Running a yoga studio and the practice of yoga itself isn’t like comparing apples to apples. It’s not even apples to oranges. It’s like comparing apples to Persian rugs. That’s because there is little to no overlap between the two, they are night and day.
However, this does not mean you can’t be great at both. They are not mutually exclusive, you just have to know what numbers to look for and how to improve them. The problem is determining what the “right” numbers to look at are. Sifting through the hundreds and thousands of business metrics can be a daunting task, which is why we’ve poured through all the numbers, calculations and data to present what we believe are the four most important key performance indicators (KPIs) for yoga studios.
For any membership based endeavor, retention is among the most important metrics to track. It not only tells you how your classes and teaching are being received, but is also important in projecting your month-to-month cash flow.
The formula is not complex, you simply take the number of members at the end of a period, subtract the number of new member then divide that number by the members at the start of a period and multiply by 100.
((EM – NM) / BM) x 100
Where EM = Members at end of period | NM = New members during a period | BM = Members at the beginning of a period.
One of the most oft repeated statements in sales in marketing is it’s much cheaper to retain an existing member than it is to acquire a new member. Sure, you are bound to lose some members no matter what you do, but the higher retention rate you can have, the better you set your business up for success.
Want to see how your studio’s metrics stack up against other Yoga Studios? Check out our Yoga Benchmark Report!
New Member Sign Ups
After looking at your retention numbers, you should flip the coin over and take a look at your New Member Sign Ups. This one is pretty self explanatory, but it is still important to track and optimize because it is vital to your business. At the very least, your new member sign ups should balance out relative to your member churn (the opposite of retention rate), but clearly you should strive to do more if you want to grow your studio.
There really isn’t a calculation for this metric. All you have to do is keep track of how many new members sign up over a given time period.
This KPI is largely an indication of how strong your marketing efforts are. Therefore, to increase the amount of new member sign ups each month, you can look at different tactics for your business. There are potentially dozens of different strategies you can employ, but it is usually best to find a few tactics that work for your business and work on optimizing those, as opposed to trying every new trick under the sun.
Revenue per Student
Another part of the profitability equation is determining the average revenue per student. This equation is simply your studios revenue divided by the number of members you have at a given period. Figuring out this metric is useful for all sorts of projections, but is also just a great indicator of your studio’s overall health.
Taking this metric into consideration alongside the two mentioned previously can help you determine what you need to do to increase the profitability of your studio. If you’ve got great retention and a lot of new member sign ups, you know you can work on boosting your revenue per student to increase your bottom line.
Improving this KPI comes down to either raising your rates in general or getting members through your doors more frequently.
During our Annual Benchmark Reports, one of the trends we’ve found is high performing studios bolster their monthly revenue with retail sales. Studios sell everything including yoga clothes, equipment, food, homemade jewelry, incense, essential oils, basically anything which fits the lifestyle of your community.
When evaluating retail sales for your business, it is super helpful to keep track of what sells the best and what doesn’t sell at all. You have limited space in your studio, so optimization is key. If you don’t like the commercialization that comes with selling retail, realize you are providing a service for your members. They are most likely going to buy those items from somewhere and chances are they would much rather support a local business they are proud of as opposed to a billion dollar corporation.
These are pretty standard KPI’s every business can and should measure. Reviewing these numbers and setting goals for each of them to measure against is something which can really be a boon to your studio. They provide not only a snapshot of the health of your business, but can also help guide your decision making when it comes to what part of your business to focus on to maximize your profitability.
Do you have some KPI’s that you swear by for your studio? Let us know in the comments below.