Cash Conundrum or Business as Usual?
More than any past crisis, COVID-19 has created the potential for an elongated and serious cash flow situation. While closures temporarily eased some expense pressures, the restrictions for reopening will likely increase cash issues with non-optimal revenue streams, especially with capacity rules, limited to no banquet or golf events and the cost of additional safety measures not to mention the ongoing hesitancy of a segment of your members to re-engage.
The good news appears to be that initial concerns over immediate member losses may have been premature. Many clubs are finding that members are eager to return most especially for golf. The rate of return to normalcy will likely be predicated on age demographics and the degree of member trust relative to the safe practices demonstrated by the Club and fellow members.
Many clubs are also reporting an increase in membership inquiries. Minimized travel and the potential necessity to stay closer to home this summer will present an opportunity for clubs to recreate a “staycation” experience of 9/11 and attract new members in this difficult time.
So, what are the lessons learned? Perhaps the most important lesson is that the member experience is the foundational element of cash flow. It drives the attractiveness responsible for robust usage, satisfaction, and ultimately member retention.
As a dues-based business, clubs derive roughly 60% of revenues from member dues. Member usage activities, along with guest play along with outside events provide for most of the rest. Both rely upon a healthy membership. But what exactly is a healthy membership and whose responsibility is it? Perhaps, we should start with a history lesson.
In the early days of clubs, the membership secretary was one of the most powerful people in the club, maybe even the community. They were the gatekeepers of who would even be considered for membership. Being accepted to membership was a privilege and not taken lightly.
As supply demand ratios of private clubs have shifted more toward over supply, the means of attracting and retaining members has likewise shifted. Instead of having the luxury of picking and choosing who would be allowed on the inside, many clubs have been required to provide incentives to compete.
Initially, many clubs moved toward pricing strategies, reducing initiation fees, creating incentive programs for members to refer new members. This strategy in some cases created regional “price wars” requiring other clubs to follow in kind. Still, the club failure rate continued.
Prior to the pandemic, many clubs were reemerging and recognizing that sustainable growth and retention was not simply a price-based issue. It was the member experience that attracted new members and retained those that were more than satisfied with what the club offered.
So now, to the question of who’s responsible. First and foremost, it is the Board, the Membership Committee and the members responsibility to find the kinds of members with whom they wish to share their community. But they can’t do it unless there is a value proposition; a relevance to the people they are inviting. And that, is the responsibility of the highly trained and competent staff in every department provided with the resources and encouragement of the Board.
The job of membership growth, retention, increasing member usage and satisfaction does not fall upon the shoulders of any one-person, general manager, membership director or director of golf. Image and brand are an encompassing process made possible by the collective and collaborative efforts of an entire team. Nothing short of “all hands-on deck” will suffice. There is no magic elixir or silver bullet in hiring a team member and giving them total responsibility. That is simply a pipe dream.
While the COVID crisis has been devastating for our country and the world, it has also created an enormous opportunity. The opportunity to open our eyes to the possibilities. The opportunity to drive greater member engagement, satisfaction, sense of community and sustainability. The opportunity to listen to all your members and use their collective voice to mold your operations around their wants and needs.
It is a time for reflection and determination. The determination to be prepared for anything that may come. It is a time to get down to the basics of a dues-based business whose foundation is a happy and contented membership. During 9/11 and the 2008 meltdown, the clubs that thrived were those already having established the “warm embrace”, the sense of community and the loyalty that comes with engagement and camaraderie.
If you’ve been there and done that, you know exactly what I’m talking about. If you haven’t, try it and you will find that there is enormous potential in the collective and comprehensive effort of an entire team, including Board and members, moving forward with one thing in mind. The Member Experience!
The chart that follows is interestingly built around something that Robert Dedman, Sr. once said. “With members everything is possible. Without members nothing is possible.” Clubs exist because they have members. Members join and remain members because of the experience. If the experience fails to be relevant to the individual or the family of a member, the club is likely to experience both a lack of growth and the ability to retain.
As you peruse the chart, it is interesting that going from the top down or the bottom up the relational elements in the chart lead to the same place.
If you or your club are currently in the process of considering what relevant member experiences to provide, I would love to hear from you and share some interesting solutions!
In the interim, stay safe and look forward…
Our team has developed a short, simple, but strategic set of questions that will provide your leadership team with an understanding of member’s fears, needs, wants and attitudes as clubs emerge from this lockdown. As a service to the industry, we are offering this free of charge for a limited time. If you would like to learn more about this excellent “listening opportunity”, please contact Peter McCarty at [email protected].