Editor’s note: Ocean Reef Club is a for-profit, private club. As such, its income from nonmember activities is not limited in the same way that would be the case for a tax-exempt club. However, all private clubs should avoid promoting club membership to the general public or soliciting nonmember use of the club facilities, if they wish to remain truly private and enjoy the legal benefits privacy affords. Each club needs to evaluate its own internal culture, mission and goals, level of nonmember usage, and applicable state or local laws that may have an impact on the club’s private status.
Imagine it is the early 1990s and you are on your way to work, taking the usual route via subway, train or bus in the busy city of Boston, when all of a sudden, you encounter a smiling face in a bright orange shirt. Much to your surprise, this smiling face doesn’t want anything from you. In fact, this person wants to give you money! First the money comes in the form of a free subway token, then in the form of a bright orange, envelope-sized brochure, which offers you $25 in a new bank account. Of course, you see the same happy, orange-clad people at every subway stop that morning and realize that you never saw banking as ‘fun’ until today.
For a lot of people in New York, Boston and other major cities, this was their first introduction to ING, a Dutch bank looking for a way to connect with potential customers who might have interest in their online banking services. And, for the people who experienced this first interaction with the bank, it changed the way they viewed banking and made a lasting impression about ING.
They had a chance to “experience the brand.” You USE a product, but you EXPERIENCE the brand. An easy way to think about this is to see a brand as something that exists when what you, the marketer, say about your product, matches the collective perception of others. Keep in mind that the brand image is not created solely by the users of the product, but also by those who aspire to use the product, and even those who are aware of the product, but neither use nor aspire to do so. Taken to an extreme, brands can transcend the product itself.
Many clubs shy away from the words “brand marketing” because private clubs are membership-based and have not traditionally had the need to “sell” themselves. However, brand marketing is not simply about selling. The definitions of branding, marketing and sales are all unique and are applied in different ways in private clubs. Brand marketing, means determining what your club represents to your members and your prospects and ensuring that brand is communicated in all aspects of the club life.
Branding the Experience
Club leaders must ask, what sets my club apart, how do we market those offerings to members, and what areas can we strengthen and improve? Once a club has completed its own market research and analysis, and has identified its positioning in the community, it can begin the branding process.
In his book about creating iconic brands, Douglas Holt talks about experiential marketing as a way to shift the consumers’ collective perception closer to your desired brand elements (see sidebar on page X).
When Holt was thinking about iconic brands, he selected several consumer products (think Coca Cola for example). However, when we think of a private club as a product beyond its physical elements (your golf course, marina, restaurants, etc.), it is the member experience that defines a large part of your club’s brand. So the real questions become:
- How do you create an experiential marketing program when the product itself is an experience?
- How can you determine the difference between experiential marketing and member events?
To answer, we need to also consider that there are two distinct product categories in which experiential marketing can be effective if applied properly. The first category consists of functional products with no natural active interaction (again, think cola or coffee). The second category consists of products that are experiences in themselves, but only while the consumer is engaged in using the product, such as a cruise ship, restaurant or, in our case, a private club.
Consider one example of each product type: Starbucks coffee and Royal Caribbean cruises. Starbucks’ product (coffee) is functional, with no natural active interaction. However, when Starbucks wanted to sell coffee, they didn’t think about just the beans and the flavor; they thought about how it was consumed and created an experience around the product. Similarly, when Royal Caribbean was launching a new class of ship, they wanted a way to show how it would be different from any other ship in existence. So they created an award-winning mobile marketing campaign, which consisted of an inflatable ship built into a semi-truck. This allowed them to introduce travel agents and consumers to an interactive video and sense of adventure by touring the ship (recreated inside the semi-truck), which is their brand.
In essence, when the product is not already an experience, experiential marketing requires you to create one around it. When the very nature of the product is an experience, you will need a way to transfer, transport or translate that experience to the desired audience. Or bring the audience to you.
Ocean Reef Designs an Experience
When the Ocean Reef Club wanted to take its club experience to an audience beyond its membership, the club needed a way to engage the right kind of person. In this case, the club was seeking someone who was not currently a member, but was likely a member of other clubs. Also considered were the desired demographic criteria and a good fit with a similar psychographic profile to existing club members.
Starting with an idea that was already a hobby for some existing members, Ocean Reef Club designed its “Vintage Weekend” to be more than just a member event. With the idea that several places have vintage car shows, a few have ability to accommodate vintage aircraft, yet even fewer have the facilities and interest to support a vintage yacht show, Vintage Weekend was conceived as the ideal way to let select nonmembers who share a passion for vintage vehicles, yachts and planes experience the Ocean Reef Club by attending these events.
Experiences for Member Retention
Experiential marketing is also about retention of current customers. Jeep discovered this with its program called Camp Jeep. Now in hiatus as a result of the recent economic turmoil, Camp Jeep was for current Jeep owners to join together in a fun, outdoor environment and put their Jeep through its paces in the specially designed courses set up by Jeep.
Many yacht companies apply a similar approach by creating a rendezvous for their customers to bring their yachts together (at the Ocean Reef Club, of course). Throughout the rendezvous, the companies are always looking for ways to enable the yacht owners to engage with both the company and like-minded yacht owners (similar to the way a club would seek individuals like-minded to their existing membership base). The event also presents a great opportunity for owners to see other yachts in the same brand, and how nice if the event introduces current owners to their future yacht perhaps in a slightly larger model.
Each year, the Ocean Reef Club has a welcome back event for members at the beginning of the season. In order to provide a fun way to keep members engaged in the Ocean Reef Club experience, the club is building on last season’s farewell reception—a tailgate—by continuing the competitive theme this season.
At the special tailgate party, each equity member represented his or her local club “neighborhood” and joined together for a gathering that was based simply on tailgating with neighbors (think block party meets pre-football game, all moved to an immaculately manicured golf driving range). Each neighborhood group then brought its own drinks, with the club providing simple picnic fare and fun, old fashioned competitions.
This year, the club will take this event and turn it into an experience, positioning the usual welcome back party as a “Homecoming” event. There the club will announce the first-ever year-long club championship called “The Battle for the Burgee.” Using the members’ designated neighborhoods from the previous year’s tailgate party, the club will track each neighborhood’s participation in all club events and contests—from golf and tennis to bridge and croquet, and any other club event where there is a first, second and third place.
Resident members who participate and win will earn points for their neighborhood teams, while social members who might participate and win will earn points for their equity member sponsor’s team. The club will track and announce the leading neighborhoods through the year and at the end of the season, as the club prepares for the tailgate party, the winning neighborhood (the one with the most points) will display a giant burgee (identification flag), have their neighborhood listed on the newly created trophy and receive a hosted bar from the club for this event.
How does that tie in with experiential marketing? It is the ideal retention event for the club. Every member can participate on behalf of their neighborhood team. It encourages being engaged with the club on any level and creates a larger sense of place for the members than just the activities in which they participate. The club already has the Web pages ready to post daily scores, so members can track their personal contributions to their neighborhood teams.
Mobile Marketing
A large part of experiential marketing is also effective mobile marketing. Ocean Reef Club accomplishes this through its Regional Council program. In the summer, when the club’s seasonal members are spending time with their friends “up North,” the club works with a select group of members to host an Ocean Reef Club reception at each of their northern clubs. The goal is that members summering in the surrounding area will invite their friends. So, rather than roll out the Ocean Reef Club 18-wheel, mobile marketing truck, the club simply brings a piece of the Ocean Reef Club experience to members’ favorite northern communities. Typically, each guest is given a nice memento at the conclusion of the event, which includes a certificate to visit Ocean Reef Club and stay at the inn for two nights as the club’s guest— because, at the end of the day, there is no better experience than the product itself.
If your club is already employing experiential marketing strategies, it is important not to let your strategies get stale. Keep things fresh by reaching out to new target groups or initiating new experiences. Although Ocean Reef Club has utilized experiential marketing for quite some time, the club is charting a new path on its marketing map this year by hosting a series of Ocean Reef Cup Challenges. For this initiative, the club worked with a select group of members and challenged each of their northern clubs to a tournament weekend at Ocean Reef. Throughout each weekend, members from the visiting club’s team will experience lodging, club amenities, social events, and a friendly tournament pitting them against an Ocean Reef Club team (which includes some Ocean Reef Club members who are also members of the visiting club). At the end of the weekend, either Ocean Reef or the visiting club will be declared the winner, and visitors will be invited to stay for as long as they like. It is not known yet where this new marketing path will lead, but the club hopes a tropical experience injected in the middle of a cold, harsh winter, could lead some visitors to recognize the advantages of adding a southern club to their lifestyle.
While all of the Ocean Reef Club’s marketing activities may not be applicable to nonprofit private clubs, there are many ways to include experiential marketing and still remain exclusive. Members inviting friends to club events, or reaching out to former members are ways to keep your marketing exclusive, selective and private. For more information on the steps to protect the club’s private status, see the sidebar, “Marketing & Private, Tax-Exempt Status” on page XX.
As you plan for the coming year, consider how new experiential marketing efforts could fit into your plan; then draw a map that allows you to create memorable experiences, which in turn become part of your brand.
Richard Weinstein is vice president of sales, marketing and membership at the Ocean Reef Club.
The Branding Process
In his book about creating iconic brands, Douglas Holt talks about four key ingredients as a part of the branding process.
1. “Necessary conditions”—The performance of the product must at least be OK, preferably with a reputation of having good quality.
2. “Myth-making”—A meaningful story-telling fabricated by cultural “insiders”. These must be seen as legitimate and respected by consumers for stories to be accepted.
3. “Cultural contradictions”—Some kind of mismatch between prevailing ideology and emergent undercurrents in society. In other words, a difference with the way consumers are and how they sometimes wish they were.
4. “The cultural brand management process”—Actively engaging in the myth-making process, being sure the brand maintains its position as an icon.
Given that a club has the necessary conditions described above, along with a viable product, the principles Holt discusses can help build a stronger brand within the product category, regardless of the product itself—even if your brand is not destined to become iconic. Experiential marketing is a way to shift both the consumers’ collective perception closer to your desired brand elements, and to move in the direction of satisfying Holt’s three other elements.
Experiential Marketing
The American Marketing Association defines marketing as: the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. This definition has been widely accepted, but there is still ongoing discussion about a formalized definition for “experiential” marketing. However, most definitions agree that it is creating an emotional connection between consumers and a brand.
Marketing & Private, Tax-Exempt Status
Private clubs are unique from other businesses in that they cannot simply advertise for new members or the availability of their banquet facilities to increase revenue, nor would they want to. Private clubs are steeped in the tradition of being selective, exclusive, and therefore private.
In times of membership attrition or when it comes time to ramp up a recruitment effort, many clubs may find themselves wondering what they are legally allowed to do. To understand the potential ramifications that could affect a club’s tax-exempt and private status, it is important to first understand the unique nature of private clubs.
A private club is a constitutionally protected association of individuals whose organization is based on social or recreational purposes, not business. A private club organized under Section 501(c)(7) of the Internal Revenue Code is exempt from federal taxes on its member-generated income and also is exempt from many federal and state laws. The Internal Revenue Code does not expressly forbid a nonprofit, private club from advertising for members. In fact, the most common error clubs make is to construe the absence of an outright ban as permission to move forward with an advertising program. However, doing so could carry significant consequences for maintaining private status.
Tax-Exempt Status
Under federal tax law, a club that has been granted tax-exempt status must ensure that the exempt purpose of the club—the social or recreational component—remains its primary function or purpose.
IRS audits of 501(c)(7) clubs usually include an examination of club brochures, membership applications, and advertising to ensure that the club is operating as a social club for pleasure, recreation or a similar purpose. The IRS expressly looks for advertising that goes beyond furthering the “exempt purpose of the club,” or which publicizes income-producing activities. The IRS is checking to see whether the club is acting like a business rather than a club. Advertising club facilities for nonmember functions like weddings could create problems.
Private Status
Equally important is the impact on a club’s private status when a decision is made to advertise the club’s facilities or advertise for members. A private club is based on personal relationships and shared affinities and is also an exclusive association. These two factors have been deemed critical by the courts when determining whether a club is truly private. The problem with advertising for members is that it undermines the “personal and exclusive” factor.
For more information on these important issues, see NCA’s publications, Private & Tax Exempt Status and Membership Marketing: Best Practices for Private Clubs at www.nationalclub.org