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Jonathan Price – CRE & Flex Expert
As kids get out of school and families leave town on vacation, coworking spaces may see a summertime membership dip. New coworking space operators who aren’t expecting the dip may be left blindsided.
Allwork spoke with coworking pioneer Jerome Chang, founder of BLANKSPACES, a brand of coworking spaces in Los Angeles, about how to avoid and deal with a summertime membership dip.
Cat Johnson: Is a summertime membership dip something you’ve had to deal with?
Jerome Chang: On and off, but historically I do better as the summer gets going. I tend to peak around May then June dips, July gets better, August gets better and September is when Blankspaces does its best.
The thinking seems to be that, as it gets closer to Labor Day, people want to set up their meetings and their office space so that after Labor Day they can hit the ground running.
Can you share any strategies coworking space operators can use if they see a membership dip coming?
In our Santa Monica space, particularly, we’ve been getting a lot of requests for workshops and classes and a lot of them are geared toward kids. They end up using my coworking space as a meeting center and as a quasi school.
I have something called Teen Fashion Camp coming in for four separate weeks throughout the summer. It’s fashion design classes specifically for teenagers. There’s also an SAT prep company that’s been a member and, as part of their business, they run SAT prep classes.
If a space wanted to do something like this, do you have suggestions for reaching out to market themselves for events and workshops like this?
Do a search for SAT prep classes and find out where they’re running them. A lot of the people running these classes actually enjoy running the classes, but finding venues and managing the venues when they have classes is a pain for them. Our roles are reversed. We know how to manage a facility but we’re not necessarily great at creating the programming.
The Teen Fashion Thing is an anomaly, but there are a lot of other camps, classes, courses. You might get some ideas by looking at the local YMCA or community center to find topics then do a Google search on those. For every one that’s at the YMCA or a local community center there are going to be at least a few others who are looking for a home.
Ideally space operators can get ahead of a membership dip and do things to prevent it. What are some ways they can do that?
Part of it is your policies. I’ve always offered a range of plans, from one month to 12 months and the prices are locked in based on that timeframe. I know a lot of coworking spaces just go month-to-month, which I’ve never understood because every month I’d wonder if they were going to stay.
You might want to start offering three or even six months for those who are going month-to-month. So if they come in in May, they’re signed up through June, July and August and it gets you through the summer. You offer a discount of 10-15% in exchange for a three to six month commitment.
What about space operators who may already be experiencing it, perhaps for the first time, or unexpectedly? Any tips for surviving a membership dip?
One thing I do is, when a member leaves for a month, we try to get them to just suspend their account so we at least know they’re coming back. Whether they come back in July or August or September, at least you know you’re not going to have to do additional marketing to replace them, you’re just suspending them.
The three month thing is the easiest one to do, especially if you have a deposit on it. If they were to flake on the three months, you at least have a month deposit, so get a deposit, for sure.
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Some spaces purely do open, hot-desking. I’ve always had a variety of dedicated and open desks. If people have a dedicated desk and they want to go away for a month, and don’t want to pay for that month, when they come back they may not get that desk back. Offering dedicated desks in some way ensures that they pay for the month, even if they’re physically leaving, as they don’t want to risk losing their space. Â
Another thing to help anchor members to the space is if they’re using the office for a mailing address, whether it’s a virtual address or an address tied to an office or desk. You can’t go away and not change your mail. We’re still getting mail and we’re liable as your agent, so you cannot not pay.
In some cases, people will just leave and pay the normal rate. Others will get savvy and suspend their account, they’ll convert to a virtual office for the time they’re gone, then reactivate their account when they get back. But the conversions to virtual and back to their plan are only for the unreserved, open spaces. You can’t do that for a dedicated desk or office because the inventory will be gone when they come back.
Another thing you can do is, if someone’s going to be gone, have them prepay for the month they’ll be returning. That helps with the cash to hold you over while you wait for them to come back. It’s all cashflow management.
You mentioned the classes for young people. Are there different audiences or markets that you can look to to fill seats in the summer?
I’m in L.A., so people come here to vacation for the summer. There may be teams that are in your town just for the summer. There are more nomadic teams these days, so I suggest operators take advantage of these.
Do you recommend trying to attract more day-passers in the summer?
The amount we would ever earn from a day pass would be way below the cost of marketing to get that. You’d have to cast such a wide net just to get a few day-passers.
The best way to get day-passers is to work with partners, such as Liquidspace, Deskpass, DaVinci, and all that because they’re running that marketing machine all the time.
Any other tips for spaces that may see their membership dropping off over the summer?
Mostly it’s cashflow management: deposits, three month commitments, pre-paying for the month they come back, reframing it as suspension versus termination so you know they’re coming back. My guess is that those can easily solve 30 percent of the problem.
