Marketing Is NOT NECESSARY at Private Clubs (Common reasons cited by Board of Directors, Members and some Managers) This club should be exclusive, we don’t.

Marketing Is NOT NECESSARY at Private Clubs

(Common reasons cited by Board of Directors, Members and some Managers)

This club should be exclusive, we don’t want everyone having access to the club

Members will think the club is in trouble. It will no longer be PRIVATE!

We don’t want the club to be over crowded. We like to play golf without reserving a tee time or having to reserve a time one or more days in advance!

If we have a lot of business in the dining room, we won’t get the individual attention and service we expect at a private club!

Marketing Is NOT NECESSARY at Private Clubs (cont.)

(Common reasons cited by Board of Directors, Members and some Managers)

Barriers to Membership Marketing in Private Clubs

Board of directors reluctant to market clubs Don’t want to upset long time members who cling

to tradition of the club not marketing itself

Marketing is a new area for clubs only in the last decade

Experienced managers are unfamiliar with marketing strategies and what works in private clubs

If they are not “Standing In Line” to dine at your club or use the other facilities you need to market!

Barriers to Membership Marketing in Private Clubs (cont.)

Four P’s of Marketing

Product Type of Club

Quality Type and number of services, amenities, etc.

Price Cost of Membership

Initiation fee, equity portion, dues, menu prices, etc.

Free service vs. fees per use items

Four P’s of Marketing (cont.)

Promotion Internal advertising to promote more member usage Public relations to create image of good citizen in

the community External strategies to create awareness of Club for

more Members

Place Location of the Club - Demographics of the area,

Number of Businesses, Competitors, etc.

Trends for Private Clubs

Most clubs do not have a waiting list for all categories of memberships (78%)

Clubs are using more assertive techniques to pursue more member or to keep their waiting list “stocked” with prospects

Clubs are offering more membership categories in order to increase and retain members

Trends for Private Clubs (cont.)

Clubs are changing policies to make membership more attractive to different groups, e.g.: women members allowed to play golf on weekend mornings

Many clubs are pursuing revenues from different sources: Unrelated business income Non-traditional income

Clubs are using more assertive techniques to pursue more banquet and catering business

Trends for Private Clubs (cont.)

A concern that unrelated business income may exceed 15/35% of the club’s revenue

The IRS has indicated that the insignificant level for non-traditional income is 5% of the club’s total revenue

With more families having dual income earners, there is a need for members to spend any free time they have with their families, including club usage

Health & fitness is no longer a fad, but a lifestyle for many especially the baby boomers. Clubs will need to add program, facilities, and items on the menu to accommodate this trend

There are more members at private clubs than ever before, but the supply of new clubs has exceeded the demand or number of new members

Trends for Private Clubs (cont.)

Trends for Country Clubs

Golf is the most important activity to members and the activity most often participated in at the club

Golf is the number one reason cited by members for joining the club

Slow play is a significant concern among members, yet they want usage by family members to increase

Trends for Country Clubs (cont.)

Clubs are reporting more outside rounds, which is attributed to more outside tournaments

Although participation in tennis and swimming is much lower than golf, members cited these areas as an important reason for joining, especially for the family members

Non-golf activities (swimming, tennis and family programs) are more important to younger members (baby boomers) than older members

Full service, state of the art exercise/fitness centers are being added by many clubs, not just a small room with a few pieces of equipment

Trends for Country Clubs (cont.)

Importance of Marketing

Survey conducted by CMAA (Club Managers Association of America) of its members found that club managers thought: Marketing was a high priority Selling memberships was very important

Private clubs are experiencing a declining membership base nationwide

Reasons For Decline In Membership Size at Clubs

Aging MembershipMany clubs had a closed membership

during the 70’s and 80’s40 year olds (prime time to join a private

club) were not replacedMembers at these clubs are now in their

60’s and 70’s

Reasons For Decline In Membership Size at Clubs (cont.)

Different Preferences for Baby Boomers Clubs with a “gray” or “blue” haired impression are not

attractive to potential 40 year olds Preference for more casual dining than formal Social tradition is not as important to this market

Economic Downturn Across the Country Businesses cutting back on entertainment expenses Businesses closing or cutting management positions

(potential members)

Tax Law Changes Entertainment expenses initially decreased from

100% to 80% 1994 changes : entertainment is now only a 50%

deduction and dues are no longer Overbuilding of Private Clubs

Real estate developments (country clubs) Office buildings (city & city/athletic clubs)

Reasons For Decline In Membership Size at Clubs (cont.)

More CompetitorsMore upscale and quality restaurants

available, giving members an alternative for upscale dining

Hotels, convention facilities, and restaurants offering better banquet facilities and service

Reasons For Decline In Membership Size at Clubs (cont.)

Reasons For Decline In Membership Size at Clubs (cont.)

More Competitors (cont.) High end daily fee golf courses

Provide high quality services once only available at private clubs Course conditions comparable to private clubs and in some cases

better Target market is avid golfers with high standards which has been

the market for country clubs

These for profit businesses can and are much more aggressive in marketing their product than clubs are allowed to

Methods to Increase Membership

Decrease initiation fees and or dues Appropriate only if pricing is not in line with

the Club’s position in the market place

Temporary price reduction during special programs Members only refer friends when a “special

“ is being offered (Cherry-Pickers)

Incentives used for Member referrals Repeat usage sends a message the Club is in

trouble

Rely on Membership Committee to be aggressive in pursuing more Members They are use to being only processors of an

application, not in identifying candidates for membership

Methods to Increase Membership(cont.)

Membership Director

Facilitates Members with the referral processTakes over the administrative

responsibilities: Collects paperwork: application, letters of

recommendation, etc. Sends materials, brochures, etc. to candidates Gives tours of the Club Follows up on applicants to ensure they join

Helps in identifying candidates: guests, executives, professionals, etc.

Helps in matching up prospects with Members that may know or willing to sponsor them

Implements more aggressive strategies if Member referral programs do not work

Membership Director(cont.)

Research Project

Questionnaire sent to 400 GMs nationwide that were members of CMAA

Questions on marketing and membership activities226 respondents - 57% response rateRespondents were from 42 different statesOnly 22% of the clubs had a waiting list for

membership

Waiting List Information

Clubs With a Waiting List (22%)49 Clubs (22% of 226) had a median of 30

individuals on their waiting list59% of the Clubs (29 of 49) with a waiting

list reported their full or regular membership only had the waiting list (13% of all clubs)

Clubs With a Waiting List (cont.) Only 41% of the Clubs (20 of 49) with a

waiting list reported that all of their membership categories were full (9% of all clubs)

Clubs Without a Waiting List (78%) Median number of memberships still available

at a club was 34

Waiting List Information(cont.)

Clubs With A Membership Director

Clubs with a membership Director 37%

Number of Membership Positions (83 of 226 Clubs) One 63% Two 19% Three Plus 18%

When the Position Was Created (83) Less than one year ago (13) 16% One to three years ago (21) 24% Three to five years ago (12) 15% More than five years ago (37)

45% Only 16% of all clubs (226)

21% of all clubs have added a membership position in the last 5 years

Clubs With A Membership Director (cont.)

Position Type

Full-time 72%Responsibilities exist in another department

12%Part-time (less than 30 hours) 6%Volunteer, board or club member 10%

Compensation

Median total compensation: $30,001 to $40,000

Median base salary: $20,001 to $30,000

Financial Incentives Reported Commission based on number of new memberships

55% Commission based on initiation fees generated

43% Commission based on dues revenue generated

32% Commission based on total club sales

11%

Compensation (cont.)

Marketing Activities

83% - Members contacted for referrals52% - Host member-guest parties37% - Attend local community

meetings for networking, i.e. rotary, etc.25% - Direct mail to prospects,

inquirers

24% - Acquire mailing lists of new residents and professionals

16% - Acquire lists of tenants, corporations and companies

11% - Purchase mailing lists from professional associations & groups

Marketing Activities(cont.)

Implications

Private clubs have started to market themselves only recently, to compete with “For-Profit’s” and other clubs

It will be common in the future for many private clubs to hire a membership director

Membership director’s primary role will be to identify prospects and make some type of contact with them and not “just” process membership applications

Clubs are currently implementing a variety of external marketing activities and that will increase in the future

Implications (cont.)