author Mike Michalowicz defines Profit: 

“Cold hard cash that the shareholder(s) (the owner or owners of the business) can use for themselves in any way they want, such that using it will not negatively impact the continued healthy operations of the business.”

My definition of Profit is: “Your reward for a business well run.”

As the owner of your business, you are the primary investor and shareholder. You have taken the risk to own and operate a business. The risk is failure, and a lot (most) small businesses do. The reward for your investment into your company is your company giving back to you in the form of Profit. This is not greedy, it is fair. 100%.

Notice I wrote giving back to you. As in you the business owner(s). To do what you want with it, outside the business. Save it, spend it, bury it. Your choice. It’s your money. There is an important distinction to be made here; you cannot “reinvest profit back into the business”. It’s either profit or it’s an expense. Once you spend cash the business has earned for business purposes it is an expense. There is absolutely nothing wrong with doing that if you choose to do so. But it’s not profit. Faking your margins to feel good is not cool. 

“Ok, Ok” you say, “what’s the big deal? Who cares if I call it profit, expense, or blue cheese? It’s my money after all”.

It makes a difference in a couple ways. 

First, profit is a habit. When you get used to taking and distributing profits it is an amazing way to operate your business. On the other hand, if you keep trying to “create” profit with more and more sales, it almost never happens. Why? Because spending is also a habit. And if you can’t curb the (over)spending habit, you can never be permanently profitable. 

The second reason taking profit regularly is so important has everything to do with the value of the company you are building. The reality is your company is probably not going to be acquired at an outrageous price by some tech or dot com investor. If you want to build a company that endures and has value to someone else, you have to demonstrate, on your P&L’s and Balance Sheet, that you have a history of being profitable. This is what my business broker called “Benefit To Owner”. In other words, when someone buys your business, they want to know what their immediate potential earnings will be. When we sold one of our gyms for top dollar, it was because we had demonstrated over a number of years a high benefit to the owner. We ran a profitable business, and when we were ready to sell, it netted us more money.

Even if you have no plans to sell anytime soon, you need to have this on your radar now. Some of the best advice I ever got was from Nick Berry of Fitness Revolution who told me; “You need to be ready to sell your business way before you want out.” Exactly right. 

Work on building a “Profit Mindset”. Get rid of the trash in your head that says profit = greed. If you want a business that you truly enjoy and make the impact on the world you want it to, you have to be profitable. 

Next time we will dig into Need #1 on the Profit level of the BHN, and discover what you need to do next to build your own profitable company. 

fit for profit - you've got profit all wrong

You’re Not A Charity (even if you are)

It’s pretty safe to say you didn’t get into business to be a bill collector (unless you actually are a bill collector of course).

One of the most frustrating aspects of running a business is chasing people down for money, if you let it be. 

Need #5 on the Sales Level of the BHN is “Collecting on Commitments”, and the question we ask is;

“Do your clients fully deliver on their commitments to you?”

If you recall from past articles, the service provider/client relationship is a two-way street, and both parties need to be happy with the exchange. It’s hard to be happy when people owe you money, it just is. 

You are a nice person, I get it. You want to offer a little leeway when someone is behind on their payments to you. Stuff happens. 

And you aren’t wrong, stuff does happen. But at what point and to what level of frustration does their problem become your problem? if this is happening more than just occasionally, it’s time to get serious about fixing it. You don’t need the added stress. 

The fact is, if we have done the work up to this point, and are attracting the “right” clients that fit into your sweet spot, collections is usually a non-issue. Sure, once in awhile someone will have a credit card problem, have an account hacked, that kind of thing, but it won’t be over and over and over. Yes, I have had a client (or two or three) like that too. 

Not only are you not a bill collector, you aren’t a banker either. If someone owes you money for a service rendered, you have now become a lender to your client. A double whammy you don’t need. 

So what to do about it?

  • First and foremost, get every client on EFT, or automated payments. In the fitness business it is now industry standard, most people expect it, so just do it already.
  • Have clear terms of payment in your contracts, as well as terms for non-payment. In your terms their should be a “cut-off point”, or an upper limit to how much a customer owes you at which point you will no longer service them.
  • Track your receivables every month and make sure every client is current. It’s really uncomfortable to go back to a client and say; “Ummm, sorry Cathy, but I just noticed your card hasn’t gone through for the last 6 months”. Oops.
  • Enforce your terms. Every time. 

Contrary to popular opinion, I am not cold and heartless. I care about my clients very much, but I am not a charity. And even if you operate as a not-for-profit, you still have bills to pay.

Remember, fulfillment of the terms of the agreement by both parties is included in and an integral part of the sales process. Selling to the right people matters. 

Here’s a review of the Sales Level of the BHN.

  1. Know what your sales level target is in order to support your personal needs as the owner.
  2. Attract enough quality prospects to support the needed sales.
  3. Convert enough prospects to clients to support needed sales.
  4. Deliver on your commitment to clients on time, every time.
  5. Every client pays on time and in full. 

Is your company fulfilling every component of the Sales Level of the BHN? If not, it’s time to Fix This Next.

Let’s Make It Happen.

Do You Deliver?

After I got out of the service in the early nineties (1990’s, not 1890’s wise guy) I got a job as an assistant manager at a Domino’s Pizza.

Back then Dominos had a very specific brand promise – Deliver your pizza in 30 minutes or you get $3 off (it used to be 30 minutes or free, but that only lasted a couple years, as it turned out to be a very unprofitable strategy).

deliver on commitments

This was a huge differentiator in the marketplace. Instead of waiting for what seemed like forever, you could ring up Dominos and you knew you were going to be chowing in 30 minutes. And if they didn’t, you could tip the Pizza Driver $3 more, right you cheapskate?

So what’s that got to do with your fitness business? 

Well you have a brand promise too, even if you don’t formally call it that. People seek your services based on your advertising, or even better, word-of-mouth because of all your raving fans. There is an expectation every customer has when purchasing your service, based on what they have seen or heard about you.

Need #4 on the Sales Level of the BHN is Delivering on Commitments, and the question we ask is;

“Do you fully deliver on your commitment to your clients?”

The quickest way to lose business reviews and get a poor reputation is to let your customers down – to not fully deliver on your commitment to them.

There are subtle ways this can happen. If you advertise high energy, high intensity group fitness classes and play polka music, not only are you going to let people down, you are probably going to have someone suggest counseling.

Seriously though, this is part of the sales cycle we don’t tend to think about as much, and we tend to be “either/or” rather than “both/and”.

As in, either I am focusing on sales or I am focusing on service, rather than having the systems in place to make sure both are being done, all the time. 

One way you can identify if you have a problem delivering on your commitments is by measuring your churn rate. If you have as many people going out the door as you do coming in, you have a problem that you need to hone in on. Customer acquisition is a huge time and money suck when this is happening, and it can be pretty emotionally draining as well.

As an aside, we were always pretty pleased with ourselves that our retention rate was about 97%, until we realized that even at that, we were losing over 35% of our clients a year. Ugh.

Delivering on your commitments means doing what you say you will do, every time. and if for some reason you can’t, you need to communicate why, every time.

Are you delivering on your commitments? Do you have the feedback system in place to prove it? Do you have systems to make sure sales and service are not mutually exclusive?

Make It Happen!

Finding Your “Sweet Spot”

Need #3 on the Sales Level of the BHN is Client Conversion, and the question we ask is;

“Do you convert enough of the right prospects into clients to support your needed sales?”

Last time out we talked about what the “right prospects” for your business are. We know that not every lead we get in the door is going to become a client, that’s just business. But if you have truly taken care to make sure you are attracting quality prospects for your specific business, you should be converting them at a predictable rate.

In the book Fix This Next, author Mike Michalowicz writes “Conversion is consideration of both sides. What do they want and what do you want.” When those two things are in alignment, conversion naturally becomes easier.

We tend to focus on what the clients wants, which is natural. But have you put as much consideration into what you want out of the deal?

When we work with our clients using our Pumpkin Plan tools, one of the things we determine is your Sweet Spot. Do you get the most joy out of selling on price, convenience or quality? (hint: you can’t successfully do all three).  What type of clients do you really enjoy serving? What products or services do you really love delivering? 

Is that what your company is doing, right now? 

It may seem strange to introduce the “joy” component so deeply into a discussion revolving around sales and client conversion. But life is too short to serve customers you don’t like with an offering you hate delivering at a price point that you know is too low. You didn’t start your business to get the life sucked out of you, but that’s sure to happen if you don’t nail your Sweet Spot down, like right now. 

I’ll come out and say it. I strongly dislike delivering personal training, I like semi-private better, but I love coaching group fitness. Don’t be a hater, it’s just what I like doing. We’d been open a few years and were being encouraged by a coaching program I was in to start doing more semi-private and personal training, and I let myself get pressured into it.

The result?

We failed to get any traction, and it’s not a secret why. I didn’t like personal training, and I was convinced our group training was just as high quality as anything I could do semi-private. My heart wasn’t in it, I didn’t feel good about marketing it, and it didn’t get the attention it deserved. 

Bottom line. I found no joy in it, so I self-sabotaged the effort. What a baby, huh?

Now you may love training clients one-on-one and have the most incredible semi-private offering ever. That’s awesome. You do you. And don’t let some expert tell you otherwise.

And once you find out what “doing you” means, ask these questions:

  • Is my company story consistent with it?
  • Is my pricing consistent with it?
  • Is the experience I deliver consistent with it?

When these consistencies are achieved, when you have found your Sweet Spot and are living by it in your messaging, marketing and sales process, converting prospects into clients becomes a much, dare I say it, sweeter process.

And I’ll go one step further. If you don’t find alignment between the customers needs and your needs, you will continue to waste money on marketing that doesn’t work, a muddled sales message, and a stagnant business. 

And life is too short for that too.

Make It Happen!

Do Your Prospects Have That “Certain Quality”?

Remember when you were getting ready to launch your business? The excitement that you felt? All the hard work you had been doing was finally coming to fruition. Your space was setup and ready to go. Your equipment was gleaming. Your programming was the best you had ever crafted. Website up and running – check. Billing system ready to go. Time to open the doors!

And people did show up. And it was all good. Until it wasn’t. 

You see the problem with people showing up is that they are, well, people! With all their quirks, problems, likes and dislikes and personalities. We human beings can just plain be hard to deal with sometimes. 

what to look for in hiring

Which is why it is so important that we focus on getting the “right” kind of people through our doors.

Need #2 on the Sales Level of the Business Hierarchy of Needs is Prospect Attraction

But not just anybody will do. 

The right kind of person for your business doesn’t mean that they are a good or bad person. But they might be a less than ideal fit for you and your gym. Every gym I have ever been in has its own unique personality. I’d fit in some, others not so much. It is crucial that you get this right, or you are going to be wasting a lot of time when it comes to selling. If you are a power-lifting gym, and you are getting a lot of interest from prospects looking for Yoga and Pilates, your messaging needs to be tweaked, just a bit. 🙂

In the beginning we just want bodies in the door, I get it. But as your business grows, you’ll want your message to be laser focused on the clients you serve best, AND the clients that will serve your business best. If your space is high energy, with lots of laughing and smiling and joking around, don’t be afraid to show that personality in your marketing. You’ll get more of those type of people in the door, which will only add to your already rocking place.

Look I know this isn’t a new concept. Client “Avatar’s” have been around forever. That’s not in question.

What IS in question is have YOU done the work to create YOUR ideal client? The client who has that specific need that for who your company is the perfect solution?

When you do, and you craft your marketing so it speaks to that person, you’ll attract the right kind of people to your business, save yourself a lot of time and money, make more sales, and create more profit.

Attracting prospects with that “Certain Quality” matters. We can help.

How To Set Sales Goals That Make Sense

What are your company’s sales goals?

You have one, right? Ok, I am going to go out on a limb here and say you do have a sales goal for your business. If you don’t, no problem. I am going to explain to you the best way to set it.

For those of you who do have a sales goal, how did you arrive at that number? Was it based on past or current performance? What you have seen others achieve? What you thought sounded good? Something else?

I’ll be totally honest. When I set the revenue goals for our gym, it was driven by nothing more than ego. In fact, in the beginning, it wasn’t a revenue goal at all, it was the total number of clients. I figured when I hit 100 clients I’d be golden, never even taking the time to think what that actually meant revenue wise for the business. Or even more importantly, for me. (Yeah, I like to eat too). 

how to set sales goals that make sense

It wasn’t until I actually got to the “cord-cutting” stage until I considered it. In other words, I had been working another job that I relied on to pay the bills. I knew my take home and what I was making from that job. But how does that translate to the business? After all, $10,000/mo in revenue didn’t mean I was going to be shoving $10k into my pocket. But what did it mean?

And that’s where Lifestyle Congruence comes in. Fancy term, simple concept.

All it means is “How much does the business need to be generating for me to take home what I need to?”

In reality it’s probably the simplest of all the Fix This Next questions to figure out. But that doesn’t mean it’s going to be easy.

First you need to figure out the personal income you need to support your personal level of comfort. This is a need based number, not necessarily wants – not yet. For instance, when I calculated this number, I found I actually needed less than what the old job was paying me which meant my goal could be lower.

After you have calculated your personal income number, you need to know how much business sales income you need to be able to do that. Here’s an example:

You find that your personal comfort number is $5,000/mo – a nice round number. 

Then you calculate how much you are paying yourself as a percentage of your business sales income. 

Let’s say your current revenues are $10,000/mo and you are paying yourself $2,000/mo.

That means your Owner’s Pay% is 20%. (($2,000 / $10000) x 100%)

So to pay yourself $5,000/mo at that percentage you would have to generate $25,000/mo in sales revenue ($5000/20%)

$25,000/mo = $300,000/yr. You now have a sales number that is congruent with what your personal lifestyle number is. It is a realistic calculation of what your sales goal needs to be. Not a guess, or a hope or a dream. Real Life.

And of course that number can be adjusted and modified. Think of what can happen if you run your business leaner, and now can pay yourself 25%, or 30% or more? That is where the magic happens.

But you gotta know your numbers first. We have the tools and coaching to help you make that happen. Let’s talk about it.

how to set sales goals that make sense
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