No one really likes confrontation, but that was the topic of my first session this morning, "How to Confront New Competition," led by Rick Caro, president of Management Vision. Rick is not a confrontational person, so there wasn't any need to worry about the session getting too heated. Caro's main message was that instead of blaming any slow growth or decline on a competitor, club owners must truly look at what they are doing at their own clubs first, and they must ensure that they have differentiated themselves enough before a new competitor comes in.
Caro talked about how you find out a new competitor is coming into your market (realtors, equipment vendors, city planning and zoning boards, club members who may have received direct mail from the new club).
Then, Caro said that club owners must know their market and that of the new competitor to truly know whether the new club will compete for the same members. Club owners should do a "drive test" (drive 8 miles from their club in every direction for the primary market--and do the same for the competitor if you know where they will be located--and 12 minutes in every direction for the secondary market). Plot this on a map and see where your markets overlap.
Then, ensure you know who your club members are by ordering complete demographics on your market and then hiring an industry expert to interpret the data. (It's only data until someone interprets it, and then it's information that can be acted upon.)
Once you know how much of your market overlaps and whether your brands and demogrpahics overlap, you'll have a better idea of whether the new club is competition.
If they are competitors, then you need to determine which members are most vulnerable to leaving. Those members would be people in the overlap area, especially if they are members who use your club less than four times a month and/or haven't been a member of your club for at least three years.
Find out exactly who the new club is, their brand, their servies/amenities, their pricing, their facility design. Find out exactly where they will be located and whether it's just one club or one club of many planned for your city. Find out what they will feature and what their concept is. What are their differentiating factors and how do they differ from yours? Ask yourself why they will have an impact on your club and why they will be successful. Then, find out how they will be positioned and priced.
Caro then talked about how to evaluate future competition, the criteria to look at when comparing your facility to theirs and the types of research you can do to evaluate your competition. I'd detail these gems of information for you, but considering how well received this presentation was, I have a feeling that Caro will be offering this one at a future Club Industry show, so I better leave a reason for you to sign up to attend. --Pam