← Pilates Business Podcast
Pilates Business Podcast
Why Pilates Is Exploding (and How to Make Your Studio Stand Out) with Rachael Lea, CEO of Arketa
00:45:25
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- [00:00]
A
Running a studio can feel complicated, but it doesn't have to. And that's why I love Archetta. It's simple to use behind the scenes and puts everything in one place, from bookings, of course, to payments and automated marketing. And you'll get easy access to the data that matters most. And you guys know how much I love data. So you can make smart business decisions with confidence. And if you ever need help, their support team responds super quickly. And they're real people who know exactly what you're going through as a business owner. Now, right now, if you go to arketa.comforward/saran, that's a R K E T A.comforward/saran S E R-A N and book a demo, you'll get three months free of our Caretta's marketing suite or a branded mobile app. Again, that's three months free when you go to archetta.com forward/Sarah Boutique Fitness is changing faster than ever. Clients are expecting more. Owners are often stretched thinner than ever. And the studios that are evolving and adapting are the ones that are truly thriving. But what's actually driving these changes? What do consumers really want in 2025 and beyond? And. And what tools are making the biggest difference behind the scenes? Well, today I'm sitting down with someone who has a front row seat to all of it. Rachel Lear, the CEO and founder of Arketa Archetta powers hundreds of boutique fitness businesses, giving Rachel Leah, a very unique view into the trends shaping our industry. Well, hi there. I'm Sarah Glanfield. I'm a business and marketing strategist just for boutique fitness studio owners like you. If you're ready to be inspired and make a bigger impact, you're in the right place. All you need are a few key strategies, the right mindset, and some support along the way. Join me as I share the real life insights that will help you grow a sustainable and profitable studio. This is the Pilates Business Podcast. Welcome back to the podcast. I'm so glad you're here. I'm Saran Glanfield and I think if you are most like most of the studio owners that I talk to, you probably are a little busy right now. Perhaps as we switch into the season that we are in, you're probably feeling the weight of running a business. You probably are in a place where you're managing schedules, you're loving the community and the energy. But perhaps on the back end, the marketing, the systems, some of the admin can feel like it's a lot. And on top of that we know that clients have higher expectations than ever before. They don't just want great classes. They want a seamless experience, something that is personalized, making that their pricing is flexible. And they also want to see how they're progressing within their movement practices each and every week. And the shifts that we're seeing aren't just your imagination. This is the industry evolving. It's happening everywhere. This industry is evolving rapidly. And if you want to stay relevant, you've got to know where we're heading. And that's why I'm absolutely thrilled to welcome back Rachel Leah, the CEO and founder of Arketa. Archetta is one of the fastest growing platforms in boutique fitness and one of my personal favorites to work with behind the scenes with the studio owners that I work with. Areta was founded in 2020. It's an all in one tool that helps studios streamline everything from scheduling, yes, of course. To payments, yes, of course. To content and marketing and reporting and everything that you need to build and grow your studio business. But more importantly, the reason why Rachel Lear is here with me today is because we are. She's seeing firsthand what's happening inside the industry, behind the scenes and amongst the hundreds and hundreds of owners that they support. So welcome. Rachel Lee, I'm so glad you're here.
- [04:16]
B
Yes. Thank you so much for having me back again.
- [04:19]
A
Back again, yes.
- [04:22]
B
It's like no time has passed.
- [04:24]
A
I know. I was just thinking that. And you know, it's always, always wonderful to have to have you on and to learn a little bit more about what's been happening in your world. I know that Arketa is evolving and growing and going from a strength to strength and it's fantastic to see Truly. It is. I know we were chatting earlier. Truly is great to see all of the different things that you're doing behind the scenes there. So I'm glad you're back.
- [04:51]
B
I know it's wild when we train new employees on our product and I demo sometimes I'm like, I can't believe we built all this. Like, the trainings have now gone from like a day or two of how much we had to like two weeks just because there's so much. It's. It's wild to see.
- [05:06]
A
It's so fantastic though. So fantastic. Well, why don't we start, um, high level and sort of see bigger picture and perhaps, you know, since we. You were last on the podcast, which I think was about a year or so, maybe a longer ago. Yeah. What do you see has evolved or changed most in that last 12 to 18 months.
- [05:29]
B
Yeah. One of the biggest things is new studios. New studios. New studios, man. I mean women, every, everyone is opening up a space. It is a space on a third floor that's small and private. It's a space in their garage. It's a brand new location. We're seeing studio owners switch locations to grow into bigger spaces. People are opening up net new units. It's so surprising because the pandemic is five years old. It's almost over, but yet wellness is now starting to have its boom of net new locations. And it's just beautiful to see. I. Are you seeing that too? Like I feel like everyone and their mother is opening up a Pilates studio.
- [06:10]
A
Yeah. 100. So I, I echo everything you've said. What I'm seeing amongst the studio owners that I work with is that we're seeing studios that have been open for, you know, even pre pandemic studios have been open for 10 years, are upsizing and adding more equipment, more space, extra rooms, more capacity really to. Because of the amount of demand that they're see seeing. And then yeah, I, I mean I think, I think last week I spoke to at least I want to say four, maybe five new studios who are brand new, either on the cusp of opening or you know, are in the sort of, the pre sort of opening kind of build up to finding location, finding a space and so on. So yeah, this is, there is a tremendous amount of expansion happening. And I think, you know, the way I look at it is that this pie is getting bigger. Right. That there is a lot of opportunity out there. Right. Because. And it's all demand driven.
- [07:10]
B
Oh 100%. There's like a small street in Michigan that has like seven Pilates studios all on the same street and they're all wait listed. If you go to their website, they're all bustling. Which leads me to the second segment that is growing is Pilates. People cannot get enough of it. They're obsessed with the reformer. Everyone has an opinion on which reformer they like best. Which means that all of them are booming because someone will go here for Balance Body or someone will go here for classical in grots and other people like Mega former and Legree. So all of them are booming. And then Matt Pilates is having its moment. It used to be called Sculpt, so back when I taught we called it Sculpt. That same format is now just being called Matte Pilates. And for whatever reason those classes are booming. And if you had the same class and you just called it sculpt way more empty than the Pilates. Something about that word.
- [08:06]
A
It's so interesting, right? It's so interesting. And yeah, it's very, very hot right now. Very hot right now. Can't, we can't get enough, we can't get enough of Pilates, which is, which I love. And I, the question that I get often have, I'm starting to get asked a little bit now is, you know, is this a. Just a trend? Am I concerned, you know, or am I concerned about the quantity of Pilates studios? And I think when, you know that, when. I'm kind of curious to hear what you think. But when I have, I've been in the industry since, you know, 2008 and what I see is that. And I always look to the clients, right? You've got to look at the clients because the clients will tell you what they want. And what I have seen is that since 2008, the teachers who I were teaching in 2008 are still teaching in 2025 and they still have a full schedule because when people find Pilates and they fall in love with Pilates, they stay in Pilates. And so no matter how much, how many studios open that if you are a great teacher and you love what you do and you're in it to support your clients and help them to move healthier, then without a doubt you're still going to be teaching in 10, 15 years time and have a studio that is still going to be extremely profitable and sustainable.
- [09:22]
B
Oh yeah, I couldn't agree more. A studio can only take so many members too, right? You think about like the population of New York and then you think about a 10 reformer studio. Well, if you got five classes a day, you can only see 50 people a day. Multiply that by seven, you're at 350 a week. There's millions of people in New York. So like you're making a bet that a tiny, tiny, tiny, tiny little piece. But the, the other thing about the fad is that yes, everything has its moment, but the good stuff stays good. And what I mean by that is like strength training has always been personal training has always been yoga. Yes, it's probably less popular than it was, but the good studios still, you.
- [10:07]
A
Can'T get into those either.
- [10:08]
B
I think it's more of the, Yeah, I think it's the like experiential studios that have a challenge, meaning the like a bungee class that you can't do every single day. And I actually talked to an owner that's doing silks they're doing aerial yoga and it's beautiful. They're silks. And what she said is, well, I just add Pilates to my studio. There we go. And so then she can still keep this experiential moment that can be a trend and evolve, but she's still keeping the hearty stuff. That Pilates is not going anywhere anytime soon. I think the name may change, like I said. How it would, like, sculpt before and now it's like hot matte. The name will probably change, but the format will be the same.
- [10:50]
A
Yeah, for sure, for sure. Sure. So let's talk a little bit about, like, dive down a little bit deeper and talk a little bit about the studios that are the highest performing. Because obviously you see behind the scenes, you speak to studio owners and you see the data, you see the trends, you see their growth. And when you look at all of that, what sort of patterns do you see are emerging among the ones that are growing the fastest right now? Right. Is it that they are adopting all this new kind of technology? Are they changing what they're doing in the studio? Are they training their team differently? Are they spending more on marketing? Or is it something else completely different?
- [11:37]
B
I think it's three things. It's. One is when my parents used to tell me this when I was looking at where to live in college, they were like, rich. Leah, when you're looking for a space, there's one thing that matters. Location, location, location. We have a studio that is generally in the world's worst location. Doesn't matter how great it is, people just can't get to it. So having a great location is important. Meaning if you're in New York, even though it feels like everything's a great location, there are locations that are not good. Being on a fifth floor walk up, not near a train, it's just hard to get to. So one is location. Second is going to be the actual space. The studios that are the most successful invest in the space and they invest in the equipment. So instead of going in Alibaba and finding the cheapest thing that you could possibly find, you chose to open a business. It's kind of like saying, hey, I'm going to open a restaurant and everything I do is going to be cheap. I'm going to have paper plates, I'm going to have paper forks. I'm going to have to go. You wouldn't spend a lot of money. You probably wouldn't come back. That's why we go to a nice restaurant. Right. The interior is nice. The Plates are amazing. It. It feels expensive. So the studios that don't. There are ways to do inexpensive build outs. Don't get me wrong, I'm the queen of cutting costs and being efficient. But there's a difference between being efficient and just being cheap. Like buying mats that everybody slips on and having dirty towels that smell. So second is like the actual studio experience and then the. So assuming one checks and two checks like you can't. Doesn't matter how good your classes are, your formats, your prices. If like 1 and 2 are not there, it's going to be really hard to get people to come and stay. The third is going to be the superstar instructors. This is the secret sauce. I'm biased because I was an instructor and I know I was the secret sauce to all my classes. Like we had location. We did not have the second one in my studio. And people didn't care about the niceness because they came for the third. So maybe if I stack ranked it'd be like location instruction, then niceness. Also if you want to charge more. And what I mean by this is if you're an owner, you either need to be the star of the show, which many owners are, right? They're blinking off from a studio and then they're the star of the show. We see a lot of ownership now that is not instructors. They're not from the space. They're business minded people. You got to find a superstar and you've got to pay them well. And it needs to be more than a single superstar because if you have a one man, woman, them business. The problem is that human can only teach so many classes till they burn out. And then that human, when they leave, you're stuck with all of your numbers dropping. And so I think he said something interesting about instruction and formatting. It's making sure that that superstar is. What's it called, like Tinkerbell, like fairy dusting the magic to that group. And when it comes to instruction, what I see working the best is the non gimmicky stuff. You see this stuff on Instagram and like people don't really want that in the studio. They kind of just want it.
- [14:45]
A
Like they like to see it. Yeah. Yes.
- [14:48]
B
Yeah. But like the Pilates class that like a human can literally not get through or like a sequence that you cannot memorize. And that Instagram. So like great instruction has. It's been the same in 2008 and has been the same in 2022. It hasn't evolved just the way we consume it on social.
- [15:05]
A
So different now, totally true. You know, and I think, you know, we do. You do run into that situation, have a lot where you. And often it's the owner who is the superstar teacher. Right. And their classes end up being super full and wait listed. And then, you know, there is a sprinkling of perhaps other teachers who are great, but perhaps they don't have that same quality as either the, the owner who is desperately trying to teach as many classes as possible to keep the client the numbers higher and also trying to organize everything else. And I think that there's a lot that you can do as a business owner, whether you are that superstar teacher or whether you are the leader of the business and investing in superstar teachers to make sure that that quality across. And it's really the experience the clients are having across the classes is really, really consistent.
- [15:55]
B
100%. And I think some of it comes to ego. So for example, when I taught at the studio, my, my mentor was incredible and wanted me to win. How did she help me win? She gave me the prime times.
- [16:08]
A
Yeah.
- [16:08]
B
So if you were that star owner, you love the prime times, right?
- [16:13]
A
Yeah.
- [16:13]
B
But the best way you're going to scale a business is give everyone else the prime times and you actually take below times and build those. And so it's this like mind flick of like I'm used to being a star. Why would I not being a star to. Hey, if his business is going to scale, scale, I have to actually make new stars. And, and that's a really hard mind mapping. When you work so hard as an instructor at a studio to be the star, it's like, oh, wait, this is no longer about me. I have to build stars. And oh wait, these stars might get so good they might leave me and then there's that whole place I won't get into.
- [16:47]
A
Yeah, yeah, yeah, yeah. No, it's true. It does. It definitely I think is like one of those seasons or stages that you have to work through as a business owner, as a studio owner, for sure, 100%. You know, I think you have to want it enough to go through that switch that, that mental math. Right. Of like. Oh, wait, hold on. Yes. If I don't do this, then that would happen and I'm going to be doing this this way forever. And oh, wait, hold on. I. That is not sustainable for me or not what I want. Yeah, 100%. Yeah. So we know that the experience is absolutely number one. Right. And I think that is something that is often overlooked and I think that the experience has gotten even more important. And these, when we say experiences, you know, we mentioned the decor and we mentioned, you know, the teachers and these, the, the, the impact of these are often not these huge, big, sweeping things that often a lot of very small things that add up to this very unique experience that I think that clients get in a studio. But we know that expectations are, I think, higher than they've ever been. You know, we've, there is, you know, competition only sort of like lifts everybody up little bit more. Right. And over the, you know, the, the, the era of boutique fitness, which, you know, I think started sort of early in the sort of 2000s to where we are today. You know, the standards are certainly higher across the board for experience, experience in the studio, but also the kind of connection community that happens outside of the studio as well. And the way that studios stay connected to their clients when they're not in the class, I think we see that. I think clients have this expectation now of that level of communication, how they're engaging that, that booking experience and so on, which obviously, you know, tremendous amount about. So tell me a little bit about how you've seen that side of things evolve.
- [18:50]
B
Yeah, I mean, it's like going to a restaurant. If that website doesn't look nice and the Instagram doesn't look high end, I'm not going. If I can't book, definitely not going. Is this a hole in the wall? What year are we in? You see this in the fitness and wellness space is if you can't get someone to see that gorgeous experience in space, first thing someone's going to see is your website and your branded app and your booking experience. And if those three pieces of tech look old and outdated and clunky and hard to use, they're gonna then map, oh, my studio experience is gonna be old, clunky, dirty, hard to use, not expensive. Why should I do this? Especially when everyone else on the market is up leveling, you don't want to be that person. And I do hear a lot of owners with a differing opinion, which is, oh, well, once they come into my studio, it's amazing, it's the best, blah, blah, blah. And it's, well, if you can't get them in the studio, you can't show them that. And so unfortunately, your website is the first thing people see. It's kind of like dating apps. It's like, right, if your dating app profile doesn't look so great, you can't even make it to the date. And so what do people do on their profiles? They go get photographers, they do cute shoots. I don't know what they do. They Photoshop themselves. So as a owner, you need to think about having the most gorgeous tech and the most gorgeous website that premium experience and makes your studio feel premium. And, and what I always say is your website, app and booking software should feel three to five times bigger than your studio is. You always want to look bigger, not smaller, in your web presence. And so everything's evolving. And so what I always tell owners is you don't want to be the last. Like being the last one on a software is not cool. You don't want to be the last man standing. You actually want to be the first mover. Because if you're not moving, a new studio down the street is opening with a fresh website, a fresh app, and fresh booking software. And we just talked about how many new studios there are. So they're all these new studios, they're getting all the new, fresh, hot software. They're not. If I could buy hot new or old and crummy, I'm buying the new. So if you're a studio that's been around for a long time, you almost need to more than ever be getting the new stuff, kind of like equipment too. This isn't just tech, it's equipment. So if the new studio down the street has brand new equipment and you don't, you should probably be upgrading your equipment too.
- [21:22]
A
Yeah. And tell me a little bit about specifically what you're doing inside of our kata to make sure that that book, that, that, that experience that a client has. Right. One of the things that I get asked as a, as a consultant is there's all these different softwares out there. Like what, what do I, should I look for? How do I decide between one or the other? And I always say we a go and demo them and see them because there is a visual difference for you. And you know, what you're looking for, you know, is, is going to be what you're looking for. But there are some, I think there are some sort of like, there's a checklist of things that I think studio owners should be really aware of. And within this software that, from a client perspective that makes that sort of journey of finding you. But then going from that website to the first class, right. Because that's the second sort of most important part of that journey. And like getting them to the point of like booking on the website and then, or you know, via the website and then getting them into class in a way that makes them really excited to get there. Right. As there are steps and sort of things that touch points along the way that can really impact how they feel when they walk into the studio. So how is. How are you like, what have you focused on in the experience that you do in Arketa? And then what are you seeing perhaps on the horizon or what are you. What else is behind the scenes? Kind of are you thinking about to make it to continue to evolve as we're seeing obviously consumer expectations evolving too.
- [22:46]
B
Yeah. So what we think about when we tour Arcada or we show any studio on Arcada is we educate so that they're educated to make the right decision. Any seller on any demo is going to be like, we have the best booking, we have the prettiest booking. We have the. You can say anything. It's like an athlete being like, I'm the world's best tennis player. I'm watching the US Open now everything's about tennis. And then you look at like you're ranking. You're like, okay, you're the. The world's best in where you are or. And how you might see it. So for Arketta, we educate on an idea called Count the Clicks. And the idea behind it is that when you are a customer, you are going on a website to book for the first time. You need to count how many clicks it takes as a first timer, not a second time or third timer. You're regular who's coming anyways to get into class and those counts need to happen on a website. Why is a first timer is not going to go to the app Store, search your branded. I love our mobile apps by like, no one's using them for your first time. Go to the app store, download the mobile app, figure it out. No, they're doing it on web. I hear so many owners say, well, my web experience stinks, but my app experience is great. Well, great. No one's downloading your app. They're booking on your website. So you land on the website and then you literally start counting every click you go. Click one, sign up, click two, book, now click three, log in. What you notice when you start going through that exercise is how many platforms bump you to another page. How many platforms have an extra click. How many platforms have signup forms that are 20, 30 fields long? When you actually go through the signup, you can record. You could actually open a stopwatch and record how long it takes you to go from start to finish. Big brands like Amazon and Shopify optimize for getting you to buy now in one click, think Shopify. They have shop, pay now you don't even have to throw in a credit card. Amazon one click buy is above before you add something to your cart. You could just buy now and skip the cart. And so that is the number one thing you should be looking for. How does Arketa evolve on that is we do those exercises in house to make sure that we are having the best checkout process possible. Where I think most platforms miss the mark is they added so many features and so many features and they don't let studio owners actually remove those features from the first time booking experience. And so it gets really clunky. Whereas Orketta, whenever we build a new feature we actually have a setting in the dashboard to not use that feature so that you can make your checkout experience shorter. So I'll give you an example. When you collect sign up from somebody like a username and password before you book, you actually just want to get someone's name, email and phone so that you can email and text them. For marketing you don't need their birthday, you don't need their shipping address. What are you sending them? A pair of socks before the first class. You don't need their emergency contact. I know they might get injured but get that when they arrive. Hide all those fields but owners put them in and then I'm in my car booking a class. Oh I'm, I'm done. I'm toast. I'm not filling it out and leaving. So it's like little stuff like that.
- [25:46]
A
We optimize it is all these small things that add up to make it the what it is. Right. And, and we often it's. It's not like the huge huge things, it's the small things that make a massive difference. Yeah. So we like the like small likes lower number of clicks. Talk to me a little bit about sort of personalization, you know and how that impacts how you're working with that in Arketa because that is obviously you know that was. This is not super new to marketing at all. But I think that we are seeing more opportunity than we've ever seen to incorporate that into our marketing efforts.
- [26:23]
B
Yeah, everyone should market differently and then everyone's checkout experience should be different. So for example, if you are a multi location business where you have many locations in a similar area, let's say you have three locations in New York in your checkout process, you might want default location so that you can understand the foot traffic between three locations. If you were a one location business, you don't need a default location field. You only got one I can't tell you how many platforms have default location that are a single location. I'm like clearly the software here did not think this through. The second personalization is what pricing options are showing at checkout and which order are they coming in. So if you were a first time customer booking one, there are many platforms that make you buy the package and then they forget to take you back to checkout. So now you're like stuck with your package. I heard a studio the other day saying yeah, so many people like buy our intro and then never book. And I'm like yeah, because they, because it should have been in the same flow. It's not you, it's actually your software because you should have them in the same. And then they're like oh, but people are not buying the right thing. I wanted them to buy. Well why when you look at the order, they couldn't choose the order and they couldn't choose how many they were showing. So now you have these owners that have like 30 price points on their checkout when they only need three to five. A human only has so many decisions. Obviously the obvious stuff but a lot of platforms don't do this. Is the colors and the fonts embedded in your website. Why is so that it looks on brand. No one wants to be taken off a page to think that they're in a third party. And so we think a lot about every business is different. How do you customize it differently? And that starts at the checkout experience. I know you went a little bit into marketing but that goes into your segmentation and your automation process because your intro offer flow is going to be different than the studio down the street's intro offer flow. Your segments are going to be different and so you need a platform that can adjust those based on your studio type. And most platforms are built for a yoga group class based business. And the problem is is yes, we support those too and we can do those automations. Businesses are evolving and they now have multiple modalities and a lot of one on ones and lots of add ons and lots of different ways in which you can market. And so you really need a marketing solution that can be bespoke for you. Not Orange Theory or Barry's Boot Camp who just has a totally different business model than you. And also they have brand awareness. So instead of looking at those brands you should be thinking for yourself which is obviously very hard if you haven't marketed for this business before. Which is why you lean on someone like you or Arketa who knows Those best practices.
- [29:08]
A
Yeah. It's so common for a studio to find themselves in a spot where they're struggling because they, you know, they don't. Their software doesn't facilitate what they want to be able to offer to clients. They see an opportunity to say, add on, you know, extra one on one or even duets. Right. We see a lot of it in Pilates and it's if it often is so sort of they just have to create some sort of like hack behind the scenes to make it all work. And that doesn't sit well with, with studio owners and it is not efficient. And I think when you're in a world where know we are now using and leaning on our software as, you know, as a team member. Right. This is the person. This is someone. This is sort of a tool that is helping you to get clients. This is a tool that is helping you to retain clients, helping you to organize your studio, helping you to make sure you're profitable and to show you where you're profitable. I think it has to be a tool that can facilitate you being able to generate as much revenue as possible. Wherever you see that demand being able, being coming from, you know.
- [30:13]
B
Yeah, a hundred percent. And I think there is a big trend of when you're confused, you look to the person up and down the street from you.
- [30:19]
A
Yeah.
- [30:19]
B
And the problem is, is that this market is changing so fast that the studio owner down the street that opened 10 years ago probably didn't have access to the tech that you have now. And so you probably actually shouldn't be looking at what the people down the street are using or the big enterprises that started in the early 2000s. And then the question becomes, and I'm sure you hear this all the time from owners. Okay. If I'm not looking at that for my software or my marketing strategy or what's on the pulse, where do I go?
- [30:48]
A
Yeah.
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B
And I think that is. Is a challenge that we work really hard at our cat on and we work with you and we're like, okay, great. How do we figure out how to elevate this industry? And I think a lot of best practices come from other industries in the space that a lot of times owners don't think to look at like the restaurant industry or doctor's offices or barber shops where you can take those learnings because some of those industries are a little bit further ahead in tech.
- [31:13]
A
Yeah, it's so interesting. I completely agree. I think. So I want to come back to something really quickly that we kind of touched on and I Think one of the areas where I have, you know, I have focused as from day one as a consultant, and I think studio owners are semi focused on generally. But when we start working together in my coaching program, it's kind of the light switches on and that is the data. And. And I think when we see, you know, I think it's something that we're seeing more and more software providers getting focused on because it's so critical in the world that we're in today to be able to use data to make smart decisions about, you know, whether to open a second location or third location. Yes. But also about, hmm, is my teacher doing the. Is my teacher up to standard? Is, should I add another class? Should I buy another piece of equipment? And so tell me a little bit about the data that you're. What data you encourage studio owners to look at and that you're focused on getting into the hands of studio owners at Arcata.
- [32:14]
B
Yeah. The first one is profits, profits, profits. Revenue doesn't matter if you can't pay your rent. I can't tell you how many. I'm sure you've seen this. Owners that are like, well, I just need 20 members or I just want to break $10,000. And I'm like, why? And they're like, well, that's the next clipping. Or I think that's what I should be doing. That's what I've been told. Your actual revenue model starts when you sign your lease. That is a really scary thing to hear because a lot of people have already signed their 5T on your leases, and that cost is fixed, and that cost is the biggest cost you will ever have for your studio. I can't tell you how many owners are like, I don't know if I can afford orchetta. And I'm like, yeah, I could discount this thing $25. But you just dropped 12 to 15 grand a month on rent. If you really want to save some money, it's not 25 bucks, it's actually your rent. So it all starts from what are your costs? Your two biggest costs are your rent and your staff. Then you need to figure out how much revenue do I need to break even on the business? And now, of course, I hope this business is in a charity. So then you need to figure out, okay, if it's not a charity, how much profit will I be happy with? That profit is either going to go towards marketing efforts or buying new equipment or giving staff birthday cards, or it's going to go towards net new locations, or it's going to go to pay your salary. So many owners forget to put they need a salary in their model. So then they're like, oh wait, business is doing well and I take home no dollars. Once you know what you want your profit to be, then you can figure out, okay, what does my revenue in Arketa need to look like to hit that profit? Some owners break it down by members. That is okay if Your business is 100% membership based in Pilates. A lot of its privates, a lot of its packages, and a lot of it's not recurring. And as much as we want to make it recurring and Arquette has all the reasons that you should and do it. The four pack a month, the eight pack a month, you get it. There will be people that want to buy packages. So you'll put in your model. Okay, if my split is this much in packages, this much in membership, over time, yes, I want to get more members. Here's the average price I need to sell per customer, and then here's how many customers I need. And Arketa now has brand new dashboarding that will show all of that. It will tell you your breakdown of membership and package so that you know how much of each you need to grow and it will tell you your average price point per service and average price point per membership. So you know, if you increase it up or you increase it down and discount it where you need to be and then the last thing you need to look at as a studio owner is which channels are bringing in the right type of customer. And Arkena now has marketing dashboards where you can see the source. Source means where every single customer came from. So that if you're like, oh my God, I have all these leads from Facebook ads, but wait, I look at the end of their lifespan and none of them ever spend a dollar. And all of the customers that are spending money is actually referral. Great. I either need to fix my Facebook ads or ditch them, or I can go focus on referral. And so what Arketta allows me to do is understand ltv, which means the lifetime value of a customer, your healthiest customers, where are they coming from? So that you can either double down on the ones that are working or you can change the ones that are seemingly not doing well. Most platforms don't have connected marketing efforts, sales efforts and booking software. So all that data becomes muddled everywhere.
- [35:38]
A
Yeah, that is absolutely fantastic. This is all the types of data that I would, I wish everyone had always had and has access to. All of those numbers are absolutely critical and it's like you said, it's deeper than just that top line revenue number. There's just. It's that really like you said, doesn't really tell you a lot for sure.
- [35:59]
B
100.
- [36:00]
A
So let's zoom out a little bit. And you know, obviously the industry has been evolving very rapidly and growing exponentially. But tell me a little bit about where you see the industry heading. You know, short term, you know, next year or so and then you know, next three to five years and then how what are you focused on at Areta to help make sure that you are supporting all of your partners and all the studio owners out there as we head into all of all of that.
- [36:31]
B
So the first thing that we are seeing is the collapse of franchise model. And by collapse you see people like exponential selling off parts of their brands they sold off. Row house, they sold off a few other ones. Cycle bar. You're seeing this massive bubble popping of franchise. Why do I think that is is franchise build outs are crazy expensive. They're like half a million to a million bucks. So before you even open your studio you're so out of money and then you have to have interest to pay all that back. And then the second big piece is you have to give 10% up to depends on the franchise of your profits back to the franchise. Now that's the big, big big box franchise. The smaller franchise. Not like that. Right. You have better unit economics. They don't have the build out costs. It's a much smaller profit. They actually work with you for a brand. We at Arketta work with some incredible franchises. I'm talking about like the million dollar build out 20% profits. Those you see closing. Why you see them closing is they don't turn enough of a profit for everybody to be happy and then the studio owners go bankrupt. So what you're seeing a turn towards is smaller franchises or independently owned. Why are those A better economical bet is truly your build out cost is not half a million dollars and then you are not giving 10% back to this big brand and all this ad spend. So a micro franchise doesn't have as hefty of a payroll staff. When you look at like the unit economics of these businesses like a smaller franchise has like one or two people helping you. It doesn't have a team of people and a beautiful office with app like all these costs they have to pay. Well where does that come from? Is your studio so movement to smaller franchise and independence. The second thing I'm seeing is a move towards big spaces and small spaces. You're seeing a movement out of the like middle size studio. So people are either going really big and they're opening like, I don't want to say equinoxes, but mini gyms that are like two floors and have sonic cold plunge or private training and classes, big cost, even bigger revenue or micro spaces. Think four or five reformers private invite, only smaller. And the why is because then they can grow into a mid level space. Whereas some of these mid level spaces, the unit economics are harder to do. And so people like starting small where they're going really big, where they have the room for it. And then the third, and we talked about this before, is so much Pilates. Pilates is everywhere. Everywhere, everywhere, everywhere. Everyone should have a reformer in their studio, use it for privates, I don't know, hanging them up on the wall for classes. Why does Pilates work so well is people are willing to spend for an apparatus. I think people see the value in a piece of equipment that they can't afford at home and so they're willing to spend. I mean in New York a Pilates class can be like $65. It's insane. And in secondary markets you're still getting up to the 35, 40, whereas a body weight class is harder to justify that that cost. And then the last biggest trend I'm seeing is the wellness economy is growing very quickly. And by wellness economy, the longevity movement and so you're seeing a lot of cold plunge, saunas, IV drips, cupping, massage. And what people are doing is they're adding that wellness part of the business to the fitness so that someone doesn't have to go to two facilities, they can just go to one. And the really nice piece about the wellness experiences is they're very expensive, they don't take up a lot of space and they really help supplement the revenue of a group class based business. I'd say those are like the four big trends. Any of those that like you're seeing or you're like no, this is, I'm asking this one.
- [40:19]
A
I am yet for sure I agree with you on, on all of those things. I see the, the studio that are opening that do well tend to be on the smaller size and then tend to move into a larger space within, you know, quite not within, within sort of that three year mark. Essentially what I see with the Pilates. The other thing I would add to what you said, which I think is absolutely what we've seen seen is that I think one of the beautiful things about Pilates that we all know about in the Pilates world is that you can do it very, very often. And so it is, I think that one of the challenges that with say, like a boxing or a kickboxing workout that's really high, intense and really high impact is that you try doing that, you know, six, seven days a week and like, good luck, you know, and it's just, it just isn't reasonable.
- [41:09]
B
Yeah, your knees, your head, your exhaust.
- [41:12]
A
Is too much even spinning on. And you know, five, six times a week is not. But you can do Pilates five, six times a week, right? Maybe not, maybe not, you know, like the advanced movement. But you can do, you can do a version of Pilates five or six days a week. And people love the way that move, that type of movement makes them feel. And I think that that is why it is for sure here to stay as long as you have the teachers and as long as you have the experience. I think I'm not concerned at all about independently owned Pilates studios.
- [41:43]
B
It also ages really well. You can get all sorts of shapes and ages in a Pilates studio. Whereas if you're at a high impact business, anyone with an injury can't come pre, postnatal, good luck, any sort of joint. Like, there are just so many less humans that you could possibly have come in.
- [42:01]
A
And if you find Pilates, you will stay with it and you can stay with it until the end of time because it is so good for, for and, and can be adapted for every age, you know, And I remember teaching folks who are in their 70s and 80s and they had the best posture, they had great mobility, great balance, you know, and it is, I mean, you know, we talk about longevity, like starting from your 30s and 40s for sure, but like, the reality is that it pays off when you're older and you can still be doing Pilates no matter what. So it's all good. So much happening.
- [42:34]
B
Sounds like we're opening a Pilates studio.
- [42:36]
A
I know. Where. Where are we going to do this?
- [42:39]
B
I don't know. I'm thinking. I mean, London's booming east coast is great. Maybe we find like a small island where, where Pilates has not yet infiltrated.
- [42:52]
A
Oh, well, thank you so much, Rachel, Leah, for coming on. I think just to recap a couple of things that stood out from our conversation is number one is, you know, experience is absolutely number one. Experience in the studio and giving that best experience you can to your clients is so critical. And that's what really will truly help you stand the test of time. Number two, personalization is no longer optional. We have to build out that customer journey and some of these utilize these amazing features, that software you have at your fingertips and your software to really enhance the in studio experience and also drive that amazing long term retention and that LTV number, the lifetime value number that you mentioned as well. And then you know, data is absolutely critical as a studio owner to stopping the guessing and making decisions with more confidence. These are the shifts that I think are happening and have happened and are happening in our industry. And I think if for those of you listening, if you want your studio to thrive in the next, you know, 12 to 18 months, then these are things you really can't ignore, right? 100% thanks so much for tuning in to the Pilates Business podcast today. If this conversation was with Rachel Leah sparked some ideas for your own studio, I'd love for you to take a quick moment to subscribe so you never miss an episode. And if you know another studio owner who would benefit from hearing this, please share it with them. It's the best way to help more boutique fitness businesses thrive. And remember, building a profitable and sustainable Pilates business is about doing all the things. It's about doing the right things. So I'll see you back here next week for more strategies to help you grow. Did you love this episode and want more? Head to spring3.com and check out my free resources that will help you run a profitable and fulfilling studio business. And before you go, one last reminder. Reminder. There is no one way to do what you do, only your way. So whatever it is that you want to do, create or offer, you've got this. Thanks again for joining me today and have a wonderful rest of your day.