Using Data to Make Smart Gym Decisions

Think you need 300+ members to run a profitable gym? The data says otherwise.

In fact, the average gym can generate an extra $45,000 per year just by keeping the clients it already has for two extra months.

In this episode of "Run a Profitable Gym," Chris Cooper cuts through the noise with hard numbers from the “State of the Industry” report—the most comprehensive data set in the fitness industry.

He walks through the six metrics every gym owner needs to make smart business decisions:

➡️ Average revenue per member (ARM)—earn more without adding clients.
➡️ Length of engagement (LEG)—keep members longer.
➡️ Net owner benefit (NOB)—your rewards as an entrepreneur.
➡️ Return on investment (ROI)—which expenses allow you to increase revenue.
➡️ Effective hourly rate (EHR)—are you a trainer or a CEO?
➡️ Client headcount—the lives you are changing with fitness.

Listen to hear all six metrics explained, then help build the next report by filling out the survey via the link below.

Links

"State of the Industry" Survey

Gym Owners United

Book a Call  

1:32 - Earn more per client

3:10 - Keep clients longer

6:17 - Take home more money

7:57 - Increase return on investment

11:11 - Earn more per hour

Transcript

SPEAKER_00: 0:00

Hey, it's Chris Cooper, and this is Run a Profitable Gym. Today, I'm going to help you do that even better by using numbers and data to make decisions. I want to help you cut through the noise in the fitness industry because there's a lot of BS out there. You've seen advice, I'm sure, in Facebook groups, emails, Instagram, Reels, TikToks, whatever. And some of it actually sounds good, but it won't actually move the needle on your business. And some will actually hurt your business. Here's one of the worst offenders. I heard recently that you need three to 500 members for your gym to be successful. That's simply not true. And the reality is that most gyms can be rock solid with 150 members if the other parts of their business are dialed in. And that's where data comes in. We want to work from truth and truth means numbers. Truth means prove it. Truth means let's actually see the metrics to determine what's true instead of just saying random things to get views and clicks. In the State of the Industry Report, we track six simple but critical metrics that tell the real story about your gym. Today, I'm going to walk you through each one of them, what they mean, what the industry averages, how they help you, what happens if you get them wrong, and an example of somebody who's fixed them. By the way, you can get this free guide by just clicking the link below this video, participating in our annual State of the Industry Report, and then we'll send you a copy of this with all the numbers that I'm going to be talking about here, graphs, here's where you should be, and some tips to get there.

UNKNOWN: 1:31

THANKS FOR JOINING US.

SPEAKER_00: 1:32

The first metric I want to talk about is ARM, average revenue per member per month. This is the average amount that each paying client spends with you every single month. The industry average for big group gyms, gyms that primarily do group training, is$167.76. For small group or semi-private, it's$230.18, and for one-on-one, it's$353.37. Now, that big group number is still too low, but it's getting better. So here's how knowing that number helps you. First off, if your average revenue per member is way below the industry average, then you're likely undercharging or you're not offering high-value services. A higher ARM means more revenue without needing more members. If you get this wrong... Well, let's say that you're 20 bucks under the big group average and you have 150 members. That means that you're losing out on$3,000 a month. Over a year, that's$36,000. And over three years, that's over$100,000 just because you don't have your prices set or you're not offering a high value option to the people who want it. Here's an example of what happens if you fix that. If you raise your ARM by$20 and you don't change it again for 10 years with 150 members, you're adding 360 We'll be right back. is enough to at least put a down payment on your building, right? What will that difference make to your family? Who would you hire if you had that money now? The second metric that you're going to uncover in this guide is leg, length of engagement. And what this means is the average number of months a client stays with you. So the industry average in the US is 18.61 months in a coaching gym. Above average, the two brain average is 24.94 months. Now, here's how this number helps you. The longer your client Bye-bye. for the next 70 years, then we need to keep them for at least two years to change their habits and behaviors. The less pressure you'll have to constantly be finding new ones. And you know, you're not just running a marketing machine anymore. If you get it wrong, and you cut your leg from, let's say, 18 months to 12 months, then you're losing a third of each client's potential value. You're also losing like most of your impact because they're not with you long enough to change. And if your arm is$170, that's$1,000 less per client. With 150 members, that's$153,000 gone every year. Just increasing your leg by two months across the client base, and you can add around$45,000 in profit each year. What would you do with that? What would your family do with it? I'm sure they could find something to do with an extra$45,000. Changing your leg is a big deal. I'm just going to do a little sidebar here before I get to the next metric. There's people in the industry who want you to believe that a three to 5% churn rate is good. It's not good. If you have a gym and you've got a hundred members, that means you have to get three new members every single month just to break even. Well, that's not too bad, but you know, what if you've got 200 members? Well, now you have to get 60 members every month just to stay the same. What happens if you've got a gym with 300 members and At a 3% churn, you have to get nine new members every single month just to tread water. And a lot of the gyms, especially the old CrossFit gyms, you know, five years ago, six years ago, they were advocating for this. They were like, no, 300 members, you got to get 300 members. And then they quickly realized that they just spent all their time marketing because they were churning clients through. And that's just with a 3% churn. If you've got a 5% churn rate and you've got 300 members, you have to get 15 new members every single month. Now, if you don't know how If you don't know how to do that, if you don't know how to get 15 new members net every single month just to stay where you are, you might want to ask yourself, like, is this really the right model for me? And by the way, in the State of the Industry Guide, we'll show you how many members the average coaching gym has. It's like 124. The people who are telling you, get 300 members, get 400 members, do whatever it takes. They're not using metrics, right? They're using shock to try and sell you on their coaching program instead of using proof to mentor you to build something that lasts. Okay, retention is my favorite bone to pick, and so I'm going to stop there. Let's move on to the next metric. The next metric in the guide is net owner benefit, which is like profit plus the pay that you pay yourself. We all pay ourselves slightly differently based on taxes or where we live, whatever. Net owner benefit is what you get from the business, and it can include pay, salary per You can also include perks like, you know, my gym pays for my cell phone and it pays for my vehicle. The industry average, and we took a median here instead of a mean, because let's face it, like there's a lot of gym owners out there who are making zero. And if I took a mean average, it would be much lower. The median is$4,000 a month. The top gyms are taking home$20,000 a month plus because they've mastered the basics. Now, here's how this helps you. Being more profitable isn't greedy. It's what keeps you in the game. No profit means no future. If you get it wrong, then if you're at$2,000 a month instead of$6,000, then you're missing$48,000 a year. That's money that you could be investing in growing your gym, careers for your staff, or paying yourself a real salary, like actually getting your kid the jeans they want before they go to school. The way that you fix this is that you fix your pricing, you control your expenses, and you retain your clients, and you can move from average to top-tier profit in under two years without doubling your workload. And those numbers are all in here. What should I charge for price if I'm going to fix this problem? It's in there. How long should I keep my clients if I'm going to solve this problem? It's in there. How much should I pay my staff if I'm going to solve this problem? It's in there. How should I pay myself? It's in there. All the metrics that you need to run the gym are in this guide, and the way that you get this guide is by helping other people, by sharing your own metrics, no matter what they are. And we will get you a copy of this to help you run your gym better forever. The next metric I want to talk about is your expenses. We call this ROI because you're smart. Every dollar that you spend in your gym, you did for a reason. And so what we want to help you do is get a better return on those invested dollars instead of just trying to cut expenses all the time. So we call this ROI. This is probably the least sexy metric, but it's the one that most people ask about. Like, what are you paying in rent? How much do you pay your staff, et cetera? ROI is how much you spend and what you get back from that spend. So we break this into staff costs and fixed costs. On average, if you've got a big group gym, your staff costs you about 33% of your revenue and your fixed costs are about 47%. Okay. So that's 80% of your revenue going out before you see any of that or before you've got a dollar that you can spend on coffee, right? But knowing that tells you where your money is actually working and where it's being wasted. So right off the bat, I can tell you that most people are paying their coaches too little. If only 33% of their revenue goes to their staff, but they're paying the landlord too much or they've bought too much equipment, they've got too much space. If half of every dollar that you make goes to the landlord, 47 cents, that's too much. The way to make yourself profitable is not to go crazy with expenses, but now you know like what the average is and what you should strive for. How you fix this is you audit everything. If you've got too many classes with low attendance, then that's dead weight. You're losing money on those classes. If you're paying only$25, which is the industry average for a class, by the way, it's all in here, and you're only bringing in$20 from the attendees of that class, then you're paying and losing money to coach people. So an example of fixing this would be cutting or consolidating your under-attended classes, and that will free up thousands of dollars a year, and that's money that you can reinvest in marketing or staff training that will actually bring you some growth. That's just one thing, and we can't cut our way to profitability, but going through your expenses will tell you where you should be getting a better return on your money. The next metric is EHR. This is your effective hourly rate. Now, what this means is, how much do you get paid per hour that you spend in the business? And this number should be higher as the CEO than it is as a trainer, because let's face it, if you could make more money just coaching for somebody else, you should probably go and do that. The industry average though is pretty low. The average owner of a big group training gym is only 25 bucks, but the top gyms are at$46 an hour and beyond. How it helps you? Well, EHR shows if you're really working like a CEO or if you're just grinding it out without getting ahead. If you get this wrong, for example, if you're only taking home about 10 bucks an hour from your gym, then you'd actually be better off coaching for somebody else or and buying a membership or going and getting a job and buying a membership at your gym. You need to become better as a CEO. And I'm not trying to tell you get out of the gym business. I'm trying to tell you focus on being a better CEO. Streamlining your operations, delegating your low value tasks, and focusing on the high leverage work could easily jump you from earning 25 bucks an hour for your time to 46 bucks an hour. That's 80% more for the same amount of hours worked. And the sixth metric that we talk about, this is the sexy one that I everybody loves talking about is client headcount. How many clients you got is kind of like the new gym equivalent of what's your bench that we used to say back in the 80s. What client headcount means is the number of paying members that you have, okay? So this is really important. The median big group average for paying clients like CrossFit gyms, Fit Body Bootcamp, it's 122.5 members. And you can have a very profitable gym with 150, but it does not make sense when the average gym has 125 2.5 members to build your model on getting to 300 before you get paid. Because headcount matters, but it's not everything. Your ARM times your headcount, that is your revenue. And if you're chasing 300 members without the systems to support them, the systems that will make you profitable at 150, you're just going to get burnout, bad service, and crazy high churn with your members and your staff. So instead, focus on getting to 150 members, paying the right amount, and you can take home over$100,000 a year, cover one full-time staff person, work 40 hours a week, and have a part-timer that does the admin stuff for you without running yourself into the ground. Look, data doesn't lie. There's six simple metrics that you can use to run your gym and grow it to really profitable and successful over 30 years. These are called the simple six, ARM, LEG, NOB, ROI, EHR, and headcount. And they give you the clearest picture of your business health. If you get them right, right, you will build a gym that lasts. If you get them wrong and you're stuck chasing fads and gut feelings and guru advice that isn't grounded in any reality, you'll be out of business and probably selling real estate within three years. So stop guessing. Let's use the numbers. Let's make the changes and let's build something together that lasts. If you want to get a copy of this guide, you just got to participate in building the guide with me. Click on the link below this video and it'll take you about 10 minutes.