Two Key Performance Indicators Every Studio Owner Should Be Using
What is a Key Performance Indicator, (KPI) and is it something I should utilize for my studio?
By general definition, “KPIs are quantifiable measurements used to gauge a company’s overall long-term performance.” KPIs specifically help determine a company’s strategic, financial, and operational achievement, compared to themselves and to other businesses in the same sector.
KPIs are exactly what they sound like. They are measurements that you can make based on your data, that will tell you how you're doing financially, how your classes are going, how your staff is performing and much more.
Are they important to you as a studio owner? Absolutely! Whether you’re a small studio with just a handful of teachers or your enrollment is in the triple digits, utilizing KPIs can help you identify potential issues, capitalize on strengths, and ultimately, provide you with specific data that you can use to make wise decisions toward growth.
Here are two examples of KPIs that are specific to Studio Owners that you can begin using right now.
The first one is Client Retention Rate. I don’t want to overstate the obvious, but this is a big one.
Your CRR measures the percentage of students who continue their enrollment over a specific period, typically on a monthly and yearly basis. The period of time that you want to use to come up with your figures is completely up to you. Here is the formula that you will plug your numbers into to determine your retention rate: Number of students at the end of the period - (September - December), minus the Number of New Students, divided by the Number of Students at the Start of the period x 100. A benchmark or target goal is 70% or higher.
The second one is Revenue Per Student. This is especially important if you are a studio that offers multi-class or sibling discounts, because it directly affects revenue per class. Not everyone attending the class is paying the same amount to be there. So, Revenue Per Student is a number you should know. Revenue Per Student measures the average amount of revenue generated from each enrolled student over a specific period. Formula: Revenue per Student = Total Revenue divided by Total Number of Enrolled Students. Now, the target goal for this is affected by many variables, so the benchmark on this is consistent growth.
There are a plethora of KPIs that you can run and we will definitely be sharing more, but CRR and RPR are two great places to start.
Of course, coming from your friendly bookkeepers, we will always remind you that if you want accurate data, you have to start with accurate numbers. You’re welcome for the reminder.