Part 2 of the FREE eBook: The Key Workspace Metrics For Success
As we saw in the first part of this series on workspace metrics, operators must be committed to meticulously tracking occupancy and revenue. While space and workstation occupancy are key determinants of success, we must not neglect the revenue generated from additional services.
Operators must track supplementary services revenue to understand growth or diminution beyond the monthly recurring rent. This number should account for a total of 20% of total revenue, half of which should originate from meeting room revenue. The measure of supplementary services can serve as an indicator of how well your team is performing; if they are creating stickiness with your members and keeping them coming back to your workspace, your services revenue can quickly increase.
Once you reach a maximum occupancy, extending additional services is an organic way of increasing wallet share and new revenue streams from customers already in your space. Most tenants will find it easier and more convenient to purchase all of their business needs from a single provider, through a single relationship and invoice.
Providing additional services can be a tricky business, especially when the barebones management of a workspace is the top priority. Nonetheless, dedicating time and effort to up-sell, cross-sell and offer more services is essential to driving revenue streams beyond space occupancy. There are many services which can utilize preexisting resources that require no additional overhead; add-on services have cash cow potential. Add-on services have potential to become a cash cow, but you must track them diligently. Here’s what you should be measuring:
Meeting Room Revenue and Usage
a. Meeting Room Usage by Residents vs. Non-Residents
Reporting on who is using your services and how much they are consuming will allow you to target customers and upsell your services. For example, a non-resident client who uses the same meeting room at the same time could potentially be converted into a resident client.
b. Meeting Room Occupancy
Determine available hours versus actual occupancy of your meeting rooms on a day-to-day and month-to-month basis. Have a historical view of this data and establish KPIs for each room. If you run a multi-site operation, establish KPIs for each location. Meeting Room Occupancy metrics can also provide you with insight into market competitiveness. Should you have a site with a greater demand for meeting rooms, it may be more profitable delivering only flexible meeting rooms, or perhaps there is an opportunity to expand to new sites in the same vicinity.
c. Ratio of Available Hours to Booked Hours
If meeting rooms are returning low usage rates, it may be worthwhile to convert them into private offices. Alternatively, if meeting room occupancy is high, consider turning common space or private offices into meeting rooms. The main takeaway here is to manage your workspace in such a way that it is flexible enough to accommodate the fluctuating demand of your members and the market.
With virtual clients, the trick is to track the services they purchase beyond virtually-consumed services.
a. Virtual Yield per Customer
Here you need to determine the revenue that each of your virtual customers is generating. Across the board, analyze what services each of your virtual customers is consuming, such as mail forwarding, meeting rooms, or call answering services, to name a few. You may have the opportunity to up or cross-sell additional services to them. For example, offering a private office to a virtual customer who has been repeatedly visiting your center to use the same meeting room.
Operators who extend upsell and cross-sell opportunities on their platform can measure the performance of additional services such as:
a. Billed vs. Consumed Services
Operators must gauge the cost of services consumed against the amount charged for those services to ensure they are getting an appropriate return on their investment.
b. Network Traffic
Knowing which tenants are consuming the most bandwidth lends the ability to offer tiered service packages and appropriate them a higher bandwidth package at an additional cost.
c. Revenue from Service Enhancements
Does your IT provider offer advanced phone features or configurations, tiered Wi-Fi options, wired Internet, or video conferencing? Additional features and services can prove to be a key revenue driver in any shared workspace. Partnering with an industry expert that can extend advanced capabilities puts you at a competitive advantage in the marketplace. All revenue from advanced features and service enhancements should be categorized and tracked by which members or companies are consuming them.
Although space is your greatest asset, you can beef up your revenue by pushing additional services. From cafe items to phones and virtual services, every penny will count towards your bottom line. Operators must have the right technology in place to measure services consumption and track the revenue generated over time to analyze trends and overall business performance.
Up next in the 4-part Workspace Metrics For Success series: Part III: Marketing, Sales & Customer Metrics