By John G. Fornaro
What’s the right mix for memberships in a private club? And what kind of memberships should private clubs be offering today?
Are they different from five, 10, 20 years ago? And if so, why?
Fact is, what’s being offered at private clubs today varies. Is there a one-fits all membership, or is there free rein, everything goes attitude.
“In the original days of the private club industry, clubs essentially, had one class of membership….’you’re either a member or you are not,’” explained Steve Graves, president of Creative Golf Marketing, a company specializing in membership development strategies.
“Private clubs had one membership where everyone paid the same joining fee, the same monthly dues and enjoyed the same privileges of membership. Those days are over and the private club industry now offers many types of membership with different joining fees, different monthly dues and different usage privileges.
“However, there’s a great deal of confusion about the ‘fundamental offerings’ that each club should consider as its ‘basic offerings.’
“The trend…clubs are attempting to offer too many memberships. There is the attempt to meet the needs of each current member or prospective member for fear of losing their dues income. Clubs are throwing a lot of spaghetti against the wall hoping a few strands stick without a true understanding of the unintended consequences of their decisions,” Graves opined.
“There are myriad options and offerings ranging from one category to the Heinz 57 variety,” injected Rick Coyne, managing partner of Club Mark Partners, an industry consulting form.
“Historically, the decision on categories was at least in part, predicated upon urgency to gain new members. Desperation generally bred accommodation. More stoic and traditional clubs stayed with the basics, some even opting for only one category, full.
“If there’s a trend, it’s toward designing a better junior and/or intermediate membership,” Coyne suggested.
“In nearly every locality, peak earnings don’t occur until the 55-year-old age range, then diminish after retirement. With that fact as the backdrop, accommodating the younger members as they ‘grow into membership’ would seem both logical and savvy.
“Many clubs still cling to the ‘age of majority’ at 35. Most markets would suggest that this should be gradually shifted higher. In second home communities, many clubs offer the opportunity at lower dues to age 55. Obviously, an understanding the specific demographic of the club is crucial to done,” Coyne added.
“Categories, like anything else related to marketing, must be based upon good demographic analytics. Too many membership categories can be confusing and unnecessary.
“Keeping the offering in concert with your market is the best practice. Categories that allow younger families to ‘ease’ into membership make sense. Earnings rarely peak until the 55-65 age range. Finding the right tier stepped approach to junior or intermediate members can be a windfall.
“Specifically driving categories to market can and should drive additional memberships. Using the junior category in an east coast market, the club attracted over 200 new younger families in a relatively short period. Do the homework, but know what your market needs before stepping off the cliff,” Coyne advised.
“Clubs cannot survive by serving only one membership type or demographic. However, clubs typically serve the age demographic that serves on the board more than any other group,” exclaimed Whitney Reid Pennell, president of RCS Hospitality Group, “and committees are often populated with members who have the ‘this is how we’ve always done it’ mentality, making it difficult to engage all demographic groups.”
Pennell added that because of varying lifestyles, different groups of people use their club at different times. “For example, a retired member may golf every weekday, but stay away on weekends whereas a working member may golf nine holes in the afternoon and with their family on Sundays.”
She suggests most clubs are staying with the “full golf or social membership, but I’ve seen clubs look at sports social, dining social, Twilight golf, out-of-state, junior or executive and extended family memberships.
“Clubs are offering more and more different types of memberships trying to attract modern members. While I understand the idea, sometimes too many choices are overwhelming for a member resulting in a lot of ‘policing of policies’ for so many different memberships with varying privileges. Also, if you study the Millennials, they are more inclined to pick items à la carte – what they want only,” Pennell added.
In his opinion, Steve Graves feels clubs should be offering more membership categories, “but not simply for the reason to offer more. Each club should contemplate offerings that would assist in both membership retention and membership recruitment.
“However, there must be strong consideration as to the ‘risk versus reward’ consequences of expanding membership offerings. The most obvious “risk” is having more current members desiring to convert to the new lower dues category than individuals outside of the club desiring to join the club,” Graves cautioned.
“An example of this strategy is to create an ‘individual membership’ for people who have non-golfing spouses, with a lower dues rate (approximately 20 percent reduction). Unfortunately, there commonly would be many more members wanting to ‘downgrade’ to that offering than prospective members wanting to join. Consequently, a club can ’sink the boat while they are trying to save the boat,’” Graves emphasized.
A strong point of contention today is the single’s membership…or lack of it at many clubs, and this is one membership Graves feels would attract more potential members.
“Single memberships would be of interest to non-married individuals – a membership is for ‘non-married individuals’ with no dependent children under age 23),” Graves explained. “Many clubs make the mistake of only offering ‘family membership’ when, clearly there is a trend in society today of not getting married.”
Other possible membership Graves suggests include: “Weekday memberships for individuals (commonly seniors) for which their weekend play is not as important to them and they have availability on weekdays. This membership has a lower joining fee and lower dues structure, and draws some individuals from weekend play, where it can be argued clubs have compaction problems. It moves these members to weekday play where the golf course is wide open,” Graves added.
“Low priced ‘dining only’ memberships have become very popular. No athletic usage (no golf, no swimming, no tennis, etc.) just the ability to enjoy dining and social events. This is a great ‘catch pool’ for older members who no longer are using the club for athletics but want to remain at the club. It’s much better than having a ‘leave of absence’ policy,” Graves intoned.
So how do clubs arrive at a cost for their memberships?
“Usage opportunities tied to specific categories is the general baseline for establishing dues,” explained Coyne.
“Some clubs provide all-inclusive usage opportunities while others charge à la carte ancillary services. The basis for cost of dues is generally tied to operational costs, while trying to remain competitive.
“Initiation fees, on the other hand, have had no sense of rhyme or reason. In fact, in the golden age of membership growth, initiation fees soared and in decline they’ve plummeted, often to no initiation fee at all. This practice of leading on price is one of the great tragedies of our industry. Both the financial and moral integrity of the private club is challenged when discounting is the lead process,” Coyne suggested.
“As with categories of membership, initiation fees should first be based upon your market’s ability to afford. Likewise, relevance of the club’s offerings must match the marketplace it serves. When these principals are observed, at least in my opinion, there is no obstacle that cannot be overcome.”
There’s consensus on club usage and payment.
“The price to join a private club should vary depending upon ‘how much of the club is used by the member,’” Graves added.
“Pricing of private club memberships is much more of an ‘art form” than it is a ‘science’, and many factors enter into the pricing of the ‘joining fee’ for a private club.
“It is my experience that private clubs have become so fixated on the need for ‘operational dues income’ that they are willing to forego or accept a greatly reduced joining fee. That is an enormous mistake as joining fees are critically important revenues that should be segregated funds, specifically to fund capital improvements and pay down debt.
“Joining fees should be high enough to be logical in the given geographic economic market (it will be, logically, more costly to join private clubs on both coasts than in the Midwest) but low enough to make sense as to the financial commitment being asked for the ‘privilege’ of joining the club,” Graves explained.
“The rest of the membership categories would then have proportionally lower joining fees than the top category of membership.” Graves offers the following examples:
Full golf $10,000
Associate golf (ages 33-39) $7,500*
Associate golf (ages 21-32) $5,000*
Sports (tennis, swim, fitness, social) $3,000
Dining (no tennis, swim, fitness, social) $1,000
* As a point of reference there would not be additional joining fee payments as associate golf members progressed by age to full golf status, and as a further point of reference, the qualification of an associate member would be based on the age of the oldest spouse, if married.
A club’s future however lies with the younger generations, which means junior memberships. What are the parameters and when should they be offered.
“Less that 20 percent of clubs engage in market due diligence. If they did, it would be easily observed that peak earnings in nearly every community in this nation does not occur until 55 to 65 years of age,” Coyne reiterated.
“Successful clubs react to this market reality by matching age offerings to market along with financial incentives to capture the younger market early and easily convert them as they reach the age of majority.
“Nearly every club in the country could benefit from matching offerings to the market they serve, and the lifetime value of your members is increased the earlier that you capture them as members,” Coyne stressed.
“First and foremost, the name for junior memberships should be changed,” Graves insisted. The word “junior” does not reflect the quality or financial capabilities of a successful young person who would consider joining a private club. We strongly recommend the phrases “associate” (similar to law practices where an individual is an associate until they become a partner).
“By and large we see these memberships being designed at much too low an age offering. ‘Forty is the new 30’ and as such we recommend that private clubs have tiers of associate memberships. Each tier would have a lower dues structure that would “stair step” up to the 100 percent dues structure for a full membership,” Graves added.
Here are examples:
Full golf $600 per month
Associate golf (ages 33-39) $480 (80 percent)
Associate golf (ages 21-32) $360 (60 percent)
“Junior or associate members should naturally matriculate to regular membership status at age 41. They would not pay any additional joining fees and they would convert to the full dues structure.
“Some private clubs have become even more aggressive in the tiering of memberships and have taken their “junior” membership up to age 44 with their full golf memberships beginning at age 45,” Graves explained.
“For years, I’ve thought that a sports social membership should be the primary membership with “golf options” added on versus the traditional memberships of full golf or social,” Pennell injected. “Golf rounds are down or flat but socializing and using family or sports amenities are in peak demand.
“If you look at trends with young people and some workstyles today, I find there is a possible niche that clubs can serve. Places like WeWork or the new Women’s Only Social Clubs in New York, The Wing, tells us that many people are seeking a place to work and socialize as much as relax and socialize.
“Clubs have to remain true to their brand, look at their target audience, understand how these people live and work and see if there is a membership type that would make their lives easier.
“So many clubs are throwing out quick fix new memberships hoping to boost their dues line, but sometimes it’s postponing the inevitable lost members because the people these quick fixes attract may not be best suited for the brand or values of the club,” Pennell opined.
“I don’t know if it is so much about offering the right membership as it is about creating the right value proposition for membership. Clubs are viewed as ‘stuffy’ and ‘too traditional’ for today’s modern members sometimes. In my opinion, Lakewood Country Club in Dallas, Texas is an example of a club serving the needs of the modern member. They have created such a great value proposition; their members are raving fans out in the community – and that is often the best membership marketing a club can have.
“I’d encourage everyone running a club to watch trends in other industries and see how they (clubs) may need to evolve and change to remain relevant. Everyone talks about it, but few are actually making the changes necessary and really embracing it,” Pennell cautioned.
“Technology, a more casual way of living and working impact how a modern member evaluates a club for membership, “Can I live my life there? Does it make my life easier? More fulfilling?” she queried.
“If the club does not enhance a member’s life in some capacity, it will be a difficult sell.
“Consider how technology allows targeted marketing and how members network via Facebook, Twitter, Snapchat, Instagram, etc. The traditional reason –social networking – for joining a club is not the only reason to join anymore because of the option people have. How can clubs respond to these trends in other areas of people’s lives?
“Interactive websites, fun dining experiences, child care, a ‘pool compound’ frequent opportunities to socialize, workout and opportunities for current youth activities are the minimum expectations these days for a country club. Golf continues to be the third to fifth driver to join a club, yet many clubs spend most of the capital dollars on the golf course,” Pennell suggested.
“I’d encourage every club to view their club as a whole and see if it is attractive to families; there is no question that is the member of today and the future. I’d also ask, how can the club serve the needs of a dual income working family who may work out of their home?
“College students today turn in homework via the web and Moms follow high school on Twitter to get information about school closures, sports schedules, etc. and it will only continue. We must realize that a 35-year-old today has had access to the internet since before they were 10 years old. If we continue to limit how they use technology at the club, we will never attract them,” Pennell observed.
Publisher’s final thoughts
There certainly have been some shifts in thinking over the past few years as many private clubs have struggled to retain members, to find new members and to simply stay afloat.
Many factors have affected private club memberships, including the fact private clubs are no longer “your daddy’s or granddaddy’s clubs.” Societal influences today as we’ve read, are much different. Many clubs, for example, are more family centric, golf is not as strong a component or draw as it used to be and the family decision making process is changing.
Today when a family member or family is considering a membership it’s often the female member who drives the money decision making, and who has developed an awareness of a private club, often through friends.
There’s often a developing interest and perhaps a trial to see if it works for the family, through a guest members play etc., and based on what they see, the potential member will decide to join.
They ask questions: Does this particular club offer the member experience my family wants, and if so, what kind of membership do they want, or is available?
These questions…and answers will often guide potential members.
To be sure the club they’re thinking about joining must have the amenities and intangibles they seek, and if it doesn’t they’ll move on to one that does.
The fact is many referrals come from people who themselves joined the club in recent years, and they have a pipeline to others who don’t belong to a private club, especially friends who have a lifestyle that allows them the time, and money to afford a private club membership.
Question is, how do private clubs take advantage of these possibilities? Where should they begin their quest?
I understand not all clubs are the same and have the same issues. But, for many clubs that want to have a full membership, respect legacy and loyalty, and promote golf in the community I suggest multiple categories of membership and two areas that we need to look at are senior and junior memberships.
Seniors memberships should be a single membership with dues around half of regular’s dues with a starting age between 70 to 75 years old, and with only weekday play.
Junior memberships are very important. We, in the golf industry must develop the next generation of private club members. The onus is on us!
This starts with varsity high school golfers on the golf team in your community. Junior memberships can be started with limited play, for example, limiting the golf to 10 players per year, with affordable dues. Juniors must qualify for this through their school grades, understanding of the rules of golf, respect of the game and scoring. Juniors could be required to volunteer for charity golf tournaments at the club. If every private club did this, we would be developing 50,000 golfers every year… great for the game, the community, and your club.
At least, that’s the way I see it! BR
John G. Fornaro, publisher
If you have comments on this article or suggestions for other topics, please contact John Fornaro at (949) 376-8889 or via email: email@example.com