The record-setting economic growth of the past several years temporarily obscured the reality that recession is a fact of business life. The current business environment reminds us that managing during times of economic turmoil is a critical business capability.
Many club owners tell me that their direct mail pieces and ads pulled in fewer prospects last year. They often point to increased competition and the economy as reasons.
In the December cover story of this magazine, Rick Caro of Management Vision said that not enough information existed to say whether the economy had an effect on memberships and retention last year. Club owners who had problems with membership numbers might have been grasping at straws when they blamed the economy, competitors or layoffs for their lack of business instead of looking at themselves and their marketing, he said.
I couldn't agree more. Although it is easy to point to the economy and increased competition as the sources for lower guest traffic and fewer sales, other factors need to be considered. One of those factors is marketing. In an attempt to compete as the economy falters, club owners often cut people, downsize operations and slash marketing expenditures.
However, at some point, these club owners' only hope for a turnaround is to take marketing out of hibernation. In every business, marketing and investing in staff are the only business functions that create and retain customers. Not finance. Not IT. If a club doesn't offer services that customers will buy, and if it doesn't market those services successfully, then no amount of financial or operational wizardry will help.
During tough times, a solid combination of advertising, incentives and rewards to loyal customers will help retain customers in the short term, but successful club owners also prepare themselves strategically during the good times. They forge resilient strategies designed to work in good times and bad. They narrow rather than broaden their value proposition, focusing on areas in which they can establish a clear lead. They do this with good research.
These high-performing organizations set priorities based on detailed knowledge of how the club creates value. Club owners should not just cut costs — they need to cut the right costs. They must divert resources to activities that actually create value.
In the most successful clubs that I have worked with, the leaders and staff knew explicitly how they made money. They knew how their products and services stacked up against those of the competition, they knew why customers preferred doing business with them, and they knew exactly what they had to do to turn a profit. This knowledge meant that recommendations and decisions about budgets were made with a clear understanding about the potential impact.
The winners of the last recession also collaborated with customers to improve value propositions. They reached out to customers to better understand their challenges. Gathering this information allowed club owners to create new products and services that were uniquely suited to the pressures customers faced during the downturn.
Clubs that are not well positioned in the current uncertain economy can still turn the downturn to their advantage by gathering unvarnished answers to vital questions. Executives have a chance to learn what is important to customers, what is essential for delivering value and what actually distinguishes their club from the competition. With this knowledge, they can create a good marketing plan that will help them prosper, just like winners did in the last recession.
Ed Tock is a partner in Sales Makers, a marketing and sales training consulting firm that has worked with more than 1,200 clubs and won the IHRSA Associate of the Year award. He can be reached at 800-428-3334 or [email protected].