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5 Steps To Setting a Gym Marketing Budget

By Tracey Heinz

Setting a budget is easy, but so is throwing money against a brick wall. The best way to set up your gym marketing budget effectively is following these five careful steps to maximise the return on your marketing spend. It'll involve some market analysis, some maths, your revenue goals and constant monitoring.

Unfortunately not all gyms were created equal. Gyms and their owners vary enormously in size, demographic, and business model. Gym chains can look at much larger advertising budgets covering a wide geographical and social area with a big media presence. Whereas smaller gyms and independents need to focus their attention on local promotion and marketing. But the same philosophy when setting their marketing budget applies to both.

Step 1: Setting Your Target Market

You already know that competition in the fitness industry space is huge, so you need to get smart quickly in order to maximise your revenue and focus your marketing dollars.

You won't find any source that doesn't agree that this is the first step of any marketing and budgeting plan. Realising that you aren't going to establish a revenue-generating group of boxers in your gym over the age of 60 is a small step on the way to ensuring you recognise who your paying customers are going to be.

So your first step must be to identify your
target market.

So get out and do some research, listen to what your community is saying and ask them as many questions as possible. Having a defined market to aim at will mean the budget you set to get their attention is more likely to hit the target and reduce wasted ad spend.

Three key aspects of recognising your target market include:

Customer Profiling - The demographic and psychological insight you gain from your customer profile is essential when creating marketing campaigns. These include age, gender, location, income, values, interests, lifestyle etc.


Competitor market - Look at who your competitors are marketing to. Are you going after the same type of people or have you identified a different market opportunity? If you are going after the same target market as your competitors then you need to get seriously competitive over price and service. But, if you have a different market in mind, i.e., body building, fitness classes, cross-fit, boxing, body-weight, weight-loss, personal training, then how are you going to find and engage that market?

Customers evolve - So the work you do in identifying your target market will change over time. Their preferences and needs adapt with changing industry trends, so continue to monitor them and adapt your marketing to suit.

Setting your target audience is the most important task for enabling you to establish an effective marketing budget for your gym. Get to know your target market well and you can ensure they will listen to your message.

Step 2: Understanding The LTV (Lifetime Value) of Your Members

How much are your customers actually worth to you? This is the most important question gym owners need to know about their members.

What it means in the bigger picture of marketing spend is that in order to effectively come up with an advertising budget for your gym, you will need to know the revenue each member is going to generate in their lifetime as your gym member, i.e., how much is it worth spending to get the customer in the first place?

When you know this, the value of your marketing dollar is a lot more tangible.

How to calculate your LTV:

LTV = (Monthly Member Fees) x (Average Length of Membership) x (Referral)

In real terms this can be played out as such:

YourGymCo charges $55 per month from its members. On average a member will stay a member for around 3.5 years. This equates to:

LTV = 55 x 42

YourGymCo's customers have an average LTV of $2,310. But wait, there's more to this equation. During that time YourGymCo's members are likely to refer a friend too, that means additional revenue. If 1 in 4 of those members successfully refer, then you can amend this equation:

LTV = (55 x 42) x 1.25

That makes each of YourGymCo's members worth about $2,887.50 in revenue to the business. Which makes it worthwhile in spending a proportion of that in acquiring them as customers in the first place right?

But how much will you spend?

That really depends on what your marketing strategy entails, both online and offline, promotional, word of mouth and in paid advertising.

Step 3: Goal Setting & The Number of Customers You Need

What your overall budget will be is often dictated by the size and membership capacity of your gym alongside a calculation of the optimum number of members you need to achieve your desired profit. You then work your marketing spend back from that.

Perhaps a precursor to the previous step (but definitely needed before implementing Step 4) is realising how many gym members you need to either break even or to achieve your revenue goals.

This means looking at the problem from a reverse point of view. It means working back from the number of gym members you need to the point of how they become a customer in the first place.

How many gym memberships do you want, ultimately?

Recognising this will allow you to break down the tasks needed to get you there. Then working out which tasks need to be done first, second, third etc., creates a roadmap of marketing tactics.

Key takeaways from revenue goals include:

  • Choosing your first core revenue goals
  • Not focusing on the end point, but focusing on the process and delivery of your goals
  • Setting quarterly time limits for achieving stages of your revenue goals
  • Ensuring you have as much data and information as possible to support your goals and targets
  • Getting everybody in your employ on board when setting goals.

Step 4: Analysing the Cost of Paid Advertising

Working on the same principle of our YourGymCo example in Step 2, let's take a new business revenue goal of $250,000. If your average gym member provides you with $660 in annual membership revenue ($55 x 12 months) then you are going to need 378 gym memberships.

Working on the basis of closing 40% (which would be at the higher end of closing rate stats) then YourGymCo needs to generate 945 sales qualified leads.

Where you get these leads can vary, it can be through direct email campaigns, pay per click advertising, print advertising or referral campaigns.

By adding together your leads and how much they are costing, YourGymCo can generate a pretty accurate model of how much its gym marketing spend needs to be in order to generate the 378 members it needs to operate at its required revenue goals.

Running a print advert - Cost: $500, leads generated 20 = Cost per lead of $25.

Email campaign - Cost: $2,500, leads generated 55 = Cost per lead of $45

Pay per click campaign - Cost: $750, leads generated 30 = Cost per lead of $25

Referral campaign - Cost: $1,000, leads generated 70 = Cost per lead of $14

Add the cost of all the above together and YourGymCo spends $4,750 in order to get 175 leads which is a lead acquisition cost of $27. Add this into your annual advertising budget calculator and YourGymCo's gym marketing budget to get 945 new leads would be $25,515 or $2,126.25 per month.

Step 5: Assessing & Amending Your Marketing Budget

The last step of your gym marketing budget is making sure it is working. Your budgeting plan will bring the additional revenue your gym needs to either stay open or make the profits required to be a viable business.


If the strategy isn't bringing in that revenue then you need to amend it. Fast. Try something different.

Evaluating your new memberships (and the memberships that leave or lapse) are your key metrics which are going to determine whether your revenue is going to increase or not.

Get it right and you'll be able to fine tune your gym pricing strategy and pinpoint where your additional revenue is coming from. Is it from referrals from your existing membership, direct email campaigns, or from print marketing (or other marketing efforts).

But you can only amend your marketing strategies once you have worked out a solid, workable gym marketing budget.  

Remember, your marketing spend can vary from just a few hundred dollars to hundreds of thousands of dollars, depending on how your gym retains members and what the revenue goals are. Whatever might be the case for you, make sure that you set aside and focus some clear strategy for advertising. Without it, your gym will be empty and losing money.

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Tags: Gyms & Clubs

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