The financial marketing fact sheet for private clubs
ECLUB NEWS |
While the professionals at McGladrey have long urged clubs to communicate their financial status in a proactive manner to relevant parties, the Great Recession accentuated the importance financial stability has for prospective and existing club members when evaluating which club to join or whether they should remain members and, subsequently, the importance for clubs in portraying that information in a meaningful fashion.
Consider a prospective member faced with the choice of Club A or Club B. The amenities at both 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 (CFO) as part of the sales process.
A meeting with the CFO? Surely that is a deal killer for the potential member seeking a good time! Or maybe, just maybe, the CFO will close the deal with a business savvy professional.
Using a simple financial marketing fact sheet, the CFO can highlight key financial points of difference, real or perceived, which 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 and the board made a strategic decision to take advantage of those rates 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 would not take advantage of this meeting to explain the economic realities of food and beverage in the private club world? Alternatively, would it be better to hand over the club's financials and let the prospective member, who inevitably operated a successful chain of restaurants, flee the club in horror at the supposedly large losses in the dining room?
A good financial marketing sheet could leverage relevant benchmark data from competitive club peer groups to portray how nicely Club B compares to the competition. In this age of heightened transparency, the open approach to the financial side of the member's decision embraced by Club B could place doubt in the member's mind regarding Club A as they wonder, "Why didn't they tell me about their finances like this? Who wouldn't tell their story—at least if it was a good one to tell?"
Clubs should consider supplying a five year graphical depiction of:
- Membership satisfaction
- 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
Clubs should seize this opportunity to narrate their own stories and ensure that the next time a prospective member passes through on a tour that person walks away confident that joining is the right choice from the amenities, lifestyle and business perspectives.