About 2-3 years ago, we started noticing an entirely new cancellation reason showing up when people left Indy Hall.
For 5+ years, the majority of the people who left did so because they were moving away, or because they took a job. Of course people left because it wasn’t the right fit for them, too, but the vast majority of the people who found us stayed.
Then, people started saying something we hadn’t heard before: “I’m not using it enough”.
Which sounds pretty similar to what I’m hearing from you guys.
So….what changed so suddenly from the first 5 years to the most recent few?
I had to talk to a lot of members, with a lot of focus on relatively new members as well as the folks who joined and left, but two VERY consistent patterns showed up:
1 - Prior to this new cancellation reason showing up, most people who joined found out about Indy Hall first – usually through our existing community members who told them “you’ve gotta join, this has helped me in so many ways..." – and then once they got here they discovered that it was this thing called coworking.
After the shift, we had more people first seeking this thing called “coworking", then finding us as an option, and choosing us. They’d heard about coworking in the newspapers, etc, and heard it was a cheap and flexible way to rent a desk.
Those two categories of people had very different expectations of what the value of Indy Hall was.
The problem is that while it might be easier to recruit this kind of person as a full time member:
b) from a purely financial perspective, a full time desk can only generate so much membership revenue. On average, a flex desk represents at LEAST 4x the revenue potential as a single full time desk ...in some coworking spaces I’ve worked with, that ratio is even higher.
c) This kind of full time member (the one who comes in specifically to rent their own desk among other desks) tend to be more territorial than flex members. They contribute far less, and are inconvenienced by the smallest things. They’re just generally bad citizens.
Once I realized that, we were able to tailor our tours and communication to the desk rental folks to help them see that yeah, there’s a place to work but the desk is barely scratching the surface of what they can get from their membership.
We didn’t “correct” them, so much as showed them how to be better citizens, reminding them that yeah…this place was big but the way it ran most smoothly is when they were an active part of the community.
Which actually led me to realize something a bit more subtle:
2 - Indy Hall had gotten BIG. When we were just a couple thousand square feet, it was easy to tell people that our community was the primary “feature”, not the workspace. But 5 years later, with multiple floors and a physically massive presence, I think that people had a harder time believing us when we said the same thing. And I don’t blame them!
So we made some focused changes:
We focused on new member education, especially during our tours and new member onboarding, to really helping people make smarter decisions about choosing a membership with us. (note: we’re still working on this today. we never stop working on this)
We put more effort into developing our Tummling practice.
We rebalanced our full time membership, which had grown to nearly 40% of our total membership, back to ~20%.
We got even more intentional with our events, making sure that they weren’t simply “activities” but things that helped members build relationships.
We did a lot of work with our online community, turning it into an equally vibrant gathering place as our workspace so that the members who weren’t physically in the room could still get value.
Cuz here’s the mistake you make by letting yourself turn into a lazy landlord: you bind your business to your square footage and the number of desks you can fit. The only way to get past that ceiling is to add more space. And worse, you continue to reinforce the idea that the only way for people to get value from their coworking membership is to use a desk.
If the only time your members derive value is when they park a computer at a desk in your space, I have bad news for you: you’re just renting desks.
For the results of our work, some cold hard figures:
- Our overall revenue grew in 2014 over 2013 by 49%.
- Over 25% of our revenue comes from our Basic and Community memberships.
- Those memberships are growing the fastest. Community membership, which includes ZERO coworking days, grew by nearly 20% in January alone.
We’re also putting a lot of work into our more nuanced churn patterns. I finally have the data to back an intuition that people who join in “peak new member” months like January and August tend to churn out 2x faster than people who join in normal months. That’s helped us do some more digging, find out why they leave.
It’s because those busy months are the hardest to get to know people, because so many new faces are overwhelming.
We could have been like a gym or a landlord, happily taking their money in January knowing that we wouldn’t see them again by March. ¯\_(ツ)_/¯
But instead, we focused on increasing the value of the community to them so it’s not reduced to the value of a desk. And now we’re able to predictably improve our retention for people who join in those seasonal bursts.
As someone who’s added more square footage to Indy Hall 4x in 8 years to make room for our waiting lists, I’ve paid very close attention to the growth patterns. The biggest one is that when adding more square footage for the sake of adding more people, the returns are diminishing. That’s not how this kind of business scales, or protects itself for the future.
Adding more square footage to accommodate for more people is MOST valuable when each of those people are contributing to the value that every other member is able to get as a member. Because that’s the biggest value of a coworking membership: the other people in the community, not the desk.
-Alex