How Much Should You Really Spend on Marketing Your Fitness Studio?

Ever wonder if you're wasting money on marketing or not spending enough to truly grow your studio? You're not alone. Most studio owners rely on guesswork, copying competitors, or arbitrary budgeting - approaches that lead to either burning cash without results or stunting growth through underinvestment.

In this eye-opening episode, I break down the critical formula successful studios use to optimize their marketing spend: the Lifetime Value to Customer Acquisition Cost (LTV/CAC) ratio. This powerful metric transforms how you view marketing expenses by showing exactly what you should spend to acquire new members based on their long-term value to your business. The ideal ratio? 3:1 - for every dollar spent on acquisition, aim to generate three dollars in lifetime value. I walk through practical examples, like how a studio charging $300 monthly with 10-month average retention can confidently spend up to $1,000 to acquire each new member while maintaining healthy profitability.

What makes this approach particularly valuable is its ability to evaluate different marketing channels. Google ads might attract members who stay longer than those from Facebook campaigns. Community events might bring fewer leads but with higher conversion rates and retention. By tracking channel-specific metrics, you'll discover where to double down and where to cut back, optimizing your entire marketing strategy. As HubSpot research confirms, businesses tracking these metrics grow 2.5 times faster than those flying blind. Download our free worksheet from the description to calculate your own LTV/CAC ratio and transform your studio's growth trajectory. Stop guessing with your marketing budget - start scaling with confidence based on real numbers that matter.

Chapters

• 0:00 Marketing Budget Problems Explained
• 1:46 Understanding LTV and CAC Ratio
• 3:24 Budget Based on Value Examples
• 7:30 Track Different Marketing Channels
• 9:20 Growth Impact and Final Takeaways

Transcript

SPEAKER_00: 0:00

Are you really overspending on your ads or worse, not actually spending enough? Today, I'm gonna kind of show you a formula that can help studio owners really understand how to budget smarter, not harder. Hey everyone, welcome to another episode of the Fitzgradcast. I'm your host, Zach Coleman. And let's kind of dive into what you're really spending on your marketing. Are you really overspending on your ads or worse, not actually spending enough on your marketing initiatives? Today, I'm gonna kind of show you a formula that can help studio owners really understand how to budget smarter, not harder. You know, most studio owners we see, they really guess with their marketing expenses. They're either doing Facebook ads, it's not working. I mean, I talked to somebody earlier today who was basically like, oh, we're spending$3,000 a month on ads. They only got 140 leads and they sold two. And they're like, oh yeah, and they only stay for a month. And I'm like, what? You're definitely not getting the row ads you need from your campaigns. But they're guessing, copying what other studios are doing, which sometimes can be good or bad, but this creates two problems. You either overspend without any results, or you underspend and stall your growth. So you need to find a better way to market smarter. You know, I work with a lot of studio owners who spend thousands on different forms of advertisement, but they really couldn't understand where their return was really at. When we kind of broke it down, we could align their marketing spend with their different channels, with the different aspects of the business, and really figure out what the lifetime value is of said members from these different channels. They were either spending too much to acquire new members or they weren't investing enough to bring in those members sustainably. So we're gonna cover three points in today's video. If you need to know more about the LTV, you can check out our last video, which we'll put up here in the comments. But we're gonna talk about knowing your LTV and your CAC CAC ratio, which if you don't know, LTV is lifetime value of a client and CAC is customer acquisition cost. Figuring out a healthy ratio of three to one for every dollar you spend acquiring a member, you should see three dollars back in lifetime value. Number two, we're gonna talk about budget based on value, not guest work. If your average client is worth$1,200, for instance, you can confidently spend three to four hundred dollars to require them. And then how you track uh consistently your numbers will change as you grow, of course, your pricing changes, your weed out, some of the smaller, you open more locations, et cetera, et cetera. So, how do you keep monitoring to avoid under or overspending? So, as we get into this, I will say look down into the description. We do have a worksheet that can explain all this in further detail and help you work through today's video on much more concise. And it also gives you a couple of examples that we utilize with some of our studios to help them understand their lifetime valueslash CAC ratio. So knowing your uh LTV in your CAC. So this is the first and foremost that I think a lot of uh studios misunderstand is customer acquisition costs should definitely be correlated to the overall of the lifetime value of SAG client. For instance, if you're spending$1,000, let's just do a good example here, three to one ratio. You know, let's say your lifetime value is two months and you're selling a$300 membership. You're selling$300 membership. So that means your lifetime value would be given at$600. Now, let's say you're spending$2,000 a month on just those two clients on Facebook, for instance, and they're only staying for two months. Is that lifetime value to the CAC ratio there? You would say$600, which would$600 to a lifetime value. Let's the lifetime value would be the 600, or you can times them together. So you could say$1,200. And then over here, you have your uh CAC, how much does it cost to get one of those clients? If you're spending$1,000, that would be$1,000 to$1,200. So you're almost at a one to one ratio, even with that, which means something's wrong. And most likely in that scenario, it's a channel scenario, is you're not actually uh leveraging the retention side of the platform that you're using effectively. So you could say, is it a Facebook, Instagram thing? Possibly you're bringing in cheaper leads, but you're bringing in leads that do that. Let's talk about other forms of marketing. Let's say now another instance, let's say you're spending$3,000 a month on advertisement. And let's say you're bringing in, we'll say$3,000, you're bringing in five clients a month based off of your membership. If you're selling them at$300, uh, 300 times five, um, that's$1,500. So we just, as you see, we just added three more clients, three more members, added$300, that's$1,500 right there. And now let's say they're just, let's say they're here for let's go 10 months. It's a nice long number for a healthy, a healthy studio. They're adding it for 10 months and it makes the math easy. So that's$15,000 that's$15,000. So now you're looking at$15,000. So$15,000 is would be your lifetime value. Well, let's say you're selling it at$300.$300 times 10 is$3,000. Let's just say$3,000 because that's one member. So you're spending uh that's$3,000, but you're now spending$3,000 on ads, but that would be divided down to your customer acquisition costs. You divide that down the$3,000 by five to get that, which is a of course would get you the three back to your$300. You're looking at a much smaller ratio. You're looking about$15, um,$5,000 to we'll just say$300, right? So how many times does that go in? That means you're actually spending less money because your ratio is not three to one. Your budget is like, oh, every$300 we spend, we're basically making$5,000 off that one client, right? So that's when you know your ratio. And in fact, that's when you should be spending more and saying, oh, now how can we spend more towards this to get even more members in? And then those numbers even out and you get to about a one to three ratio. Every dollar you put in, three dollars you get out. So if you got 900 for the 300, that would be beautiful, right? And so that's just an idea of the ratio and how the three to one works. So you want to budget based on value. If your average client, like I said, is worth twelve hundred dollars, you should be able to spend in short three to four hundred dollars to acquire them. So if you're spending three thousand dollars a month on advertisement or on marketing, whatever you're doing, um, you need to take that ratio into account and understand that hey, each client is worth twelve hundred dollars. So you take that four hundred, is that four hundred equaling? So if you're spending three thousand, you would really only need two clients coming in from that to get to the well, that only it's 24. So three clients to make a profit, right? If that's your overall thing. Do you usually get more from 3000? Yes, you should definitely get more from$3,000. So you have just given you an idea here on that ratio and how you can effectively come up with that. Again, go down in the comment section. Have you figured out your CAC LTV ratio? And if so, what is it and what's worked best for you? Now, last here, track consistently. So if you use the sheet that I have attached in the description comments, your numbers will change over time. So you want to keep monitoring to avoid either underspending or overspending. You know, you have slow seasons, you have busy seasons, you can effectively change your budget based off of those ratios of plan for the future. But the beauty with this sheet as well, and I brought it up earlier, is you don't just have to track your overall marketing. You can divide it out into different channels. If you're using like a Facebook and Instagram marketer, if you're using a Google marketer, um, if you're doing direct mail, if you're doing community events, that's a little trickier because what you're gonna need to do is you're gonna need to track time investment from your employees of them also being there at the event, which is kind of part of that marketing spend. And so you need to take all those into consideration. But if you put those all out, you'll see how different the LTV is once you kind of develop the LTV from different channels, and that will be able to help you go, oh, from Facebook and Instagram, for instance, we do need to spend to get this many leads. And because of this, Google ads, they may stay longer because they're already searching for you, right? So you're gonna have people that are gonna stay longer because of that, and then you have community events or direct mail, or if that's another scenario, we'll even say speaking opportunities that can help bring people in as well. So those are three different ways. And again, use the use the download in the comments. It's yours. Utilize it. We utilize it with a lot of our clients to really help consult them on understanding the difference in their marketing spends. But HubSpot did do some research that showcase that companies that track their LTV/slash CAC ratio actually grow about 2.5 times faster than those who don't. Why? Because you're able to understand marketing. You're not spending$200 thinking you're gonna make a million, vice versa. You're not overspending on, we'll say, marketing agencies that may be coming in and not being transparent and showing you like the point of this is for you to grow a business. That's what marketing is. And so understanding both sides of that spectrum and working with your agency andor internal marketing team to understand these ratios is going to be crucial for your growth. You know, once you, as a studio owner, start to align your marketing spend with your real numbers, you'll stop wasting money and you'll start scaling much more consistently and sustainably. You'll actually know where every dollar is going and its return value. Again, I'm Zach. This is the Fitch a great cast, and I'll see you guys next time.