Part III of the FREE eBook: The Key Metrics for Workspace Success
In Part III of our Workspace Metrics for Success series, we’re taking a look at the workspace Sales, Marketing and Customer metrics that operators can measure to evaluate customer value and ROI on marketing initiatives. To drive pipeline, profitability, and retention rates it’s critical to understand how your business is tracking against your targets.
Understand the metrics around what it costs to acquire a tenant and what value they have to your organization over time. Ultimately it’s about knowing where you’re dedicating your marketing dollars and the return you’ll get on that spend. It starts with your workspace sales pipeline, through to leads and tours metrics and in-life customer spend.
Workspace Sales and Marketing Metrics
Measuring existing business is vital, but you must also prioritize generating future deal flow, pipeline and won opportunities to understand where the team must focus their efforts to increase occupancy rates. Your baseline marketing metrics should be:
a. Lead Flow & Channel Attribution
Measuring organic leads versus referrals versus brokers will tell you which marketing channel is proving most successful for leads that convert to sales. Is Google AdWords bringing you the most success? Member referrals? Facebook advertising? Tracking your most effective sales channel and attributing converted workspace sales is a reliable metric to determine where to allocate your marketing dollars to drive office occupancy.
b. Lead Cost per Acquisition
While it’s vital to know where your best tenant leads and workspace sales come from, it’s just as important to know how much you’re spending to capture new business. While your cost per acquisition (CPA) can vary, the best starting point is to take your total revenue over a time period, monthly, quarterly or annually, and divide it by the number of customers in that same period. This will give you an idea of customer value and just how much you should be willing to spend to acquire a customer.
More specifically, calculate your CPA by adding your total spend on marketing and sales initiatives in one period and then dividing by the number of new customers acquired in the same time period. Your CPA will show you what you’re spending to acquire new tenants. The lower this metric, the better.
c. Customer Lifetime Value
Running a flexible workspace is akin to the hospitality industry, causing many operators to take a more customer-centric approach to their business. Without a doubt, it is a service industry and the focus is to deliver an optimal office experience. However, you also need to understand what value your customers have, specifically their value over time with your organization. Let’s consider a monthly customer scenario:
If you want to get down to the nitty-gritty, you can calculate the lifetime value based on the margin you make from each customer after deducting overhead and real estate. Some take it a step further and deduct marketing spend and acquisition costs to bring on new customers in the same period.
d. Lead to Tour Ratio
Calculate your conversion ratio of raw leads to qualified leads to viewings to closed deals. Know where your leads are converting from and where to focus your budget and effort.
e. Conversion Rate: Incoming Leads to Deals Closed
On a weekly and monthly basis, successful landlords and office providers are tracking the number of leads that enter the pipeline and workspace sales closed in comparison to the previous week or month. Track who on your team is closing the most deals, increasing sales, and bringing in new tenants. Tracking and analyzing these numbers help make substantial workspace sales and staffing decisions that can contribute to greater revenue generation.
f. Tracking Promotions
If you’re extending promotions on your services via third-party services, track the amount of incoming business from each source and make sure that all discount limitations are met. Assigning discount codes to all of your promotions, much like a campaign to your marketing efforts, makes it easier to track and demonstrate which promotions have the greatest success.
Aside from measuring your performance by occupancy, square footage and services, you should also capture a customers’ footprint across your total office portfolio. From events attended and services consumed to retention rates. You may know your customers on a personal level, but you must also know how they interact with your workspace from a business perspective.
a. Customer Retention Rate
Maintaining high occupancy levels is attained partly by generating new tenants but equally working to retain existing tenants. Run frequent reports of contracts and renewal dates, be sure to know who is up for renewal and check in with them well before their lease expires to prevent the risk of churn.
b. Average Length of Stay per Customer
Track tenant departures over time and calculate the average duration of residence per customer. When tenants leave, get their feedback to understand why and to improve your operation or policies if needed.
c. Customer Departures over Time
Calculate how many tenants leave your office portfolio over time to have a current and historical view and percentage reference of churn.
d. ROI on Community Events
If you’re organizing daily, weekly or monthly events or classes for your tenants, measure the cost in time, money and effort spent compared to revenue from actual ticket sales. You may have a greater return on free events targeting prospective tenants than turning a small profit from a tenants-only event.
Up next in the 4-part Metrics for Workspace Success series: Part IV: Workspace Financials
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