346. The Math on Virtual Mailbox Revenue for Coworking Spaces

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346. The Math on Virtual Mailbox Revenue for Coworking Spaces

00:00:00,"Welcome to the Everything Coworking podcast, where every week I keep you updated on the latest trends and how toss in Coworking. I owned and operated Coworking spaces for eight years and then served as the executive director of the Global Workspace Association for five years. And today I work with hundreds of operators and community managers every month, allowing me to bring you a thought provoking operator,"

00:00:26,"case studies and inspirational interviews with industry thought leaders to help you confidently stay on top of what's important and what you can apply to your own role in the Coworking industry. Welcome to the Everything Coworking podcast. This is your host, Jamie Russo. This episode is sponsored by my commitment to making you more revenue in your Coworking business. Okay, so we are launching a new program called the Everything Coworking Club and it is designed to fast track you to increased revenue."

00:01:09,"And the first project we are going to embark on, we're doing quarterly revenue generating projects, is to set up or optimize your virtual mail program. So we talked about this in the last episode, I've been talking about it in email, but in case you're missing those, there is a huge opportunity for you to start or increase the revenue you're making from a virtual mailbox program."

00:01:37,"We talked about who is buying mailboxes in the last episode. And we're gonna share some success that operators are having. I mean, I could share lots and lots of success with you. I shared in an email recently, I still remember and I know them personally so I know this is totally true, that Pacific Workplace is standing up at a GWA conference and saying that they pay their rent at one of their locations with their virtual mailbox offer."

00:02:04,"And they are total pros at marketing and selling these packages. And they have some super sexy addresses. So we may not get you to paying your rent your mailbox. You know, your address may not be Cupertino, California where Apple's located, for example. But I also have a startup school member who is not even fully open yet, who got an awesome lead from a referral partner for $3,000 a month in mail revenue as as long as she gets her her system vault set up and gets listed as A-C-M-R-A."

00:02:38,"So even in smaller markets without super hot addresses, you can create a significant amount of revenue from a virtual mailbox offer. And that's what we're gonna talk about today. I am gonna give you an example and this is gonna be really visual, so I'll walk through it so you can still get a lot out of it if you're listening. And I'm gonna link to the version of this that's on YouTube so that you can follow along if you would like to do that."

00:03:04,"So the challenge that we're running is called the, hold on, where, where'd we go? The I slipped off of my the May Mailbox Money Maker challenge. So we have a solid schedule from May 15th to get a sign up by the 12th so that we can onboard you and get you set for the 15th until the end of June. So the first challenge is not gonna be quite a full quarter long,"

00:03:39,"but in Q4 we will run a full challenge. So we are going to make sure that you have everything you need, and this is a lot of done for you work templates, pricing recommendations, sales funnel reviews. We wanna make this really easy. So if this has been on your list of things that you think you wanna do and make room for in your business,"

00:04:07,"now's the time. So you can check it off your list in just a couple of months. And with support from our team and recommendations and our eyeballs on your work as long as you submit your work. So make sure you tune in. We're gonna help you with what you should sell. We're gonna help you with your pricing. We're gonna help you sell more if you already have a program by optimizing possibly packages pricing and your workflow."

00:04:34,"I audit websites all the time and we just did a full update of our virtual mailbox training for our community managers. So I was looking around at websites for examples and every single website that I looked at had opportunities to make improvements that would convert better for mailbox memberships. It's that whole, if you're inside of the bottle, you can't read the label. So you're doing your best,"

00:04:59,"but it's hard to, you know, you, you're so familiar with your content and your workflow, it's hard to see what might not be working quite as well from a customer standpoint. So we're gonna help you make sure that you're optimized and generate more revenue. So even if you're already set up as A-C-M-R-A and you've kind of got that set up, we're also gonna provide SOPs for your team."

00:05:21,"We're gonna show you how to outsource if you wanna outsource your mail. That's what I did in my business. I didn't have my Community Manager MA manage the mail at a certain point. We had someone come in and manage the mail separately, whi, which worked really well. So if one of your barriers is picturing, you know, landslides of mail showing up on your community manager's desk,"

00:05:41,"A, that's not accurate. It takes a lot of mail clients in order to see a volume of mail. And B, you can have someone else handle it. It's true that it is not always sunshine and rainbows. There are challenges you're gonna deal with and you just have to decide if it's worth it. So we're gonna walk through the numbers and you can decide."

00:06:00,"Okay, so back to the challenge. I want you to grab the sign up link in the show notes if you're interested. There's more details on the checkout page, you could email us and it's best to be on our email list so that you get all the details. 'cause we could send nice long descriptions of the program. The program is 3 75 a month,"

00:06:19,"so you get about three months for this first challenge. And then in Q4 we're gonna do another revenue generating challenge. But you can opt out before that if you don't wanna do it. But our goal is to create a program called the Everything Coworking Club, where we focus on revenue generating projects or owners of Coworking spaces every single quarter. So we're gonna make it a pace that you can easily keep up with,"

00:06:45,"but that you're getting stuff done and checking things off of your list. So we're here to help you. There's no reason for you to do it on your own. And the ROI here is really easy. We're going to show you that on the numbers. Okay, so let me share my screen and I'm gonna walk through the numbers. And again, if you are watching along on YouTube,"

00:07:05,"you will be able to see this. If not, then you will not be able to see it. All right, let me get up my spreadsheet because I've off of it. Okay? So again, I'll voiceover for those of you who are not watching, but it's a great time to subscribe to our YouTube channel. Okay, so here's what we've got."

00:07:25,"Here's what we're gonna assume, and we can play with this number and we will play with this number in a second. Price $39 a month. Now, if you join our program, we are going to show you how you can sell basic mail plans and you can sell very expensive mail plans. We have members in our Community Manager program that are selling packages that are $329 a month."

00:07:49,"I'm not kidding you, that's far more than most of you are getting for a full-time. Coworking membership for someone who comes into your space, often drinks your copies, uses your toilet paper, talks to your team. These are folks who don't show up to the space very often unless they're coming in for meeting room use and that kind of thing. So,"

00:08:07,"but we're gonna be very conservative in this first example just from the start. So we're not inflating what's possible here. I will say my general recommendation is that you don't wanna have really inexpensive mail plans, even if you're in a smaller market, there's a lot of value. Short professional address, it's, you know, pretty much impossible for the average person to go sign their own lease and get access to an address."

00:08:31,"And you will attract customers that your team doesn't want to deal with. The high maintenance folks buy the inexpensive plans. So don't do 9 99, don't do 1499, you wanna start maybe at 29, but I like 39. And you'll see if you're following along, we are assuming that you're gonna charge a setup fee. Now, I know for a lot of you that's like,"

00:08:57,"what are you talking about? Setup fee. Yeah, so lots of Coworking spaces charge setup fees for everything and no one blinks an eye. And guess what? If they do, then you could waive the setup fee and the customer feels like they won something. So it, it takes team time to set up any new manager for an office, for a flex desk and for mail,"

00:09:21,"especially with the new CMRA requirements. So you probably wanna assume that you're gonna do this. And guess what? It's an easy thing to explain. Hey, the new United States Postal Service just implemented this new database. And so when you get a virtual address, our team has to go in and set you up in that database and that takes time. And so we need to account for that time."

00:09:44,"That's why we charge a setup fee. They're never gonna ask, but you can know that for your own edification and your team could feel comfortable with that number because you're covering their time or the time to outsource that work, which is actually included in this example that we're walking through online. Okay, so here's the other important thing about mail. And it's starting a mail business."

00:10:10,"When is the best time to start a mailbox business? Five years ago? When's, when's the next best time today? So mail just like your, you know, revenue for every other s product that you sell, it's compounding, right? Your monthly recurring revenue multiplies on itself over time. So the amazing thing about mail is there is no limitation. You are not limited to a number of physical mailboxes."

00:10:39,"We're gonna talk about all of that in the program and I gotta go into tons of detail here, but you are really essentially not limited. And if you have, again, if you're picturing landslides of mail being delivered by the postal service every day, that just doesn't happen. People don't, you get lots of mail at home because you get junk mail."

00:10:59,"Junk mail doesn't go to business addresses only like important mail goes there. And so you're not gonna get that much mail and you're gonna store it and you're gonna store it in like filing cabinet. We had a really robust mail program and we managed it all in a little pop-in plot filing cabinet with wheels on it that sat next to the front desk. We did have storage for packages."

00:11:22,"I've mentioned one of the members I remember most clearly got lots of shoes delivered to the space. So we got lots of Zappos packages, for example, and we had to put those in a storage closet because you do need to lock up and secure mail if you're managing a mail program or external customers or even your members. So that's important, but it just does not take up a lot of space even when you have a lot of members."

00:11:47,"Okay, so here we go. If you're watching, I'm gonna just kind of talk through this. We have five years laid out here so that you can see the benefit of don't wait, start now and start now with our program. And by the end of June you're done. Okay? So year one, month one, we assume that you get three new customers a month."

00:12:11,"Pretty conservative. So if that's all you're getting now, we can help you beat that. Unless you're in a teens, c teens, sea times sea little market. We had someone from Lansing, Iowa the other day ask, and I was like, I don't know, let's try. And there were referral partners advertising in her market. So I would not be surprised if there are leads."

00:12:30,"So this is for sure worth testing. There's almost no downside to testing this. And if you get no leads organically or through referral partners after say six months, go ahead, turn it off, but you owe it to yourself to try to make more revenue for your business. So, okay, let's look at year one again, assuming package at $39,"

00:12:54,"and again, we can increase that number significantly by bundling services into that. So that's a basic mailing address service. We had some things included like shredding or notifications, mail forwarding, et cetera. And again, you can also design this to work for you. One objection I heard recently is that it's a stress on the team because they have members that want their mail day of,"

00:13:21,"and their team doesn't necessarily have time to sort the mail. What, what if the mail comes in at two o'clock, are used, used to show up towards the end of the day. Okay, so in your terms of service, you say our mail service level is that you will get your mail within 24 hours of delivery that gives your team or your outsourced resource time to come in and process the mail."

00:13:43,"We only forward packages on Fridays is another example that I saw recently, right? So you designed the service to fit your team or your outsource team and just don't just say no, no thank you to the customers who have requirements that you cannot meet. No big deal. Okay? So 39 bucks set up fee is $29. New customers every month. Three."

00:14:07,"So you're starting with three customers in month one. And by the end of the first 12 months, you have a total of 36 customers. Your monthly revenue for year one by month 12 is $1,491. Your total revenue for year one is $10,000. Not life changing, but not terrible given the fact that this should take your team roughly 30 minutes a day."

00:14:36,"So William Edmondson, who's gonna be on a guest on the podcast, he's at I Postal, he was also the COO of office evolution, which is now part one. Well, they have always been one of the largest Coworking operators. Williams experience goes back years and years and years. So this is very valid and I absolutely will attest to this from our mail program as well."

00:14:58,"He, his rule of thumb is for every 100 customers, 30 minutes a day. Now this may vary, and again, if you get a customer that's super high maintenance, say no thank you. You do not have to serve a customer. That's too much work for your team. No thank you. We are not able to serve you. So just say no,"

00:15:18,"and you can turn down that revenue, no big deal. So in month, wait, sorry, in year one your team is spending 30 minutes a day and you're making an extra $10,000 or you are out, you are outsourcing that. My model does not assume if you're watching along online, that this is outsourced until year two. And I'm very conservative about the outsourcing because I know this is an objection that people have."

00:15:40,"Maybe they don't want their team to do it, their team doesn't have time, et cetera. So let's look at year two. So my assumption in year two is that by month six of year two, again, you're just adding three new customers in month. You could do that in your sleep and our program will help you beat that for sure. So this is very conservative."

00:16:01,"You are up to 50 customers in the second year, six months, so 18 months in. So at this point, maybe it's taking, you may, maybe your team, you know, feels like it's too much work. It's still probably not. But just to be conservative, you're gonna outsource this. You're gonna hire a high school student or somebody who's retired to come in and do the mail for one hour a day."

00:16:27,"And while they're there, you might have them do some other things. I share often that in my programs that one of my favorite moves was I was hiring for a Community. Manager was having a hard time hiring in a very, you know, high income area. I operated in Palo Alto, California. And I ended up with two community managers and one was really an operations manager."

00:16:52,"So she came in in the morning and she did the mail, which got delivered the afternoon before. She processed a doll, she made the coffee, she used the pillow, she said hello to everyone. She made, look, you know, checked inventory, she did all those like little operational things. And then our regular Community Manager would either come in at the same time and overlap or could come in a little bit later,"

00:17:14,"which worked really well for her. So we had somebody coming in a couple hours a day to just do admin stuff and she was amazing. So that is something you easily can do. And it could be a high school student, it could be somebody who's retired or a mom who does school drop off and then pops by and makes a little bit of extra cash every month and you know,"

00:17:33,"just is able to be a part of your community. It could be a member who does a trade. There's so many ways to handle this if you get creative. So we can help with that. 'cause in the program we're delivering standard operating procedures, making sure you have all the paperwork that you need to have and training on mail and job descriptions for this."

00:17:52,"Okay, so we're assuming now that at 50 customers, which probably is not necessary, but at 50 you're hiring someone who comes in an hour a day, you're paying them $20 an hour and you're doing this for the 20 working days a month. So you're spending 400 bucks a month on this person. So yes, that impacts your margin. So now we have a profit line that we'd add,"

00:18:13,"we've added to this model, but in year two, now at the end of year two, you're up to 69 total monthly customers. Again, you're only adding three a month, which is super conservative. 'cause of course you're gonna be able to ramp this up. Now you're an expert in mail and marketing. I know I'm, I'm, I'm amplifying a little bit,"

00:18:34,"but I really do believe with focus you can do this and maybe that's what you, you know, use task your team with or somebody else on your, or you with doing sort of the strategic growth of this revenue line. But you've got somebody who handles the actual management of the mail. So by the end of year two this year you made 20."

00:18:59,"Oh, my math is wrong there. Hold on, do there, let's fix that. Okay, we go, hold on. Yeah, I had a minus instead of a plus. Okay, there we go. Wait, no, hold on, I did the wrong line. Okay, you made $22,000 in year two after paying someone to manage your mail."

00:19:19,"So this is a little bit of your strategy time, right? So that's not accounted for here, but you, you're outsourcing this, your community management op, you know, your regular team is not handling the mail if you so choose. So that is accounted for. Once you hit 50 customers and you made an extra 22 grand, that's pretty impressive,"

00:19:42,"right? Because that doesn't require personal or any physical space. And these people generally are for $39 a month, you're never seeing these folks, right? They're probably not coming in to pick up mail. So if you're selling more expensive packages that include meeting room time or part-time, private offices, then yes, you might see these folks, but great because you're selling them more expensive packages."

00:20:07,"Okay? So we're gonna skip ahead here and just do the punchline. Year three, you're still paying somebody to come in and manage the mail and you hit a hundred customers by the end of year three. And that year in profit, you, after paying someone to manage the mail, you made $38,000. So in year four, because you're at a hundred customers,"

00:20:29,"we assume that you're gonna double the time that it takes someone to process the mail. This is not a perfect model. So, but it's just to illustrate, you know, the generally how this would work, you're not going to suddenly double the amount of time it takes. You're gonna ramp that up a little, little bit. But in year four,"

00:20:49,"you're now spending $800 a month for someone to process your a hundred and growing customers. At the end of year four, you have 135 male customers, and this year you profited $50,000, your revenue was 56, but you spent that 800 bucks a month, and so you profited $50,000 at the end of the year. So I would take 50 grand in basically passive income by leveraging my address and having someone in the space a couple hours a day to do mail."

00:21:20,"And maybe they're doing a couple other things while they're there. Okay? So if you keep up this pace at the end of year five, then you have 168 mail customers and you've made $71,000 in revenue. And if you still have somebody coming in for two hours a day to handle the mail, that's $66,000 in profit. So we can change a couple of assumptions here."

00:21:43,"What if your average, what you know price was $59? So if you're selling a $59 package with a $29 setup fee, okay, so now by the end of year five, you've made a hundred thousand dollars in profit. Not bad, right? That that is by having, you know, on average a $59 package. So if you were to nudge that up,"

00:22:09,"if you're in a market where they're $79, then you've made $139,000 in profit because it doesn't take longer to process this, right? This is just changing the price. So that's pretty impressive. So again, that's what, this is a really, really basic, this is 30, you know, 39 to $79. This does not include some of the really creative packages we could get into if you go through our program and we help you set up some of the packages that bundle other services."

00:22:43,"But anyway, that I won't go into the detail. We're gonna wrap up there. But again, if you wanna see these numbers on your screen, then grab the YouTube blank. And our next episode is going to be operators who are running these programs successfully. And they're gonna share what that looks like in their business. And again, if you are interested in joining our program,"

00:23:07,"you can grab the link in the show notes and if you have any questions, certainly reach out. We'd love to help you start or optimize your mail program and increase the revenue in your Coworking business. Thank you for listening to today's episode. If you like what you heard, tell a friend, hit that subscribe button and leave us a rating and review."

00:23:31,"It makes a huge difference in helping others like you find us. If you'd like to learn more about our education and coaching programs, head over to Everything Coworking dot com. We'll see you next week."

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