Private clubs must do everything in their power to keep their dues as low and as stable as possible. Raising dues to balance your Club budget is the simple thing to do. But, the escalation of dues is having a catastrophic effect on private clubs from coast to coast. Particularly, when the increase in dues does NOT come with a corresponding increase in services or experience.
Most private clubs are slashing their initiation fees because they are convinced that the cost of joining the Club is the deterrent to getting a person to join. This is factually wrong. The main reason for membership resignations, and a lack of new member applications, is that dues have risen to illogical levels at most private clubs.
People would rather pay $10,000 to join a club (in Des Moines, IA) that has dues of $450 per month than $2,000 to join the same club that has dues of $699 per month. I recognize that this example has been painted with a broad brush and that the specific numbers I have used may be illogical in comparison to certain areas of the country. A 3,000 square foot home in Des Moines, IA may sell for $375,000 while a 3,000 square foot home in La Jolla, CA may sell for $1,500,000. So please stay with me as to the philosophy I am attempting to convey, versus the specifics of the numbers I have suggested.
The lower you keep your dues, the higher initiation fee you will be able to command. The more your dues escalate each year, the less you will be able to command for your initiation fee.
Please do an evaluation of the membership level at your Club over the past five to ten years. Then analyze what your dues and initiation fees were throughout that time in comparison to the dues and initiation fees you charge for your membership classification today. I believe you will find the decrease in membership and initiation fees and the increase in dues to be quite startling. I promise you they go hand in hand.
If the benefits of private club membership were commensurate with the dues increases you could defend this action. But, painfully, the opposite is occurring. Clubs are asking their members to pay more each year while having to accept less of a private club experience. Consumers of today, regardless of their wealth, are looking for the combination of a quality experience and value for that experience. That combination can co-exist! With more members paying less, you can spread the costs of running your Club over a larger group of people. With the additional dues income derived by membership growth, you can begin to give people a better experience at a lower cost. Not a bad business model to consider.
I understand that it may be necessary to raise dues because the costs of running your private club are rising each year. It is factual that your fixed costs are going up. However, the need to increase your dues, substantially, will be mitigated with a focus and emphasis on a strong membership base. You have a simple solution to keep your dues stable: increase, or at the very least, maintain the number of members you have at your Club. That will help to balance your budget and create a foundation for which your annual dues increases can remain modest and your Club can flourish.
The first step towards new member growth is an understanding of how escalating dues plays against both successful new member growth and membership retention. The most powerful message you can convey to your membership is the fact that the leaders of the Club are dedicated to keeping dues increases as low as possible and initiation fees as high as possible. This can be accomplished through keeping the membership position of the Club as strong as possible. But, before you convey that message you better be dedicated to the performance of that message.
Make sure your actions are identical to your message. It takes emphasis, dedication and substantial effort. A club culture that is defined by a quality experience, that is commensurate with your dues structure and entrance fee requirements, will greatly help your membership retention and recruitment efforts.
Comments