If the bottom of the coworking marketing funnel is, as I argued in the last article in this series, the Product, then the next layer up is the Conversion layer, which obviously consists of all your conversion tactics. Some marketing funnel diagrams may refer to this as the Decision layer. It is when your prospective member is deciding if this space will be their new home.
There are two conversion tactics that coworking spaces often use to try to close the gap between a member’s decision and ultimate purchase. Both of them are bad tactics for the most part and only useful in certain cases. We’ll go over why each is a poor tactic and outline what to do instead.
This is a model adopted from the SaaS (Software as a Service) market. It’s a tactic we use at Habu and it’s very effective for software, but it shouldn’t be used for coworking spaces.
The primary reason for this is that coworking spaces cost a lot more money than most SaaS products (i.e. $300/mo vs $30/mo). This means that when you do charge somebody who forgot to opt out before the free trial period, you’re actually taking a lot of their money. Trust me, they will be surprised and will be upset and you will end up refunding the money. Refunding money costs you money. We tried this at Impact Hub and it failed miserably.
I’ve never had a member take more than one day to decide to become a member. Not once, ever. Sure, I’ve had people say things like: “maybe, I have to look at other spaces too.” But what this person is really saying is: “I really don’t want to work here, but I’m trying not to hurt your feelings.” They never become members.
The absolute best conversion tactic you can use is providing a stellar experience when a member comes for a tour and to work for the day.
Imagine, if you will, that you’ve invited a new acquaintance to your home for a dinner party. Are you going to warm up yesterday’s leftovers and tell them, “there’s a box of wine in the fridge and I think some people are playing beer pong outside?” I sure hope not! No, you’re going to pour them a glass of Dom Perignon and introduce them to all the other esteemed guests, who just happen to be having a lively discussion on [insert hot topic here]. Then, when it’s time for dinner, you’ll seat your guest next to Margaret, who you just know will become their new best friend.
That is how you want a prospective member’s tour and trial day to feel.
During this time you should be introducing them to members, offering them a coffee when they arrive, telling them about some of the amazing people doing amazing work in the space, and highlighting the best upcoming events. Always try to schedule tours on days when there’s a good buzz going on, but not where it’s going to be overcrowded with events and large meetings from external parties. You want prospects to know the space isn’t a ghost town, but also know they can get some good work done.
Spaces often offer discounts for the first one to three months of membership to attract new members to the space. They mistakenly think, well if they just try the space for a while, they’ll be hooked on the community and they’ll tell their friends and…
These are false assumptions. Let me explain why.
First, if price is the only reason that a member is picking your space, that means you’re a commodity, you’re boring. As soon as the price goes up, the member will leave for the next best price/space combination. This is the mentality with price shoppers and it will not get fixed with any amount of community cohesion or any of the feel-good-coworking-stuff we talk about. Price shoppers are also typically the worst members to deal with: always asking for adjustments because they were on vacation and always paying late.
Second, you devalue your product when you offer discounts for no other reason than to get somebody to sign up. Instead of telling a prospective member that your space is worth $350/mo, you’re really saying it’s only worth the discount price.
The only discounts I believe in aren't really discounts. They are value-based price adjustments. No, it doesn’t roll of the tongue as well. Sorry.
Let’s assume your full price, when all your amenities are in place and the construction is finished and the wifi isn’t spotty, would be $350/mo for a full-time membership. If your space is under construction, there’s no way you can justify charging $350/mo. Instead, you offer temporary pricing of $150/mo. On the other end of the spectrum, if you hire a full-time chef who cooks 3 meals a day for all the members, you raise your price to $800/mo. What this means is that if you feel the need to offer a discount, your membership isn’t really worth $350/mo, so don’t do discounts, just change the price.
The one exception to my no-discount policy is when somebody pre-pays for several months in advance. In this case I think it’s fair to offer discounts in the following way:
This is justifiable because having money now is always better than the possibility of money later from a cashflow perspective. The member is sort of acting like a bank for you (except you don’t have to pay the money back). Because you get the benefit of a lot more money now, they should get the benefit of some discount or incentive. This does not apply to office leases, only to flexible desk and fixed desk memberships.