Black Belt Banter: Martial Arts Business Podcast

#2 | Stop Losing Leads - Start Gaining Students!

• Jimmy Hong • Season 1 • Episode 2

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Master Lee, with over 2,100 active students across multiple locations, shares the mathematical formula behind martial arts school growth in this data-driven episode of Black Belt Banter. By reverse-engineering your student acquisition goals, you can precisely calculate how many leads and trials you need to achieve sustainable growth.

Every marketing activity yields different quality leads - website inquiries convert at 90%, while social media leads might only convert at 5-10%. Referrals remain the gold standard at nearly 95% conversion. Understanding these variations helps you allocate your marketing resources more effectively. Master Lee emphasizes the superiority of proactive marketing (where you collect contact information and follow up) over reactive marketing (like social media posts that require prospects to take action).

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Jimmy Hong:

In this episode. Number two are your potential customers converting into actual paying students. Welcome to Black Belt Banter the best podcast to help your martial arts school increase in profits and generate substantial revenue. I'm Jimmy Hong and my co-host is Master Chan Lee. Master Chan has over 2,100 active students with multiple locations. He is well-renowned and highly respected by his fellow peers for his business acumen operating martial arts schools . Master Chan, welcome, and how would you like to just deep dive into this topic today?

Chan Lee:

If you look at any business, it doesn't matter, everybody has a marketing department and everybody has the ability to get new customers. And then not only do you have to get new customers, and what does a mathematician have to do with beer? That's a kind of very interesting thing. He's a high-level mathematician, he goes. My job is to look at the metrics of what we spend budget-wise for the advertising that we do for our beer. And then how does that translate into sales? Miller's always played second Miller's here in Milwaukee and it's always played second fiddle to Budweiser back in the beer wars and they had this great campaign with athletes and whatever, and within a year they killed it because it wasn't translating into beer sales.

Chan Lee:

I bring that up as an example because I really believe the same has to happen for our martial arts schools and we talked about this in our last podcast about one of the key metrics is making sure that you outgrow your attrition rate and quit rate in your school. What are the numbers? So my general idea is I would like, if I want to get 20 new students in a month, let's reverse engineer that. If I get 20 new students a month, let's just use 10. Let's even, and you can just add the numbers briefly. And I have 10 new students a month and I have an 80% close rate.

Chan Lee:

That means 80% of my students will prospects will sign up. Then how many new students do I need? Or how many new prospects do I need? And then so you reverse engineer that if you are getting 80% right, then you roughly need about what 12 new people in trial. So, out of the 12 new people in trial that have paid a trial and so forth, how many leads did it take for you to get them? And in general, my general rule is about 20%. So if you get 100 leads, you're going to get 20 people in trial, if that makes sense, is it normal to be that low 20% from these leads?

Chan Lee:

100%. It depends on, let me just get. Let me just suffice to say it depends on the actual activity. If it's a buddy day, I'm going to have a higher percentage of people that are going to continue because they're bringing them to a specific event, that is, for Taekwondo. If it's a birthday party, those are a little bit harder in terms of translating into customers, because they came for a birthday party they didn't really come for a Taekwondo class. If it's a website inquiry, that's a 90% close rate.

Chan Lee:

Someone says I'm interested in martial arts and I call them back 90% of the time they're gonna come in for a trial. So it's all over the board on the quality of leads that you get. So if you average it all out, it's 20%. So it's one of those. What's the expression? You throw a spaghetti against the wall and see what sticks. That's martial art marketing.

Chan Lee:

There are some things we just want to really work out and do and getting it. Social media leads oh my gosh, maybe a 5% 10% return. You get a hundred leads coming in and maybe 5% 5% will go in. Those are not as high quality leads as we want. I'm trying to figure out some other things with that and to kind of pre-sell them or pre-do that. But anyway, I'm going off on a different topic. But point is, is I go 20%. So if you reverse engineer your numbers and if you don't know these numbers, then you're like, okay, I got to figure out what's going on in my own school and how I can convert better and what's a better lead to come in. If you get a referral, straight up referral, that's almost like 9,500%. Hey, my neighbor, we've been talking about you and they want to come in with Joey's class. That's a really high level referral. So, once again, 20% is the idea. So now you, now everybody's listening to my math skills here and now you've totally thrown me off, jimmy Hong, but we've got.

Chan Lee:

So if I want 10 new students, I want 10 new students. I need 12 in, I need 12 in trial. If we're talking about 80% people signing up, and then how many of that? If I have 20%, I need roughly I want to say 50 to 60 leads. Right, 50 to 60 leads is what we're looking for on a monthly basis to do it. So then, if I'm doing 50 to 60 leads, then what's the average lead that I'm getting from a birthday party or an event that I'm running and so forth. Once again, knowing your numbers is incredibly important, right, and figuring out if you want 20, then you're going to double it. You want 30 or 40, you can do that. So there's a lot of ways to position events and so forth.

Chan Lee:

However, the two things that I found that were really good events and things to do is working with the school systems, and when you work with the school systems, we do a program that many different people, many different organizations, do it. This is not a brand new idea, but if you are hearing it for the first time, it's just super simple. You work with the school systems. As you're talking with the school systems, you do a PTO, pta fundraiser on their behalf. You run a two or three week Taekwondo program where you got to have staff or someone to run it off site. That's the big kicker and you run the Taekwondo program there, leading to a white belt graduation back at your location. One of our locations got 30 new members in one day just doing that. That is, I want to say, a 30 or 40% return. So if you're talking to 100 kids there, you're going to get a if you do a good job, 20 to 30% return and then all your numbers sometimes don't work out.

Chan Lee:

Then you've got to look at what happened. Who ran the event? Was it done with the type of high level, high energy, vigor that is necessary to make that event very successful? Or was it done very poorly and it wasn't exciting enough for people to want to continue, and so forth? Once again, I'm not going to lie to you on this podcast. If you're not getting the results that you need, you may need to reformat, redo it, be more inspirational and fun. And you got to be honest with yourself that sucked. If I was a eight-year-old kid, would I want to learn from you?

Jimmy Hong:

And these events, whether you're at their school or at the mall or whatever the city parade, it doesn't matter what it is. You're not teaching a class at these events. You have a limited time to market your school and try to gain as many leads as possible. So don't think of it as oh, I got to teach these kids how to do a punch properly or a kick properly. That's not what these lead generation is about. It's about creating as much excitement and motivation to these kids and families as much as possible in this short amount of time, and are your number one goal is to have them walk through that door or give you a call, not about teaching them a right kick or right technique 100%, 100%, and I also want to talk about this concept.

Chan Lee:

I call this proactive marketing and reactive marketing. Reactive marketing is I put an ad in a paper. I put an ad. I'm dating myself who looks at the newspaper anymore? I put an ad at Facebook. I put an ad in social media and then I'm reacting to all the things that happened from that and I do the parade, 4th of July parade. I hand out a bunch of information. It's not appropriate for me to walk in the parade and get everybody's name and numbers and so forth. It's a parade, it's a branding type of event. It's huge for us. Unless I have a booth at the parade somewhere, then that's totally worth doing. But this 4th of July thing for us is more of a branding thing in our community. When I did the 4th of July parade, no one did it. I was the only one that did it. Now all my competitors do the 4th of July parade, so we got to be there. So I normally get 10 to 15 students throughout the whole year just off of that. So that's reactive marketing. I do something and then I know I'm going to get a return on it at some point. It's just not immediate and it's worth doing in our community to do Proactive marketing is when I do this, when I'm able to get your name, your contact info, ie your phone number, your email and I can contact you and then I can actively get you involved in a trial.

Chan Lee:

That is proactive marketing. And so I really believe that you've got to do a lot more proactive marketing than reactive marketing. Reactive marketing you do, but it's not 100% of what you do. Proactive marketing is what you should think how can I get a name and number and how can I contact you and how can I entice you to get in to our program and so forth. So it's about lead collection. That's what we call those leads and those are all what I call people that are interested. They've risen their hand about doing a program with you.

Chan Lee:

All right, my goal is to just say and I call this a sales ladder it's a common concept in all types of businesses and the sales ladder is you do it at a lower cost. So, for example, when I was growing up, mercedes-benz was the kind of gold standard for achievement. You bought a Mercedes-Benz holy cow and then they did entry level you know the C100 series and they did baby Benz. Remember the baby Benz, they did a smaller sedan and it was to get the 20-somethings to pay a little bit more than buying a Toyota. But moving into the Mercedes-Benz world, so as they make more money they'll end up getting a more expensive Mercedes-Benz and they call them entry models and so forth. Spends and they call them entry models and so forth. That's the same concept that I can't get you in a full-blown program $189 a month, $200 a month, whatever.

Chan Lee:

I got to start in baby steps and switching gears into sales. It's really important that you have a sales process that goes you can try us for free. That's one way of doing it. So that's our first opening line is that we have a one week free trial. You can try it for free, see how you'll get and so forth. So you try it and then you try a class. And then the second thing is I want them to buy something. So for me, I make them spend $59 and they buy a uniform and once they buy a uniform they get a one month of martial art classes at our academy. And so after three weeks two to three weeks I'll hit them up to do a program and in that program we'll upsell them to a $189 a month program at our school. Now our programs are 60 day notice to cancel, so you can cancel at any time. It's not a hard and fast contract. I just want 60 days notice if you're going to stop this at any time and so forth.

Chan Lee:

In my opinion, I am seeing the consumer base a lot less to making a what Commitment and it's not a commitment based society. What I want them to do is fall in love and they go. I'm going to do this to Black Belt. That really is kind of like my incentive to get them. I used to do the six month upgrade, the Black Belt Club. It was a higher dollar amount and so forth. I still have friends that use that model. If that's working for you, then do it.

Chan Lee:

But for me, from a sales standpoint, it's just very easy for my prospects to just follow this little sales ladder and getting involved in our program. Included in all of this program and for what I do is that I offer a free one-month program to a parent and if they make a six-month commitment in paying upfront for their membership, I will also include a 90 day membership for the parents. So it's half of what they commit to and so forth. Anyway, that's what we do. I do it in six months and 12 months increments. If they do want to pay in full, there is a little bit of a discount it's a 10% discount to do, but I don't live and die with people paying in full for our programs. If they want to do monthly, they can do monthly as a part of developing their memberships in our academy.

Jimmy Hong:

There's two school of thoughts regarding the pay in fulls. So you have just steadfast school owners. Listen, the pay in fulls whether you're collecting 12 months or 36 months in front is just creates so much revenue for that month. Instead of getting $180 a month, you're going to get $6,000 to $8,000 a month just from one student. If you just multiply that by three students, you're already looking at $18,000 a month on top of whatever your monthly revenues incur.

Jimmy Hong:

Versus the other school of thought is don't do painfuls. Get everybody into monthlies, get everybody into. Make sure your monthly revenues come in and that's steady and that's consistent. But the pay in fulls, the pay in full. School owners are listen, the best way to keep retention is having those families and parents pay in full. After they pay in full, even if they cancel. They can't because what do they do? They're already paying full. They're committed, just how you're committed to them. So there are pros and cons in terms of the paying fulls versus monthly. How you run your school and how you want to collect is ultimately up to you. Master Chan and I, we've done both ways. Master Chan is actually. He's done paying fulls too so well that his monthly revenues was just off the charts. But yeah, master Chan, I'm sorry.

Chan Lee:

going back to you, yeah, bottom line, here's your formula for pay in fulls. If you're not getting any new students, you shouldn't be doing paid in fulls. You're going to kill your business. It's just not the right strategy.

Chan Lee:

But if you're let's just use I'd like to use 10 as a benchmark. If you're getting 10 new students a month and let's use simple numbers you're doing a hundred dollars a month. So 10 new students, a hundred dollars a month, that's a thousand bucks a month. And then the following month if you can use a spreadsheet and do this you get another 10 new students. Then they're paying a100 a month and nine a month revenue went up to $2,000 a month. However, if I let's just use 20% two people, if I go well here if you pay in full for a year, I'll give you a $200 discount. So you get two months for free. Just pay me $1,000. Now that's the discount to do paid in full amount. If you had a fake academy here in this scenario. So then you're getting $2,000, plus you're getting the $800. So I'm making $2,800 compared to the thousand that you made. I'm up what? 1,800 bucks. All right, and so if I keep doing that every month, at the end of the year you're going to have had made $21,000 more than you, right? I go to my CPA and I go I've made $21,000 more than what you've made over the year. I said it's a good, it's a decent strategy. It's not you should.

Chan Lee:

I'm looking, you're looking. You're talking to a guy that used to do 90% paid in fulls. Everybody paid in full for a membership. I had very little monthly revenue in my early days. That's just the way I was trained, that's what I thought the industry was like. And now I advocate 10 to 20% paid in fulls, possibly going to 30 around the holiday times or you've just had a huge amount of people just paid 20, 30 people doing monthly. So that is my opinion. It is not law, but it's something for you guys to consider as a way to make some revenue and so forth.

Chan Lee:

But whole point of this is marketing and sales making sure you know how many lead generating events that you need to make for your academy. Just to recap real quick then how many of those convert to sales, how many of those trials turn into actual paying members? And then there's another number is what percent of those people are you paying full or not or are you just doing all a monthly model? Then you can extrapolate what, projecting what your yearly income is going to be. You're a school owner.

Chan Lee:

Don't say that You're a business owner. Let's just say that you need to project what your revenues are going to be and where you're going to go, and marketing and sales is a huge part of that. So if you, once again I said this in the last podcast if you don't know where you are, then you don't know where you're going to be headed. So you've got to get these numbers down and so forth and, once again, marketing and sales is a huge part of that important part of going to where you want to be as an organization. And, once again, I think Master Jimmy Hong knows I know a lot of people in this industry and I am not comfortable disclosing who they are because I haven't gotten their permission to say who they are.

Jimmy Hong:

Don't worry, I'll disclose them on the show notes.

Chan Lee:

Go ahead and then you're going to get all this vitriol online. But you know someone that in a one-year period they built a active school with 400 members. I kid you not, they're a phenomena. And I say stuff like that because I want to inspire you to think, oh, this can be done. You just got to know your numbers and you know what you got to know what activities you got to do, and if you do that and you are a hundred percent decided in doing that, you can make it happen like big time. But if you don't know what to do, then this is you're swimming without a goal. You're trying to get to the other end of the pool without really knowing how to do it.

Jimmy Hong:

So let's go into the specifics of this, the details of this paid in fulls.

Jimmy Hong:

You don't want to.

Jimmy Hong:

If you're thinking of doing paid in fulls or you're not successful in paid in fulls, a word of advice is that don't hit up your new brand, new customers and option of oh hey, here is the monthly and here's the paid in fulls.

Jimmy Hong:

Let's do the pay in fulls. Have them join your martial arts school and your classes, first for the first couple of months. Have them build that rapport with you and then within a few months, they're going to have this trust and they know that you're going to be a master, you're going to be a mentor for their kids, for the families, and that you're part of this quality of community in your community, in your neighborhood. So then they're more open and susceptible to be hey, you know what I just want to commit, I want to have the discount, and then they'll be more susceptible to your pay in fulls instead of trying to give them so many options when they have met you. They don't know you and then they have to decide whether to do the monthly pay-in-fulls or not join at all. That is one very important topic and aspect of how to do paid-in-fulls successfully if you want to take that route.

Chan Lee:

I call that TMI, which is like you go, we have this option, we have that option, we go, we get this. So once again, let's go backwards here. If you look in the minds of the customer, I want them to go. Yeah, see, if you like it, try it for free for the first week. All right, I want you to buy $59 for a month and let's see how your child reacts after a month. Then, after they pay the $59, after two or three weeks, I go listen, if I did a good job in the classroom, I want them to love it. Then I'll go give them a monthly option Once again. Let's just keep the number simple. It's 100 bucks a month. So they're paying 100 bucks a month and then, after they decide that they're gonna do with 100 bucks a month, I give them an option. I go if you make a six month commitment, right, or a 12 month commitment, I will give you a percentage off of that. I'll give you 50 bucks off the tuition. Or if you do the 12 months, I'll give you $200. I'll give you two months for free, and I don't always offer that. If we did too many paid in fulls that month I will not make, we won't do it. But then you have that option After they've said yes. So don't give them the paid in full option until they've decided that they want to make the $100 a month option, because then they're thinking do I do this? Just let them get the yes first. Get the first yes and then you have two other ways of getting the paid in full. And you got to think of how you bake a cake or how you make a dish. You don't throw the eggs into the flour after you throw the cake into the oven. There's a system You've got to put the eggs in a little earlier or whatever. Same thing If you hit someone up after they've met you for an hour and then you go, hey, my membership's a hundred bucks a month. I tell them that's not. You got to make a one year commitment or a three year commitment or whatever. It's not the mindset of the current customer and the customer base as they're doing it and Master Hong just did this perfectly and the customer base as they're doing it, and Master Hong just did this perfectly.

Chan Lee:

If you look at the sales paradigm and you go, okay, what generates sales? And you look at that, the biggest thing is trust and rapport. People have to trust you and they have to have a good rapport with you If they like you that this is kind of an old school idea If they like you, they'll make a decision to buy with you. If they don't like you or you send them the wrong vibe, they're not going to do it. Have you ever bought anything from someone that you hate or you didn't like or seemed shady to you? You didn't, you just kind of took your business somewhere else. And so super important that you guys are understanding that you got to build this trust and rapport and then you got to identify the need of the customer. Why are they there for?

Chan Lee:

And if you look at that, there's only two reasons why people bring their kids in the class make sure the kid is loud. He's, he kiaps loud, kicks, punches, raises his hand in your class eventually. That is one aspect. The second aspect of this is that you also want to make sure the second kid that comes in needs discipline. The kid's bouncing off the walls and doing crazy, stand at attention straight, look me in the eye and then, be sure, when you say look me in the eye, you do it with an Asian accent. So you go oh, it's a rook eye. I'm just kidding, don't do that. You rook eye and pre's the shit down and you fuckus, you, shit you. But anyway, don't do that Old Taekwondo joke there. Make sure that the kid is focused, he's listening to directions and he's able to follow. And so your instructor in your intro class has got to these trial classes have to follow that that's.

Chan Lee:

Another aspect of this is that do you have enough people helping you out? And make sure you can have that If you have a leadership team. When I first started my martial arts school or I was growing our organization, we didn't have a lot of paid staff, so we had a leadership team and the leadership team are your high level black belts with great attitudes, not just black belts, someone with a. I have a lady that's a green belt at one of my locations. She works at a church. She's the marketing director for a really big church and she has a pleasant disposition about her. She's very polite and nice and kind and so forth, and the reason I'm telling you this is that she helps me with all my new white belts and the moms and hey, stand over here, buddy. And she does warmups with them and she's not even paid staff so you can find people that help you. They don't have to be a black belt, they're just nice people and can they help beginners. She holds targets for them and high fives them and so forth. So anyway, that's a whole nother topic for a different day.

Chan Lee:

But make sure your beginner trial classes are staffed correctly, with the right amount of people so they all have a great experience. If one of your red belts break a toe in class, if they kick the target and they broke a toe, they'll probably tape it up and be back at your Taekwondo school, you know, the next day, or they finish out class. They're just. That's the way that you've trained them. You have a white belt that breaks their toe. On the third day they kick a target wrong or something. They're never coming back. They're like man, the third day I broke my toe. Man, by the fifth day I might break a neck. So you got to make sure that every one of those classes are over the top great. It's an incredible, fantastic experience and that's your goal. Script it out. It's one of those things I recommend is just make sure you have something. That's fun and so forth. But once again, we'll talk about more of these in detail I don't want to make these too long and so forth.

Jimmy Hong:

Well, it sounds like you have a two intro system, like a week intro system and then a month after that before they join into your program. Is that correct? Correct?

Chan Lee:

Correct. That is absolutely correct, because I got a lot of rid of our sales systems in terms of I used to be the one intro signup guy. You did one intro and usually you committed to 36 months One. That's how good I am Sorry.

Chan Lee:

Anyway, it's a common theme. You guys are going to hear that we're so sick of him, hearing him brag about how awesome he is, but anyway, the and I just it wasn't recreatable and it was one of those things where I said, okay, this is not just, it's not an easy system. So, to be honest with you and once again, I can talk about this in other podcasts in more detail but I have 14, 15 and 16 year old kids running my first intros. They do the 15 minute intro and then they bring them into class and then they just try it and then I want them to turn them into paying customers and so forth. So this is what we do in our organization.

Chan Lee:

I don't know if it works for you, but it works for us. And if I'm creating these super confident, awesome black belts, then I want them to see the product which is my black belts. They're the ones helping me out with the beginners and so forth. So that's my sales system in a nutshell and what we do, but I just want to give generalities with making sure marketing and sales as you grow your organization and I talked about this in the live podcast there's a lot of kids. There's not enough kids doing martial arts and they need us right now.

Jimmy Hong:

They need the type of inspiration that martial arts has given you, that they need that to be better kids and so forth so that's a great point you make there, master chan is because, like the, yes, you can sell the three-year program, one-year program, what the two-year program? But you can't replicate that and you can't have all your staff do it. So, to compensate, make your program as easy, as enrolled as possible so your staff can enroll everybody that walks through your door and you're not the bottleneck to increasing your students and your school. Would that be accurate, master Chan? Yeah, 100%, 100%, so that everybody, every school, has different programs and enrollment systems. But just keep that in mind while you're fine-tuning and adjusting to your school how easy, how quick you want that enrollment process to be.

Jimmy Hong:

You want, master Chan's, two types of trials that's just really easy to walk through and then just super easy to enroll. You want to do a one class, one-on-one, get their full, divided attention, motivate and then get them enrolled. That's ultimately up to you. But knowing that you have different options out there and you want to try both One month, do one way, another month, do another way Check out your numbers and see what is more effective. There's no right or wrong way to do this, it's just what is it going to take to get your school to that next level and successfully in terms of profits and revenues. That will conclude our today's episode Number two. I want to thank Master Chan, as always. We look forward to our next episode next week. We're going to have a great topic for you. I'll see you guys, everybody, master Chan, any final thoughts?

Chan Lee:

You guys keep changing the world. Every day you're out there, you guys get that email or the note from the parent about how their kid has changed and became better human beings because of it. Use that as your fuel and inspiration to do what you do. So the world needs us. Let's go.

Jimmy Hong:

Have a great week, guys. Lots of success to your schools. See you guys next week. Bye.