As a General Manager of a private club, your board and key stakeholders are looking to you for answers. What membership growth initiatives do you have in the works that are going to ensure you reach your revenue goals for the year? What are your short-term and long-term projections? How are you addressing retention challenges? How are you measuring the results of your investments?
With all of these expectations, it can feel overwhelming. Most club executives are unbelievably skilled when it comes to all things hospitality, delivering extraordinary member experiences and managing huge teams of people, but few club managers would consider themselves experts in digital marketing – and rightly so. Most would rather rely on their membership directors to generate private club marketing ideas. Unfortunately, that tactic itself opens clubs up to a whole new challenge.
Membership Direction ≠ Marketing
Marketing has evolved so quickly that attracting and converting new members using today’s mainstream marketing strategies (website, social media, content marketing, data analysis, etc.) requires an expertise that doesn’t exist at most private clubs. Understanding the best practices for achieving your marketing goals and being skilled at using the right tools to achieve them, is a full-time job.
That’s why the title “Membership Director” cannot and should not be synonymous with “Marketing Director”. Each role has a different skill set and should have a different expectation for their role in driving results. While nobody expects the GM to have a masters degree in marketing, it’s up to them to make sure there are dedicated marketing resources to support membership growth.
When it Comes to Marketing, Private Clubs are Underfunded
Yes, I said the words ‘marketing’ and ‘private club’ in the same sentence. Lack of willingness to pursue new lead generation opportunities – or where to get started – might be the biggest hurdle to driving new membership.
When most clubs are experiencing a significant decline in member referrals, marketing is sometimes first on the chopping block, which almost always exacerbates the issue. As the saying goes, “If you always do what you’ve always done, you always get what you’ve always gotten”.
Some things are pretty universal when it comes to private club spending. According to Club Benchmarking, the average private club spends in the neighborhood of 1% of their revenue on membership and marketing, including payroll. How does that compare to other businesses?
“The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you're doing less than $5 million a year in sales and your net profit margin – after all expenses – is in the 10 percent to 12 percent range.” [Nuphoric]
Some marketing experts advise that startups and small businesses usually allocate between 2 and 3 percent of revenue for marketing and advertising, and up to 20 percent if you're in a competitive industry. Still other marketing experts counsel a range between 1 percent and 10 percent, and even more depending on factors about your company, like how long you've been in business, competitive activity in your space and what you can afford.
If you’re a non- or not-for-profit club, I know what you’re thinking – you’re 501(c)(7) and you ‘can’t do any form of marketing’ – but the truth is that nonprofit social club marketing is much less restrictive than you may realize, even allowing advertisement to generate interest in membership.
Obtaining discretionary funds remains a challenge for most GM’s. Clubs with declining or flat membership can no longer put marketing in the ‘discretionary’ camp. An absence of marketing resources entices many clubs to offer reduced initiation fees and discounted dues to fuel short-term membership growth. This overused tactic may offer immediate wins at the expense of long term price erosion, decreased satisfaction among existing members and a damaged reputation.
Change the Conversation in the Boardroom
One of the most profound impacts of this new social media-savvy, Google-driven world is the ability to calculate every sales and marketing metric that matters to your organization. Measurement enables you to shift the conversation from marketing as an “investment” to marketing as a “return on investment”. Unlike traditional marketing tactics that are difficult (and often impossible) to quantify, every digital interaction and conversion is measurable.
For example, here’s a simple formula you can follow for calculating the value of a lead (which is just one way to measure digital marketing ROI):
(number of leads x lead-to-customer rate x average sales price) - cost or ad spend) ÷ cost or ad spend] x 100
For example, a club with initiation fees of $12,000 invests $50,000 on marketing for one year. Marketing generates 100 leads, of which 12 became members (for a total of $144,000 in initiation fees). Your rate of ROI would be 188%.
When you invest your time and your financial resources in a marketing program with a measurement component, your club will be positioned for long-term success. Think of it this way: What is the cost of not investing in your club?