Coworking Spaces - Key Performance Indicators for Success
Setting goals and tracking progress towards them is important to running any successful business. There’s a famous quote attributed to Yogi Berra:
This article covers:
- The definition of KPIs
- A sample KPI-process for Coworking-specific KPIs
- How to systematize your tracking
- An overview of Coworking-specific KPIs
What is A kpi?
A Key Performance Indicator, or KPI is:
There are a few key components to KPIs:
- Identify your your business objectives
- Determine what business metrics are reliable indicators over time that you are making the right progress, in the right time frame, to make your goal.
- Figure out how to collect the data that will deliver the metrics
- Systematize the process of collecting the data and dropping it into a dashboard that you review regularly with your team
- Determine what levers you can pull to impact the metrics that drive results in your business.
An important note on KPIs: Once you start identifying KPIs, you might get on a roll and come up with a very long list. I encourage you to do a big brain dump of all of the metrics in your business that you could track, but then the next step should be to think in terms of 80/20. What are the 20% of the factors that impact 80% of your business? Focus on those and keep a simplified process that doesn’t distract your team.
A Sample Process for Coworking-Specific KPIs
Let’s run through an example using the 5 bullets above and then I’ll link to a long list of coworking KPIs that you might consider for your business.
- What are your coworking-specific objectives?
- Like most businesses, your end goal is most likely a profit goal. Once you know your profit margins and your expenses are fairly consistent, you will likely focus on the revenue goal that will, after subtracting expenses, yield the profit goal you’ve set. So let’s say one business objective is $500k in revenue for the year.
- What do we measure to ensure that each month we’re making progress that, if continued over time, will lead us to our year-end goal?
- For example, if our goal is $500k in revenue for the year, we need $41,666 in revenue per month. If we need roughly $41k in revenue per month, what do we need to sell to get there? Our “products/services” likely include offices, dedicated desks, coworking memberships, meeting room rentals, event space rental and virtual office packages. Get your sales targets documented so that you know what you need to sell each month to hit your revenue number.
- Hitting your revenue number requires that your sales funnel be firing on all cylinders which is a topic for an entirely separate article.
- In order to ensure that you are set up to hit your revenue numbers, you essentially want to reverse engineer the steps to get a sale until you get to the top of your sales funnel. For example, before you sell a dedicated desk, you need to have a tour scheduled and close it. Backing up from that step - how many tours do you get per week? What is your conversion rate on those tours? What’s the biggest driver for tours? Likely that is visits to your website or Google My Business Page. What is your conversion rate from your website or GMB listing to tours? etc.
- Figure out how to collect the data to track these metrics:
Your CRM or space management platform may provide reports that contain the data that you need as inputs to your KPI dashboard. If some data is missing, see if you can find a way to get fields or reports added into software you already use. If you can’t get it from current systems, find a way to collect the data manually - i.e., an Excel document or Google Sheet.
One of my favorite metrics in the “member acquisition” section is: What % of inbound phone calls do you miss per day?” Most spaces are not tracking this critical number. I know this because I ran a survey for the Global Workspace Association – we called about 300 coworking spaces in major cities in the U.S. and about 50% of the spaces did not answer the phone during business hours when we called.
You can learn more about our findings by listening to episode #41 “How to Beat your Competition Just by Answering the Phone.” or reading the blog post that summarizes our survey. This is a great example of a metric that, if tracked, gets attention, and if it gets attention, can plug a big leak in your sales funnel and recover thousands in lost revenue.
- Systematize the process of collecting and reviewing the data:
- Hopefully one of your leadership systems is to hold weekly meetings with your team. It’s critical to get your team committed to tracking KPIs by tying bonus compensation to the goals that you’ve set as an organization. When you track KPIs, your business will have better outcomes, generally in the form of more revenue and better member retention and that’s good for the whole team.
- Tracking your KPI’s will give your team the tools they need to know whether or not the processes and systems they have in place are delivering the results they need to reach their goals. For example, if your team receives a bonus based on $X above a monthly baseline revenue target, they should be incented to pay close attention to conversions from your lead-generation partners as well as tour conversion rates. If these metrics are lower than what your team members need to hit their targets, they’ll be motivated to do some detective work to determine what levers they can pull to get the numbers where they need to be.
- If your team has 1) the right incentives, 2) the right metrics to assess their progress against goals, and 3) your support to tweak the things that impact the metrics as they see fit, you’ll have a lean, mean sales machine that works.
- Make sure that your weekly team meeting includes time for a KPI dashboard review and time for analysis if there are metrics coming up short of your goals.
- Determine what levers you can pull to impact the metrics that drive results in your business.
- Once you determine your KPIs, it might take time (months) of experimentation, more tracking and more analysis to confirm what activities really drive your metrics. The lack of this process will lead to business failure. No one knows how to run a business exactly right from Day 1. Those that succeed have systems in place to iterate and improve over time.
- For example, if your tour conversion rate goes down, here are some questions you might ask to determine what’s happening:
- What reason are prospective members giving for not joining? (If you don’t have this data, create a process for collecting it and documenting it). Do we have a product mix issue (everyone wants offices and we don’t have any?)? Has something changed in the industry that we’re missing? (All of the new spaces have walls of phone rooms and we only have one).
- Is there a break-down in the tour process (If you don’t have a documented tour flow and script, this is a good time to put that in place)?
- Is there a new manager giving tours? Does she need more training?
- Once you’ve done some analysis, determine what you can do to get back on track. In the example above, if you’re losing too many prospective members because they all want offices and you only have flex/coworking seats to offer, can you build some offices (Emagispace is a great resource to add walls in days)? If you have a new manager giving tours, does she need more training or more time shadowing an experienced tour guide that has a consistent conversion rate?
- Make the change, continue to track the metric and learn what changes are effective at improving your numbers.
What are some specific coworking KPIs?
Here’s a list of the major categories on the sample list that you can download. Each category has a number of sub-KPIs. And each KPI has a column for “Why it matters,” “How to impact,” and “Where to get this data.”
- Marketing (top of the funnel)
- Member acquisition
- Member retention
- Operational costs
The Coworking Space Business Model
If you’re already running a coworking space, skip to the next paragraph.
If you’re new to the coworking industry and the foundational principles that go into creating a space where you track these KPIs, be sure to check out my Coworking Start-Up School. This program will give you the foundation you need to open a financially sustainable coworking space.
An Overview of Coworking-Specific KPIs
- Email marketing
- Number of subscribers (net new)
- Did you send your newsletter this month? (This is a great example of a very simple KPI to track. Marketing emails are essentially free and highly impactful and yet this is one to-do that gets dropped off of many a Community Manager’s to-do list each month. If it’s not getting done, what do you need to do to make time on your CM’s calendar, or do you need to outsource it?
- Marketing email open rate
- Marketing email click-through-rate
- Google My Business Listing
- Number of visitors for the month
- Number of direction requests
- Number of offer redemptions
- Number of new photos posted
- Number of new reviews added
- Website (this list covers getting people to your site, not conversions on site)
- Number of unique visitors
- Traffic from organic search
- Traffic from pay per click
- Bounce rate
- Budget spent on Adwords
- Budget spent on Facebook Ads
- Budget spent on other marketing
- Conversion by channel (if trackable)
- Social Media (I’d set a target of consistent posts that support your brand, not necessarily followers)
- Lead Generation Partners and Direct Sales
Member Acquisition KPIs
This category includes KPIs related to your sales funnel such as:
- Number of direction requests through Google my Business listing
- Number of phone calls inquiring about membership
- Number of phone calls not answered
- % of phone calls not answered
- Number of website visitors
- Number of tours booked through website
- Number of tours completed
- % of tours converted
- Incentives paid to staff for tours converted
How these member acquisition KPIs can impact your bottom line:
These member acquisition KPIs most directly impact your bottom line because they measure the activities that drive membership which is your primary source of revenue. Certainly you want to manage costs, but costs should be relatively consistent over time, with some variable costs such as coffee that increase as membership increases (we don’t mind those costs!).
Let’s just walk through a few examples of why these metrics matter so much.
First, a very simplified coworking sales funnel looks like the following.
- A potential member:
- Searches for a local coworking space and finds you through your GMB listing or your website or possibly a referral from a member.
- Looks for your contact info on your GMB listing or website to book a tour.
- Books tour via website, phone or live chat.
- Comes in for tour
- Signs up for membership.
While the funnel is somewhat short and simple, there are a number of potential leaks in the funnel and your KPIs should identify those links and optimize the levers that you have at your disposal to move a potential member through your funnel and into a membership at your space.
Why do funnel leaks matter?
This is an excerpt from the summary on our phone answering survey:
Your customers do still use the phone. Thirty-five percent of customers begin with the phone when seeking a resolution to a problem or answer to a question.*
If you don’t answer?
40% of callers hang up after 60 seconds, and 34% never call back again**
They will never call back again. If five people call you each business day to schedule a tour and you or your staff miss half of those calls (making coffee, talking to a member, cleaning the conference room after a meeting), you miss 2.5 calls per day or 600 leads per year. If 34% of those 600 leads don’t call you back, you’ve lost 204 leads...apply your conversion rate to that number and your lifetime value of a customer to that number and that’s what it’s costing you to not answer the phone.
Some simple math to drive this home: Say you convert 30% of your leads. Each lead is worth $12,000 (on average your members/clients take a $1,000/month office and stay for a year). You’ve lost $734,000. You do not want to miss phone calls.
What are some potential areas for funnel leaks?
How easy is it to find a phone number to call you?
What percentage of calls get answered in your space? Is your community manager too busy working with members, making coffee and cleaning up conference rooms to answer the phone?
How can you plug this leak? Staple your community manager to the desk chair? I have a much easier solution. Both Davinci Virtual Office Solutions and Cloud VO (Virtual Office) offer phone answering services that will answer your phone (and the phones of your busy members as well if you’d like to add this as a revenue-generating option).
How easy is it to book at our on your website?
Are you asking someone to fill out a contact form?
What if someone has a question? Are you asking them to read through a Q&A
- Use a plug-in for your website such as Calendly or Bookly that syncs with your Google Calendar and offers real-time calendar booking.
- Add a live-chat feature to your website. Community manager doesn’t have time to man it? Davinci Virtual Office Solutions will do that for you as well. Give them a script and they will become an extension of your team.
I’ll end with those examples - you can extend that thinking to all of the KPIs on your list.
I encourage you to review your KPIs and your tracking process and ensure that you’re reviewing metrics weekly or at a minimum monthly - to give yourself time to adjust your tactics before it’s too late to impact your annual goals.
If you have KPIs that you’re tracking that I haven’t listed here, send me an email at email@example.com or hop into our Everything Coworking Facebook Group and share!