I recently met with the owners of a 2,500-square foot small group training studio in business about 18 months. As many new studio operators do, their marketing relied on word of mouth, referrals and ads on Facebook. Early on, business steadily grew, leading to a false belief that they didn’t need to spend money on marketing. When the above-mentioned lead sources began to dry-up, and in the absence of a strategy-driven marketing plan, an uphill battle became much steeper.

After reviewing their current marketing (or lack of!) I asked about their short- and long-term goals and the studio’s client capacity. They responded with “about 150,” as a number they thought was about right based on how much time they have to run classes and the business and how much revenue they think they can generate to stay afloat.

The truth is that numbers tell the real story. Numbers don’t lie or make excuses. Knowing your numbers is what it takes to increase your studio business incrementally, systematically and effectively.

Getting this studio to full capacity is based on several other key factors and the answers to several key questions:

• They are a new business, open less than two years. Figuratively and literally, a baby. Their current client base is only 68 clients

• They need to be looking at a 3-year plan.

With this data in mind, we identified that as a young business their primary marketing focus needs to be on creating a recognized, trusted brand. The tactics we applied to achieve this critical objective were also determined by budget. With 68 clients and a 36-month goal, we identified that their client capacity was 210 utilizing the client capacity formula found with the Association of Fitness Studio’s market research.

One of the easiest to determine, but least understood formulae is Revenue per Square Foot. What does it mean and what can you do about it? There are two distinct roads to travel:

If your space is maxed-out, then clearly you need to focus on current utilization by:

• Attracting greater participation. More people equals more revenue.

• Adding classes or revenue producing activities in the same space. You might not be able to change the space but you can do more with it.

• Developing new classes. Space creativity, while not a formula, is definitely a strategy to consider.

• Charging more. Probably the simplest of all strategies.

If you have extra space, then you’ve been under-leveraging your square footage for some time. But the good news is you can quickly reinforce your revenue stream by looking at all sorts of strategies.

• Add classes. The opportunity for new and different is right there. Whether it’s Zumba, or stress management, or kettlebells or any of the many options studio owners have today – select something complementary to your current offerings.

• Changing the space. If none of the above strategies is appealing or successful, you might need to look at changing the space itself. But be careful. This strategy can have a profound effect on your brand and the perception of your business while being extremely expensive.

• Add services. Juice bar, supplement sales, towels and apparel are among the many additional sales concepts that you can add.

Regardless of the modification(s) you decide to implement, the real challenge is in marketing the new concepts – both externally as a differentiator to attract new clients, and internally to enhance the experience for current clients. Keep close tabs on your new space activities, and monitor the bottom line of any new activities as well as your overall bottom line.

The next important component (among many) found in market research is the understanding of Net Client Growth. Here’s an example:

Dave owns a 3,000-square foot training studio that began as an athletic training facility focusing on middle school through college. Dave had approximately 105 clients, 30% of which were year-round adult clients with no connection to the student population. First, we needed to assess how Dave was doing in New Client Acquisition and Client Attrition.

New Client Acquisition

24 new clients added that year / 105 clients to start that year = 23% New Client Acquisition rate.

Client Attrition Rate

20 clients permanently left that year / 105 clients to start that year = 19% Attrition Rate

Net Client Growth

109 clients to end that year – 105 clients to start that year = 4 4/105 = 4% Net Client Growth

What Dave believed to be the problem in his business – client cancellations – was consistent with national averages, but his New Client Acquisition percentage was less than half the national average!

Dave identified a new demographic to service in his market: adult group training.

Without altering his business model, we created a strategy to appeal to adults in the area with a niche training approach that no other gym, club or studio in the area was doing. The lesson is that we used the Net Client Growth formulae to identify the problem and then designed strategies to solve that same problem.

23 months after we began working together, monthly revenue had tripled and Dave’s client base grew to 275 clients!