The BIGGEST Mistake Most Coworking Spaces Make That Causes Members to Quit

The BIGGEST Mistake Most Coworking Spaces Make That Causes Members to Quit

(The names in this article have been changed to protect people I care about.)

I’ve toured and purchased day passes at dozens of coworking spaces, built two (one failed, one still living), and worked in senior leadership positions at two others. During my years in the coworking world, which I love to the point of exhaustion at times, I’ve learned the biggest downfall of most coworking spaces and I’ll share it with you here.


 

“I bought a popcorn machine!” Tom proudly informed us.

My face probably gave away my true feelings, but I pulled off a meek, “That’s awesome. How much did it cost?”

Truthfully, the cost didn’t matter. The principle was the underlying problem. Our coworking space wasn’t even profitable yet, and we were blowing money like we’d won the lottery (who can relate?). At this stage in my coworking career, I hadn’t developed the hard-headed voice of reason that I employ these days, so I kept quiet on this one, at least to Tom’s face.

To be fair, I couldn’t blame Tom. He was doing what he thought was best. Honestly, everybody on the team was fairly inexperienced at the time. In his mind, a shiny veneer and fun, quirky amenities were important to members. If he liked it, why shouldn’t everybody else?

This is the beginning of the mistake. Your members are not you. They don’t like what you like. Obviously, they like what they like–but more importantly, what you like or think members like has absolutely nothing to do with what keeps members coming back.

A coworking space has a base set of needs that it should satisfy for members: productivity, comfort, professional and social connectivity, inspiration, and flexibility. Education is another need, but is a special case so we’ll talk about it another time. Every single amenity needs to reinforce one of these needs or else it should not exist. That’s the second part of the mistake.

The fundamental issue underlying every coworking space’s woes is a misallocation of resources.

If you don’t think members notice where you spend your money, think again. They notice and they talk about it, too. The problem here is they don’t often talk to you about this; they talk to each other.

So what is the proper resource allocation that keeps members coming back?

I hate generalities, so while I recognize that your space might be different from mine or Tom’s space, I’ll tell you what I believe is the proper resource allocation to maximize member happiness, which ultimately means a maximization of revenue. I’ll talk about the alternatives within this framework another time.

My proper resource allocation by % of time, energy, and $ spent:

1. Productivity and Comfort- 40%

These two needs go hand-in-hand for me as the most important factors in a coworking space by far. You can have top-quality events, reclaimed wood desks, a highly-secure front entrance, and a secret bar in the basement with free beer on tap, but if I can’t comfortably get work done, none of that matters.

Amenities that reinforce this:

  • Comfortable Furniture
  • Fast and reliable internet
  • Phone/privacy booths that are ACTUALLY sound proof (or very close)
  • Conference rooms (aim for 1 room for every 5,000sqft IMHO)
  • Properly working HVAC and climate control system
  • Private offices
  • Staff: Ops/Facilities Manager

Don’t cheap out here, it shows! I’ve seen members leave or decline to join spaces for a lack of each one of these amenities. This is the area I see a lot of spaces claim they do well on, when in fact, they only provide that shiny veneer I was talking about (non-soundproof phone booths, overly heated offices but freezing common space, trying to satisfy 60 users on 25Mbps, renting out their ONLY conference room as a private office for more revenue, etc).

Is this you? Don’t be dumb, do it right.

2. Professional and Social Connectivity – 30%

If productivity were the only focus in a coworking space, there would be little stickiness factor. The stickiness factor comes from the purely social connections members make as well as the potential for new business opportunities (sales, partners, mentors, etc.) that they can’t replace by going elsewhere.

Amenities that reinforce this:

  • QUALITY member community events/mixers that feel special
  • Member-to-member communication and discovery platforms/systems
  • Member spotlights (digital or physical way to highlight cool/new members to other members)
  • Planned introductions
  • Detailed and constantly updated member database (complete with interests, hobbies, skills, needs, etc.) (this is more of a staff resource which, when acted upon, becomes a behind-the-scenes amenity)
  • Staff: Community Manager focused on connections, not on ops

This is the need that most spaces forget altogether or invest very little energy in because it requires emotional labor, and emotional labor is hard. My recommendation: Hire a badass, empathic, solution-focused person who gets shit done and LOVES people. Give that person goals and parameters (this means a budget and any no-no’s). Let them run wild and assess/review their results monthly (eventually quarterly).

3. Inspiration – 20%

Inspiration has as much to do with space design as it does your brand, the stories you tell, and the event content you produce or curate. Different things inspire different people. For example, if you truly are the best space for entrepreneurs in your city (and it’s not just lip service as it usually is for most spaces) then you better have the most prominent entrepreneurs speaking at your events regularly.

Amenities that reinforce this:

  • Chalkboard walls
  • Nooks and lounges
  • Big, sexy art pieces
  • Beautiful furnishings
  • Speaking events with incredible thought leaders
  • Showcases of amazing work from members and the greater community (physically posted in the space or digitally via newsletters or the website)
  • Guest events hosted by top organizations or thought leaders

Most space organizers lack the connections and reputation to pull off most of these things. Regarding the physical aspects of inspiration, they often overvalue maximizing revenue, ditching lounges and nooks for more “productive” space, which makes the space look how the founders view it: a coworking farm focused on putting dollars in the founders’ pockets.

Invest in building relationships early and often with key thought leaders in the community before you build. It will make your life easier and your space (once open) more popular because you can leverage those relationships for badass events and cross promotion.

4. Flexibility – 10%

Don’t get me wrong, flexibility is important. The main point here: It shouldn’t take much time, energy or money. A coworking space is designed to be flexible. This doesn’t mean you can’t have rules or that you can’t enforce those rules strictly (enforcing rules is my personal specialty).

I fully believe in enforcing strict cancellation and refund policies for example. This only means that the terms for membership don’t lock people in. They allow members to come and go, voting with their dollars.

Amenities that reinforce this:

  • Month-to-month terms (this should be intuitive)
  • Allow members’ guests
  • Be flexible with space use (moving furniture, etc.)

Honestly, that’s about it in my book. Most spaces are either too loose–they have no rules or rules they don’t reinforce which, while flexible, their non-enforcement renders them non-existent to members–or they are too strict, not allowing easy access to non-members, asking for year-long terms on offices or deposits on flexible space memberships (the latter of which I consider bad form).

Keep flexible/open space memberships PURELY month-to-month with a set monthly cancellation date and no deposit. Allow members to have guests when they need them without asking so long as they aren’t causing issues. This increases conversion from tours and increases retention of members.


 

Resource allocation is THE BIGGEST issue you face as a coworking founder or director. It WILL make or break you, I promise. Don’t take this article as an exhaustible list of amenities, nor as a replacement for trial and error, but do take it to heart as a solid foundation for the ongoing management of your space.

Focus on these things and you’ll be in the top 10% of coworking spaces, guaranteed.

I’d love to hear from you. If you have any specific questions or disagree with anything here, shoot me an email at [email protected]. I’d love to chat and help in any way I can.

Ryan Chatterton
[email protected]

Ryan is the founder of Coworking Insights, a coworking media platform focused on delivering unique and in-depth insights for coworking founders and their teams. He’s the Marketing Director at Habu, a quickly growing coworking management platform that is simple, fast, and intuitive for managing recurring billing, bookings, and other admin tasks. Formerly with Impact Hub and PARISOMA, Ryan now has over 4 years of combined experience in a variety of roles in the coworking industry, including marketing, events, operations, sales, software, and partnerships. He’s a digital nomad and a lover of wine and tacos.

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