False Data and Fear: A Marketing Formula?

Editor’s Note: We are pleased to present this guest post by Jason Darr, owner of CrossFit 604. Darr has critically analyzed several claims made by Craig Patterson in promotional material for the Mad Lab Group. The statistics we have support Darr’s, not Patterson’s, account. Whence did Patterson get his numbers? It’s not clear. Patterson first claimed Zen Planner as his only named, independent source. Zen Planner has since disavowed Patteron’s claims and Patterson removed any mention of Zen Planner from his article. 

“Oh, were you finished? Then allow me to retort.”

– Samuel L. Jackson, Pulp Fiction

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It seems like everyone has got something to say about business models and statistics. Everyone has charts and services for sale that promise to help you be more successful. In the CrossFit industry in particular, there has been some talk from the MadLab Group about CrossFit gyms failing at an alarming rate, slowly going bankrupt, and needing to adapt to the changes coming our way. MadLab Founder and CEO Craig Patterson claims that 90 percent of CrossFit gyms are slowly going bankrupt because they have not yet adopted his way of doing business. Should we listen to him? Let’s come back to that.

First thing’s first… 90 percent of CrossFit affiliates are slowly going bankrupt? Is this accurate? Patterson, in his recent article published on BreakingMuscle.com, claims this is a fact. When I read it I was shocked—90% of CrossFit gyms are going out of business? That’s the best news I have ever heard! My affiliate is most certainly not in decline, so I guess that makes me the 10 percent. I’d better step up my strength training so I can lift my wallet.

OK, let’s get real for a minute. Our box has shown steady growth since the day we opened, and we continue to grow to this day. In our first year we burst out of our 3,000-square-foot box and upgraded to a 6,000-square-foot palace that Carl Paoli called, “The nicest box I have ever seen,” after dropping his bag (and his jaw) on the floor when he walked in for the first time. Going bankrupt? Uh, no. We are the lucky 10 percent. Coincidentally, Craig Patterson’s affiliate is about three kilometers from mine.

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Class at CrossFit 604 in Vancouver, Canada.

This can’t be right. 90 percent? Perhaps I read it wrong—after all, I was just skimming it on my iPhone—so I read it again a little closer. On my second read I noticed that Patterson states his information is based on statistical data that Zen Planner provided him. So, being that I am a Zen Planner customer, I called them and asked them a couple of things.

(Editor’s Note: the latest version of Patterson’s article did not contain any mention of Zen Planner. The screenshot below comes from the first version, which claimed ZP as a source.)

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Patterson’s original article claimed Zen Planner as a source, but he removed Zen Planner from the article after Zen Planner disavowed his claims.

The first thing I asked was why my data was being shared with another box owner in my market. Someone’s got some explaining to do, and Zen Planner CEO Jeff Gardner did explain:

“NONE of your personal data was shared with any other customers of Zen Planner.  We hold your personal data in the strictest of confidence.”

He further explained that the MadLab Group was one of about two dozen consultants that were testing a new Zen Planner product called “Health Check,” which gives a gym owner a snapshot comparison of how his business compares to other “like businesses.” Gardner further explains below:

About six months ago we began testing a program that we were calling the ‘Health Check.’  I’ve attached a sample of what this report looks like. This program was created based on feedback from boarding thousands of new customers. We’re constantly asked how they compare to other customers, so we developed some queries to aggregate data of ‘like companies’ to provide a benchmark for our customers. The program was very well received by our test sample. Our intent was to roll this out to all of our customers, but we have some data warehousing development that we need to complete to make this scalable.  

The sole purpose of this program is to help our customers understand how they stack up, and to provide information to help make them stronger.

Indeed, the statistical data that is being represented in Patterson’s article and MadLab documentation is far from an accurate representation of the current state of the affiliates in the Zen Planner database. Not only does he not have access to that information, but Gardner went on to state that CrossFit affiliates actually showed a 26 percent increase in revenue in 2015 overall.

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According to Zen Planner, CrossFit Affiliates showed a 26% increase in revenue in 2015.

Let’s do a little history lesson. Craig Patterson of MadLab opened the very first CrossFit affiliate in Canada. He also was clever enough to scoop up the trademark for CrossFit in Canada. He owned the trademark for a few years until it was recently awarded back to CrossFit HQ legally (or so it was rumored).

Craig is obviously a sharp guy. He and his team have been around for ages and certainly helped launch CrossFit in our community. For that I am grateful. But it seems that Craig has given up on being a CrossFit pioneer and has switched his focus to MadLab. Fair enough.

If the MadLab method is working for gym owners who struggle to keep their businesses afloat, fantastic. If MadLab wants to sell you their secret sauce on “how to operate your business like us,” then good for them. But using false data to try and create fear among your fellow affiliates so you can sell them your product (which looks suspiciously like a pyramid scheme) is just plain shitty.

The CrossFit model has always been structured so that anyone can open a CrossFit gym (Editor’s Note: that is anyone who meets the standard criteria, including passing the L1, proof of insurance, etc), and the superior businesses would thrive while subpar businesses would eventually fall by the wayside. Affiliates are even permitted to open their CrossFit gym next door to another CrossFit gym. If the other gym goes under for offering an inferior product, then so be it. This is business in the real world.

The cream of the crop will rise, and the inferior businesses will fail. Capitalism at its best! This ideology is how we built our business and how we continue to operate. Before we did anything we asked ourselves, “Why would anyone come to our gym over someone else’s gym?” And then we made a very long list of tangible reasons why. We took that list and created a gym that answered the most important question an affiliate should be asking.

We dug deep financially and created something special. We continue to ask ourselves daily how can we separate ourselves from our competitors. Our coaches earn great money, and nobody coaches more than 25 hours per week. All of our interests are aligned with each other, and we operate as a team. We are indeed a successful CrossFit gym, but we will never stop our pursuit of being the best at everything. Rising to the top was not a coincidence. It was all part of our business plan.

For the affiliate owners that do struggle with their business, I’ll give you some free advice. Stop looking for magic beans to fix your problems. A lot of hard work and money goes into starting, growing and maintaining a business. Being a great coach is NOT enough. You need to stop operating like a coach and operate your business like a business from top to bottom. If you are struggling to keep your head above water, perhaps you are doing something wrong.

Maybe you should work for someone else and just get paid to be a great coach somewhere? The MadLab method implies that everyone makes great money from top to bottom, so why bother owning your own business? Seems like you can just be a coach under the MadLab umbrella without the burden of ownership and still make a huge living (assuming the MadLab statistics are correct). Or, maybe you just need to ask yourself how you can improve your value in the market you are in.

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One comment

  1. Pingback: Craig Patterson: The Sky is Falling, and I’m Selling Umbrellas | THE RUSSELLS

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