Reality is a deceiving. I think that’s why most owners don’t track stats. For those of you who are not statistically minded, here is a very simple set of numbers to track that will really gauge the potential of your school.
Keith Hafner of Ann Arbor, Michigan was the first guy I know of to focus on the correlation between these numbers. He is a great success story, so it’s well worth paying attention to why these three numbers are important to track closely.
1. Tuition Per Student Per Month
2. Number Of New Students Per Month
3. Drop Outs Per Month
Tuition Per Student Per Month
This is an area of great concern and confusion among owners. In my book, The Truth About the Martial Arts Business, I devote an entire section, The Core Dynamics, to explaining the common and predictable mindset of the martial arts professional. One of those mindsets is a fear of charging a fair price for tuition.
Most of us are raised with negative money belief systems, which make it difficult to “ask for the check.” Regardless of your belief system, here is the reality. You can be the best or you can be the cheapest. People don’t expect you to be both.
In today’s market, regardless of your location, if you are charging less than $100, you are sending a signal to your market that you are not the best. I encourage you to join HYPERLINK "https://www.martialartsteachers.com/"MATA and get HYPERLINK "https://www.martialartsteachers.com/index.php?page=Books"The Truth About the Martial Arts Business and find out how to raise tuition without a student revolt.
A raise from $80 to $100 is an instant increase of 20%. If you have 100 students, you’ve just added $2,000 per month to your gross without any increase in expenses. Will you lose students? Maybe a couple will revolt and leave. On the high end you might have five that walk. That still results in an increase of $1,500 per month or $18,000 per year.
If you are really concerned about losing students, start the increase with the new students as they join. This is why keeping a consistent base standard of new students coming in is important.
Number Of New Students Per Month
If I have at least ten new students per month coming into the school at the new tuition rate, my gross should increase each month. Simply put, if I have a lot of students coming in, but I’m getting a low tuition amount, I am going to have high administration, staffing and management challenges for little reward.
Conversely, if I have high tuition, but few students joining, I’m going to have less admin and management stress, but little reward for my efforts. Both of these numbers have to be strong and consistent for growth.
At the very minimum, you want ten new students per month. The most successful schools set that minimum at thirty and you can too, but let’s build up to that. Of course, if you are losing as many students as you are enrolling, then you will be spinning your wheels and living in a state of frustration, which is, why tracking your drop out rate is so important.
Dropout Rate Per Month
Typically when working with a school, we like to tighten down the sales procedures and plug the holes in retention to reduce drop outs. The formula for measuring retention is simple, but can be deceiving. The range of time you measure will significantly affect the outcome. Let me illustrate.
We define active students as those who have attended in the past two-weeks.
1. Start with the total number of active students as of the end of last month.
Let’s say that is 100.
2. Add to that number the new students who have enrolled in the current month.
The sum of last months’ active and this months’ enrollments would be 100% retention. Let’s say you enrolled 10 new students. 110 active students would be 100% retention and a 0% drop out rate.
3. Count the number of active students you currently have in the school.
Divide the current active count by the 100% number in #2. That is your retention rate as a percentage.
The difference between that percentage and 100% is your drop out rate. Let’s say your active count is 105 at the end of the month. 105 divided by 110 equals rounds off to 95%, which is a 5% drop out rate. At a 5% drop out rate, you will finish the year with 133 students.
The longer period of time you calculate this formula for, the lower the retention rate and the higher the drop out rate. In order to stay on top of this number, measure it monthly and try to keep your drop out rate under 5%.
To get an idea of how much a difference a few percentage points represents, with a monthly retention rate of 91% (a 9% dropout rate) you will finish the year with 101 students, just one student more than you started the year with.
So, rather than look at the retention rate focus on the drop out rate number and try to keep it under 5%.
These three numbers are easy to calculate and their impact on the growth of your school will be obvious. Low tuition equals high management / low reward. Low enrollments equals high stress. Low retention/high drop out rate equals a dying school.
Your school will grow to the degree you keep these numbers strong and consistent. Like a performer spinning plates, work to keep your enrollment, tuition and drop out rates spinning under control rather than out of control.