The great recession highlighted the importance of financial stability to prospective and existing club members when evaluating which club to join or whether they should remain a club member. We have long urged clubs to place as much emphasis, therefore, on communicating their financial status in a proactive manner.
Consider the prospective member faced with the choice of Club A or Club B, whose amenities are practically identical in terms of quality and membership offerings. Club A conducts a wonderful guided tour of the facilities, offers an excellent complimentary lunch, perhaps a round of golf, and provides a glossy brochure highlighting the club history and the wonderful adventures to be found there. Club B takes precisely the same approach, except Club B also includes a brief meeting with its Chief Financial Officer as part of the sales process. A meeting with the CFO – surely that is a deal killer for the potential member seeking some fun! Maybe, or just maybe the CFO gets to close the deal from a business person’s perspective.
Using a simple financial marketing fact sheet, the CFO highlights the key financial points that anyone evaluating the financial health of a club, or any business, would expect to review. Perhaps the CFO will point out that Club B has no debt, or explain that they have debt because interest rates are at historic lows so the Board took advantage to renovate the clubhouse and ensure member retention and promote member recruitment. How about a review of costs at the club showing how well managed the expense line has been controlled over the last decade, while also providing the top notch service the prospective member received on their tour of the facilities? And of course, what club wouldn’t take advantage of this meeting to explain the economic realities of food and beverage in the private club world? Would it be better to hand over the club’s financials and let the prospective member, who of course used to run public restaurants, flee the club in horror at the supposedly large losses in the dining room?
A good financial marketing sheet could also use some relevant benchmark data from competitive club peer groups to show how Club B stacks up nicely against the competition. In this age of heightened transparency, Club B’s open approach to the financial side of the member’s decision could also place a seed of doubt in the member’s mind regarding Club A: “Why didn’t they tell me about their finances like this? Who wouldn’t tell their story…if it was a good one?”
Consider supplying a five year graphical depiction of:
- Member count
- Dues rates and total annual cost of membership
- Expense per member
- Payroll and related costs per member
- Restaurant Subsidy Percentage From Dues
- Golf course maintenance as a percentage of total operating expenses
- Operating Surplus (Deficit) Per member
- Debt Per Member
- Capital fees per member
- Capital improvements per member
So the next time that prospective member walks through the club, think about how you are going to show them that your club is the right choice for them from the amenities, lifestyle and business perspectives!
