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Blue Ocean Strategy

Posting for an intern last week, I included the sentence, "Can-Fit-Pro Certified Trainers are not qualified for this position." The post was yanked from a government website because it 'discriminates based on credentials.' While I'll leave that argument to stand on its own (or not,) I thought I'd take the opportunity to talk about W. Chan Kim's and Renee Mauborgne's book, "Blue Ocean Strategy."

A Personal Trainer at GoodLife runs $5k for 6 months.  Up front, please, or we'll lend you the money at 19% interest, and you can pay it back in three handy instalments.  kthxbye!

We do a great Personal Training business.  We also do other stuff.  Instead of fighting over the best Personal Training credentials, we run CrossFit and Catalyst Kids and Barbell Bettys and various sport-specific groups.  Where once our Personal Training business pushed people into CrossFit, the inverse is now true.  Seeing specific weaknesses, CrossFitters now draw on Personal Trainers to get them over hurdles or bring them up to speed.

 Instead of battling with other "Personal Training Studios," we try to build a large portfolio, tell a great story, and stay in touch with our friends.  We also try not to project an 'us-or-them' option; many members at Catalyst have done powerlifting programs, OLY programs, OnRamp, Personal Training, running groups, and a wide variety of one-day clinics.....but they've never gone anywhere else.  They don't need to.

We prioritize adherence and retention over recruitment, and it works.  As a member said last night, in a Games-induced fever: "I can't imagine doing any of this stuff anywhere else." 

THere's a lot of ocean out there.  Divide and Differentiate.

3 Points Of Contact

You're climbing a rock wall.  What's the safest position to keep moving forward?

a) feet planted

b) one foot, one arm secure

c) both arms have good grip

d) any three out of the four

....a climber will tell you the answer: any three of the four should be anchored; the fourth should be moving.  The moving limb is actually the only one resting.

The hand squeezing the rock is working.  The toe propping you up is working.  The extending arm is NOT working. When your fist is clenched, your forearms are flexing hard in a static position, and bloodflow is reduced. Lactic acid is being generated.  When your fingers are outstretched, and your palms open, your brachioradialis is in recovery mode.  Want proof?  Build a Bachar's Ladder (famously present at the original CrossFit HQ.) One arm works, the other recovers. 

In this business, it's really tempting to gaze inward; to get deeper and deeper into CrossFit.  It's a VERY DEEP WELL. The knowledge available through CFJ alone is tremendous. Main site WODs are plenty awesome.  Every day, 400 people comment on the WOD, and a few dozen comment on the A-blog, too. You could make a decent living and live a happy life and stay fit forever.

I recommend reaching, though. It keeps you fresh.  Go to the CFFB Cert. Read Mel Siff's blog. Start a kids' program. Keep one foot on strength bias, one on METCON, hold onto running with your left...but reach up with your right.

A 40% Raise

I can remember the exact moment when I decided that I wanted a large salary.

Returning to Canada after a three-year rip in the States, I was picked up by a local ski resort to manage their rental and repair operation. The director of the ski school was a typical young hotshot, as bold in the boardroom as he was in the terrain park.

As the business slowly shrunk around us, we found ourselves taking on more and more responsibility, and our area of direction expanding. In my naive (and, I thought, honourable) way, I absorbed more and more work without an increase in pay.  Captain Powder, though, saw his salary rise with his influence, because he wasn't scared to ask.

"Twenty years old, and making fourty thousand a year," he bragged. I made the (emotional) decision to surpass the kid.  Unfortunatley, I didn't make a plan.

If you live in Canada (and, to a lesser extent, the States,) you're overtaxed. A 13% sales tax, on top of an income tax that can reach 40%, on top of hidden taxes in most commodities.....are we closer to socialism than capitalism? Whatever your political stripe, it's too much.

Wealthy people don't just have a bigger salary.  In fact, they may have a smaller one.  The difference: they keep their money. They're wiser about buying with before-tax revenues; about using holdings companies to purchase things like gas and insurance, instead of using after-tax income.

Let's say that you make $1000 per week, and that puts you in an income tax bracket of 32%.  Your holdings company pays for your gas; all of your vehicle expenses; 10% of your mortgage interest; 10% of your phone and utilities bill at home. If those bills total $200 per week:

No Holdings Company: Holdings Company:

Income -  $1000 $1000

Tax -  $320 0

Net - $680 $1000

Expenses - $200 $200

Net after expenses: $480    $800

Tax on income 0 $256

TOTAL Net:  $480 $544

...That's a difference of $64 per week, or $3328 per year.  That's not including refunded sales taxes (13% in Ontario) on stuff you'll buy out of the Net Income. 

How much harder would you have to work for another $3328 NET per year? 

I've stopped trying to shove my income UP, and started trying to get it as close to zero as possible.

Investing For Cash Flow

Quick, what's a better investment of your money and time?

1) a week-long summer camp with net revenues of $2000; or

2) A quarterly 'clinic' series with net revenues of $700 each quarter; or

3) a year-round daily program that costs each participant $8 per visit?

Basic math would dictate the third.  Yet most of us put more effort into the short-term, smaller net gains, rather than plan a long-term, recurring program.

Ten years ago, many of us had 'boot camps.' None of us had CrossFit. We all had Summer Dryland Hockey programs; none of us had CrossFit Kids.

CrossFit Endurance affiliates are discussing team training in a different way: for a monthly fee over and above membership, you're on the Training Team.  The Training Team receives separate programming; they get Team coaching three times every two weeks; they travel as a group.

You're offering GPP (CrossFit.) You're offering specialization (personal training.) What if there were a way to bridge the gap?  What if you could do it in a sustainable way with predictable revenues?

Too Much Choice

I read a lot of psychology and sociology. My purpose is to get to the underlying rationale behind the business plans, marketing, and even programming.  If we can, we want to help everyone in the world, and that means increasing our appeal.  We'd also like to do the best job we can when we do have a person's attention.

Almost a year ago, I wrote a post summarizing an idea from "How To Sell A Lobster": the Three Boxes. While the perception of choice is critical for asking consumers to commit, too much choice - or a lack of clear choices - is paralyzing.

"The Art of Choosing," a new book from Sheena Iyengar, is a more in-depth look at the surprisingly limiting effect of having too much choice. To prevent overload, the brain will often take the path of least resistance - the one with the fewest choices, or even no choice at all. 

Given one or two choices, a prospect doesn't have much trouble.  But give them five or six, and the most attractive option may be: come back later, when I have more time to consider all the options.  Rarely is the choice to NOT choose overt; they may actually believe they'll be back at some future date. We know better, though, don't we?

It seems to be the sum of choices that matter most.  For example, a newcomer may only see two choices on your site:

1. OnRamp

2. Personal Training.

However, if they encounter more choices downstream, the effect may be the same. In other words, it doesn't matter where in the buy-in process the choices can be overwhelming; what matters is that you set a path as early as possible, and keep them on it.

Good example:

1. OnRamp (click!) - Next OnRamp Class is MWF at 8am.  Click HERE to sign up!

2. Personal Training (click!) - Meet with a Trainer for Free!  Click here for a FREE consultation!

Bad example (guilty!)

1. OnRamp (click!) - For more information about OnRamp, click here.  3 Classes available - Beginner, Intermediate, or Advanced! Click an option for more!

 - Intermediate (click!) - How to tell if you're intermediate: click here.  Read about our testing process: click here.  Intermediate groups run at 8am, noon, 3pm, and 7pm.  Need to mix and match classes? Email us here. 

2. Personal Training (click!) - Benefits of Personal Training: click here.  Most people start with private sessions.  Book a free private consultation here! Want nutritional advice, too? Click here!  For prices, click here.  Save money with packages! How many sessions do you need to start CrossFit? Click here!

...it's so boring, you can barely read it!  How does a newbie feel on your site?

The Client-Led Workout

Yesterday, I mentioned that we'd invited a member - recently L1 Certified - to create and lead a Sunday-morning WOD.  Carolle's a fan favourite; after losing 100lbs, she rewarded herself with a trip to study with Jon Gilson at a L1 Certification. 

Carolle's workout was called, "Static Cling." A lot of postural work, which we sometimes don't emphasize enough in our programming, and great teamwork.  For her, it was validation of all she'd learned over the past three years.  For us, it meant a big draw to a group that was normally slow. Plus, the coaches got to train and compete within the group for once.

Purists may argue that having a member program the day's workout means a loss of focus.  That's true; however, CrossFit's themes of 'ready for anything,' and 'unknown and unknowable' both dictate a certain degree of randomness.  While we're always working toward a common goal, and most of our programming is determined far in advance, a solid baseline progression allows for this type of "random" METCON. 

In fact, Carolle's METCON addressed an element that we've been lacking in our own programming.  She spotted a weakness, and strove to correct it. Since she's "outside" the puzzle, her viewpoint gave us a great look at the total picture.

Immediately afterward, two other members asked when they could coach. We're moving toward League Play on Sundays, and randomly drawing from member submissions for WODs may also increase attendance without sacrificing the overall goal of fitness that is general, broad, and inclusive.

 

How We Learn

This is Bloom's Taxonomy.  It illustrates the current paradigm of the learning process in most North American schools.

This, by contrast, is called, "The Learning Pyramid." Though it's hard to pin down the original source, and therefore validate with empirical evidence, it's the real pyramid being discussed by most non-traditional educators:

 Application of the lower pyramid to learning has a lot in common with the CrossFit Endurance philosophy.  When studying for my CSCS certification years ago, my strategy was to study for twenty minutes, and then 'teach' each concept for ten minutes.  I would pretend that I was teaching the concept to a group of ten-year-olds; that way, I was forced to simplify the point in my own mind.  This was Einstein's theory (you don't understand physics until you can teach it to a ten-year-old) overlaid with "The Learning Pyramid."

The implications are interesting: should we perhaps consider drawing members of the group into the middle of the circle to demonstrate? Should we have other group members critique form?

When a gym member recently attended her Level 1 Cert - a gift to herself after losing over 100lbs - we invited her to create and coach a Sunday-morning WOD. Carolle's a bit shy, but her workout was terrific; group numbers skyrocketed; and she learned while she prepared the WOD.  The next week, another member asked to lead..... 

AIDS vs. Sugar

Kenya's got a new weapon against the spread of HIV. 

Some background, from the Avert website:

Kenya is home to one of the world’s harshest HIV and AIDS epidemics. An estimated 1.5-2 million people are living with HIV; around 1.2 million children have been orphaned by AIDS; and in 2006 85,000 people died from AIDS related illnesses.¹

Kenya’s HIV prevalence peaked during 2000 and, according to the latest figures, has dramatically reduced to around 6.3 percent.² This decline is thought to be partially due to an increase in education and awareness, and high death rates.³

Many people in Kenya are still not being reached with HIV prevention and treatment services. Only 1 in 4 children needing treatment are receiving it.⁴ This demonstrates Kenya still has a long way to go in providing universal access to HIV treatment, prevention and care.

The greatest weapon against AIDS in Kenya, until 2009: death. They were literally dying faster than they could be counted, which gave the impression that infection rates were on the decline.

Cue "Sugar," a popular new soap opera.  The show is sponsored by international health agencies, but the plotline - though predictable - is 'cool' enough that the kids don't mind. The protagonists have tons of intercourse; they talk little about the real message, but make it obvious that they're taking precautions.  It's not corny.  It's a story.

If you're a fan of Seth Godin, you won't be surprised at this new tack.  What may be shocking is the enormity of its success: 60% of teens and adults have seen it, and 60% of those agreed to change their sexual habits.  That's a 36% rate of adoption among a population of millions.  It's not just agreeing to get tested, or use a condom: it's agreeing to reconsider the notion that AIDS is caused by bad luck, or bad religion, or otherwise. It's changing a whole culture of sex.  THAT is the power of the story.

Cash Flow Crisis Avoidance

If you've never been to business school (as I haven't,) it's possible that no one's told you about cash flow.

When a beginner (as I was,) sets out, they see only the Yin and Yang of entrepreneurship: revenue and expenses.  Simple, right? All you have to do is have more in the R column at the end of the day....

Except that it's a long day.  And you have to eat.  And the gym looks better when the lights are on. 

Even if you're able to make ends meet, cash flow can sink you.  The fitness business isn't constant through the year, and IOUs really aren't popular with the bank.  Now that we're midway through August, a lot of gyms are dipping into reserves.  In fact, August is the least busy month in the whole industry....but the lights still stay on.

Here's what we do:

1. First, set up a system like MindBodyOnline to allow for payment tracking, online payment, collection, notification, and membership.

2. Next, plan your biggest event of the year at the end of the slowest period - for us, that's September 11.  The Catalyst Games will take place after the start of school, but before parents are really 'in the groove.'  Fear makes people show up and train.  Stress participation, not conquest.

3. Book special short-stay events (we call them MiniClinics) for the weekends before the event.  We have four: Nutrition/Mobility, Gymnastics, Lifting for METCON, and Running for METCON. A slight twist on the original, and a condensed version.

4. Allow for early registration.  Folks who register early get their t-shirt for free, etc. This provides cash flow in an otherwise slow time.

5. Have a cutoff date for registration on a date near the end of the month, when you're struggling for cash to cover expenses.  Most people will sign up at the last minute.

6. Host a special rate for Games-Day OnRamp registration.  (Like what you're seeing here? Commit today for next week's OnRamp, and get in for half price!)

7. Use punch cards and other non-cash vehicles.  When cash isn't trading hands, folks are likely to use up their credit faster.  Small, cheap transactions actually hurt more than a few larger ones.  If I'd been a bit smarter, I would have charged two punches per MiniClinic, instead of $20, rewarding our regular clients and encouraging quicker use of their punch credits.

8. Invest in assets that generate income without your direct involvement. 

You have to plan your year in advance, but if you know the highs and lows (also easily tracked in MindBodyOnline!) you can plan for small surges.

Contrast

"Nothing is more powerful than an idea whose time has come." - Victor Hugo

When Arthur Jones trademarked his Nautilus machines, he didn't get many converts right away.

After all, the world of bodybuilding - "Physical Culture" - was prone to Olympic lifts, powerlifts, feats of gymnastic prowess, and calisthenics.  The dual-pulley cam idea was almost the opposite of the common reality. Conventional wisdom held that, to get big and strong, a boy should do cleans and presses and drink his milk.

Jones made claims that seemed outrageous - "I'll put an inch on your biceps in a week!" - and paid for the endorsement of popular bodybuilders.  But a big part of his appeal was just that he was providing novelty. 

Ten years ago, Charles Staley suggested that you could take an average trainee's program, have her do exactly the opposite of what she'd been doing, and see remarkable progress.  On the micro scale, it will work for one athlete at a time.  On the macro, it will work for your business.

We've swung so far 'round the spectrum that Jones' style is now the norm.  Machines are the gym's default setting.  It's a good business model: machines simplify the workout for the intimidated.  Machines mean you can buy a Trainer's contract for ten dollars an hour, and when he leaves, there are a dozen high school kids to take his place.  Machines are also boring, which increases the dropout rate; if you've got 'em on a contract, that's a definite plus!

That is, unless you're Greg Glassman.

The pendulum, nudged by CrossFit, is beginning to swing back. You're smart to be in on the ground floor.  Trend analytics suggests that CrossFit is bound to succeed simply because it's the opposite of what we've been doing.