Mike Arce - Loud Rumor & Fundamental Principles for More Profitable Gyms

Hey everyone, welcome to the Future of Fitness, a top-rated fitness industry podcast for over four years and running. I'm your host, Eric Malzone, and I have the absolute pleasure of talking to entrepreneurs, executives, thought leaders, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. Please stop by futurofitness.co to subscribe and get our interviews with summaries delivered straight to your inbox. Thanks for listening and on to the show. Hey friends, I couldn't be more proud and excited to announce that today's episode is powered by Workout, the ultimate tool for modern fitness professionals just like you. There is one thing that fires me up. It's elevating the personal training and coaching industry. For that, the workout app is an absolute game changer. No more promoting top brands without compensation or dealing with confusing social media links. In just a few clicks, Workout's user-friendly app lets top trainers and coaches curate and share the world's most sought-after fitness brands like HyperIce, Vega, and more. Product lines covering everything from fitness equipment to supplements and apparel. Save time and boost your earnings with generous commissions and bonuses every time your client purchases the products you already endorse. Do not wait. Maximize your income and streamline your business with store by workout. Discover more at workout.com. That's w-r-k-o-ut.com. Just one-o. W-r-k-o-ut. Go get it. All right, we are live. Mike Arcee, welcome back to the future of fitness. It's been a minute, my friend. It's been four years. I, you know, I feel like uh over the pandemic, I've just uh sat and watched myself age via Zoom in Riverside, uh, you know, in the mirror reflection. And uh, you know, now that we're talking about four years later, it's making me feel a little bit aged, but uh it's the new COVID's the new, it created the new BC.

Now it's before COVID. That's what so now we talk in after COVID and before COVID. That the this is how we'd like to define where our businesses are. Yeah, totally. Yeah, it's so last time I was on this show was BC.

It was, it was, and it was a very different landscape, right? Um, I'm sure things have started to to regulate a little bit back to somewhat of what they used to be, but I'll I'll get your insights on that. And um, you know, I I enjoy having you because you have such a unique perspective on the industry. I mean, you work with so many different gym owners and uh you have insights that people uh rarely get, you know, with just that that wide breadth of of connections. So uh, you know, you are the CEO and founder of of Loud Rumor. Um, you also host the podcast. Um uh what's the name of your podcast? The The GST show. Yeah, the GST. I love that name. Uh I think you've done like 253 episodes. So as one content creator to a next, like, dude, kudos for for pumping them out. That's that's a grind.

Thank you, appreciate it.

Yeah. Uh and what I loved about our pre-recording conversation is I asked you what you're passionate about today, right? And not today, but just in general. And you know, three things that I love to hear was you know, you you want to help gyms get more members, make more money, and get their time back. And yeah, when you boil it down, it doesn't have to be more complicated than that. Things get complicated. That's actually uh if that's our purpose at Loud Remur.

So if you if you if you're in our community, we talk about it all the time. So our members know our purpose because we say it more members, more money, more minutes. Right? That's what we say. Um, and if you could have all three of those, we're good. And I think a lot of times people chase more members. They if I get more members, I'll definitely have more money and more minutes. But in reality, not necessarily. Um, and you think if I have more money, great, I'll have more minutes, not necessarily. Um, so we really believe it's important to really focus on all three. If you can get all three down, you got a system to get all three. Uh, very few people I know that have that um are are upset with their life and where they're at.

Yeah. Well, let's I let's dive right into it. I think that the big con thing that we're gonna talk about is, you know, you're very passionate about more profit, right? All those three things and ultimately getting success for people uh who are, you know, gym owners and across the boutique space, primarily, and but correct, I'll let you explain your constituency a little bit better. Um, you know, it's not easy like uh at the ground floor of being an operator of uh, especially an independent or a franchise owner, but that's that's you know, uh I think people look at the big picture very often of like, well, how is F-45 doing? How is Orange Theory doing? How is Alloy Personal Training doing as a company? How is Matabolic doing, right? But we forget that at the base layer, the success is dictated by the franchisees and you're there helping them along the way. So if we can just maybe set the table a little bit, Mike, like who is it exactly that you work with and and how do you work with them?

So we yeah, we work with 56 different franchises uh within the fitness industry space. Uh we work with um HQ level at at many of them, and we work with the franchisee level exclusively at some of them. Um we work with you know tons of gyms and fitness studios uh in over 10 countries. I think it's 11 actually. So I make it sound bigger than it is 11 countries. Um but we we really focus on uh helping entrepreneurs within the fitness space. Um and I feel like everyone probably thinks, well, if I have a business, I am an entrepreneur. No, you might just be a business owner, and that's okay. There's nothing wrong with that. Um when we say an entrepreneur, the person that wants to create something, um, the business owner, uh it's it's kind of like the difference between being a father and a dad. You could be a father, but not necessarily a dad, right? Like there's fathers, there's a lot of fathers, but did you have a dad, right? So um for me, you could be a business owner because on paper you are one, you own a business, uh, but are you the entrepreneur? Are you somebody that's actually getting creative and you're networking, you're you're building relationships with other business leaders and you're learning from them, you're applying things that truly make a difference. It's noticeable because you're tracking things and you're careful about it. And so we want to work with real entrepreneurs. And um, as long as you're making over $15,000 a month, you're uh you're qualified to have a conversation with us. Um, even at that point, we still say no to more people than we say yes to. Um, just because it's it's not a uh course that you can buy. This is a it's a program. Um, you don't get into every college either, you know. So um it's it but it's allowed us to do really good work. It's allowed us to have great results. The average gym in our program grew by 89% last year alone, just last year. It's almost that's pretty much like every gym doubling, right? Um, and it's not about you being great already. That's not the case. It's more of are you the avatar? Are you are you the person that will do great in this program? If the answer is yes, I think the best way to just master attrition and not have to worry about cancellations is to get the right person in the door in the first place. So that's what we focus on.

Yeah, that's great. And it's a really interesting differentiation between the the business owner and entrepreneur. I've talked about this quite often. And I use a uh analogy of when I was younger, I was a competitive swimmer. And I had a coach once who said, uh, you know, Eric, there's there's two types of swimmers. There's swimmers, right? Who are just that's what they do. They swim. That's that's their their life. And then there's athletes that swim. And I was like, oh, I want to be the second category, right? I want to be in that. And I look at it the same way as there's business owners, and then there's entrepreneurs that do business. And, you know, like there's a big like my dad was a dentist, right? Like, was he an entrepreneur? I don't know. I mean, can how much innovation do you do within the dental industry over time?

Oh, you could do a lot, you could do a lot, but it doesn't mean that he did. Um, but absolutely, I mean, if you look at dentistry, uh, by the way, I niched in a dentist first before I niched into fitness, um, just because we had so many dental clients at a at an agency model that we had prior. And um, you know, some dentists they just go through the routine, right? Like come in, check up, upsell you on something that needs work, and you get them in. And then you have others that lead with like teeth whitening and um they start doing other things like veneers and crowns and and stuff uh to be able to draw in a higher paying client because they know, man, if I can get 10 people that get veneers, I'll I have a better chance of getting another 10 because birds of a feather flock together. And so veneers are a lot more profitable for a dentist than, say, filling a cavity. Um, and also one of them is pretty commoditized, the other one is not, right? Filling a cavity, virtually every dentist could do it, but not every dentist does veneers or does good work because you can do it wrong too. It could look bad. There's some people with some really messed up looking teeth that actually are perfect teeth, but it just doesn't look right for some reason. So I I think in any model, I mean, look at electric cars. The Prius was not cool. The Prius was a lame car, you know. Now, now keep in mind that's an opinion. It doesn't mean my opinion. I don't have an opinion on cars, but if you take the overall opinion that you took from the marketplace, there was an overwhelming joke on people that owned Priuses, right? For whatever reason. It wasn't a tough car, whatever. And Elon Musk made it cool. And now there's Hummers that are EVs, there's Corvettes, there's Porsches, the fastest car that Street Legal is an EV, the Tesla Mot, the plaid, right? The Model S. Computers weren't cool. I don't know, I don't know how old you are. I'm 40. How old are you? 46. You remember in high school? Oh, I'm not a computer guy. It was it was lame to be a computer person. Do you remember those days? Can you go back to that? Yeah, yeah, completely. Steve Jobs made it cool. And now all of a sudden, no, not to the person using it, yeah. You know, like to just yeah, but like to the person using it, I didn't care how if Bill Gates was making money off Microsoft back then. It's all of a sudden now it's weird not to have a you're lame if you don't have a computer. And I think the same thing's gonna happen with electric vehicles, and I think the same thing could happen in a lot of businesses when an entrepreneur knows how to create that, how to how to go, okay, this is what the mindset is now. It doesn't mean it has to be. I'm gonna make it into something totally different.

Yeah, awesome, man. And you know, I I want to get into the the meat of what we're we're gonna chat about, which is you know, making more money. Like, how do we help ultimately this industry thrives? You know, we we can talk about the mission, right? You know, uh effective, you know, affecting obesity and and uh, you know, uh metabolic health issues and all that. That's really important. But in order for that to happen, I kind of look at it the same way as like uh, you know, we talk about whatever your thoughts are on climate change, whoever's listening is you know, what's going on with our climate. Well, the best way to do that is to get more people above the poverty line, right? Same in the fitness and health industry is like if we can get more people into a position where they don't have to worry about, you know, uh, you know, paying all their employees, paying their mortgage, putting some money away for their kids' college. And now we can focus on the biggest issues of the day of like all those things I mentioned, right? Metabolic health, diabetes, um, same thing, really, obesity, all that, right? That that we talk about. Uh, we need to get the industry making more money. So I'm gonna pass it over to you because that's a big, that's a big problem to solve. But how do we do that? How are you doing that within within Loud Rumor?

Yeah, we we uh we helped the average gym in our program grow by 89% last year alone. Um, and there's a reason for that. That doesn't mean they got 89% more members, that just means they made 89% more money. And there's there's two types of way you can look at money there's revenue and profit. So you'll hear people say, like, oh yeah, my business did a million dollars, right? And uh, and that's great. That's but revenues for vanity, right? Because you can say my business did a million dollars, but what if you lost money? What if you did a million, but your expenses were on point two? Well, that means you lost 200 grand, right? And I don't know about you, but I'd rather have a business that does 500 grand and profits 200 grand than have a business that does 1 million and profits 50,000, right? So at the end of the day, profit is really the number you want to look at. And um, with the businesses we work with, we've gotten them really, really focused on profit. And I think everyone should really be building a business that way and thinking about it. Um, marketing is usually the avenue that people tend to focus on when they go, we need to grow this company. And they're they're right. They're you're right to think that. But where there's cloudiness, and why I think a lot of people tend to fail, is because they see marketing uh as synonymous to social media ads. So for example, yeah, I need marketing in their brain. A lot of people are thinking I need to be able to find somebody that can run ads on Facebook and Instagram and TikTok and YouTube and stuff like that, right? Um, I need to find a marketing each. What you're really saying is I want a lead gen company that can help me get leads through digital. Like that's what you're really saying, but you're just articulating it as marketing because that's what everyone else articulates it as. But in reality, social media ads are under an umbrella that's under an umbrella that's under marketing. So the marketing is very broad. A lot of people don't know that under the umbrella of marketing, there's actually four main pillars, and they all start with a P. And one of them is promotion, and that advertising falls under, that's one, and then under advertising falls Facebook ads, uh, digital ads. Actually, under that, sorry, one more umbrella. Under advertising, there's social media, and then under that, then there's Facebook ads, Instagram ads, stuff like that. But the other three Ps under marketing, a lot of people don't even consider part of marketing because of their own definition of what marketing is. But the other three Ps are product, product optimization, what's the naming of the product? How's the what's the delivery of the product? How are we improving the product? When cars started including Bluetooth, that is product. That is also marketing, right? Because now we can say Bluetooth, we can use that in our ads. When people talk about it, when you get in the car and you sync up and you go, Yeah, look, oh, yours can do that. Yeah, that's marketing. It's garnering the interest of other people towards your product over others for whatever reason. So product is one the second P. The third P is uh placement. So where are you positioned? So, for example, uh opening up a gym uh down an alley is not nearly as effective as opening up a gym on a major intersection, and even more so, that's not as effective as opening up a uh gym in a major intersection where your demographic tends to live. And it's also not as effective as doing all those things, plus the neighboring companies within the shopping center are very good referral partners with your business. And then more so is very easy to get in and out of that shop. Like there's a lot of things to consider when it comes to placement. Placement also is digital. How easy is it for your clients to book meetings? How easy is it for them to find your phone number, for them to be able to reach you, for them to be able to buy your supplements if you guys sell supplements? What's the what's the path of ease for your customers or prospects to be able to give you money in exchange for goods or service? So all those fall under it. And a lot of people just tend to focus on this. But in reality, the number one lever to increase profit that everyone could do today, they can literally do it today and immediately increase profits. And depending on where you're at in business, you could double profits, triple profits, or even more, it's price manipulation, your pricing model. Um, and and here's how this works. Let's say your business, which is very this is common, at least what we see with with the average gym that we see is either not profitable or they're hovering around that 10% mark. The top of the top are doing 20, 30, 40, right? But that 10% seems to be pretty common, and that's a good version of the common. Well, if you're doing 10% profit, that means just by increasing pricing by 10%, you're able to double profit. Because when you increase pricing, it doesn't change your expenses. So that increase goes directly to profit. So if how that works, if your business is doing easy math, $50,000 a month with a 10% profit. Well, if you are doing 10% profit on $50,000, that means you have $5,000 in profit. Now, if let's say those 50 customers, again, for easy math, are made up of um uh 100 customers paying you $500 a month, right? As an example, I'm sorry, that wouldn't make sense. Yeah, that would be right. 100 customers paying you $500 a month. If you raise your price by 10%, go into $550, that's a rather unnoticeable price increase. The person from the person that can afford $500 a month can afford $550. He's in the same bracket. It's not like you're going from a $20 membership to a $70 membership when you raise $50. You're going from $500 to $50. When you go from $129 to $149, it's the same bracket. That that person's not going to be like, you know, at $129, I was able to do it, but now I got a few kids. I can't do $149. No, you're in the same bracket. And so, and price is increasing in everything around them. Gas, Netflix doubled in pricing in the last few years. So, anyway, um, if you were to do that, $50 times an extra 100 members, that's $5,000. Your profit initially was $5,000. Now you got another $5,000. Now you could say, well, Mike, people are going to cancel though. What we've noticed across over 110 gyms that did this last year, and by the way, not one gym lowered it by or raised their pricing by less than 10%. We had some people that doubled their pricing.

Wow.

But regardless, across the board, it was less than a 3% overall cancellation rate. That means you're losing 3% of your members. When you run the math on that, the revenue that you lost and lost members compared to the revenue you gained by the increase in price on all the ones at stayed is huge. And it's way better in your favor, disproportionate in your favor. But then on top of that, if you think, what would I have had to do to get that revenue by just getting more members at the same price point? You would have had to go make more sales. In this case, you would have had to make 10, get 10 more clients. That could take time. Also, you got to spend money on marketing, sales commission, possibly as well. And then all those future sales you make don't have that extra $50. Whereas in this case, it would. So the average gym that we've worked with, we worked with thousands of them, okay? Uh, the ones that increase pricing on at least an annual basis. At least we have some that do it every uh twice a year, every six months, and we have others that do it every three months, every quarter, a 5% bump. And then we have others that have trigger points. And what that means is once we get to here, we'll increase a price. Once we get to here, we'll increase price. So let's say they're like once we get to 80 members, once we get to 160 members, whatever. But it doesn't really matter. The point is you have to continuously increase pricing. Because if you don't, um, you're not marketing. You're you're kind of doing one thing, you're running a social media ad. So price is a very important one. And then using psychology behind the pricing in order to make sure everyone always chooses the most expensive option. Again, that's price manipulation. That's a big part of it. So I'm a big fan of decoy pricing. And uh if you haven't heard of decoy pricing, it's essentially like to give you an idea that you can see, and you might have even seen this example. If you go to a movie theater and the popcorn is $3 for a small, $7 for a large, you're gonna have a good percentage of people choose the small. And by the way, this isn't an assumption, this is tested. You can actually go to um decoy effect brain games and they actually show you the research study that was actually done, like people going through and buying the small. And when you ask people why did you get the small, well, $7 is a little out of line for popcorn. That's what people were saying. It's a little out of line. Then what they did was they added a middle option for $6.50 for a medium. And almost everybody chose the large. And when asked why did you choose the large, people would say, Well, it's only 50 cents more. It's not, it's $4 more than the one they would have chosen if that one didn't exist. But that's it, it played the role as a decoy. No one's ever going to order the medium, right? And even the people that ordered the small in spite of it, all the cashier had to say was, Are you sure it's only 50 cents more for a large? And people would go, Okay, yeah, it was crazy. So um, really, really interesting when you can go, okay, how do we structure our pricing so it's more attractive? It's a no-brainer. None of us like the phrase, I need to think about it. Well, the guess best way to avoid I need to think about it, is don't get them to think. Put it on paper. You don't think it's a large, yeah, 50 cents more, easy. But then also increasing your pricing on a regular basis. Those two things alone, just those two things, are things that unanimously we're noticing the most successful gyms are doing better than everybody else. It's not just Facebook ads.

That's awesome, man. It it's so critical because I think you're right. I know you're right. Like people automatically think, like, oh, I need to make more money, I need more leads. But there's so many things fundamentally that you can do to change. And I want to circle back to a couple different things, but since we're fresh on the the price increase, I mean, uh especially due to the inflationary period that we're in right now, like you can't sit with stagnant rates. You gotta expenses are high, right? You just you have no choice. But There's I I've as a you know as an operator for so many years, I raise prices a lot. And every day or every time, the night before you hit that send email to let people know that you're gonna be raising rates or whoever you want to announce it, there's a extreme amount of anxiety that goes into that, right? So when you look at that from the emotional, this all numbers, complete sense. Logic, total sense. But we're dealing with people, right? The hardest thing about business is people, I believe. Um, so how do you deal with that emotional component of the anxiety around the price increase? We we don't.

Okay. We never deal. Here's why. If if our clients didn't talk to each other, which they do, our client, it's a tight community, tight, which is also why we filter strong at the door, because if culture-wise, you're a know-it-all, I've done it before, or you know, you're you might just uh uh have this uh mentality of I can't learn anything from anyone, right? Like I just things around me need to be better, right? My better employees, but whatever, you're not making it into our community because you're you're gonna ruin us, right? So the reason we don't deal with that anxiety is because the anxiety doesn't exist because the whole room successfully did it. So it you actually, the only way anxiety lives is if you don't do it because you feel like you're the only one not doing this obvious thing. So actually, you have more anxiety not raising your pricing, you have more anxiety not doing the 20-30 things that we teach because you're go, well, I'm not doing it. They are, they're killing it, all of them. So why am I not doing this? And you immediately want to do it. So the anxiety actually lives on the opposite. Now, if we didn't do that, you're right. I mean, convincing someone to do that is is like pulling teeth because in their brain, I can't fathom the idea of me raising pricing, wakes a sleeping bear, people are gonna cancel. This is the worst idea, and then I got to go back, but now with less customers. Yeah, that makes sense. But um, we know it to not be true. Yeah.

And and I know it not to be true too. And I think a lot of people who pull or about to pull that trigger, they know it as well. But it's just, you know, no matter what, I think there's always gonna be a little bit of fear that maybe even when it's a strong community like yours, I think there's always gonna be a voice in someone's heads be like, but what if I'm what if I'm the outlier, right? What what if what if, you know, uh yeah, it gets it gets smaller. It gets smaller and it lasts shorter. Yeah, I I would say so. And and circling back to another thing that was really interesting that I will unpack a little bit, and maybe you can do it anecdotally, is that um marketing can be built into your product, right? It was second P, I believe. Um, and so explain that a little bit more. I think that's that's worth a lot of clarification in depth.

Yeah, I mean, like uh take any car, any car, and compare it to the model five years ago. Which one would you rather have?

Yeah, probably the newer one. Uh why?

Five years ago is cheaper. Why wouldn't you rather have it?

Well, I mean, you're asking uh the wrong guy because I hate points of failure. So sometimes like technology tends to, you know, bother me. I kind of like the old school radios with AMFM. But I see. Because it has all the up-to-date features. And that's right. That's it.

And that that's it. That's that's the answer.

Yeah.

You will pay more, meaning more money for the company. And marketing's marketing has one job. Let's not overcomplicate it. Marketing has one job, increased revenue, nothing else. There's no other function. Now, everything that you might say that people might say is that it all is actually a stepping stone to more revenue. No, it's to build our brand. For what? Why? Why do we want to build our brand? Well, because eventually it'll be more revenue. Yeah. Well, no, it's also to be able to get more leads. Why? No, it's just to get more people in the door. But why though? What's the overall outcome that we want to achieve? Increase revenue. Can we agree on that? That's marketing's job is. Yeah. Right. And so if that's the case, think about how improving the product makes you spend more money on the same car, but the better version because you want that. So I can have the same car, just older, the different model for less, but I choose to spend more money, more revenue for the company, on these features. And that's why it's important to do. That's why Apple, right? The phone has to get better. This laptop that you and I are on, whichever one you're on, I'm on. It's not the same as the five years ago. The TVs, they have to, because the consumers will be willing to pay more for a better, more advanced product. And so in marketing, if you're standing still, Toys R Us. If you're standing still, blockbuster, it's not going to work out well for you. That's why a lot of trainers, a lot of gyms, they come out of the gate really strong, things are exciting, and then nothing really happens. And it feels boring. And it does. It feels boring after a while. You start getting this monotonous feeling of like, do I really want to do this for the rest of my life? No, the answer is you don't want to be a trainer on the floor for the rest of your life. But you are. But an entrepreneur, people could do for a lot longer. And if you're just a trainer in this room and you're not really innovating, you're not doing stuff, yeah, it gets boring real quick. But if you're going, okay, how can we improve our experience for our members here? How can we improve the product? How can we improve the relationship between the customers and the way they feel when they're using the product? All of a sudden, you see, Orange Theory did it, right? Where they start the heart rate monitors and the screens, and then you had Psycho Bar that made it look like a nightclub. And then so, I mean, there's companies that invest money. You don't need all that stuff in order to have a great workout. You can have a great workout in the garage. Every trainer listening can agree with that. But the reason the ones in the garage are not beating the orange theories who average $90,000 per location, with some doing north of $130,000 with almost $30,000 a month in profit is because they've innovated. It's attractive. And the average consumer doesn't care where they get the better workout. They want the features, just like with the car. Car, get to A to B, right? That's what a car is for. But we pay more for the one with the buttons and the screens and the stuff like that because that's really what people are buying. Not the car, not the A to B.

So technology aside, right? Um how else would you, I guess, modernize your product as a gym owner? Like what other ways, you know, that don't take large, you know, investments or shifts in adoption of technologies, you know, like an orange theory did with their you know heart rate monitor, which is now ubiquitous, right? Um what other ways can you innovate that doesn't take necessarily a large technological adaptation or a large uh investment monetarily?

I don't know. Um, and the reason I say that is because innovation takes time. It's not something that's thought of on a podcast after a question, right? Uh but what I can tell you is where I've seen it in the past. Okay. So personal training used to just be personal training. And then they started doing semi-private personal training or overlapping personal training, a small group personal training. That is an example of innovation, right? Because what we did was we found a way to provide as good or better service to the type of client that this is perfect for. This may not be great for the guy that wants to be like on stage, he wants his own person, but for the customer, great. We're able to charge you a little less. We're able to get you an environment where there's other people working out with you, and you're feeding off that energy. Also, what we notice is it solves a problem of trainers getting comfortable with their clients on the floor over time, which you'll notice I was in the industry for a decade. I know. Once a trainer works with a client for a while, man, that first week or month, great workouts. After that, a lot of conversation around what you do this weekend and ideas around business and whatever, right? And now the workout is not the same workout. And for the client, they'll never say it. I know I was a client of these trainers several times too. They'll never say it because they like you too much, but in reality, they're wishing you were better, but they'll never say it. So you feel like, no, my clients love me. I give a no, no, no, it's not true. But when you have four, five, six people in a group, that changes that. You there's a lot to manage, and then people are kind of coming in and out of that. So you don't have that same relationship. So great, we found a way to give a better experience. We also found a way to improve the pricing for the client. That's innovative. And we also found a way to increase the margins for us because the margins are actually better in a semi-private than a personal training. And we also found a way to decrease the likelihood of when a trainer leaves, we lose clients because they're staying for the people now more than they are the trainer. When it's one-on-one, that trainer goes, I want to go wherever gym you go to. But if I got like six of you that I work out with, I tend to work out with over and over, and I got the system that I use, I'm here for that. Thank you for leading it, but I'm here for that. So that's an example of where I've seen it. And we saw, aren't you? But I think you said like less the technology and stuff like that. Okay, great. Uh, we also saw innovation when people started merging things that people can enjoy doing that don't feel like working out. Now, not everybody likes to work out. I do. Not everybody does. I'm not the I'm not the avatar, right? But people like to do sports, people like to dance. So when you see people incorporating dance inside of fitness, like bar, great example. Bar took off, right? Um, and you also see that people do that in other forms, like hit training can kind of feel like dancing because you're going to music, right? Um, and then with sports, what they've done with boxing and kickboxing, you see that that's happening. And so people love to feel like they're not working out. They but we got this drive of us to be active. So that's an example of innovation, right? We're taking this idea of fitness and the fundamentals of what needs to be done with fitness, and then we're taking something that people would actually rather do, and then we're finding a way to merge these two things together to be able to get them to feel like this is different. Does that make sense?

Yeah, oh yeah, oh yeah, yeah. I mean, my mind immediately went to like, you know, pickleball, right? Pickleball, great, you know, uh, outdoor activities, things like that. Like, there, there's so many ways to incorporate like what I call more lifestyle activities into um, because you're right. I mean, there is a subset of people, you and I are two of them. I just like to work out. I like, like, I couldn't wait to get to the gym and just lift some weights the other day, put on my podcast and just let it rock, right? But that that's not normal. Most people have to drag themselves to it's a task in the day. Like I like 100%.

And lifetime fitness, I think it was last year, yeah, 2022. They doubled their profit, doubled their profit by focusing on two things pricing and product development. Now, what they didn't like, how do you develop the product at lifetime? Like, what are you gonna do? Add more dumbbells? No, what they did was they did a couple things. Number one, they focused on the pickleball market, they knew it was a growing sport. They had two full-size basketball courts, not like high school, I think they were like college size, right? Two. They took one of them and they turned that one into three pickleball courts, and they had a flood of people coming in. You actually now, it's so packed, believe it or not. Even if you're paying for a membership, you have to pay for a spot to play pickleball. Right. Because the demand is so high. That's innovation, right? Now, again, what they did, another thing is they created this thing called the Aurora Club. And this is where they they partner, I think, with possibly insurance companies. I don't want to quote me on that, but they focus on the elder demographic, the older group, and they focus on bringing them in. There's this community where there's like free coffee and there's um free like activities that they do, and they get together and they have events. But what they learned was older people, there's two things. Number one, they have the best retention. A lot of people focus on young people thinking, well, I want the young people because I want to last a long time. No, no, that's not how it works. The 21-year-old wants a different nightclub than their dad went to, right? They want to go to different clubs, they want to experience different restaurants, they want to experience different places. My dad, he's 60-something years old. He has three restaurants he goes to and he orders the same thing at every one that he goes to. He's had the same landscaper, he's got the same handyman, like the same guys are in my dad's life. That's how it is, right? And so the average retention for somebody 21 to 24 at a gym is three months. Uh 25 to 34 is seven months, 35 to 44 is 11 months, and 45 and up is 14 months. That's more than four times better than your 22, 23-year-old, right? And so they said, we need to focus on this market. So, how do we build something that's great for them? Where it's actually, we work with your insurance agency uh agencies to be able to get them a discounted membership. And what older people tend to have is a lack of community. Their friends start passing away, their children are grown, they have their own families. So now they may see them maybe once a week, if that. So this helps them find friends, gets community. It's what they value and it's what they're afraid to leave. Between that, another thing called DP training, and then uh, which is like small, small groups, same thing, and then the uh pickleball, along with increasing pricing, they more than doubled profit. And a company like that doubling profit is a big deal because they're not like doubling 12,000 a month, they're doubling like in the millions to billions, right?

So yeah, yeah, it's it's really uh kudos to them. I mean I admire Lifetime and Equinox, Equinox, however you want to pronounce it. I I've heard it so many ways, but those companies are are are brilliant in their innovation, they're always leading, right? And innovation's core, I would imagine, to their to their values as a company. And I want to circle back on one more point that you that you've brought in and um placement, right? Number three, I believe. P number two.

Um there's no real order, just those are four. Well, just for sake of conversation.

Uh location, get it, right? We've been taught in business school forever location, location, location. But you brought up digital placement. Unpack that a little bit. Why is that so critical? And what what do people most often misunderstand about that?

Yeah, think about the experience of not wanting not being able to find what you want online. What's that like?

Yeah.

Go into a website to go get whatever you want and you can't figure out how to get it or where it is, or you have to call customer service in order to uh make that happen, and then you can't get a hold of anybody, right? So, placement to me, uh and not just to me, to the people that I that teach it that I've learned it from, uh placement is just the ease of accessibility for your clients or prospects to be able to make purchases and give you money. Right. So, you know, for for uh I just got this battery here, right, for uh for my bike. And for this here, it's better for them to be placed in a certain area in the store than another area. So that's an example of placement there. But also that store, it's better for them to be placed near motorcycle shops and stuff like that rather than someplace else, right? And on top of that, it's better to be placed where that demographic lives. Um, but then also on their website, where how can I find if I want to type in, can I search this easily? I want to be able to search, you know, this type of bike battery, boom. If it pops up right away, that's an example of great placement. If it doesn't, if there's not even a search bar, or it gives me like 30, 40 options I gotta sift through, that just lowered the placement experience. It it increased the friction between purchasing. And so the likelihood of the purchase not happening increases. If you can get me the thing I want, or if I search this, boom, it pops up, and there it is, and and it's just Amazon. How easy is it? Now they added another thing for placement, which was well, they've had this for a couple of years. One click, like click to buy. Like you could just skip the cart, buy it right now, and then you have all the options underneath it for people that bought this, also bought this. These are all examples of placement. So if you're selling supplements on your website and you have whey protein, what else do people that typically buy whey protein according to your data would also buy? So you can create a stack. And here's where you can do that in one click. That's an example of placement. If I want to book a class, how easy is it for me to book a class if you have scheduled classes? If I want to be able to make a payment, if I want to be able to leave a review, these are all examples of how much have you thought through the friction between somebody that already your marketing got interested in taking action and then making a purchase? Because how much would it suck if you got them to hear? And because this was so so much friction, they didn't make the actual purchase. It's the same thing with lead. You work on getting a lead, but if you don't have a sales process, no one calls a lead, or when they call, they suck at booking. That's not marketing's fault on the paid ad side, but it overall is marketing's fault under under the umbrella because selling, personal selling is one of that. That's actually the name of it. Personal selling is one of the attributes underneath marketing. A lot of people don't think marketing and sales are the same. They are exactly, yes, it's under, it's like Honda and Civic. Sales is under marketing.

Awesome. Well, let's let's go back over these again. So review these in one final time to kind of clean it up. But the the four P's, and then and then I want to ask you a final more questions and respect your time.

Yeah, promotion, product, yeah, promotion, product, place or placement, and price. Awesome. Those are the four P's.

Awesome. Uh, really actionable stuff, Mike. I really like it. And I I want to touch on uh your podcast too, because I mean ultimately, you know, uh stats are different every time I read them, but people who listen to a podcast are going to listen to six or seven, right? So uh if people are listening to this, maybe you're looking for a slot and you can fill in uh you know with with with GST if you don't listen to already. But tell us about the show, man. And uh once again, I I always I say this all the time to people who have podcasts, like I I respect the grind in so many ways. Like you have to, in order to continue on with 253 episodes, which you've done, um that's a commitment, right? You you've obviously committed to it. So a couple of questions. I guess first of all, tell me what what is your mission with the podcast? And I know you've had some amazing guests, Grant Cardone, I see, all over that thing. Um, a lot of really highly respected people in the industry. So why do you do it? Why why do you grind that out?

Yeah, and and and also quick fun fact we actually have done more, much more than 253 episodes. The reason that it seems like that, though, is because we actually will take episodes down with information that's outdated or that we have better data on and we'll recreate episodes so that it's easier for the user to not like, you know, um get like two episodes of the same, but one's better than the other, right? So anyway, um, yeah, this right here is an example of what you would hear on our podcast, this type of a conversation or this type of a training. Um, it's to me the best free training in the market for gyms and fitness studios. I would say that podcast is better quite, and it's not just me teaching, it's a lot of really, really smart people. But I would say the GSD Show podcast is a better training uh resource than what most people, if not all people, would really pay for in order to learn this stuff. It's free. So why pay for it? It's free. Um, and we talk about all this stuff, marketing, but then we also talk about leadership and strategy and money management. I mean, everything. If you own a gym, there's no other place that you need to go to learn this stuff. Now, it doesn't mean you don't learn other places, right? I think it's it's like silly to say only read one book. I think it's great to get different perspectives, but um, I would say the perspectives that are shared on the GSD show are are awesome. I learned stuff even with some of the people that we have on.

Yeah, I would uh and I don't like it when people ask me this like, which who's your favorite guest? Like, there's no such thing, right? But recently, is there anybody, anything off the top of your head, any particular uh episodes that you you you were really uh you really enjoyed?

Oh man. Well, I have it's like saying which one's your favorite kid. I know it's a horrible question, but no, it's not a horrible question, it's it's a thought-provoking question, at least. And I've had different ones. Um, and I feel bad because I can't remember the guy's name, uh, but we had a I'm I'm bad with this, but we had a scientist on. And the reason we had a scientist on uh was because we wanted to make a point that data sells. And you know, like here's an example. If if you come into my gym and I were to just be enthusiastic and all that stuff, that'd be great. I I would I would sell you possibly. But if I were to say, hey Eric, so what are your goals? You tell me what your goal is. And let's say you say your goal is I want to get stronger, I want to build muscle, and I say, Oh, awesome. Well, hey, really cool. Want to know a fun fact? What 92% of the members that join increase their strength by more than 50% within the first 45 days, and that's tracked. Now, by the way, we have trainers listening that go, there's no fucking way. Nobody can break, right? Because they're thinking uh squat, right? Like, no, you're not gonna squat 50% more in 45 days, especially if you're already maxed out, right? But a couple variables to consider one, the typical person that comes in isn't already maxed out. There's a lot of opportunity for growth, not only in strength, but in form. Form alone can get you to do more, right? That's one. So it just by that. But then the other thing is um, in what you test. So the test in the baseline would be like push ups, air squats, planks, sit ups. So, how many push ups can you do? Now, if a person comes in, they could only do 12 in 45 days. Can you get them to do 18? Because that would be 50% more. If somebody could hold a plank for 40 Seconds, can you get them to hold it for a minute in 45 days? Because that's 50% increase. So you can really focus on the data points. And then what would what I loved is like how well it was working. But I go, how can we get even more data? So we brought in a scientist, and this guy like broke down like hit training and nutrition at such a level that um like most trainers are dwarfed. I mean, it just doesn't even look a scientist and a trainer are just two different games, so it's pretty interesting here. So I really liked him, but man, I've gotten to connect with some really, really great franchise ours. Dave Long, Orange Theory franchise or was a great conversation. Roger Martin, Rockbox, uh Rick Mayo. Rick Mayo, I love Rick Mayo, his stuff in Al, I think he's franchise order there. He had he had he sold over 120 locations in like a year. Uh Roger did over 100 locations in a year with Beam as well. He's on the show. So we have a lot of franchise ours. Forrest Karen from Iron Tribe. It's hard to pick because everyone's different. Karen and Forrest have culture and people down. They just have they have people that have been on their team for 11 years and they work like it's their first week. Um, Roger's got strategy down. Uh Rick Mayo has like systems and data down. Um, Dave Long has experience innovation down. Like everyone's got their own thing, which is why they're so good in different ways. Shaquille O'Neal was different than Steph Curry, but both great, right? Yeah, totally.

That's great, man. And I I I love that you I love that you love it. You know, uh, it's such a great way to learn. I mean, the relationships I've had through this podcast and the amount of learnings that I've um been exposed to is is just it's invaluable. And I I I get so excited for my Friday mornings when I get to interview people like you and all the guests I've had on the show. So it's it's it's awesome. Um, Mike, I I really uh very insightful, very actionable. And I know that's always your goal when you go out to do interviews like this is you always want to make sure there's value delivered. And I think I think you nailed it, buddy. I think you got it today. So uh well done. I if one last question I always like to ask um in the spirit of collaboration with the audience and our community is that what can we help you with? What do you need right now? What's important?

Great question. Um, I've got a conference called GSTCon. We do it every quarter. So, how anybody listening could help me? Um, we've got a couple things. Uh, number one, we're always looking for really good dynamic speakers that have proof that can actually show um here's what we've done, like with data, right? We're not on the hoopla, we're not in the motivational game. Like the people in our program are there because they're motivated already. So uh actionable stuff. So that's one. Next is sponsors. Man, we could always use sponsors for GSDCon. It helps us create a much better event and bring in said speakers. And then guests. Um, so we always allow about 10% of the room to come in as a guest if it's their first and only time coming at GSDCon. So you can't come twice if you're not a member of our program, right? Um, but if you are a member of our program, you come for free every single time. So the people in the room are very, very successful, they're very strong. Um, but we are always looking to grow it. And I think the easiest way to get clients for us is to get them around our clients and they go, dang. So everyone here is a testimonial. Yes. Every however many hundreds you see, everyone in here, no matter who you talk to, they're gonna tell you you should have joined yesterday. And so we're always looking for people that fit that avatar um to come in as a guest and experience it. And we always give them uh two tickets for free. If it's their first time and they fit the avatar, it's normally $2,000 a ticket. So they would get $4,000 worth of uh event tickets. Killer.

I love it. And when is the next one? I mean, it's a we're we're recording in in Q2 right now.

Next one is August 19th and 20th. Perfect. Um, and then the one after that's in uh October. I don't know the exact date. Um, it's we have a establishment, I just don't have it. But if you uh if you were to gsdcon.com, you can get all the information you like.

Great. That's how I was looking for. And where else would you like people to go online? Uh any particular socials or websites?

Yeah, YouTube loud rumor. Um, loud rumor. Uh, I would say YouTube is is pretty much where most of our people come to us for. They say I've been following you for years, and you know, that now I want to join. So I would say YouTube is the best place for you to experience what we do.

Oh, I didn't know that. That's great. Well, Mike, uh, it's always a pleasure. Let's uh let's promise it won't be four years until the next one.

Yeah, I promise not until the next BC, whatever the next one is.

Yeah, I hope it doesn't come soon. Uh I really like where we're at. Uh yeah, really good stuff. And ladies and gentlemen, Mike Garcy.

Thank you.

Hey, wait, don't leave yet. This is your host, Eric Malzone, and I hope you enjoyed this episode of Future of Minute. If you did, I'm gonna ask you to do three simple things. It takes under five minutes and it goes such a long way. We really appreciate it. Number one, please subscribe to our show wherever you listen to it, iTunes, Spotify, Castbox, whatever it may be. Number two, please leave us a favorable review. Number three, share. Put it on social media, talk about it to your friends, send it in a text message, whatever it may be. Please share this episode because we put a lot of work into it. We want to make sure that as many people are getting value out of it as possible. Lastly, if you'd like to learn more or get in touch with me, simply go to the futurofitness.co. You can subscribe to our newsletter there, or you can simply get in touch with me as I love to hear from our listeners. So thank you so much. This is Eric Malzone, and this is the Future of Fitness. Have a great day.