Numbers aren't always the first thing we want to think about. But when you're looking to grow your gym or yoga studio, purposefully measuring your critical numbers can make or break your fitness business.
But which numbers are critical to your success? It’s easy to get bogged down in a sea of numbers, or worse, waste countless hours scratching your head over reports that aren’t relevant, and chasing industry benchmarks that don’t apply to your situation.
Then, even if you’ve got the right numbers in hand, there’s the question: So what? How do you use the stats to take action that will create happier customers, and grow your business?
We talked to Josh Biro, yoga studio business consultant, and founder of the Yogaprenuer Collective to find out. Biro owned, and sold, his own successful yoga studio, and now works with yoga and fitness business owners to help them thrive.
“I’ve been obsessed with figuring out the difference between studios that are killing it, and those that are just killing their dreams,” Biro says.
Tracking the right key performance indicators (called KPIs) is critical, especially because it helps create a strong foundation for satisfaction, retention and sales as you go after new customers. With the right studio management software (like Punchpass), you can find all the golden numbers -- and set up a monthly tracking plan -- so that you never miss a beat.
“The number one question I get asked is “How do I get more new students,” Biro says. “(But) if you don’t have a handle on your numbers and you’re flying by the seat of your pants and trusting you gut, there’s always one blind spot,“ says Biro.
That blind spot could mean that your yoga studio or gym is already losing a ton of very qualified leads. You want to repair those leaks before you pour more resources into going after more customers.
Tracking your key performance metrics can also show you what you’re doing well and give you victories to celebrate along the way -- something we all know studio owners could use a lot more of.
“We open up with a lot of enthusiasm in the fitness business,” says Biro. “But eventually it’s exhausting.” Tracking your numbers “lets you see your success, and you can celebrate it,” and keep yourself motivated. Ultimately, that can make the difference between a yoga or fitness studio owner who sticks with it, and one who gives up, Biro says.
Lastly, tracking gives you, as an owner, the ability to manage your instructors without the opinion or emotion that often clouds requests for change. Armed with cold, hard facts about sales, attendance and retention, you can make clean requests of your team and give them the satisfaction of seeing their performance improve over time, says Biro.
Winning on this metric is all about focusing on creating a stellar customer experience. Your potential new customer had a gazillion other options (YouTube, gym, in-store class, park). From the comfort of home, they can access group fitness classes all day long. But instead, they took the time to research, find you, get dressed, drive across town and show up on time for a class.
“It’s an insane amount of effort to get to your door,” says Josh. “They are looking for an experience.” A lot of fitness business owners miss the importance of that first moment, he says. You can find some great ideas here about how to get your brand new customers to come to a second class.
Another consideration for those brand new customers is the way they pay for that first visit. Do you know what percentage of them are buying your introductory offer, versus paying for a drop in or coming in on some other coupon, guest pass or offer?
“If you can’t get clients from class one to class two, you don’t need to worry about what’s going on with their auto-pay at month six,” he said.
If you don’t have an intro offer, it’s time to create one! It should be a screaming deal that keeps students coming back while you and your team wow them, and is obviously a better choice than your drop-in class pass. For example, 30 days of unlimited classes for $40, or 2 weeks for $20.
Most fitness and yoga studio owners assume that nearly all of their new customers buy their intro offer at their first visit. They're often surprised to find out that a large percentage only buy a single class... and don’t come back.
The goal is to keep them returning so that you and your team can upsell them to a multi-punch class pass or membership. Which leads us to the second key number you want to keep track of...
This is where the real money is. If you can improve this conversion, the revenue growth can be exponential. This is also the biggest indicator of whether students truly value what you are offering and whether you are communicating to them the benefits of a regular, committed practice.
Biro says he often encounters a mentality among yoga studio owners that says wanting more money is somehow wrong. But the bigger mistake, he says, is not realizing that you and your team have a moral imperative to support yourselves in doing good in the world. It’s a crime not to help someone understand and commit to a program that will make them healthy, happy, and perhaps even save their life.
“The more money your business makes is an indicator of everything else you do,” Biro says. “Your clients are probably getting results.” And that’s a good thing.
A solid conversion rate from intro offer to class package is 20-25 percent, he says. If you’re hitting 30-35 percent you’re doing very well. It’s even possible to hit 40, which is extraordinary. Don’t get too caught up in comparison, Biro warns. Even small increases in whatever your studio’s rate is, can be hugely impactful.
“To get from 20 to 25, that’s the difference between a studio owner paying themselves or not,” he said.
The number one way to up your performance: Contact, contact, contact.
“If I’ve participated in your business and I don’t hear from you in ten days, I’ve forgotten you,” Biro says.
Many studio owners are afraid to be perceived as too pushy or spammy, he says. But the fix is easy: “Don’t send them spammy crap.” You can use your class management software to reach folks directly and personally (like Punchpass' email feature).
This is the sum total of all the dollars your yoga studio or fitness business brings in during a set time frame. This number is telling because it’s the biggest indicator of whether your business is growing or not.
Because most yoga and fitness studio costs are fairly fixed, there’s not a lot of ways to grow income by cutting expenses, says Biro. For example, you probably can’t change your lease rate, teachers’ pay rates, or energy bills.
To thrive and grow, your must increase the top line.
This indicator can be huge, and is one to include if you only choose a few to focus on for the year.
You may hear in business that its way more expensive to go out and get a new customer than it is to keep an existing one. This is true.
Plus, the longer your student stays with you, the more passes they buy, or months of membership they pay for, generating exponentially larger profits.
What you want to calculate is what percentage of your students are still with you after a year (Jan 1 to Dec 31).
According to Biro, a 5-10 percent increase in your retention rate, can equal a 30-50 percent increase in revenue growth.
Again, this metric is all about creating an exemplary customer experience.
One great way to do this is to use the client notes feature in your studio management software platform to include not just physical injury or health information, but personal details about each client such as the class types they enjoy, their fitness or practice goals, their family, pets, and profession. This gives you and your instructors a way to connect more deeply and personally with each of your students.
According to Biro, this number should be 60 to 80 percent. When you’ve got that many student on automatic, monthly payments, your revenue is much more stable and predictable, and your students are likely to take more classes, and be more loyal. .
One way to up this number is to make your membership program the most prominent feature of your website, social media and in-studio before and after class conversations. Price it right so that it is the obvious “deal.” Avoid offering too many types of class passes and packages; it just contributes to decision fatigue and most people will default to the least expensive and lowest level of commitment, says Biro.
You can read more here about making memberships a win-win feature for you and your clients.
Typically, as a yoga studio owner, you will set your studio’s class schedule up based on when you or your teachers can teach, when your think it’s a good idea to offer classes, and when your best client wants the class.
This is a mistake, says Biro.
There’s a smarter way.
Here’s how to do the math on when and how many classes to offer to maximize your revenue. Take your total expenses for the year, and divide that by the number of classes you offer. That will give you the amount of revenue per class you need.
If you’re not achieving that number, you and your instructors need to increase class attendance, or you may need to cut down on the number of classes you offer to increase attendance in the remaining classes.
On the other end of the spectrum, if you’re meeting or exceeding revenue per class numbers, and you are considering adding more classes to your schedule, a good rule of them is to add when classes are 80 percent full, 80 percent of the time, says Biro.
This figure should be no more than 30 percent of overall revenue. Ideally, it’s no more than 20 percent. Every market is different, and you will need to research what the going pay rates are for group fitness and yoga instruction in your area.
If you are spending more than 30 percent of your total revenue on staff and instructor payroll each month, you may want to consider a more performance-based system, offering a smaller base rate, plus per-head rate that kicks in when class attendance hits a specific level.
For example, instead of paying $45 per class, consider offering $30 per class, plus $1 or $2 a head over 10, 15, or 20 students. You’ll need to use your class attendance report to do the math. You want to make sure that at any pay rate, your yoga or fitness business is still making enough revenue per class.
This performance indicator tells you which of your instructors is helping you to grow your business and keep your students feeling happy, healthy and getting results. It’s one of those metrics that Biro mentioned can be incredibly helpful in supporting you as a yoga studio owner in having potentially challenging conversations with your teachers about their performance.
By showing your instructors the percentage of students your studio needs to retain per class and how they are meeting that number (or not), you can take the emotion out of the conversation and set up a plan for measurable improvement. If the instructor doesn’t show improvement, you have clear, factual grounds for letting them go.
This is similar to the measure of teachers’ retention, but the action step may be different... especially if you have multiple instructors who teach the same type of class.
This measure, the percentage of students who returned to a specific type of class within a defined time frame, typically a month, will show you the popularity of the class type. You may reduce or increase certain class types based on what you find over time.
This metric is far more reliable than your gut, your teachers’ preferences, or what your most vocal students say, according to Biro.
This is your profit and loss statement. Typically, fitness business owners fall into one of three camps with the P&L’s, says Biro: Ignorance is bliss. A quick glance at tax time, or those who can read and interpret the numbers with skilled know-how.
You want to be in the latter category. Don’t be scared of the numbers, and don’t pore over them in a marathon session once a year.
Have your accountant send you a statement quarterly. Lean to look at your expenses (some will probably surprise you) and your top money earners.
Maybe you can cut back a bit on all those expensive digital media campaigns, and instead focus your staff’s energy toward conversations with students about your workshops and trainings.
Or perhaps adding a new training program or a retreat would really make a big impact to your bottom line.
This is where you get to see that other, all important money number: Net revenue. This is the money you get to take home, and reinvest in your business. It’s your profit, and reward for a job well done.
So, this year go smart. Dive in. Look for wins to celebrate and areas ripe for improvement. Let the math inspire you and your team to be your best.