In almost every city there are numerous nightclubs. In larger cities there is usually at least one nightclub that outshine all the others. You’ll easily recognise these clubs because people usually line up and wait for extended periods just to get inside.
In my teens I didn’t get it. I had little patience and hated lining up for anything if I had a choice. On the odd occasion that I did go to one of these clubs I found them to be overrated. The drinks were expensive, the music was annoying and too loud to talk and there was standing room only. It turns out I am not the only person who feels this way. Let me share two negative reviews from a very popular nightclub in the UK.
“Waited in the queue for an hour on Saturday night in the pouring rain from 10.30-11.30. Even requested guest list in advance so we could head straight in- and still had to queue. 6 girls for a 30th birthday- hair ruined.. will never go back!! The queue didn’t even move- shocking service!!!”
“Had a great night out for old school Friday night music was great. Only thing was price of the drinks, £10 for one drink not great. Won’t be in a hurry to get back there which is a shame, wasn’t even a good vodka for that price.” In the first review they complained about waiting for an hour in the pouring rain. In the second review they complained about expensive drinks. With such negative criticism how does this club survive? As you will see these negative criticisms are not necessarily a bad thing.
The predictable life of a failed nightclub
Nightclub closures are so common that we are rarely surprised when they happen. The life of a typical nightclub begins with a big launch usually in the form of an exclusive invite only party. This is followed by a series of promotions of one type or another to get the word out. In some cases the club will do well for a while but then comes their inevitable decline. The promotions stop working, numbers dwindle along with profits and budgets run dry. Many clubs will resort to lower prices which can help to attract the budget conscious but usually means lower profit margins. In most cases it’s a losing strategy because there are already clubs and pubs offering low prices. If low prices were not part of the original strategy they will rarely work as an after thought. Many nightclubs failed because they don’t understand the formula for nightclub success. They become desperate and resort to price cutting instead of creative thinking. Don’t get me wrong, price cutting has it’s place but when it’s the only trick you have failure is almost assured.
Examples of nightclub success strategies
Nightclubs can succeed using various creative strategies. For example the location strategy often works because of positioning. If your club is located in a high traffic position your chances of success go up based purely on numbers. The downside is usually cost. Good positions tend to attract high rents which can be a big gamble if you don’t have plenty of capital. The drawcard strategy is where you bring in someone like a popular DJ or a celebrity to attract people. This also tends to be an expensive option plus celebrities can be unpredictable. If the celebrity is the main reason people attend the club the success hinges on the celebrity sticking around. Then there is the theme strategy. This can work well but it tends to be hit and miss. The underlying reason for the success for most top nightclubs stems from the same simple strategy which I’ll explain next.
The ‘Exclusivity’ strategy
The nightclub I am going to talk about is based on the exclusivity strategy. The idea behind any club is to create a place where likeminded people feel comfortable and can socialise. The way to make your club exclusive is to implement rules that dictate who gets in and who gets rejected. I will use a fictitious example. In our nightclub we will have the following rules. Rule 1. Dress code. All men must wear a suit and tie. Rule 2. Even ratio of women to men. Rule 3. Demand over supply. Seems pretty simple right? In theory it is simple but in practice most clubs fail to fully implement. The difference between successful clubs and the many that fail is a willingness to stick to these rules. Business owners in general run with the mantra that any paying customer is a good customer. They have no rules therefore no customer selection process but, its precisely what separates the winners from the losers. Not only in the nightclub business but in almost any business.
Rule 1. Dress code. By setting strict standards about dress the club literally rejects anyone who does not meet their required standards. By requiring men to be dressed in a suit and tie they reject anyone who is not in a suit and tie. Every business is a solution to a problem. Clubs solve the problem of not having a place to go that meets the standards of a certain group of people. The nightclub dress code keeps out those who are not prepared to dress to this standard while attracting those who like the standard. In the case of women its attracts those who like clubs where the men dress up. Perhaps because it gives them an excuse to dress up or they just appreciate a man in a suit.
Rule 2. Balancing the ratio. Getting the ratio of women to men right is important to the nightclub because of its social function. In other words nightclubs serve as a place for males and females to meet. If the club had too many women or too many men there would be an imbalance and one sex would be disappointed. To ensure an even ratio they have a door person who keeps count of how many women and men come in. If one man leaves another will be allowed in. If one woman leaves another will be allowed to enter. If the club was 150 men to 50 women the women might be happy about it but many of the men would feel there were too many men decreasing their chances of meeting a woman. They would soon lose interest in the club and find a new club where the odds were more in their favour. This particular factor doesn’t apply to every business but you do need to be aware of what attracts people to your business and what could be causing them to choose your competition. Every business will have elements that require balance. Too far one side or the other and your business will lose its appeal.
Rule 3. Demand over supply. A line gives the perception that there is something worth waiting for but also shows people that there is more demand than supply. Recently while in Kyoto, Japan I noticed a long line of people in front of a cake shop. It turned out the shop was famous for a certain type of Japanese cake. I wouldn’t have even noticed the shop had it not been for the line. I even considered lining up out of curiosity but we didn’t have enough time. The power of a line should not be underestimated. It’s also worth noting that when people are made to wait they appreciate the club more when they finally get inside. When it takes time to get in you are also less likely to leave early. If you just waited an hour to get in you are hardly going to leave 30 minutes later. Even if we are on to the club’s strategy we still can’t help but wonder. We want to know for ourselves whether the club is truly worth it. The only way to really know is to jump on the end of the line and wait. There is also social proof. Most people prefer not to take risks if they can help it. To avoid making a decision we may regret we look at the behaviour of others for cues about what to do in a given situation. If people are lining up, the club feels like a safer option than the club next door with no one waiting.
Having the courage to implement
Now that you understand how the nightclub strategy works you need to understand why most fail to implement this strategy. As I said, its simple in theory but difficult in practice. The reason its so difficult is because it takes faith. The truth is the owners of most nightclub startups don’t understand the strategy. Some don’t know the strategy while others don’t believe in the strategy but there is another group. The ones who know and believe in the strategy but don’t have the courage to implement. Its easy to think courage is not required but try sticking to the strategy when you have large overheads to consider and a month to generate the required revenue to keep your doors open. It’s very difficult to stay the course and in some cases not even wise. Imagine needing $20,000 to cover your basic running costs for a month and you made around $5 per drink in profit. You must sell 4000 drinks just to scrape through. What would you do if you had potential customers at your door with money to spend wearing jeans and a t-shirt. You need the courage to turn them away in the hope that you’ll get enough men in suits and ties and women to sell 4000 drinks. Finally, what about the ratio? What if you have 10 men and 10 women in your club and you know its not enough to make budget. It’s late and a group of 20 guys turn up. These guys have money to burn and will be buying a lot of drinks between them. Are you going to say no?
Setting standards to avoid failure
Most businesses fail because they don’t use a proven strategy. This occurs either by choice, circumstance, ego or lack of knowledge. Choice meaning they choose not to follow a proven strategy despite the evidence. Circumstance meaning they have no choice and are forced to abandon their strategy just to survive. Ego meaning they are bias toward their own ideas and fail to test their validity. Lack of knowledge meaning they are unaware of any proven strategy. An all too common scenario for those who fail is an attempt to appeal to anyone and everyone. When you try to please everyone you usually end up pleasing no one. A good way to avoid this problem is to set standards and rules to target your ideal customers. There are many ways to set standards in a business and the aim of these standards is to both attract and protect your ideal customers. The nightclub example attracts a certain clientele due to a dress code but, they also protect their customers by maintaining those standards. If the club were to let even a few people in who do not meet the dress code their chances of success would begin to drop and in some cases dramatically.
Find the ‘right’ customers
When selling your product or service you need to find the right customer if you hope to survive in a competitive market place. The right customer will be the one who loves you for who you are. Just like any great relationship, you want the customer who isn’t criticising and trying to change you all the time. The right customer loves and appreciates what you do. They are a raving fan and are out telling the world. Finding the right customer is not as hard as you may think. The right customer is not someone you make large compromises for. The funny thing is, most business advice preaches the exact opposite. They recommend you bend over backwards to please every customer. There is some truth in pleasing your customers but its largely misunderstood. Pleasing customers should never come at the cost of compromising your product. The reason is its very difficult to sustain a strategy that you don’t believe in. Make changes by all means but only if you believe in those changes. Its very difficult to promote and sell something you don’t believe in. Faking it just to please your customers will eventually make you depressed. When you do what feels right and comfortable you will be more consistent and be able to sustain it for the long term. When you look at many of the most successful entrepreneurs you’ll usually see a long history of consistency.
You product needs a market
The best business strategy in the world won’t help you if you don’t have a good product that people actually want to buy. Your product needs to solve a real problem for enough people who are willing to pay for a solution. You want to be different to stand out from the crowd but be careful not to go to extremes. If you happen to like tomato sauce on your cornflakes just be aware that most people do not. Selling such a product may not be a wise business decision. Research your market thoroughly and test your product before going all in. The point here is balance. Be willing to compromise and meet the market halfway.
Know your business
The nightclub is solving the problem of where to go to meet people and if they have done their research, would be reasonably confident that there is a viable market for their nightclub concept. You would also assume they understand the inner workings of a good nightclub. i.e. What music to play, what decor people like, what drinks to offer etc. It would not be wise to open a nightclub if you don’t have experience in the industry. The nightclub strategy is not about giving you a formula to go an open a nightclub. It’s about pointing out the elements that make it work so you can apply it to the business that you are in. I think it’s safe to say that no matter what business you are in experience in the industry helps. Sure you can learn as you go but it’s often an expensive way to learn. Better to work for someone else while you gain experience.
Marketing to the right people
Lets say I owned a nightclub where my door person was regularly dealing with angry people who were not happy about the dress code. I would assess the situation to find out why this was happening. Was it my marketing? Did my ads not make it clear that there was a required dress code? If so, this is usually easily fixed by adding something to the ad. E.g. *Men are required to wear a suit and tie. Imagine waiting in line for an hour only to be turned away because your weren’t dressed for the occasion. To avoid this problem I could install a sign or video screen clearly explaining the policy. I want to avoid attracting the wrong customers by educating them about my policies through effective marketing and signage. People mostly get angry when their expectations are not met. Attract people whose expectations meet what you deliver and you’ll end up with very happy customers. They will in turn refer more happy customers.
3 ways this applies to the business of teaching guitar
A successful guitar teaching business could learn the following points;
The ‘Exclusivity’ strategy – Why be average when you can be exceptional. Choose your niche and be the best at it. If you can’t be the best then choose a different niche. This could mean only teaching a certain age group, style, skill level, limit times etc.
Have the courage to implement – If you don’t try you’ll never know. A big reason most guitar teachers stay average is because they don’t have the courage to implement. Go all in for a year or three and keep learning. At first you probably won’t make much progress but the more you experiment the more likely you are to succeed.
Find the right students – Your perfect students are out there. They just need to find you. The more you put yourself out there by way of videos, podcasts, blog posts, social media, guest appearances, paid advertising and anywhere else, the more likely you are to attract the right students. The ones who love what YOU do.