I recently picked up this book on "Growth hacking" by Sean Ellis & Morgan Brown as I have been interested in learning about the matter for some time, and, while this methodology applies mostly to digital products, the more I read, the more I realized some of the concepts can also be used in your fitness business, even if you don´t have an app or a web platform and you only have a "brick & mortar" gym.
So, in this post, our goal is to help you learn & understand basic "growth" concepts that will help you take your brand to the next level.
What is growth hacking?
To put it very simply, as it is defined in several books:
"Growth hacking is a process that looks to maximize earnings by applying a scientific method based on testing, persevering and iterating."
With that in mind, growth hacking is something you should at least consider since which business is not interested in maximizing earnings?
The importance of the sales funnel in your business
A sales funnel is a framework in which to visualize the different stages in the purchasing process that your customers or potential customers go through. Although it has adopted many forms and variations over the last few years, it is typically represented as follows:
In the awareness phase, a potential customer needs to find out that you exist and that you can provide a solution to their problem. If they decide it might fit, they will consider trying or purchasing your product. If they end up purchasing, the goal will then need to be to get the customer´s business on a recurrent basis and not let it be a "one-off."
For instance, an example of a hypothetical journey along the funnel for a "brick & mortar" fitness organization would be the following:
A side note to mention that linking any piece of advertising to a free pass is a great way to combine the digital strategy with the offline. Potential customers prefer free passes since it usually does not require any commitment from their side. For the gym, it is a very easy way to obtain leads (be sure to provide a registration form before letting customers download the pass) without having to offer discounts during the first interaction (Why would you offer a discount to someone who is not interested in your product in the first place?).
On the other hand, if your business is an app or web platform, perhaps your funnel could look something like this:
Again, this is just a simple example which looks to demonstrate how a potential customer can convert to a recurring one. An important thing to notice here is that the sales funnel, although represented like a straight line, is by no means a linear process; anybody can go back and forth along the stages at different times.
Finally, please note that a sales funnel will be of no use if you cannot measure correctly, so identifying the adequate metrics is key. In these examples, you can easily track:
Number of clicks in the link to the free pass (CTR)
Number of downloads (CTA)
People trying out the gym or the app (Leads)
New memberships (Conversion rate)
Lifetime Value (based on renewals of the membership)
The issue on metrics deserves a future post of its own since it can go a long way. Our recommendation though, which is aligned to what you will find in the book, is that it is better to focus on less metrics but making sure they are relevant for your decision-making process.
The first impression is critical
Another concept that is also reinforced is that in a digital environment, the on-boarding process that shows users how to interact with a digital product (a web or an app) is critical for future success (success defined as getting users to return to use the service). This is usually known as the "aha moment." Similarly, the first impression that customers get from your gym or your app will define the rest of the experience for them.
In the gym, your on-boarding process is what customers encounter on their first visit. This covers everything from personnel, to variety of services you offer, how clean the facility is, maintenance, etc. We need to show customers very simply what they will find in the gym and how it can add value for them.
On this topic, Club Solutions Magazine ran an episode in their podcast that covers 6 key ideas to consider within your onboarding experience:
Believe in your product (This even includes working out at your facility)
Shift the conversation away from price
Take into account that you should look to develop onboarding experiences for staff as well
The first conversation with potential members should be about understanding customer motivations. In other words, their "why" and "why now"
Enable "trial" periods or sessions for potential members. For instance, we once worked with a leading fitness brand on a project in which we enabled users to download a free "one day pass" on the website. This action lead to an increase in conversions across their entire set of gyms where we ran the experimentation.
Plan follow up calls with every potential customer that tried out your gym. This usually is best within the first 7 days after the user enjoyed his or her free pass.
On your app on the other hand, the on-boarding process might consider things like showing all the features, challenges or other apps/devices that can be connected to your app, that will enable users to reach their fitness goals.
Now, it is important not to over-promise on the first experience, since in the long term, customers will not renew their membership if you cannot manage to live up to that first impression. Be sure to provide a "real" experience and your objective should be to improve it as much as possible in a way that you can maintain it in the future.
Customer retention is critical for your business
We covered this in detail in a post about Lifetime Value (LTV), which we believe, is the key aspect for the survival of your organization.
Going back to the funnel, you can make all the efforts you want in acquiring new customers or providing a fantastic first experience but at the end of the day, it may sound obvious, but you need your customer to either, stay as much time as possible signed up to your membership or to spend more money on your services. Ideally, both.
Remember, the critical element to remember is:
LTV > CAC
Which essentially means that the value you obtain from a customer must be greater than what it cost you to acquire it.
If this equation holds true, there are more chances for your business to thrive.
ROI should be the guide of all your business decisions
Your business decisions should be aimed at achieving growth and there are three main
ways to do so:
The potential problem though may arise when trying to compare the different actions that look to tackle each of these areas. For instance, how do you compare the result of a paid social media campaign with a sale of brand related merchandise?
The main metric for the former would be new customers whereas the latter would be measured against units sold.
The answer is “Return on Investment” or “ROI.” At the end of the day, generated revenue compared with how much investment was needed will determine the success of each of tactic / action and will enable an easy comparison between them.
Maximizing your ROI also relies on understanding who your best customers are to make sure that you seek similar people to sign up to your service. In this sense, it is useful to ask yourself three questions:
What are the behaviors of your best customers?
What are their characteristics? (This includes how close they live, how did they get you know about you, demographics, etc.)
Why do certain customers cancel their membership?
Member get member actions vs the K Factor & growth machines
In the realm of growth hacking, the K factor refers to the average number of additional users a current user can bring to your product / service.
Similarly, many fitness clubs look to their own members to acquire new customers.
“Word of mouth” in many cases is the best way to grow your business since customer referrals are usually tied to better customer retention results in the long term. For this to happen though, it is important to use your best customers as reference to increase the chances of bringing in similar ones to your business.
Moreover, the capacity of building a successful “growth machine” or “growth loop,” basically refers to being able to get current your users to exponentially bring more users to your web / app.
There are many ways to do so including increasing the capacity of your customer plan (ie: Dropbox), price discounts or exclusive invitations.
This is not different from the goals you may have with your member get member programs but ultimately, the best recipe for building a “growth machine,” whether it is in the physical or digital world, is to provide a fantastic experience all along the customer journey. This is easier said than done, but if achieved, not only will it be the option that will lead your customers to keep signed up to your service over time, but it will also drive a higher number of recommendations.
Other channels that drive “acquisition”
We also recommend taking a look at the book “Traction: A Startup Guide to Getting Customers” by Gabriel Weinberg & Justin Mares, as it details other channels which fuel the acquisition of new customers.
There are 19 identified channels and while all of them can be applied to your fitness organization, my personal choices are the following:
Some experts recommend identifying the 6 more relevant channels for your business, dedicate 80% of your resources to 3 of them, and the rest to the other 3. It is better to focus and aim at maximizing results on whatever you decide to do.
Beware of “Vanity metrics”
One of the risks of using so many channels lies in tracking “vanity metrics,” which are those metrics that may look good on paper but, they do not add any value to the business. Some of these may include:
“Likes” in social media
Visits to your website
App downloads
Number of emails in your database
For instance, what value is there in having thousands of likes on Facebook or Instagram if none of those people end up becoming your customer? A deeper level needs to be reached in which “conversion rates” must be measured. Obviously, if conversions are high enough, it will help to have more likes on social media platforms as this will broaden your upper funnel, but as a “stand-alone” metric, it does not really mean anything to your bottom line.
Lifetime Value: The main metric for your fitness business
We have already covered this topic in another post in this blog but we cannot point this out enough. Customer lifetime value should be your “north star” when making any business decision during this time.
With the main formula in mind, it should be able to help you identify gaps and opportunities around customer retention and / or in the average order from your existing customers:
LTV = Customer retention x Average order
But always remember that for your business to be profitable:
LTV > CAC
It may sound obvious but the value a customer provides through time should be greater than the cost acquiring it.
Test, measure, learn & adapt on your way to sustainable growth
Although in this post we have focused on strategic concepts from the realm of growth hacking that can be applied to the fitness industry, it is important to understand that this methodology relies on testing, learning and improving based on those findings. Ideally, you should focus on one stage of the funnel, one key metric to tackle and carry out test that will let your business grow in the long term by taking small steps through the undertaken tests.
Be sure to get in touch if we can help you develop a sustainable growth strategy for your fitness brand and help you take it to another level.
Keep safe.