Various mistakes can kill your chances of running a successful studio. And one of them is offering free trials early on.
Many people open their F45 or FS8 studios due to the tremendous potential to make money. They launch their business and hope to attract plenty of clients, but something holds them back.
They can’t achieve their operational excellence and make big bucks. As a result, they can’t create freedom and enjoy a better lifestyle.
You might face the same risk… if you make a huge mistake in the beginning. And chances are, you’re already making it.
But what is this mistake that can kill your chances of thriving?
This article will reveal the answer.
The Controversial Problem
The problem that can stunt your company’s growth is slightly controversial. And it has to do with one thing:
Offering free trials at the beginning.
This issue is prevalent because studio owners are taught to offer free trials early on. The belief is that this helps them boost attendance and establish their brand.
You might be thinking, “What’s wrong with free trials if every studio provides them?”.
The problem is this: the bills start coming in from the get-go. The launch expenses can be enormous, and you’ll owe money to many people.
Free trials can’t cover these costs!
Consider my studio as an example.
My F45 studio operated in 2015 under the same business model as all other studios in Sydney. That is, we provided free trials and failed to recognise the flaws of this system.
As all studios had free trials, people could train in multiple studios without spending any money. After two or three weeks in one place, they would join a different studio and exercise for another two or three weeks… then move to another studio that offers free trials.
Our bills had already piled up before we finally realised the truth:
That free trials weren’t working.
The only reason owners adopted this approach is that everyone told them to. Nobody tried to break the mould despite losing money.
My studio was the first one to move away from free trials.
I was frustrated since the sign-up rate was abysmal. About 20 people registered for our free trial… and only 10 turned up. And out of those 10…
…just three people would sign up!
We were stuck with a 30% rate, unable to increase our membership.
If this is the case in your studio, you need to take a different approach.
Some Approaches Are Better… But Not Ideal
Removing free trials from your offerings is a must. However, this doesn’t mean you should follow just any alternative approach.
For instance, many studios offer “$7 for 7” trials. While this is better than free, you can still operate at a loss with this approach.
Let’s analyse the numbers to determine the drawbacks of this system.
Suppose you’re running a “$7 for 7” trial, and the cost per lead stands at $20. Your conversion rate is 30%, which puts the cost per new member at $60 because you need three of those leads to make a sale.
Can you see the problem?
You need $60 for each sale, and you’re only charging $7 for your services – you’re already in the red!
Clearly, this goes against the main reason you’ve launched your studio – creating lifetime value. You’re not charging your members properly, and you can’t retain them because you’re losing money from the get-go.
As a result, even cheap trials are basically free these days.
The gap between your leads and the turn-up rate is dramatically lower than what you initially hoped for. This is because there’s no skin in the game – your clients have only invested $7, which is a minimal loss to them if they don’t show up.
But if neither free trials nor the “$7 for 7” option works, what system should you implement in your studio?
A higher-value approach is the answer.
A Higher Value Trial
Instead of hampering your studio with subpar trials, here’s a better approach:
Implement high and medium ticket offers.
Take my studio as an example.
I charge $199 for trials… and the conversion rate is 80%!
You might think that such a high price would put people off training in my place, right? But that’s not what happens.
Why is that?
The reality is that there’s more skin in the game with such offers. They’ve already paid for the trial, and they’d waste nearly $200 if they don’t show up.
They can tolerate losing $7, but $200 is a different story. People are more likely to follow up on their investment than move on to another studio.
One of the most significant benefits of high and medium ticket offers is that they create cash flow. They make a huge profit and can cover the cost of some other activities in your studio, primarily marketing.
To be precise, you can use the money generated from the conversion to pay for your ads. In turn, the ads can attract more clients to keep the cash flowing. It’s like you’re doing your marketing for free!
This is why this model is a dramatic upgrade over both previously mentioned trials. It makes more sense financially and helps you create more lifetime value.
More clients sign up and stay in your studio, increasing the value of your brand.
And best of all, you can make all this cash by using other people’s money. You also get to charge for your services appropriately instead of offering them for free.
Keep in mind that running this business model requires your entire team to be on the same page – it must be a choreographed effort. Otherwise, your target clients may not recognise the value of your offerings and will walk away.
Don’t Underestimate Your Services
You might be hesitant upon launching your studio. This causes you to undervalue your services and resort to low-performing tactics, such as free trials.
But you want to avoid this mistake at all costs!
Instead, be confident about offering paid trials. Make it clear to your clients that they’ve signed up for high-quality services that will help them reach their peak physical condition.
Remember, putting a higher price tag on your trials means clients can lose more money if they switch to a different studio. Therefore, they’ll be more motivated to stick to yours.
The improved cash flow and faster growth will help you achieve your goal – creating high lifetime value.
