The other day I was walking out of the gym, when I saw a scruffy looking white board punched up with scribbles, that caught my eye.

What was jotted down on this whiteboard, was nothing shy of astounding. Here it is:

Before we go through this, let’s think this through here…

A successful marketing campaign is one where the difference between what a customer, client or patient will pay you… and what it costs you to acquire that customer, client, or patient through your marketing efforts… is great enough to leave you with enough to pay your expenses and take home a healthy profit, afterwards.

And the greater this difference, the more efficient your marketing campaign is, right?

Sure, of course.

Now when it comes to business that is referred to you — you get an even sweeter deal. And that’s because you really have no customer acquisition costs to pay for. Which means, obviously there’s more left over for you, in profits.

So now let’s take a look at what’s going on here, and why this is such an EPIC fail, as far as marketing goes.

L.A. Fitness wants you to refer people to them, who will sign up for a free one-week trial membership.

Let’s dig a little deeper on this one:

If someone refers a friend to sign up to the gym, and they actually sign up and go for a week’s trial… this is a very qualified referral.

After all, people will typically refer friends who might want to train along with them. And it’s a LOT easier to go and work out if you have a partner.

On top of this, that referral had to make a lot of effort to sign up. They had to get dressed in workout clothes… get in their car… drive down to the gym… and then have the courage to walk through the doors… meet with (and most likely be bored to death by) a sales rep… walk through the entire gym while listening to the sales pitch… and then agree to sign up for a free week’s trial.

That’s a heck of a lot of work to do. And as you know… the amount of work a prospect has to do to qualify themselves… is directly proportional to the likelihood of them buying.

So basically, a lead like this is worth a LOT to LA Fitness, in terms of net profitability.

And what’s their offer?

These cheapo’s will give you ONE LA Fitness towel — these are small “sweat towels” that MIGHT cost them ONE WHOLE DOLLAR each — and… they won’t give you this towel until you refer not one… not two… not three… but SEVEN qualified prospects to them.

Can you see how absurd this is?

I mean, really… this takes a bit of gall to make that offer.

It’s like being a landscaper and telling your clients — hey, if you refer 7 new customers to me, I’ll give you a free bag of mulch.

Wow. Talk about making you feel special, right?

First of all, most people will NEVER be able to refer 7 one-week trial signups to any gym, simply because it’s a pain in the ass to find people who want to work out.

Second, don’t you think you could incentivize your paying clients with a MUCH greater reward than basically, giving them a small dish towel that says LA Fitness on it — and even then… only giving it to them if they give you SEVEN referrals?

I mean, think about it. How much would you pay someone for ONE referral?

Let alone SEVEN of them?

Now, if they gave away a free one-hour training session, or $25-$50 worth of free smoothies for every ONE person you referred… this would be a much sweeter incentive, and I’d bet the gym would be filled with new members, faster than you can imagine.

But I guess you can only expect so much from a company that makes you sit and listen to music by Madonna during the 1980’s, while you’re pounding away at the weights.

If you have any thoughts on today’s post, leave ’em below.

Now go sell something, Craig Garber

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listening to: Hang On To Your Life – The Guess Who (1970)