Male Speaker: All right. So we talked about how some guys like contracts and people think month to month, whatever. There’s no right way [Inaudible]. Barry’s Boot Camp, you guys heard of that? It’s like nine locations. A couple more outside the country.
They just raised their prices from $250 a month to $325 a month. It’s a pretty big gap increase I would say and they don’t even do – everything is month to month but they don’t even reoccur their clients.
You pay 325 bucks. It expires 30 days and when they go to scan their key, they have to like pay again. They don’t even reoccur credit cards. It’s how stupid the business model is and they have nine locations and each location probably does – with what they charge and how many clients I see in that, they probably do like – they have a fulltime cleaning – mirror cleaning guy at …
Male Speaker: … they got like 100K a month in each one of those small locations. So anyway, obviously they don’t do contracts. They don’t even do reoccurring credit cards so there’s not a perfect way to do anything. Maybe [0:00:58] [Indiscernible] cell phone commercials and everything. Everything is going against contracts. So we don’t do contracts like the big companies do and also it’s like no contacts anymore. We’re not saying that’s wrong or what – or not but I kind of don’t like it.
A contract does good for retention but it doesn’t really do necessarily anything for referrals except the fact that maybe they’re there longer. So I want to do a program where it actually stimulated referrals and retention. So a lot of like network marketing companies do this where it’s like three and it’s free and there’s no better retention than free. They’re not paying for it.
So what I want to do is find a price point with a no contract that I can do some kind of reoccurring referral commission. So it’s not just they get half off their next month for referring someone. Every month that referral that they brought in stays on, they keep getting a commission for it or a discount for it and that’s where like some of the companies make a lot of money or network marketing companies because they pay it over and over again. They can do the work once. They get paid over and over again instead of a one …
Male Speaker: Commission, yeah. Residual commission. So basically, this would be – if you have an assistant, this would be real easy. Again, I haven’t tried it yet but I wanted to do where they have one referral. So the membership price is $147 a month. They get one referral then. Their membership goes down to $97. They get a second one, $47 and they get a third referral and I’m going to start paying them for like more than just one. Maybe something like gift cards or supplements or whatever but basically if you look at the average price, so now you have [0:02:36] [Indiscernible] so three people are paying $147 and they’re at zero. So if you decide $147 by four people, your average income per – your average membership price now is $110.25.
Participant: How did you get that? I’m sorry. How did you get to that number one more time?
Male Speaker: So the fourth person that referred these three, they’re now free, right? So that’s $147 times the three people that were on it. Divide that by four. That means the average membership price is 110.25.
Male Speaker: OK? Because you want to divide that. The fourth person is not paying into it. So now your average membership is 110 bucks. So you were talking about finding your average membership price. So I found right now my programs are month to month $197 and 12 months for $147 but after I divide my gross of what – how many clients I have, I’m around $127 a month because I’m [0:03:24] [Indiscernible] 97 bucks or whatever. So I’m at $127. With my business model, if I keep it, this is a little bit low. I want mine more about $125 a month for how many people I can fit in my gym and how many classes I want to run and what I want to take home after the gross. I want mine to be more like at $125.
So I could do – the only thing I thought doing was making – getting rid of all the contracts and now my gym is just $197 a month and for the first referral, I would give like a fast start bonus. So they would jump from $197 to $97 for their first referral. For their second one, they would go $47 and the third one, they would go free. This $197 times three clients divided by four, the third person is not paying, will take the average to $147. So then I would be [Indiscernible] at all.
But now the way you manage this is that your system would have a spreadsheet so you can have like client 001 with their name and then they would have the referrals out to the side. So when a referral quits, whenever your system gets a cancelation, the system would have to search that person’s name who’s canceling in your refer database and see whose name pops up in the spreadsheet and they delete it from that person’s …
Male Speaker: Yeah, and you would send that client email that hey, one of your referrals dropped out. You have a 30-day timeframe to get another referral in or your membership goes up 50 bucks, whatever price point. So they’re at zero. It’s going to be 47 bucks. But even if most of your clients only brought in one or two, then your average goes up. This might be $113 or $119 a month but even if you just give them to $47 bucks, they’re like gym membership prices. They’re still not going to [Indiscernible] for 47 bucks a month. Even 97.
Ninety-seven is the sweet spot price point where I’m at. Like if I was at 97, it would be good but it’s a little bit low for how much workout room I’ve got. My place is 3600 square feet but the stupid lobby was built out because of the [Indiscernible] before me and it looks cool but there’s way too much lobby space. My workout area is probably 2000, even a little bit less. So 35 people would get like really cramped. So eight, nine times of the day, there’s only so many [Indiscernible] and stuff like that around that anyway.
So yeah, this is as far as like referral generation goes and retention rate. No matter what, we’re hiring at everyone else. Like boot camp [0:05:50] [Indiscernible] 50 bucks a month. They’re in a huge 70-person stupid, retarded kickboxing class and they call it boot camp and so from a push marketing perspective, it’s hard to come [Indiscernible] because they’re getting a postcard. They only know when they come in, that it’s worth more.
Participant: Well was that why you changed your name …
Male Speaker: Huh?
Participant: Is this why you changed your name?
Male Speaker: Well, yeah, pretty much people call it [Indiscernible] but I just got to take the boot camp off. But no one can compete with free. So they’re getting [Indiscernible] and all they have to do is refer me three people and they don’t pay. One person, they’re at $97 a month. Most people can get one person by accident. It’s because they told their friends to do it.
So what I was thinking is when everyone signs up, they do a goody bag. Maybe it’s like the Success Journal with three gift cards and like an example text and Facebook post they can do when they get home. It maybe converts well or stimulates referrals or something and [Indiscernible]. So anyway, what do you think?
Participant: I think it’s a brilliant idea. And how can you lose? I mean I really like the method and the only thing I don’t like about it is like I said, you need to have an assistant. I don’t think like you as a business owner need to be behind – and you just have an assistant that’s very good at keeping records and following up and all that kind of stuff because I personally – if somebody falls out, man, I want to make sure they go back up to the price point. And right now, like with 400 members, it could be a daunting task but then again, if you have somebody who’s doing it, I definitely think that it’s totally worth it and I think it’s a brilliant idea. That’s me.
Male Speaker: If you look at how many cancelations you’re really getting per month, it’s not going to be that much work for them. Plus it’s not like – this is a benefit. You’re not screwing your client when their referral quits by putting them – you’re putting them back up to the regular price. It’s only your membership is overpriced, the full price. It’s worth that. So this program is not really people who can’t afford your boot camp really. It’s people who want to get down but they need to be able to afford the first price …
Participant: The only thing John is you’re not screwing them that once somebody pays a certain amount of something and I will say [Indiscernible] for whatever reason even if you already told them that. I have that experience before. For whatever, you lower and all of a sudden, they will go, “No, come on. [Indiscernible] this is not my fault he didn’t stay.” And the next thing you know, they quit because they feel like we did them wrong, whether you did it or not. And it’s just one of those things that once at a certain point, they feel like they earned it forever.
Participant: Yeah. One thing I was thinking about too is …
Male Speaker: But they do earn it forever as long as they stay on. How hard is it to go get one more person? It’s not that hard to get – like because I’ve had clients who have referred eight, nine people before …
Male Speaker: And they get four months of boot camp and then they’re back to the regular price. They’re the ones that’s like they want it forever because they got you [0:08:46] [Indiscernible] and you’re like, well, some of them stopped. You only got one that still comes here. Yeah, but I still like have given you all that money. So I hear that more often than I think I would hear here because they’re actually getting a residual referral benefit from …
Participant: Yeah, yeah. I think it’s definitely …
Participant: If you were still with Fit Body Boot Camp, it would [Inaudible].
Male Speaker: [Indiscernible]
Participant: Yeah. So it …
Participant: I think it’s definitely worth putting into it and see – you don’t know – we can theoretically say how it’s going to work now and in theory, it’s great. I can see a couple of – definitely the benefits of it I think are genius. I can see a couple of things that might go wrong but we don’t know until like you put the rubber to the road. You know what I mean? So …
Male Speaker: The worst case scenario, you would keep the people on [0:09:42] [Indiscernible] and just not let it happen [Inaudible].
Male Speaker: Take your poster down and say we don’t do that anymore.
Participant: And I like the name.
Participant: The problem that I see with it – and it sounds really, really good – I think that the minute you bump somebody back up, you’re going to lose them. If they’ve gone down and now their friends quit – friends come together. I always see this. A group of women will come. They come five, six, seven. They’re [Inaudible] circles. Seven of them come together. One quits, another quits. Next thing you know, all seven of them are done.
Male Speaker: Well, they’re quitting away. The friends don’t leave …
Male Speaker: You still – it’s not like …
Male Speaker: … keep going at $47 if you like that person. You were already doing that earlier, right? You said you charged someone 50 bucks.
Participant: If somebody – well, I have a few people. When you’re doing a sales process, this is the last kind of thing like they just can’t afford your program but you want to help them out. Say, hey, well what [Indiscernible]. I could do 50 bucks a month and my response to that is I can do $50 a month if you pay me for six months upfront.
As a matter of fact, I do have a program for you [0:10:49] [Indiscernible] six months. Every time you refer me somebody, I give you $50 back. I don’t give a half off for the next month thing. I actually pay them cash in front of all my clients. Hey, so and so just referred me so and so. New to our family. Thank you very much. I [Indiscernible] I do it right in front of everyone and everybody can see that I hand that money …
Participant: Over the years, when it comes to stimulating referrals, the thing that I see motivate people than most and it’s like the weirdest thing because even training, I would give them a free month for every person. I’m giving free personal training but it seems like – and I don’t know what you guys have experienced but my experience, whenever I get somebody like a physical gift, not from my – not oh, if you get free – and even though like a free boot camp is worth so much more. Like if I give somebody free boot camp, 100 bucks, 150 bucks, they don’t value it as much and I say if I wanted to get somebody like a $25 gift card to …
Participant: It’s more personal.
Participant: Yeah, to a restaurant. It’s the weirdest thing because I remember whenever I was in the field and a client refers somebody, I remember at one time, I went to the movie theatre and got a thousand dollar worth of gift cards, movie gift cards [Indiscernible]. What’s going on? They call the manager. And it has got a whole bunch of them just to save it [Phonetic]. And every time I got a referral, a thousand dollars [0:12:21] [Indiscernible]. Boom, a gift card and I think with the little – I said, well, thank you so much for referring so and so and here’s movie tickets and some popcorn. No butter on the popcorn.
Participant: See what I mean? Because that was like [Indiscernible] and next thing you know, it’s the weirdest thing. I couldn’t figure it out. It was the weirdest thing. As soon as I give that to them, like I started getting like two or three more referrals from the same person and to this day, I can’t put my hand on why that worked so well and that I would give somebody – hey, if you refer someone, I will give you a free personal training. That cost me 500 bucks.
Participant: It’s because you took time out of your day to give them something …
Participant: That’s part of that personal touch.
Participant: You’re already here is what they’re thinking. And you’re already here. Me coming in an extra time. It’s nothing …
Participant: I think it’s like the way like your wife will think. My wife has a great life. For me, it’s like – I mean …