Cheap or Quality - Who is your club appealing to?

12 June 2019

My Grandfather used to say, "if you sell to the classes, you eat with the masses.  If you sell to the masses, you eat with the classes."  Clubs are a mass market model.  If my Grandfather's cliche is to be believed, all clubs should be successful.  Clearly, there's a lot more to success than trying to sell to the masses.  You need a business model that generates sales and a sufficient margin to ensure the club is profitable.  With most clubs' gaming revenue flat or in decline, many are trying to win customers through promotions and discounts such as 2-for-1 meal nights and $10 roasts.  Their appeal to the hip pocket makes sense, but in many ways it is a race to the bottom.  The customers who only come for the discount meal are not likely to spend money on drinks and gaming, so the club's promotion may become a loss, not a loss leader.

I was talking with a CEO who arrived at their club one night to find a couple eating dinner in the club carpark, in their car.  They said they were waiting for the members draw.  The couple had no intention of spending money on dinner, drinks or gaming, but were taking up a club carpark that a paying customer would want, and taking their chance at pulling (other peoples') money out of the club.  This behaviour is completely understandable and it is legal, but it should be prevented.  A member draw is a marketing promotion to incentivise and reward club customers, not a free lottery for local cheapskates.  A good solution to this problem would be to ensure your club's systems can restrict entry to the draw - for example, so it is limited to members who have spent a certain amount at the club in the month before the draw.

It is reasonable to suggest that clubs should aim higher than those who want everything for nothing.  Whether they are 'bring-your-own food and drinks' bowlers, golfers who 'bash-and-dash', or just penny pinchers, clubs cannot lower their prices enough to make them happy and a discount won't consistently draw a big attendance.  Over time the club will become known for being 'cheap'.  When it's not cheap, they won't come because lower prices usually mean lower standards in food and service, leading to complaints and fewer customers.  It also leads to lower profit margins.  Eventually the club will go broke.

The latest research on customers indicates that people value a great experience more than they want discounts.

Clubs will thrive if they appeal to people who are happy to pay for a quality dining and entertainment experience.  These people want the ambience, the service and the food to be consistently great.  They have high expectations if they are paying full price, but the club can afford to meet those expectations if it is making a profit delivering the experience.

It is hard when you realise one of your Grandfather's favourite sayings was off the mark.  Perhaps he should have said instead, "if you provide a consistent, quality experience to the masses, they'll be happy to pay like the classes".

(SOURCE: Josh Landis, ClubsNSW Executive Manager - Public Affairs, ClubLIFE May 2019)

Please Note: Membership Draws in New Zealand must be conducted according to the Department of Internal Affairs Lottery Game Rules and participation cannot be determined by an entry fee or 'spend'.  Clubs in New Zealand can however run promotions that are linked to spend or other determinants.

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