We are still working through the implications of COVID-19 - from the closure of clubs back in March 2020 to the social distancing measures that currently remain in place - but one of the positive outcomes for clubs is the re-thinking and re-strategising around member expenditure.
These closures and social distancing measures have seen expenditure decrease significantly. Our KPIs showed that clubs were spending on average $16 per member in the December 2019 quarter compared to only $9 for the most recent quarter being December 2020.
Whilst this expenditure should increase with further reductions to social distancing measures and clubs returning to operations pre COVID-19 in the near future (fingers crossed), it is an ideal opportunity to consider the benefits of member expenditure, and the return it is providing to the club’s bottom line.
The amount of member expenditure will vary across clubs and is subject to your competitors and location. It will also depend on target markets including age and gender.
Sometimes the Profit & Loss Statement (P&L) will simply not show enough data to quantify member type expenditure.
Data should also be collated from membership and POS systems showing revenue over time periods when a promotion is held to gauge the cost versus benefits. It is imperative that promotions or events can be measured.
A P&L may only show total raffles expenses and income, but a club may hold a couple of raffles a week. The P&L will not show which raffle may be underperforming and running at a loss. The ability to obtain and analyse this data as well as spend patterns before, during and after the promotional event will assist in improving decision making processes.
A club with 10,000 members that can reduce their spend by $5 per member can either assist the club’s bottom line or that saving could be used more at target markets per the club’s strategic plan. This could be through its direct marketing via social media platforms, or testing other options.
We do understand that some promotions are held in the club to improve and promote community awareness and relationships. Whilst these benefits may not be financial immediately, the longer-term benefits also need to be considered.
Whilst it is great to reward our loyal members with benefits, as ultimately members are the fabric of our clubs, unnecessary spending on member expenditure could be utilised in better ways to improve the club’s bottom line. Now is a great time to re-consider spends in these areas.
The team at Cutcher & Neale are here to help, please get in touch if you would like further assistance.
