As a General Manager of a private club, you bear the weight of expectations from your board and key stakeholders. They look to you for solutions to ensure the club meets its revenue targets for the year. What strategies are you implementing to drive membership growth? What are your short-term and long-term projections? How are you tackling retention challenges and how are you measuring the efficacy of your marketing investments?
With all of these expectations, it can feel overwhelming, especially considering that while club executives excel in hospitality and team management, they often lac expertise in digital marketing. Many prefer to rely on membership directors for marketing ideas. However, this reliance presents its challenge.
The landscape of digital marketing has evolved rapidly, demanding skills that are often absent in private clubs. Achieving marketing goals requires expertise in website optimization, social media strategy, content marketing, data analysis, and more. Recognizing this disparity, it's crucial to distinguish between the roles of Membership Director and Marketing Director. Each role demands a unique skill set, and the responsibility falls on the General Manager to ensure dedicated marketing resources support membership growth.
Despite the critical role marketing plays in diving membership, private clubs often underfund it. The reluctance to explore new lead generation opportunities exacerbates membership decline. According to Club Benchmarketing, Most clubs allocate only about 1% of their revenue to membership and marketing, including payroll. Comparatively, other businesses allocate significantly more, ranging from 2% to 20% of revenue depending on the industry and size of the company.
Even non-for-profit clubs classified as 501(c)(7)can engage in certain marketing activities to generate interest and awareness of the club. Yet, obtaining discretionary funds for marketing remains a challenge for many General Managers. Instead, clubs may resort to short-term tactics lie reducing initiation fees or offering discounted dues, which can compromise long-term sustainability and damage the club's reputation.
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 its 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]
Amidst these challenges, it's essential to change the conversation in the boardroom. The advent of digital analytics allows for precise measurement of every sales and marketing metric, transforming marketing from an "investment" to a "return on investment." Unlike traditional tactics, digital interactions and conversations are quantifiable, enabling informed decision-making.
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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 in 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%. This, however, doesn't account for the revenue of additional prospects joining in the future.
In summary, the success of many private clubs hinges on their ability to adapt to the evolving marketing landscape, allocate adequate resources, and leverage data-driven insights to drive growth and ensure sustainability. By embracing these principles, clubs can thrive in an increasingly competitive market.