The Studio Owner's Manifesto

I've often gone back to Seth Godin's wonderful Bootstrapper's Bible for inspiration. In that same spirit I put together this little manifesto for studio owners you might find useful, based on a slew of my observations over the years. 

I am an Independent Studio Owner. 

What I have built is important and unique and valuable. 

I work for my customers and students. I open the studio doors every day to provide them with a valuable offering. I am important to my customers and I have gratitude that they include my business in their lives. Knowing I cannot please everyone, I always do what is best for the community at large.

I am an independent studio owner. I am not afraid of technology. 

I use modern technology to be the lever I wish it to be, so that I may pursue my intention with my business. I understand the power and influence of technology, and I keep a watchful eye to determine who is working to benefit me and my business as opposed to who is working to benefit themselves by exploiting my creation.

I am an independent studio owner. I am wide eyed aware that billion dollar companies are being built off the collective value of what my peers and I offer society. I am constantly told by discount sites and deals marketplaces that I need them, when we both know the truth is it is they who needs me. 

I am an independent studio owner. I understand the value of partnerships and of those who introduce my business to new customers. I am aware of the impact these relationships have on my business. I measure their impact with data and I compensate these companies appropriately. I do not work with people or companies that devalue me or my offering. 

I am an independent studio owner. I understand the value of quality Instructors and know they are a vital part of the community. I treat my people well and I pay them fairly. 

I am an independent studio owner. I am aware this studio would not exist in it's present form were it not for the vision on which I executed, and the risks that I took to make it happen.  In addition to valuing partners, customers, students and instructors, I also value myself. I pay myself fairly and in a way that recognizes the contributions I have made as the owner and creator of the business. 

I am an independent studio owner. I see clearly our society is embracing health, wellness and mindfulness in a way that it hasn’t before and I am excited to be a part of this movement. 

I am an independent studio owner.

Ten Key Metrics You Should Be Tracking if Your Studio Uses Classpass

I’ve written before about why Maile decided Tula Yoga Studio wouldn't join classpass, but also about how we built a small integration for our customers that use Classpass.

The more I learn about Classpass the more and more skeptical I become that their model is sustainable for independent studios, however I’m also aware studios still use them, and nobody knows better than you whether Classpass is good for your business. 

But whether you think Classpass is great for your studio, or whether you’re considering abandoning the Classpass network, they are a business partner and you should know the impact they are having on your business. If they’re good for your studio, awesome, now you have data to back it up. If they’re not good for your studio, excellent, you’ve identified an area where you can improve. 

Ten Key Metrics

With this in mind, here are 10 easy to gather, simple to understand, key metrics you should be tracking & questions you should be able to answer, for the time preceding and following the adoption of Classpass at your studio. (And sometimes even if you're not).

Total Monthly Revenue: Is it going up or down?

Monthly Member Count & Monthly Member Revenue: By far the biggest risk of joining Classpass in my view is losing members. Did anything happen with your monthly members? Did they go up or down or stay flat? Is that consistent with what you’ve experienced in years past?

Total Revenue Received from ClassPass: How much money total did ClassPass pay you for a given month?

Total ClassPass Attendances: How many total people are coming in with classpass? 

Revenue Per ClassPass Attendance: How much revenue are you on average receiving for each Classpass attendance?

Total Non ClassPass Revenue: How much are you bringing in without classpass? How does this compare to before you started using classpass?

Revenue per attendance of non-class pass students: What’s the average revenue you're receiving for your full price students?

Percentage of attendances by way of Classpass: What percent of your total attendances are coming in from classpass?

Revenue per non classpass, non member attendances: How much less are you getting paid by classpass than you're getting paid for your other drop-ins?

Percentage of revenue received from Classpass: What percentage of overall revenue does Classpass account for?

 

How do things look?

Like I mentioned at the start of this post whether you tend to think Classpass is good for your business or you think Classpass might not be quite right for you, this simple spreadsheet should help you see with data how Classpass is affecting your business. Below is a view of a template with some generic data filled out in one row. Cells highlighed in yellow are formulas driven by numbers you enter in the other cells. Like I said: super simple. You can dowload an Excel version here, a Numbers version here, and a CSV file here.

It's amazing what a simple spreadsheet can do for you!

The thing I like about looking at data this way is you're laying out cleanly a way to see how Classpass has affected various aspects of your business, and then you can compare to whether that matches your intention. 

On Mindbody, Marketplaces, Fear, and Hypocrisy

I’ve been writing about Mindbody a lot lately, with my recent open letter to their customers, and my open letter to their CEO, regarding their new application that competes with Groupon called Mindbody Connect. 

And while I thought I was mostly done writing about how terribly they're treating their customers, I had completely forgotten about the fact that Mindbody worked with Yoga Journal to prevent companies like Tula Software, and other like us, from participating in the Yoga Journal Marketplaces.

The Yoga Journal Marketplaces, if you aren’t aware, are nationwide open to the public events contained within the Yoga Journal Conferences, and are a fantastic way to meet people in the yoga industry around the country. 

Tula Software was told directly by Aim Media sales representatives, the parent company of Yoga Journal, that we were not allowed to participate in their marketplaces because Mindbody had gotten upset when our mutual competitor Front Desk showed up at the January 2014 San Francisco Yoga Journal Conference, which I also attended as we were preparing (or so we thought) to sponsor an event in a different city.

So a short 2 years ago, the CEO that is saying this kind of thing on the Mindbody customer forums:

“A relatively small number of people are caught up in self perpetuating fear. And, if they don’t break out of that negative spiral, their businesses will suffer - not because of us. Because of them.”
— Rick Stollmeyer via mindbody customer forum

And mocking his customers on twitter by saying things like this:

The past two weeks remind me: the opposite of love isn't hate. It's fear. Fear paralyzes. Fear manifests the outcome you fear most.

— Rick Stollmeyer (@stollmeyer) January 6, 2016

Yes, that is the CEO of the company that was actively working with Yoga Journal, the industry's most respected publication with the industry's largest marketplaces, to prevent Tula Software and others like us from participating in the same marketplaces Mindbody was participating in. 

And now that same company is shoving their customers and their students into their marketplace and minimizing the impact that their decision to compete with Groupon has had on your business. 

They can try all they want to lecture you about competition and fear, and I’ll be here every step of the way to teach them about hypocrisy. 

Healthy Studios Are Built with Memberships and Loyalty, Not Deals

I’ve been playing around with our newly updated reports in Maile’s studio, and I’ve been able to visualize more clearly something that we talk about a lot: That the path to a healthy studio not through deals, but that it is by building a solid member base and loyal customers.

Of course, it’s not just the revenue from the members that matters. Certainly that’s important, but it’s not just about the money. It’s that when you’re able to build a successful membership base, this is also a signal that what you’ve built is important and valuable and worth paying for.

What’s fascinating though is the degree to which the idea of memberships matters. In this chart below, I’m zooming in on a handful of the most popular passes at Tula Yoga Studio in December of 2015. 

You can see most of the revenue was generated from the sales of ten packs, followed by a number of singles and introductory 3 pack offers. Lower down we see the sale of ten memberships, generating about $1,000 in revenue.

So if you're looking solely at December, you might reasonably think that these 3 pack intro offers could potentially be even more important than memberships.

But that’s not the whole story.

When we look out at the whole year, we can see that the memberships generated almost the same amount of revenue as the ten packs and far more revenue than the singles and the introductory 3 pack. 

Are the introductory offers important? Absolutely. Are they anywhere nearly as important as monthly memberships? Not even close.

What’s so striking though is not just the revenue difference. It's the number of times a purchase decision was made in order to generate that revenue. Because of the nature of the memberships, there’s a compounding effect. The first month, you sell 10 memberships. But then when you sell 10 more the next month, you have 20 memberships going. Of course some people will cancel, others will join up, etc. So you might sell 170 membership passes all year and have 120 active members at any given time for example.

But if you're always only looking at your monthly numbers, you'll never get the whole story of how important memberships are.

Another way of thinking about this is that one membership purchase, has many payments, but there’s still only one purchase decision being made here. So the reality is that 183 purchase decisions generated far more revenue than over 1,500 purchase decisions of single classes.

The other benefit is that memberships are the exact way people can usually get the best deal on yoga. So the way you talk about memberships matters too. When people ask if you have any discounts, say “yes!, we have an unlimited pass for $99/$108/$125….whatever your case may be…so if you come 3-4 times per week you get your yoga for $6 or $7 dollars per class.”

The flip side of this is of course to wonder how much value discounted classes are really brining you? What matters is the degree to which people who buy your introductory passes end up becoming regulars at your studio, not the number of deals you sell.

Something to think about as you gear up and set your sails for the year ahead, and hopefully these charts remind you to zoom out now and then to see what's helping your studio the most.

Mindbody's Vice President of Marketing is Hawking Free Workouts on Twitter

You can tell a lot from a tweet.

For example, in this tweet below, we see Amanda Patterson, the Vice President of Marketing for Mindbody, (yes, the Vice President of Marketing) retweeting San Fransisco Magazine.

But what she's retweeting, this Vice President of Marketing, is clearly something sponsored. Something that a company paid them to say. And what exactly is it that they were paid to promote? 

How consumers can work out nearly every day for free because "Mindbody online makes it happen." 

So while the CEO is hitting their customer forums telling their customers how the new mindbody connect app is going to supposedly be good for their businesses, the Vice President of Marketing is out there buying up ads to promote how your students can work out for free. In January. Your busiest month of the year.

Because somehow more people working out for free is going to be awesome for your business, just like Groupon was.

On a personal note I want to acknowledge we've spent a good amount of time talking about mindbody this past week. We don't love talking about them, but we feel what they're doing is both wrong, and also a big opportunity for Tula to show how we're different. We won't be too obsessive about this for much longer. In the meantime, did you see how in between all this we lowered our credit card processing rates to 2.3% + $.30/transaction?