Revenue Builders--Part 1
By Alexa Pritchard
As more parks and recreation departments are forced to rely less on the general fund, the need to develop and utilize different revenue-building strategies has become important. First, department members need to understand revenue expectations and have a system in place to monitor progress. Second, they need to decide on the cost-recovery goal and at what level it will be tracked—division, facility, program, or all of the above. Third, they need to know the total general-fund support in order to develop strategies to reduce that support.
A powerful number to note is the actual per visitor/user subsidy amount from the general fund. For example, if a department’s general-fund subsidy is $500,000, and the number of visitors/users of the department’s parks, facilities, and programs is 600,000 people, the general fund subsidy is less than $1 per person annually (actually 83 cents). Then the “marketing campaign” is this: For less than $1 per person annually, the department positively impacts the community by providing exceptional parks, facilities, and recreational programs.
Two other important starting points for discussing revenue-building strategies are:
1) Identifying which programs generate the most revenue and determining whether there is the capacity to do more programs
2) Identifying the barriers to increasing revenue and determining how they can be minimized or eliminated.
Having the answers to these questions will allow you to identify which revenue builders might be implemented into a department’s operations. Here are some to consider:
The Experience Economy
Consumers most often want to spend their discretionary dollars on experiences instead of tangible items, which is great news for the parks and recreation industry. View programs and facilities as experiences that the customer is going to enjoy. In order to provide exceptional experiences, you must begin long before the customer steps into the facility. From marketing and registration to facility aesthetics and staffing, all of these items impact the overall customer experience.
To provide exceptional experiences, one must identify the top three or four things the customer wants from the experience. For example, our department surveyed swim-lesson participants and asked them to rank a list of 10 values provided in swimming lessons and then narrow the list to three:
1. My child is safe.
2. My child has a fun and positive experience.
3. Instructors are enthusiastic and caring.
Skill development and progress didn’t even make the top five. This information completely changed how we trained swim instructors, focusing more on a fun and safe experience first, and good teaching progressions second. We also follow up on these three items at the end of each session to ensure we are meeting the mark.
Products And Services That Enhance The Experience
Adding products and services may not only enhance the overall experience, but may also create new revenue streams. For example, our swimming lessons are very popular, but kids are always forgetting their goggles and towels. And even fitness members often forget to bring their own locks for the lockers. So, staff members developed a “swim boutique” that carries towels, swim goggles, locks, and swim diapers. This was not only convenient for customers, but added a revenue stream of $600 to $1,000 each month. At several large community events, we also added rentable cabanas so attendees have guaranteed seating and shade. This not only provides an enhanced experience for attendees, but also creates additional revenue.
Are you offering “specials” on social-media outlets to attract new customers to facilities or programs? For example, if a Friday morning group-fitness class has low attendance, and you are trying to increase this goal and awareness of the program, create a “special” and send it out on social media. We have been fairly successful with using a secret code word to get into a program or event free for that day. This not only attracts new customers, but also creates awareness about program offerings.
The 80/20 Rule
The 80/20 rule states that 80 percent of revenue is generated by 20 percent of your customers. Do you have a way to identify the 20 percent? If so, what are you actively doing to keep them as loyal customers? For example, does your registration software suggest programs based on the customers’ previous buying habits, like Amazon? I buy things I didn’t even know I needed until Amazon made the recommendation to me. If you can’t track the 20 percent, what are you doing to reach out to your customer base strategically and routinely? We reach out to seasonal summer swim-pass holders from the previous summer, beginning in January. We offer special pricing for purchase by a specified date, and add coupons for other summer events and programs. We want customers to feel special and to know we want them to return.
New Services And Programs Aimed At New Customers
The final revenue builder is the creation of services or programs aimed at bringing in new customers. We created a “floating pumpkin patch” where attendees “pick” their pumpkins in a swimming pool for Halloween and then head to a decorating station. The event also includes carnival games, bounce houses, and story times. People who have never been to the pool before come to this event because the activity is unique. This is a great opportunity to educate new customers about other program offerings. What programs can you offer that will attract new customers?
When applied strategically and thoughtfully, these proven revenue builders not only will assist in generating more revenue, but will also create a loyal customer base and ultimately help to decrease the department’s general-fund subsidy.
Alexa Pritchard is the Recreation Superintendent for the Parks, Recreation & Libraries Department for the city of Roseville, Calif. Reach her at APritchard@roseville.ca.us.