Source: https://sozai.app/transcript/youtube-video-transcript-287/ Insights from a top software PE firm on customer scoring and gym business optimization shared by a Gym Launch speaker. ## Key Takeaways - Scoring and segmenting customers based on value is crucial for business growth. - Simple, well-guarded SOPs can dramatically increase company value. - Focusing on high-value customers improves service and profitability even if sales volume decreases. - Commitment level and business structure (e.g., owning a building, having employees) impact gym success. - Setting realistic expectations during sales and onboarding is essential to maintain customer satisfaction. ## What the video covers - The speaker attended SAS Academy and shared insights from Marcus Rivera, former head of pricing at Vista, a leading software private equity firm. - Vista uses highly guarded SOPs (VSOPs) to increase company value by focusing on tripling investment returns in three years. - A key strategy is scoring leads, prospects, and customers based on their value and segmenting them to focus on high LTV (lifetime value) customers. - Vista’s approach involves simple systems and data parsing to identify the most valuable customer segments. - The speaker applied these principles at Gymlodge by analyzing 90 days of customer data to identify traits of the most and least successful clients. - Findings showed gym owners fully committed to their business with leases and employees perform better than side hustlers. - Qualifying customers more strictly reduced sales volume but improved quality and service outcomes. - The speaker emphasizes fundamentals and continuous learning from mistakes to improve gym business models. - The video also discusses the importance of setting realistic expectations during sales and onboarding to avoid customer disappointment. - The overall message highlights the value of data-driven customer segmentation and focus on fundamentals for business growth. ## Chapters 1. 00:00 Introduction and Event Overview 2. 01:24 Vista's SOPs and Value Creation 3. 02:50 Importance of Fundamentals in Business 4. 04:12 Customer Analysis and Segmentation at Gymlodge 5. 05:33 Impact of Customer Qualification on Sales 6. 07:17 Adjusting Programs Based on Customer Data 7. 08:39 Lessons Learned and Future Focus 8. 10:02 Sales, Onboarding, and Customer Expectations Answers ## Questions about this video What is Vista and why is it important in this video? Vista is one of the world's largest private equity firms focused on software companies. The video discusses how Vista uses secretive SOPs and customer scoring to increase the value of acquired companies. How does scoring customers help a business according to the video? Scoring customers allows a business to identify and focus on the most valuable segments, improving service quality and profitability by targeting high lifetime value customers. What were some key findings from applying Vista's strategies to Gymlodge? Gymlodge found that gym owners fully committed to their business with leases and employees performed better, and qualifying customers more strictly reduced sales volume but improved overall outcomes. ## Full Transcript — Download SRT & Markdown 00:00 Speaker A What is going on, everyone? Hope you're having a wacky Wednesday. I am fired up today. I'm probably going to make a bunch of content because I've had like 10 straight days of events, and I have all these questions that people were asking me on my mind and little anecdotes that I shared that people found value in. So hopefully, you don't mind me just sharing those things with you now. 00:10 Speaker A me on my mind and little anecdotes that i shared that people found value in so hopefully you don't mind me just sharing those things with you now so um the first uh two days were actually events that we attended and spoke at uh which 00:21 Speaker A So, the first two days were actually events that we attended and spoke at, which is at SAS Academy, Dan Martel's event. I was fortunate enough to be at the speakers' table, which was valuable in and of itself. One of the people who was at the speakers' table with me was a man named Marcus Rivera. He was Vista's former head of pricing, packaging, and products. So pretty much, when they would acquire a company, he would be the guy that would go in and retool the entire kind of fulfillment structure, who they were serving, how they would break down, you know, the levels of membership, etc. 00:31 Speaker A named marcus rivera he was vista's former head of pricing packaging and products so pretty much when they would acquire a company he would be the guy that would go in and retool the entire kind of fulfillment structure who they were serving how they 00:46 Speaker A For those who don't know what Vista is, Vista is, I think, the world's largest private equity firm for software. If you put their whole portfolio together, it's over 50. They do over 50 billion a year. They would be ranked third, I think, in the world behind like Facebook and Amazon, so like for software companies. They're really, really big, really, really smart. 00:59 Speaker A they do over 50 billion a year um they would be ranked third i think um in the world uh behind like facebook and amazon so like uh for like software companies so they're um they're really really big really really smart 01:10 Speaker A I was fortunate enough to sit next to this guy for two days, which was awesome for me. One thing became really clear when we were having dinner. They have something called VSOPs, which is Vista's SOP. So they're kind of their standard operating procedures, and these things are so closely guarded. You need like retinal scans, and there's like you only get access to certain numbers of them if you're at certain levels, and then your access gets removed. It's like super top secret stuff. This is literally how they create value, how they purchase companies, put their system on top, and then increase the value of that company. 01:24 Speaker A uh sop so they're they're kind of their standard operating procedures and these things are so closely guarded you need like retinal scans and like there's like you only get access to certain numbers of them if you're at certain levels and 01:36 Speaker A For them, their whole mantra is tripling their money in three years. So it's three and three. One of the things that he shared with me, now obviously he couldn't share like the intricacies, but the concept was really, really powerful for me, and I'll tell you how we applied it at Gymlodge. 01:49 Speaker A tripling their money in three years so it's three and three and so um one of the things that he shared with me now obviously he couldn't share like the the intricacies but the concept was really really powerful for me 01:59 Speaker A One of the things that most companies don't do is they don't score their leads, right? They don't score their prospects. They don't score their customers based on the value of that customer. Scoring them can be based on a number of characteristics, behaviors, etc., that that person shows to put them in a certain bucket, right? What Vista does and what they count on is the fact that when they go into a company, when they're assessing a company in the diligence process, they're going to learn more about that company than the founder and the people in that company even know about it. 02:13 Speaker A based on uh the value of that customer right and so scoring them can be based on a number of of characteristics behaviors etc that that person shows uh to you know put them in a certain bucket right and uh what vista does and what they 02:28 Speaker A So what they do is they parse out the data and start trying to find the veins or the buckets of the most valuable customers. Once they find those buckets, that vein of customers that's more valuable, what they then do is they basically expand and focus on that vein of high LTV customers. It sounds simple, and one of the things that Marcus actually hit on a lot was like, "We stick to simple, simple systems, simple processes." 02:38 Speaker A so what they do is they parse out the data and they start trying to find the veins or the buckets of the most valuable customers once they find those buckets that vein of customers that's more valuable what they then do is they 02:50 Speaker A When I've said things like the people who are the most advanced never don't do the fundamentals, I feel like I've seen this at so many levels. Seeing this from probably the biggest and probably biggest software turnaround increasing value company out there is pretty cool. 03:03 Speaker A when i've like said things like the people who are the most advanced never don't do the fundamentals i feel like i've seen this at like so many levels and seeing this from probably you know the biggest and probably biggest you 03:13 Speaker A Let me tell you what we did to kind of go through this process. Marcus was explaining that they don't even just do it for customers; they do it for prospects, opportunities, and customers—three different segments they're going to look and score at each part of the pipeline, all right, using the analytics that they have and the teams that they do. 03:27 Speaker A prospects opportunities and uh and customers so three different segments they're going to look and score at each each part of the pipeline all right using the analytics that they have in the teams that they do now you're like 03:39 Speaker A Now you're like, "Okay, cool, that's awesome, Alex. How does this make more money at my gym?" Let me tell you how we're applying it right now. What we did is we took the last 90 days—I think it was July, August, September, or maybe it was September. I think it was July, August, September—so it's like a 90-day block of time. We looked at all of our exits, all of our escalations, the people who kind of sucked the most, the people who didn't get the most results, whatever you want to put it, the people who were the hardest to serve and who got the least results using our program. 03:50 Speaker A july uh july august september or maybe it was september i think yeah i think it was july august september so it's like a 90-day block of time and we looked at all of our exits all of our escalations uh what 04:04 Speaker A Then we looked at the reverse of that: what were the characteristics of the people who made the most money, who got the highest returns, who were the easiest to work with, right? We found some unsurprising facts. If you are not a gym owner, you don't do as well as people who are gym owners. Crazy, crazy facts, right? 04:12 Speaker A least results using our program and then we looked at the the conversation the reverse of that what were the characteristics of the people who made the most money who got the highest returns who were the easiest to work 04:23 Speaker A We also learned that if you're not full-time in your gym and you have a job outside and you're trying to do a gym as a side hustle or something, you don't do as well as people who are fully committed to their gym. If you don't have a signed lease or a building of your own, you don't do as well as someone who has a building of their own. If you don't have any employees, it's harder for you to do this, mostly because there's a huge time constraint. 04:38 Speaker A full-time in your gym and you have a job outside and you're trying to do a gym as a side hustle or something you don't do as well as people who are fully committed to their gym if you don't have a signed lease or a 04:49 Speaker A It takes effort to implement new systems because not only do you have to keep your existing business going, you have to start working on top of that in order to dig yourself out of the hole. When we found those characteristics, we started filtering and qualifying our front end. We started doing this for the month of October. We took the 90 days, found the findings, and then implemented for the month of October. 04:58 Speaker A constraint right like it takes effort to implement new systems because not only do you have to keep your existing business going you have to start working on top of that in order to dig yourself out of the hole right and so when we 05:09 Speaker A Now we're in November, and what's crazy is this is from the previous four weeks, so in September, the last four weeks compared to after we started doing this qualification, there are two crazy numbers I'm going to share with you. One is once we qualify prospects that they had to have at least 25 clients, they had to have a signed lease, they had to be a full-time gym owner, and ideally, this was optional, but ideally have one employee or more who worked with them so that they could share the load and focus more on selling and working leads. 05:20 Speaker A findings and then we implemented for the month of october right now we're in november and what's crazy is this from the the previous four weeks so in september the last four weeks compared to after we started doing this 05:33 Speaker A When we looked at the after effect of that, our sales decreased from over 100 a month in terms of gyms to about 40 to 50. Now, here's where it gets interesting. That cut our inflow in half by qualifying our customers, by really making sure that the people coming in were the best fit who could be served the best. 05:46 Speaker A this was optional but ideally have one employee or more who worked with them so that they could share the load and so that they could actually focus more on selling and you know working leads etc when we looked at the after effect of 05:59 Speaker A Here's what's cool on our side now that we've done this: in the first four weeks, in the four-week period since then, the people who started after those qualifications, we've had zero escalations from those people. Prior to that, we had 22 escalations, as in people who were having issues, you know, whatever it is, just red flags. The prior four weeks, so from 22 to zero. 06:14 Speaker A that the people were coming in were the best fit who could serve the best right here's what's cool on our side now that we've done this in the first four weeks in the four week period since then the people who started after 06:27 Speaker A Now think how crazy this is in terms of scaling a business and operational complexity as you go up. We had this huge vein of people who were taking up the vast majority of my team's time and were actually worth less. They made less; they were worth less to us. 06:48 Speaker A to zero now think how crazy this is in terms of scaling a business and operational uh complexity as you go up right so we we had this huge vein of people who were taking up the vast majority of my team's time and were 07:03 Speaker A So when you're thinking about scaling and maintaining operational efficiency and profit, if you're looking at the customers that are the highest lifetime value, the best customers, right? Here's what's crazy: the people, so after that October date, we switched back to the define in P— 07:17 Speaker A customers right and here's what's crazy the people so after that october date um we switched back to the define in program which is what we did for you know three years so we did a a brief stint where we uh where we basically 07:30 Speaker A signed people up for a year up front because we wanted to give them everything it was it was a trial we did a 90-day sprint and uh it turned out that that didn't work nearly as well as having defined it and it's kind of the 07:39 Speaker A same way you run the gyms it's like having a defined end program tends to be a little bit more it's a little bit easier for people to wrap their heads around a little more defined in terms of the skills that they need to acquire etc 07:48 Speaker A but what's interesting is that the people who uh came back in were actually paying more than the the people who uh were paying more than the people who who we were letting before so this this new vein of customer who's higher 08:02 Speaker A qualified is paying more is making more requires less work now that sounds like a recipe for a higher profit business right it also sounds like a recipe for better happier customers and so also what happens if you think about it from a reputation 08:17 Speaker A standpoint it's like you're if you if you lower the bar too much then what happens is you bring in people who are not qualified right they take up more of your team's time they cost you tons of effort and 08:30 Speaker A they're not making as much which means that then they say like your thing is not as good right when in reality it might just not be as good for them right which makes sense i mean like it makes 08:39 Speaker A intuitive sense and so i just like sharing these these mistakes learns with you so that maybe i can look back on this 10 years from now and be like hey i remember when we started doing that um but now what our focus is is cool we 08:51 Speaker A know who the best customers for us are and it's like dear god why did this take us three years to do this you know like you know learn from my stupidity like hopefully you can start doing this with your own stuff 09:03 Speaker A and now we're just gonna focus and double down on that vein of customers and try to expand that by really focusing on on them in multiple platforms right and so um i say this is to say if vista has has 09:16 Speaker A repeatedly you know been able to go from i mean they're not a super old firm you know from basically nothing all the way to 50 billion in a very short period of time it's because they know how to extract and amplify value and the 09:28 Speaker A biggest thing is not change i mean they do shirt they tweak the pricing they find the right buckets etc but they do that by analyzing the customers better than the business that they're purchasing purchasing even knows their own customers and so i challenge you now 09:42 Speaker A this may sound like super analytical it's not all you have to do is look over the last three months okay look at the people who left your business all right this is where you get the the best data 09:52 Speaker A is from all the people who leave right so look at the data from people who left your business try and get as like to think about as many character traits as you possibly can what's their age what's their you 10:02 Speaker A know what's their job uh what are their goals what do they sign up for how much money down did they start with um what do they sign up for in terms of their continuity etc and if you can if you can 10:13 Speaker A piece those things together then you're gonna get a really good idea of of uh of who the good customers are and who the bad customers are and it's okay to have a stern line because we're doing this now now the thing is is like in the 10:27 Speaker A in the short term you can be like oh my gosh my inflow cut in half but so did all my operational overhead and and the issues that like all that work that the team had to put together um to 10:38 Speaker A try and service these people who were not necessarily the best fit right and so um i share that with you and i'll give you one more tidbit that i learned from him and so uh we learned this from 10:49 Speaker A the from the whole event which we took is a huge takeaway for us that you can totally apply to your gym is that customers in a recurring base business or really any business decide whether they're going to stay at 11:01 Speaker A two points in the beginning of your life cycle all right between the sale and when they start getting the thing right the service the product the whatever and once they start using the product the implementation or onboarding period so 11:18 Speaker A in that period so if you're doing an orientation with your clients right they buy something all right the time between the purchase and when they start getting the thing which would be your orientation and the actual orientation itself 11:31 Speaker A is typically when people are already making the decision of when they want whether they're going to stay with you in the long run all right which means if right now you just think your your orientation is an aftermath it's like oh 11:44 Speaker A yeah now we have to fulfill that thing we sold you're screwed right you're getting by just on the fact that like you're you have enough volume in the door but you're losing massive amounts of money by not making that a completely 11:56 Speaker A choreographed experience that you're really focusing on over delivering a value and the way to do that is to demonstrate the skills that they're going to need to be able to use to use your services right and so whether that 12:10 Speaker A like they not just not just saying hey yeah you should download this app yeah yeah you'll figure it out but actually doing it with them holding their hand and then having them duplicate the process so that you can see that you've 12:22 Speaker A transferred the skill to them so that they now know and they are self-sufficient in being able to consume your services right and so if your onboarding is rushed right your orientation is rushed then expand the time period because it's going to 12:37 Speaker A massively multiply the lifetime value of that customer and the likelihood that they're going to stay with you so this is one of those few times where you don't want to be lazy and not and not deliberate and intentional in how you're onboarding the 12:50 Speaker A customer after you complete the sale so the communication that you have with them immediately after the sale which is like sending them a personalized video you know giving them swag maybe a letter whatever it is definitely texting them 13:02 Speaker A between the time that they make the sale or you make the sale and when they start the onboarding and the second piece i'm already going back to the big beginning is the sale itself and so what we're learning 13:12 Speaker A internally for us at gym launch and this may seem obvious but maybe i'm sharing it with you because we're learning it too is that expectations are everything right expectations are everything and if you set proper expectations for what is 13:24 Speaker A going to happen next and then you fulfill that beautifully your trust with the prospect goes up now here's where it can get uh tricky right and this is what we call selling hot it's where you where you set expectations so high it's 13:38 Speaker A impossible for you to ever fulfill or for you to hit that with the majority of customers right and so this is where selling towards behavior and selling towards sustainability and long-term change comes really into play so that you can shift and break the 13:55 Speaker A beliefs of your prospect to shifting their time frame to what is really going to be beneficial for them rather than um simply trying to sell them to say yes right and so um an example of this is you know for us if if someone has only 14:10 Speaker A consumed testimonial and we've we've changed this in our marketing we've changed this in our testimonials we've changed it in the in the post that we tag people in is that we're really no longer focused on on saying like hey 14:22 Speaker A look at these 10 people who made a hundred grand in their first you know six weeks with us right we have those right we totally do but the thing is is like but what are the averages right and 14:32 Speaker A so now we just share what the average gym does all right and it's significantly less you know appealing i think the average gym right now is like they do 16 000 in their first six weeks with us right now that's a lot but it's 14:45 Speaker A not a hundred grand in your first month and and showing what the average gyms are getting in terms of leak costs and lead flow gives people at least an average understanding and we can explain to the person that means that half the 14:56 Speaker A people who sign up get less than this right this is the average and so that way um if you if and when you do go above that mark then their expectations are reasonable and you can over deliver right um and in 15:11 Speaker A an ideal world you would probably try and sell on the bottom 25 of results so that the expectations are so low that everyone is excited about the fact that they're over achieving from that um from that baseline that you have set for them 15:28 Speaker A and so what i've like i'm continuing to learn this i like want to write like a whole presentation on expectations but expectation management is everything right it's amazing what happens if you set a really high expectations and like 15:41 Speaker A this is where this is where someone makes twenty thousand dollars in their first month and is disappointed with gym launch and we've had this happen plenty of times right they're like well this sucks i thought i was gonna do better right when in reality 15:55 Speaker A that's [ \_\_ ] amazing right um in terms of the big scheme now maybe this resonates with you because you've had someone who loses five pounds in their first 14 days with you and they're disappointed now why would they be disappointed only one 16:10 Speaker A reason because the expectations that were set for them in the sale and in the orientation were were too high for the average person and then most people are disappointed with what would otherwise be considered an amazing great start and 16:24 Speaker A so if you can reset the expectations that are being uh put on the customer in the sale right and you sell around the fact uh not around yourself through the fact and you break the belief around what the explanation should be in a 16:37 Speaker A short and long-term vision so that you can shift their expectations towards long-term change and a process and behavior change so that they can ultimately achieve what they want which is being fit forever not fit for the next six weeks or six months right 16:50 Speaker A and so um all that to say the big takeaways that we have at gym launch is that we are now heavily qualifying people on the front end so that we have longer lifetime value we have superior client outcomes we have less operational 17:02 Speaker A complexity because these people have the right characteristics of people who are successful both externally in terms of like what they have their gym but internally in terms of how they work um and how like what level of effort 17:14 Speaker A they're willing to put in to be successful right we found out that entrepreneurs are not a very good uh demographic for us and so it's like cool we're not going to service them right we're not going to service them in this 17:25 Speaker A way maybe we'll create an info product that's um less for them so that they can go through it at their own leisure or their own time frame rather than the intense time frame that we uh put on to 17:36 Speaker A people uh when they start gym launch because it's really like ready fire go you know you have 72 hours and leads are starting to come in right and that's how we do things in gym much because that's how i am right um but 17:48 Speaker A we have now used this on the qualification side and then also how our sales people are tagging and setting expectations and then being extremely deliberate and we're still working on this um in making the onboarding and implementation even more choreographed 18:01 Speaker A and we have a pretty darn choreographed orientation process but even better even even more reinforced even simpler so that the handoff is seamless so that everyone knows exactly what is going to happen before it happens and then they 18:14 Speaker A know exactly what is going to happen next uh in their experience with us and so you can use this all these these lessons that we're learning right now um in your business so that you can increase the quality of the customer set 18:25 Speaker A the expectations properly and then over deliver on the expectations that you've set so that they can make the decision in the first two or three meetings with you that they're gonna stick with you for the long haul so i hope this is 18:36 Speaker A valuable for you like it uh drop a drop a comment drop a review if you're listening this on the podcast um and uh as usual if you uh want some free goodies you can you know download them somewhere you can go to alex'sbook.com 18:49 Speaker A if you want more stuff like this uh and get a free book anyways lots of love keep being awesome and have an amazing wacky wednesday and i'll catch you guys on the flip side alright bye [Music] Topics: Vista private equity customer scoring lead qualification gym business Gym Launch business fundamentals customer segmentation software investment sales onboarding --- This is the markdown twin of https://sozai.app/transcript/youtube-video-transcript-287/ — the same content, without the markup. 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