Target Your Market -
Marketing LBLs: Love the Ones You're With

By Randy White

© 2000 White Hutchinson Leisure & Learning Group

If advertising works so well, how come I can still find a parking space? You'd think, with all the money location-based leisure centers (LBLs) spend to advertise and pull in new customers, that eventually there'd be new customers squished in next to yesterday's customers jammed up against customers from a couple months back. However, that's not how it works, is it? It's more like pouring sand into a leaky bucket, as new customers simply replace old ones who've taken their money elsewhere.

The problem with most companies, including LBLs, is that they place most of the emphasis on the advertising and selling side, rather than the marketing side of the business. Instead of developing a service that matches the needs and wants of the customer - marketing - LBLs pour more sand into the bucket, hoping against hope that the thing will fill up. But in any location-based business, there are only five ways to add customers. In increasing degree of difficulty and decreasing return-on-investment, they are:

1. Stop defections - customers who leave and don't return.
2. Increase how often existing customers frequent the business.
3. Increase how much existing customers spend on each visit.
4. Attract new customers from the existing market area.
5. Increase the size of the market area.

You'd think that LBLs would pay most attention to the first three, seeing as how they're easiest. But no. In fact, few businesses could even tell you what their customer defection rate is, or the frequency of customer visits and spending per visit. Our company has analyzed many existing LBLs for clients who wanted to improve sales and profitability. Consistently, we have found customer defection rates of anywhere from 25 to 50 percent and higher. Just to stay even, these businesses must advertise to recruit large numbers of new customers to replace the ones they've chased away. They were focusing on the fourth and fifth steps on the list, which are the most difficult and least profitable.

Focusing on retaining existing customers in the truest sense of marketing accomplishes two things. First, you increase your sales by generating more revenue from existing customers over a longer period of time. Studies have shown that even a five-percent decrease in defections can result in a 25-percent increase in profits. Secondly, you end up doing a better job of attracting new customers than the traditional route of advertising and discounting. You produce customers who are really happy with your business and want not just to return, but to tell their friends. Powerful? You bet. Think about how you choose which restaurants to visit. Would you be more likely to visit one with a pretty ad in the newspaper, or one that a friend praised to the skies? Yeah, we thought so.

So how do you market to customers so they will become loyal guests of your LBL, and vocal disciples for new customers? It's by understanding them, their unique needs and wants, and by understanding the continually shifting marketplace that shapes their preferences and expectations. And no, it's not easy.

Marketing means designing and updating your LBL to meet the tastes of the guests, not what you think they want. Marketing means not assuming the last four LBLs you visited have the answers, as they probably just copied some other LBLs they saw, which were already years out of date and out of sync with customers and the marketplace.

True marketing requires both quantitative research of the demographics and psychographics of both your customers and market area residents, as well as ongoing qualitative research in the form of interviews, focus groups, and other research methods. To do this, you must target and focus on a market niche of customers, as you can never be special to anyone if you try to please everyone. To match your product to customers, the time-tested rule of marketing is that you must shoot with a rifle rather than a shotgun.

The second half of the equation is to stay abreast of the continually shifting marketplace that is influencing your customers' changing wants, needs and expectations. To stay competitive in today's world requires keeping pace with shifting customer tastes and expectations, responding to the changing competitive environment, innovating to stay ahead of the competition, and developing and exploiting the power of a brand.

Change will creep up on you. What were once subtle trends are now multiple and major transformations of society, our lifestyles and values, and the economy. This transformation is already having an impact on all forms of location-based entertainment. It threatens the existence of many forms of LBL facilities, especially family entertainment centers, which are becoming increasingly out of sync due to their generic formulas. Unless FECs reinvent themselves to better match the new competition and changed customer expectations in the new economy, they may be the first entertainment dinosaurs of the new millennium.

The Growth of the Experience Economy

It wasn't long ago that out-of-home entertainment options was limited to typical LBLs such as FECs, bowling and skating centers, cinemas and amusement and theme parks. Not anymore, as a major shift has occurred almost overnight. Now what has been called the "e"-factor (entertainment) is present or rapidly being incorporated into just about every form of out-of-home destination. There's shoppertainment and eatertainment and even agritainment. And what used to be a simple sports event has now become a major entertainment extravaganza. As a result, entertainment is everywhere customers visit, and much of it is now given away for free as value added to sell goods and services. The three realms of products, services, and entertainment are increasingly blurred.

The concept of what is being called the "experience economy" was first described by Joe Pine and Jim Gilmore. They described the distinctiveness of experiences as economic offerings in an article in the Wall Street Journal in August 1997. In their just-published book, The Experience Economy: Work Is Theatre & Every Business A Stage, Pine and Gilmore point out that a common mistake is to equate experiences with entertainment. They explain that staging experiences is not about entertaining customers, it's about engaging them. With experiences, they explain, "the second time you experience something, it is marginally less enjoyable than the first time, the third time less enjoyable than that, and so on until you finally notice the experience doesn't engage you nearly as much as it once did."

This new economic order has important implications for the marketing of FECs. Whereas FECs used to be unique, they are now becoming commoditized by the pervasive presence of entertainment everywhere, lowering their attractiveness and perceived value to customers. Moreover, the value equation of what consumers are willing to pay, if anything, has changed radically since so much entertainment is now free. Customers didn't used to expect Disney quality in their hometown entertainment. Now, as malls, theme restaurant, retailers and urban centers are incorporating high budget entertainment and theming in their projects, expectations are rising. Consumers now have a wider choice in their own hometowns, and many of those are of very high quality.

A Threat and an Opportunity

The good news is that entertainment-type spending is actually increasing - the threat caused by more entertainment is actually an opportunity. The bad news is that the fundamental formula for FECs will need to change if FECs are to earn a larger slice of the expanding pie.

Since 1993, consumer spending on entertainment activities in the US has grown faster than total spending and spending on apparel and personal care:

Consumer Spending 1993-1998
Annualized Growth

As the number of "-tainment" destinations grows, FECs will need to differentiate themselves if they are to survive. So it's back to marketing and reinventing the product. This requires three essential ingredients:

1. Moving from entertainment to transformational experiences,
2. Creating connectiveness to the communities in which they are located, and
3. Creating a brand identity.

Experiences Fade, Transformations Endure

Experiences have no lasting consequence beyond their consumption. They may be memorable, but one's memory of a typical FEC experience fades over time. Transformations, on the other hand, go much further. They actually change one's being.

People today value and use their leisure time more passionately than ever before. It is important to them that their time (even more so than their money) is being well spent. In today's educated and knowledge-based society, people want something more powerful than a memory. They want something what any good entertainment or typical FEC experience can offer. They want to improve themselves, to transform themselves, to become different. Transformations guide or assist the individual toward realizing some aspiration, the most worthwhile earthly value.

Transformational experiences also appeal to another important and pervasive change in Western society - consumers' desire to express their individuality and uniqueness. Faith Popcorn has labeled this trend "egonomics" - customized offerings as an antidote to feeling depersonalized. Transformation experiences are the most individual of experiences, as the customer is the product. The public's increasing appetite for educational transformational experiences is the driving factor behind the rapid growth of attendance at museums, zoos, aquariums, and other cultural institutions and historic destinations.

To compete, FECs must decommoditize themselves by offering transformation instead of just entertainment and amusement. Some types of FECs already do this. Golf driving ranges offer lessons to help their guests become better golfers, and likewise with some bowling and skating centers. These kinds of transformations deal with physical improvements, although transformations can also affect people emotionally, intellectually, and spiritually.

One kind of FEC that is appealing to the new-millennium consumer and is based almost wholly on transformational experiences is children's edutainment centers. By offering children a wide variety of developmentally appropriate, spontaneous play activities, these centers held children develop physically, emotionally, intellectually and socially. As much as children value the fun, their parents value the developmental benefits. Contrast this with the older generic model of a center based on rides, animatronics and games.

Connectiveness and Branding Provide a Sense of Place

If you've seen one mall or chain restaurant or bank you've pretty much seen 'em all. Consumer destinations rarely add to a community's sense of place, as they are increasingly generic and plasticized. Consumers yearn to visit places that are unique and that celebrate the character of their local communities. They also seek comfortable, communal meeting places where everyone goes and mixes, where they can come together and see one another and have a sense of community. Being able to provide that is the second great marketing opportunity for FECs.

Creating connectiveness to the local community goes hand-in-hand with branding a center. Branding - created with storyline-based theming and a unique brand name - creates an emotional bond with the guests. This goes way beyond calling an FEC "Kid's Funtown" or "Play City" and throwing up a few colorful murals.

Successful thematic branding begins with a storyline, which is the foundation for everything that follows. From that flows the thematic interpretation in the form of the characters, the physical, visual and sensual environment, and the facility's entire operations. In a well-themed project, you can look at any single element and sense the theme, as every element of the center is seamlessly combined as a harmonious, meaningful and cohesive whole.

So how do you make this work? The best way to create a brand identity for a community-based leisure center such as an FEC is to reintroduce the local community to itself. In a sense, then, the community becomes the brand and the brand celebrates the community. As such, the brand becomes unique to that center, based, as it is on what makes local community members proud and their values and heritage.

Our company calls this cultural- and values-based theming and design. This not only gives the center a strong connection to its community; it also gives a center a soul. Soul is something lacking in most sterile entertainment projects, whose superficial decor themes lack any real meaning and relevancy to guests.

Our company has created many very successful community-branded FECs based upon this concept, including Wol-Ha, Dinotropolis, Davis' Farmland, Bamboola and the Magic Forest, each offering transformational experiences with unique brand themes that embrace the culture of their communities and the values of each center's target market. We are currently developing a theme for an FEC in Dubai, U.A.E., that will embrace the multi-national composition of the population, the area's heritage as both an Arab culture and an international trading port, and local children's environmental values. The theme is being developed around a mascot character named "LouLou al Dugong™" (Pearl of the Manatees in Arabic) for the dugong species of the endangered manatees of the Persian Gulf and the pearl-diving heritage of the region.

Reliance on mere advertising gives you a soul-less FEC and a customer base that acts like sand flowing through a leaky bucket. High-quality marketing, which satisfies deep-seated needs in the target market and connects guests to their communities, plugs those nasty leaks.

Randy White is the CEO of the White Hutchinson Leisure & Learning Group, a Kansas City, Missouri, U.S. firm that specializes in market feasibility, consulting and design of FECs and family and children's venues. The firm has won many awards for the design of its domestic and international FECs. Mr. White can be reach at voice: +816.931.1040, fax: +816.756.5058, or via e-mail or on the web at </>.