Club owners collect a wealth of data, but often, all of it is not fully used. To be used, data must be relevant, timely and in a form that is usable by key staff members. The challenge is to identify a few select drivers for each person, provide timely data in a usable form and then encourage that person to make appropriate decisions.
Key decision-makers need to know how to interpret data and how to compare it with this year's projected budget, as well as with actual results from the same period last year or with year-to-date totals. By doing so, club leaders can analyze whether results are better than budgeted and how to continue that success, or they can delve into why results are short of the target budget and try to take remedial action.
Club leaders need statistics to give themselves the greatest opportunity to make mid-course corrections. The key is determining what data is worthwhile, collecting it in a timely manner, analyzing it for revised actions and then ensuring a win at the end of the day — or year.
Some club operators compare data from one of their clubs to another to determine why certain businesses are performing better than others. Others compare their clubs to industry data or to clubs of a similar size but in a different market.
Much of the data important to club operators focuses on revenue, often starting with the sales process where owners track inquiries, leads, appointments, club tours and new member sales. Many clubs now have predictive measures and known ratios to convert prospects into sales. Others study new members to analyze the most effective marketing tools, length of time in the sales process, member profiles and the possibilities for proper new member launching.
Since membership revenue is such a critical element of the club's total revenue, club leaders also study the number of paid members. They analyze regular monthly dues via electronic funds transfer (EFT) for each membership category and project the number of new members offset by the expected cancellations to get a net number of paid members. To get a handle on the total revenue, operators study sales on a daily basis and EFT monthly. They also study total cancellations, as they have to give prior notice before payments are stopped.
Club leaders look at the big revenue picture, comparing monthly revenues against budgeted totals, looking at the same month for last year and analyzing them on a year-to-date basis. Then, club executives study the membership dues revenues against non-dues revenue categories. Department heads scrutinize ancillary revenue break-outs to look at total revenue dollars and the net margins each one produces.
Club owners often analyze more specific data because the revenue challenge is so great. They might determine on a big-picture basis what revenue is per member and per indoor square foot and what overall revenue is compared to last year. Breaking down the big picture into more specific elements can lead to creating detailed implementation plans, which leads to new internal marketing efforts, such as getting each member to increase ancillary revenue spending by $20.
The challenges in acquiring new members, retaining current members, increasing monthly dues and gaining greater ancillary revenue are even greater in today's economy, which has translated to a greater focus on controlling expenses. (For more on cost cutting, see an online story at www.clubindustry.com/specialreport/economy.)
Typically, department heads must control their areas with profit margins. Operators often use EBITDA (earnings before interest, taxes, depreciation and amortization) as a bottom line measure. Club leaders study the dollar total and the margin (as a percentage of total revenue) each month and on a year-to-date basis. In some cases, club owners use EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) instead. Also, many operators keep an accurate analysis of their cash flows, which involves using several balance sheet categories.
Usage totals and facility patterns offer insights into the success of a business. Operators can view these on an overall total membership basis or they can be broken down by low users, new members, corporate members and other categories. Each functional area of the club can then be analyzed for relevant changes in use and the need for management actions can be assessed.
Rick Caro is president of Management Vision Inc., a 25-year-old consulting company that serves the club industry. The company focuses on market analyses, valuations, member surveys, club finances, expert witness testimony and operational analyses. Caro can be reached at 800-778-4411 or at [email protected].