Last fall, on the advice of my friend, colleague, and fellow Andover resident Jared Spool, I signed up my seven-year-old son, Roger, for tae kwon do classes at Master Shin’s Martial Arts School, a few miles from my home. Roger needed an activity that would challenge him physically, engage him emotionally, and teach him valuable life lessons. He got all that, but I also had the opportunity to learn a great deal from the Master.
Inspired by Roger’s enthusiastic participation and example, I signed up for adult tae kwon do classes; I am currently a green belt and in the best shape of my life. But the tae kwon do lessons are not what we’re here to talk about. We’re here to talk about developing viable business models. And while I’ve been stretching, kicking, punching, executing flying side kicks, and breaking boards, I’ve been quietly observing Master Shin’s business model — and I’ve been learning…
One of the key elements of Master Shin’s teaching is discipline. When a kid puts in a half-hearted effort, gets a little sloppy, misses a kick or punch, or comes up short in an area where she has the capacity to do better, Master Shin points at the errant student and yells, “TEN PUSHUPS!” The student immediately hits the ground, “ONE, SIR! TWO, SIR! THREE, SIR!” all the way to “TEN, SIR!” after which she stands, faces the Master, bows, and yells, “THANK YOU, SIR!”
So let’s take a look at how Master Shin has developed his business model. But I’ll warn you, if you come up short, “TEN PUSHUPS!”
When we went in to sign Roger up, Master Shin had a trial membership program ready. For $59.95, Roger could take two lessons a week for five weeks. As part of the bargain, he got a tae kwon do uniform, which Master Shin gave him with great ceremony, bowing as he handed it over. Roger walked out feeling like a million bucks.
Progress in Master Shin’s school is measured both in belts (you start as a “no belt”) and tapes (colored tapes that are added to your belt as a sign you’ve mastered a particular skill; you need six tapes to qualify for the next belt level).
Roger was only three weeks into the program when he got his first test paper, qualifying him to test for the White Belt.
(The Master speaks: Do you have an introductory membership that costs your new customers to sign up for, gives them an immediate premium (like the uniform) as a reward, and immediately engages them in the full value of the content or service you offer? NO? TEN PUSHUPS!)
Interesting thing about that White Belt test. If he was going to go for the belt, he had to pay a $20 test fee to take the test. And there was no guarantee he would pass.
(The Master speaks: Do you have additional products/services to market to your trial customers? Ones that will engage them even further than they already are during this trial period? NO? TEN PUSHUPS!)
Well, Roger passed the White Belt test. Being the softie I am, I wiped tears away as Master Shin put Roger’s new White Belt on. He also gave Roger a trophy for achieving that first level. As each student got his belt, proud parents and supportive students cheered loudly, part of the culture Master Shin creates at his school.
My mental cash register was also going ka-ching! as I noticed the 12 other no belts getting theirs. That’s $240 at the White Belt level alone, and he had tests scheduled for all belt levels throughout the day, all of which involved an additional fee… and that happens once a month!
Keep in mind, we were only three weeks into the trial program. We had already gotten a uniform, six lessons, a trophy, and a white belt that we gladly paid $20 for the chance to earn.
(The Master speaks: Are you doing everything possible to engage your newest customers to the fullest? Are you offering even more free benefits than you promised them at signup? NO? TEN PUSHUPS!)
At the end of the five-week trial, Roger was four tapes into his six-tape requirement for taking the Yellow Belt test. He — and I — were emotionally in so deep there was no way we weren’t going to sign up for the full membership.
When we sat down to discuss membership with Master Shin, we had a range of options: two days a week, three days a week, or unlimited lessons per week (with only a few dollars per month separating them), along with a 6-month and 12-month program and “Black Belt Club” (you sign up for a three-year program leading up to a Black Belt), with a strong incentive on longer-term commitments. We signed up for a 12-month unlimited-visit program, but at renewal time we might go for the Black Belt Club. To be totally honest, this was the first time we had any clue what the rates really were. By the time we learned what it cost on a monthly basis (it’s more than the cost of a five-week trial), we didn’t really care. Roger was on a mission.
(The Master speaks: Do you offer clients a variety of programs for your content or services they can sign up for? When the time comes for them to make a long-term commitment, have you so overdelivered on your original promise that price becomes a minimal issue? Do you provide an incentive for people to sign up for a longer term? NO? TEN PUSHUPS!)
Well, a couple of weeks later, Roger qualified for a Yellow Belt. The test fee this time? $40. So in two months, we paid $60 more than we originally anticipated, but we didn’t care because Roger was engaged physically and emotionally and committed to succeeding.
It was about that time Roger noticed some of the other kids wearing different colored uniforms than the standard white one he was issued. The “cooler” kids were wearing black, blue, or red uniforms, and he wasn’t. Hmm… He asked Master Shin about it and was advised of the two ways he could get a new uniform: He could get one for free by recruiting a new member to Master Shin’s — one who ended up signing for a six-month or longer commitment. Or, he could buy one for $60.
It just so happened my ex-wife’s boyfriend’s seven-year-old daughter was looking for a new activity, so Roger invited her to check out a tae kwon do class. She did. She liked it. She signed up for the trial membership, and when it expired and they were dragging their feet about signing on for the full program, guess who put a little pressure on them to sign on the dotted line? Not Master Shin. He didn’t have to. He had a seven-year-old salesman out there who wanted a blue uniform! She enrolled. Roger is now the proud owner of a blue uniform. In the interest of full disclosure, I’ll add that when Christmas rolled around and uniforms were on sale for $45, Santa Claus got him a black one as well. Oh… and a satin Master Shin jacket, too.
(The Master speaks: Have you developed programs that reward your current members in meaningful ways for recruiting new members? Have you developed a supplementary group of products and services that add value to the experience they have with your products and services? Do you have ways to take advantage of holidays or special events to enhance sales even further? NO? TEN PUSHUPS!)
I must confess I was inspired by Roger’s achievements. I needed to find some way to get into shape. Given the amount of time I was spending at Master Shin’s, I figured I might as well sign up. I learned that with each additional family membership, you get a 10 percent discount. Ten percent for the first one, 20 percent for the second, and so on. Looking around, I noticed any number of families in which all four or five were students of Master Shin’s. Hmm…
(The Master speaks: Have you developed programs to sign up multiple family members or business associates for your product or service at a discount? NO? TEN PUSHUPS!)
As I write, it’s spring break for the schools here in Andover. What do I do with my kids? It just so happens Master Shin has a helpful solution. For $140 per student, my kids can sign up for his Excel Program, which keeps them active doing the tae kwon do thing from Monday to Friday, 8:30 am to 12:30 pm. And if they’re really committed (as many hardcore members are), Master Shin still has regular daily classes they can attend. Benefits for the kids? They can earn tapes and belts quicker than in regular classes.
Oh, did I say my kids? I should mention my 13-year-old daughter Hannah decided that she wanted to sign up for Excel camp and a trial membership. In less than a week of Excel camp, she got her White Belt and is well on her way to Yellow.
(The Master speaks: Have you developed supplementary programs that are time-, season- or event-specific that could add even more revenue streams to your business? NO? TEN PUSHUPS!)
Online businesses are on the same playing field as our offline brethren. We have to offer products and services people are willing to pay for. We have to find a number of different ways to offer them. We have to slice and dice them every which way we can think of — and add a few more. We have to leverage our customer base to grow our customer base. We need to underpromise and overdeliver in every way we can think of.
When people are happy, engaged, and involved, they’re not nearly as price sensitive as you might think. Even on the Internet.
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