Complications of aging members and membership offerings
ECLUB NEWS |
The recent bankruptcy of the City of Detroit brought city employee pension benefits into the spotlight with regard to where those obligations reside in the long list of the city’s creditors. Similarly, the projected effects of federal benefit programs for retirees on national deficit and tax policy are the subject of comment in the news media and financial press on an almost daily basis. It is against this background that clubs should take a hard look at the age profile of their membership roster and its effect on future revenue streams. While the aging nature of club memberships is not new, clubs should consider the specific steps they can take to help manage these revenue challenges.
Reduced dues for seniors
Some clubs continue to offer automatically reduced dues levels to members upon reaching certain milestone age thresholds, often without any commensurate reduction in member privileges. For those clubs that continue to offer these age-related dues benefits, consideration should be given to the age level at which reduced dues are offered. If members continue to be physically active into their seventies, should reduced dues really be offered at 65 years old? Regardless of whether club leaders are prepared to touch the third rail of age-related discounts, clubs should ensure that they have a clear picture and understanding of the impact that these discounts will have on future years’ dues revenue, so that dues rates charged for the different levels of membership can be adjusted accordingly. Otherwise, the club may fail to capture sufficient operating revenues to cover expenses.
Transition between membership categories
A similar thought process applies to those clubs that offer members transition opportunities to downgrade to a social or house membership category. This is becoming increasingly common as some members find they do not want to play golf as frequently, but would like to maintain membership for social reasons. The challenge here is substantially one of timing, as budgets and dues prices will often already have been set before members return their membership renewal documents. Building some cushion into the dues pricing, within market constraints, may be necessary, in order to absorb an unexpectedly large number of downgrades. However, by carefully monitoring member behavior and the overall age profile of the club’s membership, the number of step downs in membership in a given year should not come as a surprise.
Since member recruitment is currently the industry hot topic (as it should be, since this is essentially a dues business), clubs should consider tying age-related member discounts to member recruitment activities. It could be argued that there has been something of a collective failure in the necessary membership succession planning, in order to ensure clubs’ future success. The question then arises as to why members, who have collectively failed to recruit sufficient numbers of replacement members, should be able to take advantage of age-related discounts.
Use your information systems
Monitoring the age profile of club membership should not be administratively burdensome. With a properly utilized club management system, reports profiling member demographics should be readily available. While some clubs may require assistance from their system vendor, most clubs should already have the necessary functionality to support age profile monitoring, and its impact on pricing and member succession planning. But, as is often the case in clubs, whether existing system functionality is being fully harnessed is a very different question that will be left for another day.