Alex Hormozi Reveals Planet Fitness EVIL GENIUS Business Model

0:00What do you think about like Planet Fitness marketing? Like the lunk alarm and stuff. >> From a business model perspective, it's brilliant. So, they fig- they looked at it and they were like, "Okay, 92% of people don't actually want to use anything in the gym. They want to sign up for a gym and not come. They're like, "You know, we can have smaller gyms that have more members if we get >> bad about the people that are here. >> Exactly. No, I mean like legit, they're like, [laughter] "Okay, the people who use the gym the most, who we lose money on a per usage basis, are people who actually use the gym."

0:28>> the protein shakes on their way out. >> like, "What do people who use the gym use? They use heavy weights, they use squat racks, they use chalk." And so, they're like, "Well, if we eliminate these three things, that knocks out 80% of the people who actually going to use the gym." And so, then we can have a facility, sign up as many people as possible here knowing they're never going to come. And then we'll incentivize them with pizza. Legit. And they're like, >> Pizza, I'm on your side now. Listen. >> it's 10 bucks a month to come here.

0:55>> Right. >> And if you just come and get pizza once a month, you already covered your 10 bucks. You're like, "What's the deal? I'll just come and get pizza." And of course, they don't come to the gym to get pizza, either. But they just pay their $10 The average Planet Fitness does has 10,000 members at 100 bucks. I'm sorry, at 10 10 bucks a month. So, for them to make their model work is 10,000 active members. >> Wow. >> And what they figured out was that you got to go easy on the exit. So, someone's having a hard time, whatever it is, most people you know, most gyms like send you to collections, they enforce the contract. Planet Fitness took the opposite approach cuz they need so many members, they need positive word of mouth. So, if people are like, "No, don't sign up there. It was a [ __ ] pain in the ass when I tried to cancel.

1:34They sent me collection people and I was like, "Oh, I'm not signing up there." They're like, "Oh, no, they're cool." So, you go there and you're like, "Hey, I don't want to pay anymore." You can cancel over the phone. They're like, "No sweat. We'll cancel you right now. Come back when you feel good again." And so, people don't feel afraid to come back in. And so, they can go into a city that's got like 30,000 people and they'll churn through the same 10,000 active and ongoing. And so, they do they just people get motivated and sign back up and then they get demotivated, they just churn right through them. And that's how they took our like took their money. >> ask people on the spot, "Hey, like I noticed you haven't been coming that much. Want me to cancel your membership?" They'd be like, "No, no, no, that's okay."

2:05>> Cuz you give up hope. >> Don't do that. You know? >> Yeah, for 10 bucks a month, it's like I pay 10 bucks a month for the idea that I might someday go to the gym. >> Right. Right. I know I'm going to come in starting next year. >> Yeah. It's a different model. >> If you like this video and you're a business owner who wants to break through your current revenue ceiling, I distilled every lesson from scaling 10 businesses past 10 million and three businesses past 100 million into a completely free scaling road map that I've used to go from zero to one, zero to 10, and zero to 100 plus. And so you can click here and you can check it out.

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