Market research transforms luxury clubs into lifestyle brand

The Luxury Club Makeover

It’s amazing what a little market research can do. Boston-based Millennium Partners Sports Club Management watched at the beginning of the recession as clients at Sports Club/LA and the Reebok Sports Club/NY drifted away. Attrition rates steadily rose from 30 percent up to 37 percent. On top of that, ancillary revenue from existing members declined as members cut back on private trainers and other programs.

CEO Smaiyra Million decided to get to the root of the problem instead of simply watching revenue decline by 10 percent in 2010 alone. Her solution? Well, it was partly based on market research.

After listening to customers and potential customers, Sports Club/LA stopped referring to its brands as luxury clubs. It turns out that “luxury” is perceived as being excessive. And excess hasn’t been selling well the past few years.

The company also stopped calling its brands “urban country clubs.”

Today, you’ll hear Millennium discuss the lifestyle associated with the club. In the minds of company management, their clubs are an essential lifestyle for those who can afford it. The company’s current ad campaign, The Essentials of Life, features health and fitness as an essential part of life that should not be put on hold. (Oddly, the company still uses the word luxury on its corporate website).

Here’s how Million described the shift in marketing focus to ClubIndustry.com:

We don’t try to downplay the fact that we do have extras and that we do pay attention to the individual needs of our very discerning customers, but we just don’t talk about it as a luxury because a luxury is something that most people think they should be doing without.

Million projects revenue will increase in 2011 by 5 percent over 2010. Attrition rates are improving and revenue is rebounding. Millennium is now ready for the growth, with Atlanta potentially in the mix.

If Millennium is successful, this will serve as a powerful example of the power of using marketing research. Every company should consider research a necessary investment and a first step with any new marketing campaign.

NOTE: This article is cross posted at Jackson Spalding’s blog, JS Thinkstand.com.