356. Embracing On-Demand Users: Maximizing Revenue with Flexible Offerings

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356. Embracing On-Demand Users: Maximizing Revenue with Flexible Offerings

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."

00:00:43,"Hey there. Did you know that the three critical decisions that you're going to make that will drive the success of your co working space happen before you even sign your lease? Most people get these wrong. Did you know that there's a stat out there that says that 50% of co working spaces aren't profitable? I don't want to believe that stat. And yet I suspect it's probably true because a lot of people make these mistakes."

00:01:13,"So this podcast episode is sponsored by our upcoming live masterclass, during which we're going to help you identify and avoid these three mistakes. So join me live on Thursday, August 15 at 10:00 a.m. pacific 01:00 p.m. eastern for our live masterclass, grab your seat at everything coworking.com forward slash live. If you can't make it live, it will be recorded, but we want you to come live. You'll get the most value."

00:01:44,"You can ask questions. We'll dig in to those three critical decisions. So we'll see you on August 15. And now into today's episode. Welcome to the Everything co working podcast. This is your host, Jamie Russo. Thank you as usual for joining me. For those of you who are new listeners, welcome to the podcast. Don't forget to subscribe so that you get updates in your feed every single week."

00:02:12,"So a few episodes back, we talked about the painful trend of the day passer and how tactics that we can use to upgrade them to a recurring membership. So I'm going to flip that just a little bit today. I do think that's an important topic. I think it's totally relevant. And I also think we have to be cognizant that folks, we talked about this in that episode, the commitment phobic."

00:02:42,"So some of those folks will be able to upgrade into maybe a five day pass or at least something recurring. But there is a growing segment of folks that probably are not upgradable and they are on demand users to the core. And that is something we can resist because we prefer to go to sleep at night with recurring memberships in our p and l in our billing software."

00:03:09,"But the reality is that more and more folks, and the growing segment of users like the enterprise user, is going to want on demand use. And one of the biggest growing segments in co working post pandemic has been meeting room usage. And this is a huge opportunity and we should talk more about this in other episodes for folks that are able to take on the liability of larger meeting rooms."

00:03:36,"That business is really growing and it provides a great opportunity for co working space operators, but it can feel less predictable. So I've had several conversations about this recently and sort of lamenting the days of just being able to sell private offices and full time co working memberships. Raise your hand if you can still sell a lot of full time co working memberships. Every time I work with somebody in my startup school or somebody I'm working with on a pro forma, we are very careful about our predictions for those full time co working memberships because we just don't see the demand for those."

00:04:16,"So today we're going to talk about on demand products and the demand or on demand products, we're offerings in the co working sector and we're going to talk about what those products are, talk about pricing them and talking about our mindset around them, and then tactically how to offer them on your so the segment, there's, I think there's always been a segment that's wanted on demand. I think part of it is that supply has not been willing to offer it."

00:04:49,"So even I used to really try to hammer home this idea that like if you want access, you have to have a full time membership. I used to say, look, you can't get, can't pay for just what you use at the gym, right? Well, you kind of can if you're willing to pay a premium for a day pass, which is what we're looking at here. It is. You should have to pay a significant premium for not committing."

00:05:16,"For example, I'll just throw out a simple example. I am spending a lot of time not in at home for the summer. And so I had to decide, am I going to a, am I going to do crossfit in the garage? No, my daughter is painting the garage for her summer cash and summer activity. So am I going to do day passes at the Crossfit gym or am I going to buy a membership?"

00:05:38,"And they actually made the membership so much more attractive, even if I just bought a two month membership. So they must do this for summer folks, which I kind of like just going back to our upgrading. The day pass is I could buy a two month membership. That's it. It doesn't recur. I don't have to worry about canceling it. That's it. If I want to renew it, I have to do it manually."

00:06:01,"It was way less expensive on a per visit basis than a day pass. Even if I'm not going every day, which I am working out most days. Just an example that there is still are ways. You have to be careful how you price. Which we're going to talk about in a minute. So we see remote workers, small businesses, the enterprise user using on demand products. Why don't we just start to blend in here?"

00:06:27,"What are on demand products? Obviously day passes, we've done those forever. Some people don't do them because they don't want the administrative hassle that has historically been an option. That is pretty common. You look at some of the major brands. No, you cannot walk in on a day pass. Day passes might have been used as a tool in smaller markets to help people get to know what co working is to do a trial or in really touristy markets."

00:06:55,"And then the day passes are expensive. I remember talking about this with operators pre pandemic, going back quite a while, where they would just really make that day pass pretty unattractive from a price standpoint. And you had to really want to come in. They just didn't really want transient folks coming in, taking up staff time and potentially having a bad experience because, you know, they're so in and out."

00:07:16,"And somebody said this the other day, I think it was Kat Johnson. We were on a panel for the flexible workspace of Australia. Conference was very cool. Anybody from Australia listening, and if you were there, it looked amazing. They had an in person conference, but they zoomed us in and we were huge on their screens. I could see a giant version of myself anytime. It was my turn to talk."

00:07:43,"It was very cool to be able to do that and very technically savvy. I thought there was a great opportunity to make a conference global and to get global speakers. So kudos to you. But I think Kat said, like, look, co working spaces are not a hotel. Even if we talk about the experiences as having elements of hospitality, because, you know, hotels are greeting you as if they're just meeting you for the first time, even if you're there for a few days."

00:08:10,"Right. It's a very sort of transactional experience, even if there is a hospitality overlay to the experience, whereas in co working spaces, really we're designing the interactions to be for regular members. So you're new, you get onboarded, you go through some sort of 90 day new member experience, but really the front desk, the community managers are seeing you often and treating you as if you'll be there for a long time."

00:08:38,"It is a different experience than hotels. One of the reasons we resist them possibly is because we don't want members having that transactional, just not great experience and leaving negative reviews and that kind of thing. And we would probably more commonly see them also maybe in big cities where there's just demand for them all the time. And so the operators just okay, fine, you can come in for the day and they set up the systems and they enable it."

00:09:02,"So meeting room bookings are the other really typical on demand experience. You could come in, rent for an hour and roll back out again. That has been more typical since pre pandemic for years and years. Decades even. There are brands that don't do it. Cato, for example, they've been on the flex uncensored podcast. They do not open their meeting rooms to external folks because they just really want to keep operations really simple."

00:09:28,"It's just how they want to run their business model. But many co working spaces are seeing meeting room revenue as being just a huge revenue stream for their business, and so it's really hard to say no to that. And having those beyond demand is really what folks are looking for. Certainly we've seen success with folks selling like meeting room memberships. Folks are experimenting with that as a way to get that recurring revenue right."

00:09:54,"Like what if I sold not a co working membership but a meeting room membership so that people get discounts and they're the really incented to come back and use your space every time they book a meeting? I think we'll start to see more of that. I want to talk about two other products that I was getting the sense everybody knew about, but we had somebody ask about this at the Australia conference and I got the sense like, oh, maybe this is something we don't talk about enough, which are on demand, private offices, which is really more of a day office."

00:10:22,"And that product has been around for decades because the executive suites, which started in the seventies and eighties, they used that product. They might have used it for an office that was hard to sell, maybe an interior office, but they could make some good money off of it by renting it on an hourly basis, fixed office, and get a fixed amount of money for it for the month, or to take that variable revenue that we think is going to be higher than that fixed amount."

00:10:47,"But that still is like booking a meeting room, but it's booking a day office for an hour or 5 hours or for the day. Um, and then there. The other version of that is the part time office membership. I love this product so much, and we see operators that we're working with who test it and give it a really strong opportunity to grow over time, have a lot of success with it."

00:11:10,"I had the post workspaces on and they do really well with this product, episode 266. So I'm going to put that in the show notes so that you can reference that. That is a great one to go back to. Punch cards is another one. You buy a set number of visits up front and use them as needed. So this is like in between a membership and a day pass."

00:11:36,"Buy a five pack, a six, probably more like a six pack or a ten pack or a twelve pack. And these expire within 60 days, for example. So the nice thing about this is you're getting a bigger chunk of revenue and you're encouraging usage because they've paid up front. So I also like this as an, as a way to upgrade a day pass. Like you could just say, we don't dupe day passes."

00:11:58,"You have to buy a five pack or you have to buy a ten pack. I know 25 north one summer experimented with half day punch cards because again, instead of resisting, like they would like everybody to pay for a full day, they were finding that people were resisting buying a full day, even though it was not that expensive, like $30, which you can spend in Starbucks, or. Not that we really compete with coffee shops, they're too noisy."

00:12:22,"But $30 is not a lot of money to get some really good work done for the day. But they felt like mentally their visitors were resisting paying for a day when they knew they were only going to be in for a half day. Maybe they had to pick their kids up from camp at one, and so they knew they weren't coming from nine to five, so they did a half day punch card."

00:12:42,"And this, we'll talk about this when we get to the mindset section. And then I think that's it for on demand. There may be other versions. If you're doing other kind of on demand things, we'd love to hear about that, because the more we know of what people are working on and experimenting with, the more we can help everyone. So the mindset is really around. I will give sue some props."

00:13:06,"I won't give away all of Sue's information. But sue, if you're listening, high five. Because she got me thinking about this. We do a monthly operator call and we were talking about on demand and she said, you know what, I'm embracing it. I am seeing it. And yes, it is moving dollars from one bucket, which is the membership bucket, to on demand bucket, but I'm able to charge a premium for it."

00:13:31,"It's what people want. So I'm rolling with it and I'm creating more opportunities for on demand memberships. I'm trying to be more flexible than ever. She talks about giving tours and she said people will show up and have gotten no's from other spaces that they visited in terms of the type of membership or duration of membership. And she said, you know what, we're just having the mindset that if we can do it, we're going to do it."

00:13:54,"And I can just totally relate to this because I used to go into our membership management software and I would get so irritated with all of the plans and I would just have this reaction and say like, no, we're not selling all these custom plans anymore. We're only selling what's on our website. We're not going to make up custom plans for people. And of course, this was before the pandemic, and it felt like it was simpler to just really force people into the few buckets that we had online."

00:14:24,"It's also nice because if you have fewer choices, I would say you do have to be careful about how many choices you offer on your website because we've talked about this before, the paradox of choice, which is if people have too many decisions to make on your website, they will not make a decision. And we're going to talk about some best practices for setting these up on your website in a minute."

00:14:44,"So the mindset really is, look, no, we don't love on demand use because it's unpredictable. We like recurring revenue. On the other hand, if we could look at this as glass half full like sue is, okay, I can get a focus room from room. I can add inventory that people want. I can capitalize on this demand by serving a consumer need and charging more because they're not willing to commit."

00:15:11,"So it's very easy to set up premium pricing for on demand services. Overdose memberships. If you're getting lots of on demand and they're willing to pay the premium, then you can come out ahead. You just have to be okay with the variability. And what might help with this is if you set up more on demand services and you start to build up revenue. That is pretty consistent month over month."

00:15:34,"So no, it's not recurring, but it's consistent, then that will help the mindset. So it's, it's really, I think we're in an interesting, and I'll say challenging time in the industry. It's, our industry is so exciting because it continues to grow, but also consumer demand changes. And of course, there's the background of what's happening with interest rates and, and access to capital and that kinds of things. Let's talk a little bit about tactics."

00:16:04,"So we've talked about mindset, which is, okay, what if we embrace the on demand user? What if we say we know they're out there, we know there's probably more of them, then there are folks who want to commit month to month with us, at least outside of the offices. But even because there's a segment of people who really want their own office, right, we love them and we're going to build offices for them and we're going to take their money every single month for a year and we're going to be really happy about them."

00:16:32,"But there's going to be people who want an office, but they don't want to commit full time. They might want a day or they might want a bucket of hours or they want just a day pass or they just want a couple of hours of meeting room bookings. And so if we embrace them and we charge them more for not committing to us, then we can serve them and build up a great on demand revenue stream that we over time get comfortable with."

00:16:57,"Okay. So if you're going to offer these products, tread carefully on your website because again, we don't want the paradox of choice to overwhelm folks. There is an interface to make it like a point of sale checkout. I think on mobile you can probably Apple pay, for example. It's really, really easy. Name, credit card number to book an on demand offering on your website. Yes. You can also do this through officer and d, for example."

00:17:31,"And we had this discussion about, you know, is officer indeed much harder than flex based AI? No, not really. You do have to make an account, but oftentimes you have to make an account when you check out and buy anything. But in flex based AI does not require an account. I'm going to put these examples in the show notes so that you can take a look at them."

00:17:53,"So it's just really, really frictionless. Okay, so, but how they do it? I'm going to use the yard for an example. They've been around for a long time. I remember meeting the founder at an early juicy in 2012 ish. Probably. They're in a couple of different markets. They're in New York, Philly and Washington DC. So they're in major markets. So office R and D is probably fine for lots of you."

00:18:20,"I'm just using that as an example because it's the one I'm most familiar with and most of our members use. And you can absolutely do on demand booking by setting up the e commerce functionality for folks to book on demand on your website, which is awesome. So the yard, if you go to their website, major markets like Manhattan, they have their offers split out between on demand and full memberships."

00:18:47,"And I think this is such a good, just simple way to break out the offers and segment the website user. And this matters a lot, right? Because when a user comes to your website and they have to really dig to find something on demand because it's not what you sell, then, you know, Donald Miller says, you confuse, you lose. If they have to work too hard, they're not going to find it."

00:19:11,"It's going to be frustrating and they're not going to book. So this is a way if you're in a market where you have on demand users for meeting rooms, day passes, et cetera, just spell it out. So the yard, I love the way they have this laid out. Very simple. You click the on demand button and you can see what they have. They have a day pass, meeting rooms, a day office and hybrid access."

00:19:34,"High flexibility without having to sacrifice the privacy of your own office. I love that language. It is perfect because that is so many people. So what they're doing is selling credits or private offices and meeting rooms across all their locations. You buy credits and you can use them to book private offices or meeting rooms anywhere at a yard location, which is wework as another example. I didn't pull them up as an example initially, but I remember Gio mentioning this, which is that it used to be you could not walk into a Wework and do anything on demand."

00:20:13,"You had to be a member. And now they have on their website markets that offer on demand products and you have to download the app to get access to it. But you can create an account and then book on demand. So they don't have the e commerce ability on their website. I bet that's coming. But they do offer it and they did not used to offer it. So take a look at the yard because I love the way they've got their offers laid out."

00:20:38,"And do you book now? It's super simple, super e commerce. It's just like super clean interface, makes it very, very consumer friendly. So take a look at the yard. The other one I'm going to put in here is mindspace. They are also using Flexpace AI, they're calling it online bookings, which is another way to put it. So on demand was what the yard used and these folks are using online bookings and that may be because they're mostly not in the US, they're mostly international."

00:21:12,"And so that may be what makes sense for their users. So you click on online bookings and we go to daily and multi access, daily office meeting rooms. And then you can still see location based membership, all access membership, and entry based membership, which are memberships, but you can just buy online without ever going in. So an entry based membership is work eight times a month from any mind spaced location."

00:21:42,"So a little bit similar to what we saw on the yard, except it doesn't, it's not based on credits, it's just based on full days. And then the daily or multi access allows you to on demand book for eight or twelve pass passes, which are day passes, sorry. And then they're valid for 30, 45 and 60 days respectively. So again, I really like that they expire. So it's not like somebody buys twelve passes and sits on it for a year."

00:22:11,"You're really encouraging folks to use it, which is great. Nomad works just a single location. Nope, two locations in Manhattan. At least one of them was one of the original grind spaces and they also have on demand. So if you go, let's see if you go to their website, it's right on their homepage, nomadworks.com. book a meeting room front and center. And they have a lot of meeting rooms and they're in Manhattan."

00:22:45,"Or I can click book a space and I see the same interface that you're seeing from the yard and seeing from mind space, meeting rooms, event spaces, day office, premium day desk. I love working looking at other people's memberships because it gives you ideas of what you might experiment with. And you have to know, oh, this might work in my market or no, this is totally irrelevant. But the premium day desk I'm digging."

00:23:12,"Dive into productive work with premium dedicated desk. Raise your hand as many of you consider trying something like this where you're calling it a premium day desk. And you should. Let's see if this is listed here. You want monitors on those desks? I was just talking to someone else recently who said they put monitors on all the desks. This is another trend that we see and that it's going very well."

00:23:38,"So I'm assuming there are monitors on these desks. Although it does not actually specify monitors. I would want to see monitors for these to be or screens. The extra screen, I might be using the wrong terminal. So access our exclusive dedicated desk space on the more private third floor, complete with all member amenities for $45 a day. Love it. Okay, so you can just literally book that. You just pick your location, pick how many you want."

00:24:08,"Book online. So we're going to wrap up here on this topic. So one, I would say in most markets, unless you're in a very small market, folks are really just starting to understand what the product is. I think we had this question come up on, oh, maybe it was the Australia conference. Like, do you still have friends and family who don't know what co working is? Yes, 100%."

00:24:28,"One other episode that I wanted to mention is 224 with Phil Kershner. He is with McKinsey's real estate and organizational transformation practice. He also worked for JLL and WeWork and he had a really important experience for us to learn from in booking a day pass at a space in New York City. And it really highlighted how you have to make sure that your processes and procedures and the way your team interacts with on demand folks is really intentional."

00:25:03,"Because he had a terrible experience, he couldn't get in on time for his phone call. The title of that episode is, is your co working space really ready for enterprise clients? But you could easily swap that out with is your space really ready for on demand usage? Because you want to be really intentional about how they experience the space so that your team knows they're coming, your team knows that they're not a regular member treats them really well, is prepared to put in that extra energy that our on demand users require and that they leave a positive review."

00:25:36,"So okay, we're wrapping up. So there's mindset. Let's embrace this is what people want. Let's sell it, but let's sell it at a premium. And then let's put those products in a special space on our website which is easy to identify from the homepage. And let's make it really easy for them to book online. I still see a lot of websites with no e commerce enabled. That is not how the modern consumer behaves."

00:26:03,"I booked a mani pedi today and also booked online. I talked about my dog groomer and booking online and how I appreciated so much. And today I just don't like talking to people on the phone I have my list, I want to get through and I don't want to have to call and blah blah. I just don't. I want to boom, I'm on the website. I picked the time, I got the confirmation, I'm in."

00:26:26,"And so if you don't have that, I saw a site the other day, actually, I'm not going to go into that. You have to be e commerce enabled and these websites that I'm going to put in the show notes are going a step further and making part of the reason they're using flex based AI is because the on demand booking is very frictionless and also they enable dynamic pricing which you can learn more about if you listen to that episode, which I'll put in the show notes of the Flex space CEO explaining how that works."

00:26:57,"And that is probably mostly relevant for major markets where there's enough space to make dynamic pricing work. So I would say for many of you, if your management platform allows e commerce purchases like Officer and D for example, that is enough. We don't have to chase the shiny objects. But if you're in a major market, you might want to take a look at this. So make sure you have frictionless booking on your website."

00:27:23,"It's separated out. It's not overwhelming your consumer, it's giving them the options that they need and that you are intentional about the experience that the guest has when they come in. Okay, that's it. We're going to wrap up there. We have a number of exciting guests scheduled on the podcast for the next few months, so stay tuned and we'll see you same time, same place next week. Thank you for listening to today's episode."

00:27:52,"If you like what you heard, tell a friend, hit that subscribe button and leave us a rating and review. 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. Bye."

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