By Christopher Rappold
There’s an old business adage that reads, “It costs seven times more to acquire a new customer than it does to sell to an existing customer.” And when it comes to operating a martial arts school, it has never been more true.
Think about it – what does it cost you in actual dollars to get a new student? Even if your school has great systems in place, and you only spend time, effort and energy doing low- or no-cost activities, you have to admit that it is still labor intensive.
Now, contrast that with taking steps to ensure that your students are making progress and moving towards their goals – something you should be doing anyway. When you compare actual time and money spent keeping students on track to their goals versus the efforts and money it takes to add a student, it may make you take a second look at how you prioritize your time.
Try some quick math. Review all the memberships you have in your school. How many students are on their first program and what is the total monthly revenue in dollars this represents? Now, add up how many students are on a renewal or upgrade program. How many students does this account for and what’s the total monthly dollar amount this represents?
If your school has passed its initial opening stages, I would be willing to bet that 60-90% of the revenue on a monthly basis comes via students who are on at least their second membership (renewals and upgrades). Based on this number, I would suggest that the number one most important responsibility for instructors, program directors, assistants and counter help is to retain students.
I can hear some of my marketing friends grumbling, maybe saying, “If you can’t get a student, you won’t have a student to keep.” To this point, I think they are correct.
I absolutely concede that every school, depending on its size, needs an adequate flow of new students to realize its goal. But though this is true, it has been my observation that most schools are forever focusing on the lack of new students as the problem, when they should be working to repair a broken retention system.
Let’s focus on your renewal system and offer a way for you to assess where you are. To take this from concept to calculation, I ask you to evaluate the health and predictability of your current renewal or upgrade system this month.
Here’s how you do it: Let’s imagine 10 white belts started your program this month and their first membership was for six months. If all of your systems are working properly, determine how many students will renew into a longer-term program or second membership by the end of month one, then month two, and all the way up to month six.
While some people think in terms of months, I know many school owners think in terms of belt promotions. The point is, however, you choose to do it, you want to create a norm that you can measure against and immerse all your team members around.
And while I strongly believe that criteria of attitude, performance and attendance are what allows a student the privilege to upgrade, it’s nice to benchmark the percentage and see where you are.
I know some high-performing schools that look to have 90+% of their students upgraded by the second month, while others are looking for that percentage by month four. Regardless, both types of schools would agree and caution against waiting for the membership to expire prior to establishing a new goal and upgrading.
As an easy starting point, lay out your attendance cards and count by belt how many from each color are already upgraded onto a second membership. What percentage from each belt does this represent? This becomes your starting point. With this in place, you can go to work to improve the percentages.
Remember the old saying, “What gets measured gets managed.” If everyone on the team knows what the percentages are, then with a little thinking and strategy each player on your team is asking themselves, “Who are my target students to get ready? What do I need to do to help them get ready? What kind of interactions will be positive and cause them to want to create a long-term relationship with our school?”
The largest revenue comes via student retention or, said another way, “keeping the promises we make at the beginning of our relationship.” Make sure you’re spending the correct proportion of time regularly nurturing these relationships, so they can become part of the lifeblood of what makes your school a success.
Chris Rappold can be reached for questions or comments at [email protected]
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