Fitness Sales Tips – How to improve Customer Acquisition Costs for your Gym
06 December, 2019
A term that we often use in sales is CAC, which stands for Customer Acquisition Cost.
It’s basically a dollar value on the amount of money it takes to acquire a new customer for your business.
This is an important number to know because it can helps your Fitness Business determine things such as marketing budget, the efficiency of that budget, and the opportunities for future growth and success.
Here is a quick and very simple example.
Cost of Marketing Department = $2500 per month
Cost of Ad Spend = $900 per month
Cost of Client Welcome Pack = $50 per client
TOTAL $3900 (based on 10 new customers per month)
Based on the example above, if you are bringing in 10 new customers to your fitness business across the month then the client acquisition cost = $390. This is determined by taking the total cost above and dividing it by the number of acquired clients.
Now for a fitness business, this isn’t a bad number at all.
We could take this a step further by incorporating things such as wages for your appointment setters and sales staff, which would drive the cost per acquisition up. However, for now, let’s just assume you are handling everything solo (which is often the case!).
So how can your Fitness Business bring your CAC down?
Here are 5 ways to improve your CAC.
Improve Fitness Sales Ability
If you are closing above 80% of all your fitness client appointments, then this point does not have much value. However, I don’t meet many people with such a high closing ratio. The normal conversion rate is around 30-40% of all appointments.
The obvious fix is to improve your conversion rate, which put simply means to improve your sales skills. This will instantly lower the CAC.
This is something that will take time if you intend to get better on your own. Just like learning to ride a bike, sales is a skill that must be learnt and practiced over and over again. If you are the person making the sales calls (or training other members of your team to make sales calls) then it will be important to make the time and the investment to improve your skillset in this area. It doesn’t come naturally to most people – it needs to be learnt, practiced and improved.
Here are a snapshot of the fitness industry sales funnel for a clear picture of how we move people through the sales process:
Another option is to hire someone skilled in Fitness Sales. Yes, your cost spent on wages goes up, however if they are really good and improve your closing ratios by 20-30% then it will be highly worth it and will bring your CAC down.
To be 100% sure what is right for your fitness business, you should do the math yourself and work out what is the most viable option. Taking action is the most important step here.
Ensure your Fitness Marketing is delivering
Don’t spend money on marketing and pray for results. You need to make sure you are using your budget smartly and tracking everything to ensure your marketing is working for you. If you are forking out huge amounts of money on ads in local papers and you aren’t seeing any return, then ditch it. Ensuring that your marketing budget is delivering you high quality leads that are converting into clients is a sure way to get that CAC down.
Much the same as sales. If you don’t understand marketing, then you need to spend the time and the investment to learn it. It is one of the most important components of your business and coupled with healthy sales it is the only way to grow.
If you don’t know what you are doing when it comes to marketing, then perhaps it’s time to hire some experts. Yes, again outgoing costs will rise, but if in return you get more leads and more clients then before it’s a smart business decision (plus it frees up your time to concentrate on where you can truly add value).
Up-sell and Cross-sell
I once heard someone say, “the best new business is repeat business”. In essence this means it’s better and much easier to get more business and more money from existing clients.
According to a lot of statistics and data I have read the likelihood of someone buying from you again is 60-70%.
When you compare that to trying to sell to someone for the first time at 5-20%, it makes a lot of sense to invest your time, effort and money into repeat business.
So if you can improve your clients average spend with you, you can bring down the cost of you CAC.
For example think about running challenges and programs that they can purchase, events that they can attend or merchandise you can sell them.
There are so many options available, you just need to be okay with asking your clients for more money, which they are very open too according to the data, so go for it.
The good old point-of-sale (POS) referral, it works wonders and yet very few do it.
The best time to ask someone for a referral is after they have just agreed to join your gym or sign on for Personal Training. They obviously are willing to invest money into your business which means they trust and value what you have to offer.
So why not ask them if they have anyone else they know that would benefit from a complementary experience with you and your gym?
I have spoken about this before but let me tell you this story again.
I remember sitting at an operations launch and they had an award for POS referrals for the quarter. This award was for the membership consultant who got the most referrals at point of sale on average. Now to give you an idea of what would be considered the norm you would be looking at 1 or 2 referrals. If you are really good you may be hitting 3 or possibly 4.
The guy who won this was doing 6 on average! This means if he was signing 40 new members per month he was getting another 240 leads.
Just read that again and let it sink in.
240 new leads with zero effort or investment.
Now imagine if you could get 6 with every new signup you did.
This would bring your CAC way down.
Improve Client Average Spend
Simple increase your fees. In fact, a lot of fitness business owners I work with increase their prices after 1 call with me.
Whether it’s $10 or $100 if the value is on offer then do it. If the value isn’t on offer then create it, simple. Many people are actually under charging for what they offer so this is a very legitimate point. Know your place in the market. There are members who are only looking for a basic low-price gym that offers just the equipment. Then there are just as many members who want so much more than that and are willing to pay for it.
Think about everything you give to your members and clients on top of just the training. What about all the training programs, nutritional advice, mindset training, progress tracking, support, calls, text messages, welcome packs, events etc – all of this has real value to a client. So think seriously about what you offer and the total value to your client. Are you charging enough?
Improve Client Retention
The last tip is all about client retention. This hurts a lot of businesses.
If you have clients coming and going every few months your CAC is going to be extremely high.
If you can improve your retention and get members to stay for 12+ months it’s going to really help improve your overall profit margin.
This article isn’t about how to improve client retention cause that is a whole other article on its own, but it’s all about the journey and experience your clients have with you.
If it is average, they will leave.
If it is amazing, they will stay, it isn’t rocket science.
Look now you know what your CAC is and how you can improve it. Get out there and start implementing these tips immediately for a more profitable business.
- Jason Mottlee, Sales Coach at More Gym Members
Want to invest in yourself with business, sales and marketing coaching? Book in a no-obligation FREE call (https://moregymmembers.com/45-minute-strategy-session/) with More Gym Members and let’s look at your current state of play, and how we can help you take your Gym (or PT Business) to the next level.