Membership Development & Retention – Steve Graves

Steve Graves, and his Creative Golf Marketing firm have assisted numerous clubs in developing sound membership development programs. They’ve been bestowed with numerous honors for their work and most importantly have turned the fortunes of many clubs around for the better. Located in Kansas City and in business for more than 30 years, Steve really “gets” membership development and most impressively recognizes that even in the good times many clubs are experiencing as a result of the COVID pandemic, many clubs aren’t taking full advantage and those experiencing success, need to plan for the future, when things might not be so good.

Since membership is the economic engine of private clubs, I posed some questions to Steve to learn more about the challenges of membership development.

From a “30,000 foot” view, I asked him what are the most relevant (macro) issues impacting membership at private clubs. He immediately answered that truly identifying “selling proposition” of the club and what the club stands for. “Clubs do a horrible job of telling their story internally and externally. It is very difficult for a management team to provide the best membership experience possible when the staff is not exactly sure what the club leadership has decided are the core values of the club.” Graves says it is common for the culture of a club (male dominance) to prevent the stated goals of being a “family club” to actually occur. On the “micro” side he said that successful clubs “have a membership development strategy that “sings from the rooftops” their many selling points and unique benefits of membership and lifestyle at their club.”

Among the most common mistakes he observes clubs making is the tendency of clubs to be reactive rather than proactive, and often too late. Waiting until the club has 50-100 openings and has financial distress often results in discount programs that devalue membership and put the club in a situation where both operational and capital needs are victims of this mismanagement. He calls membership development a “marathon” that requires a long-term, consistent approach even when times are good. Graves stresses the branding of clubs as a vehicle to establish the image clubs need to produce both the quantity and quality of members desired by the club.

I once belonged to a club that ultimately failed because they declined to reinvest in the facilities. I asked Graves about this phenomenon, one of the most common questions of the private club industry. Clubs commonly say “if we had more members we could afford the capital projects we know are so important to membership development (retention and recruitment) and then they say “if we had the capital projects we know that are so important we would retain and gain more members.” That’s exactly what happened at my old club – that failed and closed in 2017. Graves says do both simultaneously. “Clubs need to be forward looking in their vision and recognizing that the membership must have a bit of trust in the fact that if the members assist in bringing in their friends that the club leadership will invest those resources wisely on quality capital plans and operational experiences for the members. You can’t have one without the other. If you build it they will come is a really cute line in a movie but, in and of itself, does not produce membership growth like the capital planning companies will promise you.”

One of my favorite topics is the determination of the right number of members and the cost of membership. He says most clubs can take more members than they think is optimum. Graves emphasizes using every square inch of the club campus to spread out membership usage allowing for a larger group of people covering the expenses of the entire club operation. Matching this number with the culture of the club and willingness to pay is what Graves calles “much more art form than science”.

Graves’ thoughts on entrance fees are emphatic. “There should NEVER and I mean NEVER be a discussion of equity or refundable deposits for joining fees. NEVER!!!! There should simply be the initiation fee paid to join the club (which should be marketed as an investment in the capital planning efforts of the club to enhance the enjoyment of all members) with no intention of ever seeing one penny of that money returned upon resignation. There is no logic of any kind that would support the stupidity of a “refundable component” of a fee to join a private club. Unless of course you were a Developer and wanting to use the “Ponzi Scheme” as an initial strategy to get people to pay you big checks to pay off the capital investments made initially to start the club and then burden the membership with the obligation when it reverts to them.” Given the numerous failures, lawsuits and other travails experienced by clubs with refundable memberships, it’s easy to see why he feels that way. Not only that, but the residual liability impacts the value of the club if and when it’s time to sell and often limits the club’s ability to take on debt for capital improvements. Graves observes that only members that have been sold a bill of goods by developers think they’ll ever get their money back. The concept is nearing extinction with the exception of five states (Washington, California, Arizona, Florida and Nevada). It is hanging on by a thread in those states but almost completely gone everywhere else.

Of course, an obvious question these days relates to the stability of the recent surge in club membership resulting from COVID. Graves warns that the market is in a complete and utterly false economy and that resignations will accelerate this fall as members realize just how much they are now using the club in comparison to their dues obligations and the other choices for their discretionary time and dollars that did not exist during 2020-2021. “Private clubs, with golf courses, were 100% monopolies and think they did something special when all they did was exist during a catastrophe that had affluent consumers looking for some same and recreational environment. Name me something other than a golf course or private club they could have chosen for that option?” Graves now emphasizes membership retention to his clients and promotes membership growth strategies representative of a club’s overall goals.

Graves says that his biggest and most frequent challenges in membership development are that clubs remain fixated on not changing when they should. He observes that “with the most recent success that private clubs have enjoyed they all think they are “running smooth” and have no need to consider anything that would help them in the future. They all still think they have too many members when they won’t be thinking that in the next 12 to 24 months.”

Graves has some interesting thoughts that some club leaders may not want to hear. However, a quick visit to his website page on clients shows some of the many success stories CGM has created.