Friday, March 04, 2016
Three Tenets of Club Management
The past five years of the club industry in Australia has been marked by fierce competition among gambling providers and rising regulatory constraints. With industry revenue predicted to decline or stagnate over the next few years, navigating this business environment would be a challenge for any executive. With the right mindset, however, clubs are in a position to attend to initiatives that would ensure sound financial performance and prosperity.
Capitalizing on the turbulent macroenvironment will require strict adherence to three precepts across the organization: (1) fact-based decision making; (2) enlightened people management practices; and (3) providing a high-quality customer experience.
Fact-based decision making
Clubs are in an enviable position whereby their cash registers (EGMs and POS) also double up as powerful instruments of customer research. Yet, there is a tendency in far too many clubs to turn a blind eye toward the insights these data can provide, and make decisions on past experience, intuition, and managerial whim instead.
Data, when properly analyzed, can provide answers to almost every pain-point any club executive might face. From floor layout to player reinvestment, and optimum AEMP investments to diversification of services offered, insights from primary and secondary data should be the principal input for decision making.
While quite a few clubs do spend some of their resources on customer and competitor research, such research often lacks reliability and validity. Reliability refers to the degree to which a test is consistent and stable in measuring what it is intended to measure. Most simply put, a test is reliable if it is consistent within itself and across time. To understand the basics of test reliability, think of a bathroom scale that gave you drastically different readings every time you stepped on it even though your body mass has not changed. If such a scale existed, it would be considered not reliable. Validity refers to the degree to which the test actually measures what it claims to measure. For example, if the money a player drops into a machine is used as the sole measure to test whether that player is a problem gambler, it would be a poor test for gambling addiction. As a rule, all research should be tested for underlying reliability and validity before any credence can be based on its findings. Using invalid data for decision making can sometimes be a lot more dangerous than having no data at all.
Enlightened people management
Andrew Carnegie probably said it best, “Take away my people, but leave my factories, and soon grass will grow on the factory floors. Take away my factories, but leave my people, and soon we will have a new and better factory.”
Clubs are social institutions and employees constitute the public face of your club. A study by Mercer Consulting suggests that around 70 percent of your guests’ perception of their experience is determined by the attitude and behaviors of your employees. So, if there is one lever you can use to attract more customers and retain them, look no farther than the people you have working for you.
People management starts with organizational culture—the norms, beliefs and practices that signals to organizational members and others the “way things are done around here.” Peter Drucker, probably the greatest management guru who ever lived, always said that “Culture eats strategy for breakfast.” Great U.S. companies such as Southwest Airlines, Zappos, and Nordstrom (or Mecca Brands and Mindshare in Australia) work hard at developing and perpetuating a culture that is characterized by integrity, fun, and customer-centricity. In order to have a right culture in place, management should first assess the club’s existing culture. Then follows an arduous journey toward determining which aspects of current culture you need to keep, which ones to discard and which new elements to adopt and embed within the organization. Cultural assessment and change is a complex scientific process, and needs to be carried out and facilitated by experts in the area. For those organizations serious about putting an appropriate culture in place, the rewards are significant in scope and long-term in duration.
The two main goals of putting in place a solid organizational culture are (1) to create engaged employees; and (2) to provide employees unambiguous behavioral guidelines. However, culture alone does not bring about ongoing employee engagement.
An engaged employee is one who is “fully involved and enthusiastic about his or her work.” Gallup Organization reports that less than one in four employees in Australia are engaged in their workplace. Workplace engagement enhances productivity, reduces absenteeism and conflict, and has a strong positive influence on the customer experience. Club management can enhance employee engagement by (1) Consistently demonstrating that management values its employees; (2) Communicating a clear vision for the organization; and (3) Demonstrate to each employee how their inputs contribute to the success of the organization in a meaningful way.
Providing high quality customer experience
Numerous consumer surveys report that people are looking less to “things” and more to experiences to achieve satisfaction with their lives. Be it a gaming or a non-gaming customer, what she looks for when visiting your facility is an enjoyable experience. The customer experience occurs across several touchpoints or “moments of truth” whenever there is an interaction between the customer and the club. Not all touchpoints are equally important in determining the customer’s satisfaction (if not delight) with her experience. However, it is important to understand each touchpoint during the course of the entire customer journey and analyze the underlying elements that would make this touchpoint proceed as intended.
One effective and proven way to understand the customer experience is by designing a service blueprint to depict the customer journey for each segment of customers you serve. I have designed customer journeys for several large gaming operations and the results in terms of customer retention and revenue generation have been nothing short of phenomenal.
For each touchpoint in the blueprint, the following components are teased out: (1) The physical evidence of service quality witnessed by the customer; (2) the customer’s expected behaviors; (3) the contact employee’s expected behaviors that are visible to the customer (frontstage behaviors); (4) the contact employee’s behaviors that the customer does not get to see (backstage behaviors); and (5) the support systems and staff behaviors required for each touchpoint.
After designing the preliminary blueprint, the next step is to flag current fail points and offer suggestions for correcting these fail points so that the entire journey is more rewarding for the customer and more profitable for the club. Inputs for the various touchpoints are gathered by (1) Interviews with key staff personnel; (2) Participant/Observer activities by the Consultant; (3) Company records; (4) Customer feedback; and (5) Informal mystery shops.
The task of correcting fail points draws attention to several existing lacunae in the service delivery process which need attention. These shortcomings, inter alia, may be due to employee headcount, employee training and motivation, standard operating procedures, technological bottlenecks, or lack of understanding of customer needs and expectations. When failpoints are corrected and each touchpoint constantly monitored, service blueprints become living documents that can guide all major activities within the organization to deliver a truly fulfilling customer experience.
This article touched upon the three tenets of club management: fact-based decision making, enlightened people management, and providing a high quality customer experience. Volumes more can be written on each of these tenets. My main purpose here is to sensitize club management to each of each issues so that they become embedded in the DNA of management ethos.
About the author: Sudhir Kalé, Ph.D., is Senior Consultant with Bullseye Services (www.bullseyeservices.com.au), a boutique firm that provides marketing consultancy and analytics services to the club industry. He has written over 100 papers on the marketing and management of gaming businesses . Sudhir has also consulted with clients on five continents on matters relating to service quality, organization culture, market research, customer service, and CRM. You can write to him at firstname.lastname@example.org.