In the words of a wise man named Peter Drucker: “What gets measured, gets managed.” Poring over data isn’t usually the most exciting part of running your business, but that data holds the key to unlocking the potential in your business.
Our metrics can help us hone in on what kind of business decisions we should be making, where our business is hurting, and what we need to put our effort behind on a large scale.
Of course, to do this, you don’t just need to track the numbers: you need to track the RIGHT numbers. Especially for your particular type of health or wellness business. Let’s go over what metrics can make the most difference for your business (and how to translate them into real results).
Should you be tracking your metrics for your gym, practice, or studio? While it certainly never hurts, there are key points in your business development where tracking your metrics is non-negotiable. You should prioritize tracking your matrics when:
If your business is at a major crossroads, metrics can help. If you feel like your business is not where it is supposed to be, metrics are a must!
Your business data has a LOT of different categories to it. That’s a lot of numbers, but not all of them “matter” — at least, for your tracking purposes. You want to focus on the data that actually means something to you. It needs to be clear, actionable, and comprehensive.
Ultimately, your metrics should give you a clear snapshot of what’s happening in your business. This is where a scorecard can come in handy to serve as a “dashboard” with all of your most important metrics all in one place. You can track your weekly, monthly, and quarterly metrics to see how your business is working on any scale.
No matter what timeframe you choose, your most important metrics will fall into three main categories: growth, operations, and finance. The metrics in each of these categories can answer three major questions:
How many new clients are you bringing in each week/month/quarter? This can show you how well your marketing strategy is working, whether that be by word of mouth, Facebook ads, email campaigns, SEO optimization, etc.
You also want to check and see if you are converting new clients consistently. Are they signing up for one-off sessions, or are they committing to the group packages?
If you’re not seeing the conversion rates you want, it’s time to see what may help new clients feel comfortable taking the leap. Is your sales system working to convey your value? Is your product or service as good as it can be? Do you need to help your new clients overcome the money objection?
New clients can help you grow, but active clients keep you strong. It can be 7 to 10 times more expensive to get new clients than to keep one you already have a relationship with!
You will inevitably have clients leave sometimes. Maybe they’re downsizing, maybe they’re staying home because of COVID, maybe their schedules have changed. This isn’t usually in your control, but if you see your attrition rate (the rate that active clients leave) spike, it may be time to investigate the reason why. Some simple adjustments can help you support your clients and keep them coming back for more.
Your time is valuable, so you want to make sure that your schedule is used wisely. Your utilization rate is how much of your schedule is utilized (and how), by percentage.
At PIlates in the Grove, our aim is 70% or higher. If it’s getting too high, however, that can be our sign to regroup. Do we need to hire to meet the need? Do we need to invest in other services (like telehealth or livestreams)?
This one might seem obvious, but it’s important nonetheless. Your revenue includes all the money coming in with each service: your private appointments, group classes, private therapy sessions, etc.
To calculate your gross margin, you want to include the immediate cost of goods sold. This can be the cost of your instructors, music, etc: anything that directly helps you provide the service or product. When you subtract this from your total revenue, you get your gross margin.
Your net margin will include all the indirect costs that help your business run on a day to day basis. These include some of the behind-the-scenes costs like rent, your owner salary, admin team, computer software, lights and utilities, etc.
Your financial metrics help you get an idea on how financially resilient your business is. You may be bringing in a ton of overall revenue, but if your costs are fairly equal, your profit suffers for it. You may not actually be bringing in a lot of cash flow, which is the #1 reason businesses go out of business!
Your metrics aren’t just statistical noise: they are an essential asset, as long as you know what to look for! Looking for a way to make your metrics work for you? Check out my upcoming masterclass on pricing, profits, and process to learn how to make your own scorecard — and boost your operations.