Something in the world of floating have you stumped?
Graham and Ashkahn talk about the guiding principles and metrics that dictate how they run Float On and what they measure for success. While they don’t have any float center secrets, they do provide some useful advice in how to look at numbers, when to pay attention to them, and perhaps more importantly, when to ignore them.
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Transcription of this episode… (in case you prefer reading)
Ashkahn: Okay. Hi there everybody.
Ashkahn: This is Ashkahn.
Graham: I am Graham.
Ashkahn: And like we do every episode, start you off with our business quote of the day, this one is from Michael Sesna and he says that “there’s no business like show business”.
Graham: Alright today’s question is, “what’s the single metric that guides the direction of your business? Your North star so to say.”
Ashkahn: So to say.
Graham: Other than they actually say or so to say.
Ashkahn: As we editorial license.
Graham: No. Artistic license. Something we say. Alright what’s our single metric?
Ashkahn: Well the great business philosopher Michael Sesna-
Graham: Get out of here! Yeah. We totally think about business metrics and we’re very formalized with things like that. Actually we-
Ashkahn: Well okay, I mean I have a feeling the answers to this are going to be much more simple than-
Graham: Our normal questions?
Ashkahn: I mean like-
Graham: Or our normal answers I mean.
Ashkahn: If you’re using just one or maybe we can say a couple of metrics to really guide things like, they’re I think the most obvious ones like income-
Graham: Number of floats.
Ashkahn: Number of floats. I mean really those two are more than anything and then you can get more granular into like number of members or income from memberships, almost like income per float.
Graham: And I would say my metric when looking at Float On marketing stuff is actually just number of floats run in a month.
Ashkahn: Kind of. I mean I feel like we have to, there has to be some consideration for finance in there.
Graham: Yeah, I mean I guess there’s the, it’s yeah, I mean-
Ashkahn: I mean just assuming-
Graham: Other things need to be in place.
Ashkahn: Assuming we’re doing things logically I guess and reasonably and our business is running as normal then yeah, like number of floats in a month is very important-
Graham: And I guess that’s what I mean practically for us, you know what I mean-
Ashkahn: Assuming you’re not giving away 100% of your floats for free, like you’re making zero money and you’re about to go out of business-
Graham: And even if you were to like try to do that. I don’t think it would be possible, if you’re giving away all your free floats. People are like, “Can I please come in there? is there some way that I could schedule a float, it’s so packed?” It’s like, “No, sorry, you can’t even pay to get in on this schedule.” So that’s why I say like in the practical world, I think that that’s what I’d choose. And there are times when we look at other things for sure. And it’s usually when we’re making very concrete decisions.
Ashkahn: I mean the two main things we look at are number of floats and income.
Graham: Yep. Just income.
Ashkahn: Like we’re just mostly on a monthly basis. We’re just looking at how much money we’re making each month, compared to previous months and compared to the same month, the previous year is often the most useful metric that we tend to find when trying to compare it against ourselves. And we look at number of floats and both those things are the most basic but also the most fundamental and important numbers we look at for significance.
Graham: Yeah. And then members would be number three. We do very regular updates on members because in a lot of senses we view them as our lifeblood.
Ashkahn: Yeah. But it gets tricky because yeah, one number of members compared to membership income depends on your membership structure and so assuming you have all that sort of stuff kind of solid and you’re not doing huge changes to your membership structure, then yeah, I mean either number of members or income from memberships and total number of floats and total income. I mean those really just are the most fundamental, it feels silly to be tracking other things more importantly than those because that’s kind of what other things filter into. If you’re doing other things well, hopefully it’s increasing the number of floats you’re doing and the amount of income that you’re making.
Graham: Yeah, I thought of one other like more philosophical wrench to throw into it too, which is we’re really interested in happiness. I’d almost say or satisfaction both from ourselves, the people working in the shop and our customers coming through. So it’s like at least for Float On specifically. And I guess, again we’re focusing on one true metric or something like that. So this would not be our one true metric. But if everything else was in line and our memberships are rocking it and our revenue is up and our number of floats is high, but we’re only getting one time visitors and members who are staying on for the length contractually of their membership and our staff is really unhappy working there. And we’re not stoked to be running the business we’re running, I’d probably sacrifice some of that revenue and floats to make it a more pleasant place to go into, you know? So yeah, I guess the idea of the North star metric is to have something that you look at everyday or one thing that you can watch.
And in that sense it’s everything we said earlier, but just know it’s a simplification. You don’t need to follow that North Star at the sacrifice of everything else. Like having one metric that kind of gives you a reading of the life of the rest of your business doesn’t mean you’re trying to raise that at all other costs I guess was the point I was trying to get at here.
Ashkahn: Yeah, that’s true or yeah, like if that is going well, it means everything’s going well.
Graham: Exactly. It’s more like you can get overwhelmed with data, which is where this idea of KPIs, Key Performance Indicators comes in. And from there you can even get overwhelmed with things that are essential to your business. So you really want one thing you can look at on a day in day out basis where you’re like, okay, at least I know my business is healthy, and that’s kinda what we’re talking about when we’re looking at this kind of North star metric.
Ashkahn: I feel like the concept comes a little bit out of the tech world too, where the context of running a tech business where your customers are, you don’t ever interact with them really personally. They’re through this magical internet thing and you have so much data at your disposal and people are signing up for accounts and leaving accounts so you don’t know who the heck they are or how long they are, if they’re real people or not or like when you’re kind of swimming in that sea of numbers and you have so much less tangible stuff at your disposal. I feel like these concepts of like figure out what your really key numbers are and track those becomes a little bit more significant than when you’re running a small business in a shop with people that you interact with and staff that you interact with everyday and customers you actually get to see coming in and out. Like it’s just a little easier in that context to be slightly more touchy feely or loosey goosey or not so hard nose reliant on a single piece of data.
Graham: Yeah, I totally agree and I do think it comes directly out of the tech world. And even though like you can take really useful lessons away from all this stuff and you can absolutely apply it to brick and mortar businesses. There is also something to just being totally enmeshed in your business and even us saying there are key performance indicators or number of floats. If you’re the one running your business, you probably don’t even need to be looking at those stats, you know when your schedule’s been lightly last week, you know when it’s heavier it’s not like-
Ashkahn: You have gut feelings about these things.
Graham: Yeah, no point. We’ve never had a meeting to sit down and be like, “What’s our North star metric that we really need to be sure to watch?” This stuff comes kind of naturally. So that’s the good news.
Ashkahn: If anything, I feel like the lesson is don’t get too confused in really complicated metrics. Don’t look into really fancy things or be tracking some very finite demographic metric and lose sight of the fact that ultimately you’re trying to turn that into people floating in and people paying money to come float. If you don’t see the path from what you’re looking at towards those much more basic things, I feel like you’re maybe lost a little bit in your numbers, but yeah, I dunno, that’s not necessarily a pitfall. I see a lot of float center people falling into.
Graham: Okay. Anything else on North Star metrics? I think we’re good.
Ashkahn: Yeah. Alright, great.
Graham: Thank you.
Ashkahn: Yeah, you’re welcome.
Graham: Yeah. And if you have your own questions, give them to us.
Ashkahn: Go to floattanksolutions.com/podcast.
Graham: Talk to you tomorrow.
Ashkahn: Yeah Bye.
Graham: Bye everyone.
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