Your potential ratio is the percentage of the population that has a realistic potential of joining your school. The number used for decades has been 1.5%. Due to the explosion of exposure and credibility the martial arts gained from the fitness kickboxing boom in the mid-1990s, I personally feel the number is larger than that. But, to be safe, let’s say two percent of the population may join your school. This applies mostly to medium and larger cities and metro areas. Smaller cities and towns can draw a much higher percentage of the population, depending on the demographics and the type of program being offered.
Let’s say you are in a 100,000-population area, which means you have a potential ratio of 2,000 students. Sounds great, right? Well, slow down. First, those 2,000 are the potential for all of the martial arts classes combined. Your job, of course, is to get more than your competitors. Second, what if they live on the other side of town?
Your pull radius is the area surrounding your school, from which your students will come. Typically, a student will not drive more than 10-15 minutes to your school. Yes, yes, yes, I know you have students who drive an hour and walk uphill both ways to get to your classes, but unless you are going to charge those three people $1,000 per class, you can’t build a school around them.
The real question is, how much of my potential ratio is within my pull radius? Here is just a sample of the factors that will influence the answer:
1. Regardless of the population of your area, what is the population within your pull radius? Multiply that by .02 to get your potential ratio.
2. Is your school near a natural barrier? Where I live, there is a subtle bridge north of us. While there is nothing stopping us from crossing it, we rarely do. We turn south on the main roads to travel to shops, restaurants, and parks. I’m sure there are good restaurants and shops across the bridge, but we don’t go there, and I’m sure people on the other side don’t come south to our area. Other barriers include railroad tracks, rivers, bridges, busy highways, and tunnels.
3. What are the real demographics of your pull radius? Do you have the area’s largest trailer park or retired person’s community inside your pull radius? You’re not going to get two percent of those markets.
The demographics within your pull radius will make you or break you. Your job is to match your pull-radius demographic with your school.
For our purposes, we will narrow your demographic focus to those people within your pull radius. Imagine setting a ring with the radius of a 15-minute drive on a map of your area and then moving it around. Wherever you move the ring the demographics will change. Our goal is to find the best demographics within that ring. Keep in mind that a 15-minute drive ring will be much smaller for a densely populated area with lots of traffic than a more rural area. A 15 minute drive in Orlando or London could be two miles, while it could be 15 miles or more in smaller, less congested areas, so be realistic in your ring size. You have to know the size of your pull radius.
Once you zero in on a location, drive from the location at different times that your students would be going to class, so you can experience and time the drive, to see how far you get in 15-minutes.
If two percent of your ring is your potential ratio, a population of 15,000 within the ring equates to a potential market of 300 students. Keep in mind that a good school in a smaller market can pull much more than two percent. Still, that is a sobering thought.