Inside KPI: Monthly Revenue
Monthly revenue is one of the most important KPIs for any gym owner or manager. It measures how much money your gym makes in a given month from all sources of income, such as memberships, classes, personal training, merchandise, etc.
Monthly revenue reflects the overall performance and health of your gym business and helps you plan for future growth and expenses.
How to calculate Monthly Revenue
But how do you calculate monthly revenue? And what factors affect it? Here are some tips to help you understand and improve your monthly revenue KPI:
To calculate monthly revenue, you need to add up all the payments you receive from your clients in a month. This includes recurring payments (such as monthly memberships), one-time payments (such as drop-in fees or class packages), and ancillary payments (such as personal training sessions or merchandise sales). You can use your club management system (CMS) to track and report your monthly revenue automatically.
To increase your monthly revenue, you need to focus on two main strategies: attracting new clients and retaining existing ones. You can use marketing campaigns, referrals, promotions, events, etc. to generate more leads and convert them into paying customers. You can also use customer retention strategies, such as loyalty programs, feedback surveys, quality service, etc. to keep your customers happy and loyal to your gym.
To analyse your monthly revenue, you need to compare it with other KPIs, such as revenue per client, revenue per square foot, lead to conversion rate, and customer retention rate. These KPIs help you understand how well you are using your resources, space, and sales skills to maximise your revenue potential. You can also compare your monthly revenue with your monthly expenses to calculate your profit margin and return on investment.
Monthly revenue is a crucial KPI for gym management because it shows how much value you are creating for your customers and for yourself. By tracking and improving your monthly revenue, you can ensure the sustainability and success of your gym business.
How to use it
Once you have calculated your monthly revenue KPI, you can use it to monitor and improve your gym business in several ways. Here are some examples:
You can compare your monthly revenue with your monthly expenses to calculate your profit margin and return on investment. This will help you evaluate how profitable your gym is and how well you are managing your costs.
You can compare your monthly revenue with your monthly revenue target to measure your progress toward achieving your strategic goals. This will help you identify any gaps or opportunities and adjust your plans accordingly.
You can compare your monthly revenue with your previous months or years to analyse the trends and patterns in your income. This will help you understand the seasonality, growth rate, and stability of your gym business.
You can compare your monthly revenue with your competitors or industry benchmarks to assess your market position and performance. This will help you identify your strengths and weaknesses and develop a competitive advantage.
You can break down your monthly revenue by different segments, such as membership type, service category, customer group, location, etc. This will help you understand which segments are generating the most or the least revenue and how you can optimize them.
Using your monthly revenue KPI in these ways can help you make better decisions and take smarter actions to grow and improve your gym business.
How to interpret it
To interpret and apply your monthly revenue KPI, you need to follow these steps:
First, you need to define your monthly revenue goal based on your strategic plan and budget. This will help you set a clear and realistic target for your gym business and measure your progress toward it.
Second, you need to collect and analyze your monthly revenue data using your club management system (CMS) or other tools. This will help you track your actual monthly revenue and compare it with your goal and previous months.
Third, you need to identify the factors that affect your monthly revenue, such as customer acquisition, customer retention, pricing, marketing, etc. This will help you understand the drivers and barriers of your revenue growth and performance.
Fourth, you need to take action based on your analysis and findings. This will help you improve your monthly revenue by implementing best practices, solving problems, seizing opportunities, etc.
For example, if you find that your monthly revenue is below your goal and declining over time, you might want to investigate the reasons behind it. You might discover that your customer churn rate is high or that your competitors are offering better deals.
Based on this information, you might decide to launch a loyalty program, offer discounts or coupons, improve your service quality, etc