How to Determine Your Retention

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In consulting with school owners for more than two decades, I can pretty much predict how the initial conversations will go. I ask how many students the client wants and then how many he currently has. When he gives me his current student count (usually higher than it really is), I ask if he knows his retention. He usually says something like, “I don’t think I’ve lost more than one or two students this year.”

I then ask him how many students he enrolls each month. He gives me that number (usually higher than it really is) and kind of holds his breath, waiting for a verdict on the numbers.

I quickly add the monthly enrollments together before I ask him how many students he had 12 months ago. Usually, the number is just about the same as the current student count. The question then is, “Where did the students you enrolled each month for a year go?”

When I started the National Association of Professional Martial Artists (NAPMA), I was always amazed at how many members judged the value of the service solely on how good our ad was that month.

I saw message boards that proclaimed NAPMA the best service because we had the best ads. In truth, until MATA, NAPMA did have the best ads, but what’s the sense of wasting money on running ads if you are going to lose the new students anyway?

Let’s think of how much money and stress is put into getting new students:

  • You have to market. That costs time and money. 
  • You have to train someone to answer the phone, or you lose the money you invested in the marketing. Eighty percent of your phone calls should set appointments to take an introductory class or trial lesson.
  • You have to confirm the appointments to make sure they show up. Eighty percent of your appointments should show up to take the intro.
  • You have to teach a trial lesson or two, and then you have to make an enrollment conference. Eighty percent of your enrollment conferences should enroll.

That is an expensive and stressful process to go through. But, if you do it well, 50 percent of the people who call you will give you money. If you do it poorly, and most do, far less than 50 percent will give you money.

This is why retention is so critical. Once students are in your school, it is far easier to keep them than to have to repeat this process. Imagine the nightmare if the only way to get paid was to go through that process for each student’s monthly tuition. The beauty of the membership-based business is that, if you do a good job of teaching and servicing your students, they will continue to pay, month in and month out. This is why improving retention is mission one in turning a school around. Lazy school owners want a magic ad to fill their school when in truth they need better classroom management to keep their students in class.

The first step toward improving retention is to find a way to measure it. Here’s a simple formula to help determine your retention throughout the year:

(“Active students” are those who have attended in the past two weeks).

1.  Start with the total number of active students as of January 1.

2.  Add to that the total number of new students who have enrolled year-to-date. 

3. Count the number of active students you currently have. Active is defined as attended class in the past two-weeks.

Divide #3 above by the sum of #1 & #2. That is your retention rate as a percentage. For example, if you were to do this in April:

1. January 1 starts with 150 students

2.  New students January 1 to March 30 = 40

3.  150 + 40 = 190 students (this is 100-percent retention)

4. Current active count = 165 students

5. 165 ÷ 190 = .86 or 86-percent retention or a 14% loss rate.

The shorter the period of time, the higher the percentage. Don’t be fooled into thinking you have an 86-percent retention rate year round with these figures. Most schools end up with around 50 percent for the year. You, of course, want to push it as high as you can but it has to be more than 50 percent to grow.