By Len Fridman, Special FBA Contributor
The fear of failure can paralyze business owners from making changes needed to grow their bottom line. Fortunately, we have access to more data than ever before, which helps us uncover trends, identify growth opportunities, and navigate major business decisions.
According to Gallup, businesses that leverage their client behavior data outperform others in sales by 85% and more than 25% in gross margin. With capacity down and expenses up, it’s critical to make decisions based on key performance indicators (KPIs) to drive your business forward.
Nicole D’Andrea, a business success coach, was recently featured on WellnessLiving’s Live Your Dream webinar series, where she discussed how to use data to drive your business decisions. Nicole has a reputation for working with yoga studio owners and wellness practitioners, helping them change their mindset, think bigger, work smarter, and obtain commercial success in their business. In fact, her business—Nicole D’Andrea Consulting—was built on the success of her own studio’s (Black Bird Yoga Studio) impressive growth.
What KPIs will help your business achieve long-term success?
Nicole says that most wellness business owners are passionate about their work, but they often lack proper business operations, sales, or marketing to make educated business decisions. Boutique fitness owners often make business decisions based on their competitors and not what is good for their business.
Here are the top 4 KPIs you need to start tracking to understand your business’s unique needs better, adopt best practices, and set you up for long-term success.
1. Profit Margin (PM)
Profit Margin is a measurement of profitability, the amount of revenue generated that exceeds your business costs. One of the largest expenses that affect the profit margin for most boutique fitness studios is payroll. Nicole recommends that your payroll shouldn’t represent more than 30% of your monthly expenses.
2. Recurring Revenue
A predictable revenue stream is the single most effective strategy for small businesses to grow. In fact, 80% of your studio’s revenue should fall in that category, with 30% of your introductory students converting to autopay members.
3. Average # of Classes Attended per Month
It’s important to know the average number of classes your clients attend each month. By evaluating how often your clients attend classes each month, you’re better equipped to identify at-risk clients and develop strategies to prevent churn and boost average class attendance.
4. Client Retention Rate (CRR)
Customer retention measures a studio’s ability to retain its customers over time. Many studio owners place most of their focus on attracting new members. But did you know that it costs 5-25x more to acquire a new client than it does to retain an existing one? Before you consider building a retention strategy, it is important to understand your client retention rate.
Make data-driven decisions for your business
KPIs are essential for growth and taking your business to the next level. Did you know that WellnessLiving’s advanced reporting feature allow you to track various types of data within your business? Our reports can be used to track your payroll, sales, projected revenue, attendance, client retention rates, and more.
Interested in learning more how WellnessLiving can help grow your business? Remember, when you book a free demo with WellnessLiving you get 50% OFF the Professional Plan.
Len Fridman is a fitness business expert and successful entrepreneur. He is the CEO and Co-Founder of WellnessLiving, a leading business management software company tailored for the wellness and fitness sector. Len began his journey back in 2009 when he started a local boot-camp in his neighborhood park that soon grew into multiple locations across the country.
He teamed up with businesses across North America to create the MetaBody Yoga and Fitness Pass, with upwards of 60,000 active clients at its peak. In the midst of Len’s success, he realized there was a lack of reliable, cost-effective business management software in the market. And so along with his childhood friend Sasha Davids, the two created WellnessLiving, an all-in-one and easy-to-use software solution to help bootstrap business owners, just like them.