To Market, To Measure

6 July 2017

Marketing is a discretionary expense for clubs and must be measured.

In a not-for-profit enterprise such as a club, why do we market? While club constitutions refer to meeting the needs of particular interest groups or supporting activities, there is no reference to maximising profits or members' wealth.

The hospitality marketplace is competitive and to meet the requirements of our constitution, we need to provide a relevant and appropriate venue to as many patrons as possible. This means recognising the challenges around changing demographics and our access to digital communication tools.

Club have become much more than an institution that supports a particular sport or objective.  Clubs are now hospitality venues competing in a broad market and seeking patrons to support food, beverage, gaming and other offerings to derive a profit which supports club objectives.  Simply, we use marketing to attract people who are not necessarily promoters or supporters of our core objectives, but who are prepared to spend money in a hospitality venue.

A term often used to describe marketing activities in a club is AEMP or PEMA, which relates to advertising, entertainment, marketing and promotions.  Marketing also includes other activities associated with promoting a club, such as entertainment and promotional events.

Measuring the success of club marketing is essential as marketing costs are a discretionary expense.  A logical consequence associated with incurring an entirely discretionary expense is the desire to measure the outcome of exercising that discretionary judgement.  Measuring the outcome from marketing is a science in itself as the direct relationship between cause and effect cannot always be identified.

When incurring a marketing cost is is essential to define the expected result from the cost being incurred and how the expected result can be identified or measured.  Statistics have a significant part to play in correlation analysis.

A club may introduce, for example, a special campaign to promote gamin activity over a particular time period.  The club will have extensive historical data for activity levels during time periods and if a promotion is introduced, the variation in revenue during that time period can be measured.  Provided there are no other activities that would impact on revenue, a club can then analyse the cause of an increase in revenue and the costs involved in achieving that increase.

Whether the promotion of a gaming activity has a net financial benefit requires further detailed analysis to identify additional consequential costs.  A variable cost associated with increased gaming activity is increased gaming duty, or potentially increased labour costs as a direct result of the need to provide increased service.  A proper analysis of the promotion for gaming in this example would include an analysis of the impact on revenue and on the profit after direct costs are identified.

Other, more obscure activities can also be measured as a result of "marketing activity", including brand awareness and its rise or fall depending on marketing strategies.  If you don't have internal marketing staff, it is worthwhile considering expert advice on discretionary promotional spending versus costs incurred.  A simple club promotional activity is the meat raffle.  Usually attended by the same people at the same time each week, competition to win can be fierce.  Arriving just in time for the event and leaving directly after, it is common for unlucky patrons to complain they have to visit the supermarket instead.

There is anecdotal evidence that marketing activity such as a meat raffle is provided simply because it has always been done, with no rationale nor justification.  This is not a marketing activity; it's a community support activity and should be accounted for as such.

Marketing is a discretionary expense for clubs and must be measured.  Failing to do so can compromise your club's bottom line.

(SOURCE: Greg Russell, Russell Corporate Advisory, ClubLIFE, June 2017)

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