353. Tips for Upgrading Day Pass Users to Recurring Memberships (and how to price them)
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353. Tips for Upgrading Day Pass Users to Recurring Memberships (and how to price them)
00:00:00,"Welcome to the Everything Coworking podcast, where every week I keep you updated on the latest trends and how tos 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 thought provoking operator 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 co working industry."
00:00:44,"Hey there, welcome to the Everything co working podcast. This is your host, Jamie Russo. It's great to be here. We maybe missed a couple of weeks of podcasting. It's summertime, lots of family stuff going on and actually lots of work stuff going on. We have been really, really busy. If you are a member of our community manager university, I want to remind you that we have a exciting training that's happening this week and if your community manager misses it live, they can catch the replay and make sure they download our playbook."
00:01:25,"So our topic this month is around leveraging the back to school mindset to to host a fall membership drive to get more members into the space, particularly focused on co working memberships. So that back to back to school mindset of getting more productive, getting into a better routine, maybe buying some back to school outfits and joining a co working space. So we have templates, we have email campaigns that are literally you can copy and paste and schedule them out."
00:01:59,"We have social media posts that you can leverage. So we have a done for you package that your community managers are going to get during our live training this month. So remind them to leverage that if that's on your team list and if that's not on your list, they have access to an amazing library of special projects and training. So if there's anything on your list, make sure they pop in there and access one of our guides or send us a request."
00:02:27,"We of course always take requests. So a couple of other previews we are working on updating our masterclass and we are going to run that live pretty soon. Hang tight for a date. We'll make sure you can register. That will be coming up probably end of July. So that is our three three success secrets. Wait, three secrets to successfully launching a profitable co working space? No, that is our free masterclass."
00:03:02,"Three behind the scenes secrets to successfully launching a profitable co working space. We are also going to rerun our mail challenge in September, so we'll be letting you know when that is ready for registration and sharing some of the behind the scenes of our first cohort, which we are just wrapping up. So stay tuned. We have a lot going on and are here to support you and your business."
00:03:32,"And we're going to talk about day passes today. So if you're on our email list, then you got a little taste of this last week and we had some responses asking about pricing. So this one is for you. If you respond to our emails, we record podcasts for you. Okay, so I'm just going to hit the high level concepts here and then we're going to dive into some detail about day passes."
00:04:01,"So here's the thing, I think about day passes. I think you probably have a love hate relationship with day passes. It probably depends on the market you're in. So I would say if you're in a more tourist friendly market, you may just embrace the heck out of those day passes and say, look, they can be high maintenance, they are not recurring revenue, but when we're in season, they bring in a lot of extra revenue."
00:04:27,"And so this episode may not exactly be for you, but stay tuned because you might get some pricing insights from this conversation that might be helpful. So again, there might be a segment of you who are like, look, it's a no brainer for us. We're always going to have a day pass. So you love that extra revenue. Those of you who are not in a touristy sort of seasonal area, you may be offering day passes because, well, flex memberships can be a little bit hard to sell."
00:04:56,"So you're frankly happy to have a little more buzz in the space with the day passers. If they're going to come in and add a little activity, you're taking them. That's the love part of this relationship, the I don't want to say hate. Nobody hates day passers. I was just leveraging an expression. But day passers, let's be honest, can be a little high maintenance. It can be challenging to make sure they have a great experience, and probably especially for your team if you're not, if your team is running the space, it probably feels like they might be a little more work than they're worth."
00:05:30,"Here's the thing about day passes, and offering them day passes create the ultimate flexibility for the commitment phobic user. And these days we have a lot of commitment phobic users. We have a lot of I can work from anywhere, so why would I work from your space every single day? I know I'm not going to. I am commitment phobic I don't want to commit to things. I only want to pay for what I use."
00:05:54,"That is a pretty typical mindset and it can be hard to overcome that. But I will remind you, I used to talk about this all the time. The gym makes it pretty painful for you to buy a day pass, right? They want you to commit. The gym also does not want day passes. Imagine the state of the gym industry, or crossfit or orange theory or bar classes or whatever it may be."
00:06:19,"Imagine the state of that industry. If they allowed people to come in only and pay only when they wanted to work out, they would go out of business. And I know our model's like a little bit different in terms of how people think about the space and use it, but it's not so different in that it requires, you know, energy and planning and human behavior change to get folks out of their home and into a co working space, just like it does to exercise."
00:06:45,"But anyway, those gyms do not want you to buy a day pass. They make it pretty hard and pretty expensive. So we're going to talk about that a little bit. So here's the thing. We have commitment phobic users in every market. If you offer them a day pass at an attractive price, then you might get repeat day pass users who never upgrade to a recurring membership. And those recurring memberships help you sleep better at night."
00:07:10,"This topic also came up in our community manager university, which prompted me to talk about it because one of our members was asking, what? How do I get these day pass users to upgrade? I can see that they probably should, and we're going to talk about that in a minute, too. One quick point is there, this is again like a philosophical, or, hey, we just don't think it's worth our time."
00:07:33,"There are plenty of brands that don't offer day passes, plenty of well known. Some of the larger operators in the business don't offer day passes. So let's start with that. It's a choice. You don't have to offer day passes if you don't want to deal with day passes. Again, the pros to day passes would be there are a lot of commitment phobic folks out there. There are people who want to try."
00:07:55,"There are people in your market who just know they're not going to use anything more than a day pass. So, and there are, you know, people who travel, you know, or are meeting a colleague or whatever it may be. The day pass certainly has its place, and that may be relevant for your market and the type of business that you run. And there are lots of really sophisticated brands that simply don't offer day passes."
00:08:19,"So I probably spent way too much time looking, doing like a market survey to, to do some research for this episode. I tend to go down rabbit holes on, on these things and so I, you know, is just looking at a lot of different examples. The other thing I have noticed, which is probably a sec, separate podcast, uh, episode, is that there are a lot of folks who still only offer full time co working that may be working for you."
00:08:46,"It's not working for a lot of folks because the, you know, the whole discussion about the day pass is that it's really attractive because it's for the commitment phobic. It's pretty hard to convince someone that they need full time co working, that they need to come to the office every day of the week they know they're not going to. You may have some folks who do that, but if you're only offering full time co working, either you simply don't want to deal with fractional co working members or you haven't quite segmented as much as you could."
00:09:18,"We see the most common membership is like a five day a month pass that is not a high ticket item, but it's probably pretty sticky. I don't know that for sure. It would be great to get some data on that, but it's a lower price point. People are less likely to cancel and it aligns more with usage, which is really what people are paying attention to today. So."
00:09:39,"Okay, so let's talk a little bit about pricing and then we're going to talk a little bit how to get folks to upgrade from a day pass to a recurring membership. I'm interrupting for a second. Are you working on starting a co working space? Space? I often emphasize how important the planning stages. You've heard me say most unrecoverable issues happen well before you open your doors and they are related to the size of your space, your real estate deal, and a few other things."
00:10:16,"If you think you are going to pick your favorite co working space and reverse engineer what you think you see happening in there, and then pick your own paint colors and your favorite furniture, you are in for a surprise. This business is really about making the right fundamental decisions that align with your individual personal and financial goals. So we want to help you avoid the mistakes that a lot of operators make in planning and launching that can really set you back in terms of time and finances."
00:10:52,"So we have got your back. We have created a free training to help you really get behind the three key decisions that we think are the most critical for you to get right when you're designing your co working business. The model, not the colors. The model. And these insights come from years of operating, designing the model for two different locations and then my work with hundreds of operators as they work on their businesses."
00:11:24,"So grab your spot in our training class. You can watch it anytime, it's totally on demand. And start your co working journey with confidence and the right strategies in place. You can grab that training at everything coworking.com forward slash masterclass okay, let's talk about day pass pricing. So the if again, I'm speaking to the segment of you who would like to somewhat discourage day passes. You'd like to maybe not completely discourage them, so you offer them, but your preference is that folks would upgrade to a recurring membership."
00:12:07,"Now, again, if you're only offering day passes or full time co working, you probably can't expect that upgrade. That is a giant leap, which is why a lot of folks are offering the five day pass, the eight day pass, the ten day pass. I mostly see the five and the ten. So like I said, I kind of went down a rabbit hole looking at, um, just looking for spaces who and to see what they offer, what their pricing is."
00:12:32,"So I made a little spreadsheet to compare. So let's go through our first example. So this space is actually in a bit of a touristy seasonal area. And actually, I saw this happens all the time. I find errors on people's websites all the time. So you're not alone. But the day pass on this site, there was one place where it was listed as $90 a day, and then every place else, it was listed as $50 a day."
00:13:01,"So I suspect they were maybe experimenting or during a high season they had increased the price and then they lowered it again. So anyway, it is standard $50 a day. That is, I found one other location that had that price. The third location that I looked at was 45. So 45 to 50. Lots of you have 25 and $30 per day passes. So let's talk about the dollar 50 day pass."
00:13:30,"This is really for the desperate. I think you might agree with that. $50 for a day pass is a lot. I could easily talk myself into a coffee shop, but if I need to do, assuming that it's possible with a day pass to make a phone call and I was Inc. I would encourage you to make this very clear on your website, if you're encouraging day passes, that you have some phone booths."
00:13:52,"What I would not do is include meeting room credits, et cetera, which actually, this location does do total overkill, in my opinion. You need to really provide clear fences, so clear delineation between the benefits of being an actual member and an on demand member. So if I'm an on demand member, again, this is if you want people to upgrade. Lots of different ways to approach this. I'm just saying, in general, if you have a really affordable day pass with access to phone rooms and discounts on meeting rooms, people are going to take advantage of that and they're going to stick with that."
00:14:29,"So in this case, the day passes 50, the five day is 95, the ten day is 195, the 20 is 275. Now, you might say, what do you mean, a 20 day pass? So here's how I look at this. If you have full time co working, you might have people coming in on the weekends, but look, most people do not. Some tiny percentage of folks are coming in after normal business hours because most of your members have families."
00:14:58,"I mean, there are folks who serve a younger audience, but even a younger audience is now working like nights and weekends. So there are really, in effect, 20 working days in, on average, in a month. So in a four week month, you have five days a week 20. So your full time co working day pass is really a 20 day pass. I think that's really important because when you're thinking about segmenting out your offers, you need to."
00:15:31,"I think 20 is the accurate number. It's not 30. Right. So when people are doing the math, I think they're thinking about, well, it's 20 days. And here's the reason. I think ten day passes work so well. Ten days is half of all the working days. So that, I suspect, is about the max that most people could ever imagine coming into a co working space if they don't have a private office."
00:15:57,"Most people, certainly you're going to have some heavier users who are coming in more often. So the ten day pass is pretty amazing for a lot of people, probably most people. That 20 day pass is going to be a hard sell. So anyway, back to our day pass discussion. $50 for the day pass. Okay, so let's break the other options into daily rates. The five day pass at 95 is then let's for simple math, call it $20 a day."
00:16:25,"Same for the ten day pass. So they're priced pretty equivalently. And then the 20 day pass is $14 a day for this first location. We're just looking at one to start with as a case study. So what I like here is that if I'm willing to upgrade to a five day a month recurring membership and they have a minimum of two months on their memberships. Then I'm only paying $19 a day versus 50."
00:16:53,"It's almost three times the price to only to do it as a day pass. It's $57 to do three day passes, or the. So it's $19 a day for the five day price. And if you multiply that daily rate times three, it's 57. I mean, I. If you're going to use three days a month, you more than two days a month, you've sold yourself into the five day."
00:17:19,"And the five day comes with, in this case, meeting room credits, phone room credits, et cetera. So there's a ton of value in upgrading to that five day pass. I think the single day pass is only actually, you know what I noticed on their website? Sorry, I don't have everything pulled up in front of me. I think you could get into the space at 06:00 a.m. i think that's a big mistake."
00:17:42,"Day passes should be nine to five, because if I have a phone call at eight, then I need to have a membership. Unless you really have a lot of day passers and you just really want to make it easy for them to get into the space and you're totally fine with them using your digital door access and letting them come in early and get themselves set up. But if you are trying to encourage the upgrade to anyone but the person traveling through, limit it to business hours, because that's going to be a reason to upgrade, is getting that 24/7 access."
00:18:14,"So I actually really like this pricing. The only thing I'm questioning a little bit is that the five day and the ten day are the exact per day rate. What you get with the ten day is just more meeting room hours and more phone room hours. So if I were them, I would experiment a tiny bit with maybe not having that jump to ten be quite so much, but."
00:18:36,"But at that point, you've got folks on, at least on a recurring membership. So. And then the next example, the $45 day pass. There is no five or ten day option. We go straight to the full time, which is 229, which is $11 a day. That's not actually the lowest. So this is also just going to vary by market. This is really important. So the daily rate on the full time co working ranged from nine dollars seventy five cents to fourteen dollars."
00:19:08,"So again, I'm just taking the full time co working rate and dividing it by 20, which is the effective number of days in, in a working month. So 975 to 14, that's a pretty, or actually 1495, that's a pretty big range. So there were two locations in this little sample set that I looked at that only offer the day pass and then the full time. So the other option that offered an in betweener had a day pass at 25 and then the eight day was their next option at $12 a day."
00:19:44,"So again, here, if you're going to. Well, you'd have to spend more than, you have to come in more than four times a month. So 25 times four to make it worth upgrading. But your daily rate is much lower if you're going to upgrade. So I think the jump from one to eight, from the day pass, you know, to eight times a month is maybe a bit tricky."
00:20:10,"It's probably easier to really step wise folks like, hey, day pass to five day, day pass to eight day is going to be harder. So here we're not discouraging the day pass really at all. $25 is very affordable. Think about what you spend at Starbucks. We are doing a kitchen project and I've been spending all my disposable income at Starbucks and on my very basic breakfast, I probably almost clear that."
00:20:35,"So. So something to keep in mind. So again, the $25 to $30 is not discouraging the day pass at all. And it's not probably going to encourage folks to upgrade because like, again, in this example, you have to buy, you have to be coming in four days to make it equivalent to the eight. And you're jumping from one to eight, which is a bigger jump because even eight is too days a week if I'm doing all my math right."
00:21:01,"So I like trying to get folks on that recurring five day pass. And this is again, a different in, you know, probably in market. So we had one five day pass at 95 and one eight day pass at 95. So again, for the five day, that's pretty easy to get people to upgrade from one to five. Not easy, doable, you know, makes sense. Not so much of a behavior stretched."
00:21:26,"And then you've got a recurring $95 a month membership. It's also, from a mental standpoint, I think, easier for folks to say, well, yeah, you do already doing a couple of day passes a month, it makes sense to go to five and have that be the equivalent. So instead of paying $100 for the two times I'm coming in, I get $100 for five and I get all these extra benefits."
00:21:47,"So that's an easier upsell. Okay. I'll let you, you can poke around and do all of the pricing research that you want to do in your marketplace. Hey there, I'm jumping in again. This time I'm speaking to those of you that are either getting ready to hire a community manager or who have a community manager and you would like to support their training and development. We know how challenging it can be for co working space operators to create their own training and development material to support their community managers."
00:22:25,"And this is so important in terms of onboarding new community managers and supporting the growth of your existing community managers. And we're getting towards the end of the year, what a great holiday gift, end of year gift to give to your community manager. So the platform is really around a couple of things. One is access to a community of like minded folks. We have a very active slack group with really wonderful questions, questions that are posed every single day."
00:22:56,"And we find that's one of the biggest values. We have community managers from all over the world, and this is an excellent group of community managers that have invested time and effort into getting better at that role. And they are the kind of folks that you want your community manager to be by and hanging out with, and they know their stuff, or sometimes they don't and they ask questions and we help them out."
00:23:20,"So I'm in the group. We have coaches that are in the group to support them. So we love when they ask questions for things they need help with because the other aspect of the program is really around helping them get resources they need to make their jobs easier and to learn things that they can use in their role to be better at their job. So we provide some done for you resources like Google Business posts, detailed event ideas, et cetera, that they can just kind of grab and go and use."
00:23:52,"And we also provide monthly resources that add to our training library so they can do our certification. And then we have a lot of electives that help them kind of get better at all the things that that go with the role. So the our community managers wear a lot of hats. So we break our content into industry knowledge for new community managers, community building operations, sales and marketing and leadership."
00:24:20,"So the leadership bucket is great for our more advanced community managers. We also have virtual office and digital mail training and coffee training for anybody who needs to know how to use commercial coffee brewers. So we have some of the, I'm just going to give you kind of a sampling of content that we have. So in our community building modules, we have hosting your first member events, building community with budget friendly events, member event swipe files."
00:24:51,"Our sales and marketing modules. We have tour training. We have the training on the full co working sales funnel so they understand what that looks like. We have social media planning frameworks. We have. What else do we have? Three simple steps to an effective marketing newsletter. These are just some of our samples. Ooh. These are some of our best utilized topics. Demystifying the process of letting your co working members use your address for their Google business listing, how to close a tour operations modules, how to set up automations, how to do a new member onboarding audit, simple ways to use AI to boost your productivity."
00:25:33,"We have over 40 courses in the program, so we cover kind of higher level topics, and then we also cover things that are timely, like the CMRA updates, Google Business updates, et cetera. So we get together monthly to do official training, and we also host a best practice sharing call, which is one of the fan favorites of the group and the Slack group. So if you have any questions at all about the program, don't hesitate to reach out."
00:26:04,"You can learn more and register at everything coworking.com forward Slash community manager now back to our episode. Okay, let's go back to our day pass discussion. There we go. Okay, so here are a few tips to encourage day passers to upgrade to recurring memberships. Raise that price of your day pass. We just talked about that. In terms of pricing, if your daily rate of your lowest recurring membership is not significantly less than your day pass rate, you're not going to get the day passer users to upgrade."
00:26:40,"There's a monetary cost and a mental cost to committing to a recurring fee, right? So our commitment phobic folks are like, nope, I just want to pay when I come in. So if it's only $25 to come in, and, you know, I could spend that much on breakfast at Starbucks and my, you know, my next latte at Starbucks while I'm hanging out there, or I'm just at home."
00:27:02,"I mean, we're mostly competing with people who are at home, right? So the $25, okay, you know, not that big of a deal to get out of the house for a day, but if you want me to commit to $95, that's a bigger jump. So that's a recurring membership, and that's a mental commitment to showing up, you know, more regularly versus just like when I feel like it."
00:27:25,"So you have to make that jump, you know, pretty compelling. That being said, one of the other things we're trying to do here is nothing, you know, fight tooth and nail with the member who really really, really only wants the day pass, but we're really trying to nudge over the folks who are pretty close. So, like I said, this came up in our community manager, slack group. One of our members has folks that are like pretty close."
00:27:48,"She's like, I don't know why they're not flipping over. Well, we have to give them a reason to flip over, and you can do that in a couple. In a few ways. So we talked about pricing. So for those who are coming in, you know, more than twice a month, probably make it easy for them monetarily to jump to the five day pass, which means your day pass needs to be more expensive."
00:28:09,"So 45, I like 45. 50 sounds really expensive. 45 feels more reasonable. But that's just intuitive. Pricing is really tricky. Right. There's a lot of just, there's, there's technical aspects of pricing. I took a pricing strategy class in business school. It was one of my favorite classes. We did some really intense projects. We talked, you know, did a lot of work on, like, bundling and different, you know, pricing approaches, and I just completely nerded out about it."
00:28:39,"And I think that's one of the reasons I still really enjoy thinking about it. The next thing you can do, in addition to pricing, which we've talked about a little, is create a more compelling fence between your day pass and a recurring membership. So again, this is really about the benefits of being a member. Not that we want to treat our day passers as inferior humans by any means, but we really want to encourage membership."
00:29:04,"The recurring membership that helps you to sleep better at night, and a $95 a month membership is not going to make you rich. You need to sell a lot of them. But on the other hand, they add up a lot faster and they're just more predictable than the day passes. Right. So again, you want to make it not as comfortable to be a day pass member. Business hour access, not getting meeting room discounts."
00:29:32,"You're not getting the other advantages of being a member. So you want your memberships to come with those benefits and make them more compelling. Discounts on meeting rooms, maybe some meeting room hours included, or phone room hours after hours access is available to them, discounts on anything else you offer, et cetera. And then to really tip people over, you have to encourage them, suggest it to them, remind them that it's an option, because we as humans were super busy and we just don't do things like, for no reason."
00:30:09,"So we got to give people reasons. And one way to do that is run periodic promotions to create urgency and scarcity. Humans make decisions with a little bit of urgency and a little bit of scarcity. So we generally operate on inertia and you have to give humans a compelling reason to change their behavior. So encourage the upgrade by offering things like new members only promotions with a compelling discount on a recurring membership for a short period."
00:30:37,"You could put a minimum membership commitment on that promotion, such as three months. So you don't want people upgrading. You have to do all the admin work of changing their membership and then they cancel because you gave them a really great deal for one month and then they opt out and they go back to the day passes. So don't do that. Say look, this is valid if you sign up for three months at a time."
00:30:56,"So run some sort of new member promotion. So I saw one pop up today on one of the websites. I was on 50% off of new co working memberships. I think it was for three months. That's a pretty big offer. I don't even think you need to do three months. I think you could do 50% off of your first month's upgrade and point out and highlight for them the math on that decision and say look, I noticed you're already coming in a couple of days a week, so you're spending the equivalent of our five day pass, but you don't get the benefits."
00:31:31,"So what if you just upgrade to that $95 a month pass and then you get the membership benefits? You can come in off hours, you get some meeting room credits, you get the value. Maybe you well, anyway, I was going to layer on some benefits, which you certainly can do, but we don't want to give too many benefits to our five day passers quite yet, and then say, look, in order to take advantage of this, you just have to be a member for three months."
00:31:55,"If you change your mind, you can downgrade again to a day pass user and set up an email campaign to encourage them to convert. So you're going to run a campaign, maybe once a quarter, run it to your day passers who are tagged in your CRM system and say, hey, we're running our quarterly promotion. Here's the behavior that I see from you. Here's what we're going to offer you to convert."
00:32:20,"And make sure you know you, your team mentions this offer to those JPAss users individually because you know, maybe they're not reading your email or reading your slack messages, et cetera. So mention it to them personally, but do it once a quarter and you could schedule that out of and literally set it and forget it, except the fact that you do want to say something personally to them."
00:32:42,"So those are a few suggestions to consider. So if you want to discourage day passers a little bit and encourage more upgrade to a recurring membership, create reasons for them to not do the day pass. Make the day pass a little more expensive than is comfortable for them, and make it easier for them to convert up to, say, a five day pass and then run some promotions around that once a quarter."
00:33:11,"Those are some suggestions I would love to hear back from you if you're a day pass lover or a day pass not so much lover a couple of other things I just wanted to mention that we need to be careful about our day passers because this is probably one of the reasons why day passers are challenging for you. But if you're thinking about like, if you're one of those people is like, I don't really think it's worth it."
00:33:35,"You want to be you totally feel free to remove it from your offer. And one of the challenges here is that you whatever. I'm going to stop right there. Okay, that's it for this week. Thanks for hanging out with me and we will see you same time, same place next week. 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."
00:34:05,"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.com. we'll see you next week."
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