The secret to running a profitable CrossFit affiliate
The secret to running a succesful Crossfit box is understanding how much a new member is worth.
For every box it will be different, but if you can sign someone up for less than that number, you’re making money.
People sometimes talk about these two important factors with the following terms:
- Cost of acquisition: how much it costs to get someone to join
- Lifetime value of a customer: how much that new member is worth
If cost of acquisition is less than the lifetime value of a customer you’re good to go and grow.
A member is worth at minimum between $1,200 and $3,000
When we think of signing up a new member we often think about the initial fee to join. What we need to consider are the long-term revenues a new customer will generate.
The calculation we use has two considerations:
The first is the price a member pays each month to a box. Membership typically ranges from $100 to $250 a month.
The second consideration is how long a member is with the box. Conservatively lets say they stay for 12 months. Of course many members stay longer.
12 months times the typical membership suggests that each new CrossFit member is $1,200 to $3,000. The real value is even higher because members often recruit their friends to join and more happy members makes it easier to recruit other new members.
The Cost to Acquire a New Member
Understanding what a new member is worth is the first step to running a profitable CrossFit box. The next step is finding ways to acquire a new member for less than that price.
By thinking about it this way you know how much you can spend on marketing, advertising or of your own time selling and still be ahead.
You know what you can spend to make a profit. Seeing as members are worth well over a thousand dollars you should be willing to spend a lot to get them.
For example, you could spend $3,000 worth on advertising. If you get three new members as a result of the campaign you are coming out ahead. Luckily there are cheaper ways to get members than that.
We’ve found that the internet offers cheap, repeatable ways to gather new members, but we write about that elsewhere on the blog.
The important thing to remember is that new members are really valuable and you should be willing to spend some money to get them. You just have to make sure the lifetime value of a member is greater than the cost to acquire that member.Hope that was helpful. Have any questions? Let us know. We’d be happy to help you answer them.