Every KPI (key performance indicator) is rooted in a well-articulated business outcome.
What does this mean exactly? It’s not as complicated as you think.
Let’s start simple.
Some common business outcomes are: Maximizing revenue, growing a member base, and increasing sales leads.
Business goals come in all flavours; they can be big or small; short or long-term. KPIs serve to measure business goals. Ultimately, providing those accountable for a KPI a clear target to aim for.
That said, a good KPI is only as valuable as the action it inspires.
In other words, as your business grows, you may discover that certain KPIs fail to track their underlying business goal. That’s why it’s vital to continuously monitor KPIs and consistently re-evaluate their efficacy.
When you're just starting, tracking your KPIs manually via Google Sheets can be done, however, as your business grows this will become increasingly difficult and needlessly time-consuming.
But don’t worry!
There are plenty of software solutions out there designed to help entrepreneurs automate this process and track business objectives.
In this article, we will be looking at two fundamental business objectives of modern coworking, and in extension, the KPIs in place to achieve these high-level goals.
Bucket 1: Member Acquisition
Congrats! Your space is being set up and is soon to be (or perhaps already) open for business.
As an entrepreneur, you’re now embarking on a mission to find new customers. But you can’t just open your doors and hope people will come. As it’s sometimes said; hope is not a strategy.
First, you need a strategy, but more importantly, you need metrics to measure the relative success of that strategy.
This is where KPIs come in.
It’s crucial to create targets that gauge how effective each point of your member acquisition process is.
It is also important to leverage technology with coworking space management software such as Spacial to help automate the process of tracking and nurturing leads.
That said, here are some common KPIs that are used to measure the effectiveness of your customer acquisition process.
Think about an online retail store.
What are the chances that an online shop will bring in sales if no one visits the site in the first place?
The answer is zero.
Similarly, your coworking space is much more likely to get real leads if people are visiting your website. That’s why this metric is important in measuring the early performance of your business. And can be easily tracked for free with Google tools like Google Analytics or Google Webmaster.
Number of interactions with your Google Business profile
Hopefully, you’ve already registered your business with Google, it’s easy and free to do and an essential first step in marketing your business.
That said, Google Business provides easy to use tools to monitor and track how often people are interacting with your Business Profile.
For example, asking Google for directions on how to get to your space. If the activity is dead in this area, you know there is publicity work to do.
New leads per month
Keeping track of new sales leads is a common and important metric to track long term growth goals.
What qualifies as a real sales lead in coworking?
A hard lead would be considered someone who signs up and/or shows up for a tour. A soft lead would be considered someone who is interested in what you have to offer but needs more time before deciding to take the plunge and actually book a tour.
For example, someone who reaches out via any channel such as DM on social media or by phone to inquire about your space, membership offers, and pricing. But doesn't come in for an in-person tour.
Number of tours booked
So you have a lot of people visiting your website and interacting with your Google Business Profile.
It’s only a matter of time before you begin receiving direct requests for tours or getting curious potential leads walking in.
The number of tours booked is a valuable metric to track the performance of your marketing and sales team. If this number begins to drop, some investigating must be done to assess how effective your sales and publicity strategy is.
Percentage of tours converted
Zooming in on the number of tours booked is important, but is not sufficient. A more nuanced performance metric is conversion rate (CR).
In other words, after they are given a tour, how many people are converting to paying customers?
If you’re getting a whole lot of tours booked, but no one is following through, this is a problem.
Somewhere along the way potential customers are turned off. Try to figure out why. Follow-up with leads. Ask them candidly why your space doesn't fit their needs. Ask them which space they ended up choosing. Market and competitive research is an ongoing process.
Ultimately, knowing why leads are not converting will allow you to improve and remain competitive with your offering.
Number of no shows
This is self-explanatory, no shows are the people that back out of a tour or never show up.
If this metric starts soaring then you know something has gone awry at a very specific spot in your sales funnel and it’s time to do some investigating and strategizing.
Leads from outside partners
In an effort to publicize your space you should have already listed your space on coworking aggregators like Coworker.
In tracking the performance of your space, it’s vital to consider the number of leads you are receiving from these outside partners as well as the leads you're receiving organically or directly from your sales team.
Bucket 2: Existing Memerbership Growth
If your sales funnel is operating smoothly and you’ve been employing a smart marketing strategy then you should start seeing leads convert into sales. In other words, customers should be signing up and becoming real members of your space.
However, the work is not nearly done.
Once you have new members on board, you can’t just sit idly hoping they’ll enjoy their experience and stay.
A superior coworking space must consciously create strategies to entice customers into becoming repeat customers and recommending friends - in other words, make their experience a great one.
In extension, it’s crucial to set in place targets that accurately measure growth, loyalty, and profitability of your existing membership base.
So, let’s zoom in on your current members and the KPIs you should be tracking to assess the overall performance of your space.
Number of new members per month
This is a pretty straight forward metric and a great place to start tracking the performance of your space.
This metric also gives you a high-level understanding of the overall performance of your sales team and marketing efforts combined.
The drawback of this metric, however, is that it doesn’t tell you how much of your floor plan is being occupied or how much each member is contributing to your bottom line.
We will have to look to some more nuanced metrics to determine this.
Tracking your occupancy means monitoring the space occupied by square foot every month.
This is normally calculated as a percentage, for example, 20% of your floor space is currently occupied.
Monitoring this metric will help you stay on track to profitability.
Occupancy rate by workstation
This is similar to calculating the percentage of space occupancy by square foot on a monthly basis, except this metric calculates the percentage of workspaces occupied by dividing the number of occupied workstations by available workstations.
The result will tell you exactly how many of your workstations are filled.
Average revenue per member
The initial sales process can be arduous. Once the deal is closed, it’s typically a time to breathe a sigh of relief.
But not so fast!
Once the deal is sealed, the work has actually just begun, as you need to continuously keep your member satisfaction high.
But how can you quantify something like member satisfaction?
Well, naturally, satisfied members will use and spend more on additional services, or upgrade their membership plans.
Keeping an eye on “average revenue per member” allows you to focus your efforts on the quality of each of your member’s experiences, so you can identify areas of opportunity to improve your existing product offering.
Revenue by product type
Imagine you are a boutique hotel owner and your business offers a diverse range of services and amenities.
For example, you offer high-profile rooms with luxurious add-on services but also regular rooms with simple add-on services.
To measure the performance of each room, you would need to know the revenue associated with each room type.
Likewise, your coworking space performance can be tracked in a more nuanced way by looking at the revenue brought in, not only by each member but by each product type per member every month.
Revenue by occupied workstation
In a shared coworking space, one flexible workstation can be utilized by several members.
For example, a “hot desk” can be used by certain members that come and go during the week, and other members with a weekend membership will use the same desk on the weekends, or during evenings.
As a result, calculating the revenue by occupied workstation gives you a more detailed metric of the profitability of your space.
Studies show that coworking spaces begin to break even at the 13-month mark.
As a business owner, you should know how high your occupancy rate has to be for you to break even every month. As a result, break-even will be a metric that helps you stay on track towards your long term goal of profitability.
Member's needs constantly evolve and change.
A top coworking space will allocate resources to ensure that member experience is a top priority. This is why member churn - otherwise known as member attrition - is a gold-standard measure of a coworking space’s performance because it tells you a great deal about the experience of your existing members.
Otherwise known as “retention rate,” this is the number of members who renew their membership each month.
This does not include the new members who are signing up each month. If the returning member metric is high, your space is moving in the right direction.
On the other hand, if this number is stagnating, perhaps this is a good opportunity to identify the shortcomings which might be holding back members from returning for another month.
Archie provides the world’s fastest growing coworking spaces with an all-in-one platform to automate their operations and elevate their customer experience by enabling their clients to enjoy coworking services from an elegant self-service app.
From large coworking space networks to individual flexible spaces, we believe that powerful, innovative team operations should be within reach for every workspace, no matter the size, or ambition.
Through its intuitive platform, Archie helps you cut down redundant manual work and make your member experience a breeze by providing you with the right tools that power ambition.
Click here to connect with an Archie product specialist.