The misconception
Let’s address the misconception first. The misconception is
that a commercial karate club, for clarity this is a club where one or more of
the instructors are paid a salary or the club owner lives off the proceeds of
the club, must do everything within its power to attract new members and do
everything possible to hold on to them. This is because the club is profit
focused, apparently, and so cannot afford to lose members. This means large
class sizes, belts given out like candy and consequently, a poor standard. The
shame is that there are clubs run in this way but you might be surprised to
learn that this is not in the commercial interests of the club nor is it
restricted to commercial clubs.
The economics
As an economics graduate I tend to approach such issues from
an 'economics' perspective. The issue here is economies (or diseconomies) of
scale. A basic concept in economics that makes common sense. Simply put, the
larger a business grows, from the point of view of revenue, the lower the ‘per
unit’ cost. This is simply due to some costs being fixed (hall hire for
example) and an increase in purchasing power (you get more discount on buying 100
suits than only buying 1 and so you can make more profit per karate suit). This is
known as economies of scale and will tend to lead to companies in almost any
sector to grow and expand. The incentives and advantages to larger businesses
will mean the ones that fail to grow will no longer be able to compete and so
will go out of business.
However, this advantage is almost exclusively financial but
not necessarily best in other areas. What about standards, customer service and
trust. We see that alongside economies of scale we have diseconomies of scale.
As a company gets larger it often fails in connecting to customers (as there
are so many of them!) and so the quality of care or service will fall, overall
standards are likely to slip as the business struggles to monitor and
communicate internally and all of this leads to the customer feeling that they
are not receiving the standard and quality of care expected.
Of course, a customer may be willing to overlook some of
this as the larger company will offer a better price (financial) even though they
receive a substandard service. Research has shown consistently that human
beings are very poor at considering choices in financial terms and so will
regularly make decisions that are based on other, perhaps aesthetic, concerns
rather than price. Think about Apple. Their products are horrendously expensive
and often inferior from the point of view of pure technical power. However,
they do have an appealing nature, a beauty in design and a creative ‘something’
that appeals to many fans. They are also excellent and fostering brand loyalty
(although most certainly not from this writer).
Back to the dojo
All of this has implications for a karate club, both
commercial and non-commercial. If we know that customers are often more
interested in ‘other things’ than in the price when making commercial
decisions, we immediately recognise that a large membership base is not necessarily the
answer to running a successful karate club. The point being that the members
should not feel like they are a part of a large club but a small, friendly club
that offers excellent instruction. However, you need to make a sufficient
income at the same time and so the answer is simple. Small class sizes but many classes. This is not the best way to run
a business when looking at ‘per unit’ costs but it is actually the best way to
run a business commercially. You will have higher levels of satisfaction,
better customer service and higher standards caused by improved instructor to
student ratios. Your retention will go through the roof and your numbers grow, facilitating higher profit despite the extra cost of running more classes.
I am always amazed how many commercial karate clubs don’t get this point. JKS
York Karate Club (my club) has a class target size of 20 per class for over 8’s
and 15 for under 8’s. If this target is breached we stop accepting new members
or we add additional classes. Remember, the quality of your classes, students
and teaching IS your brand. Make
your brand a quality, luxury brand and people will flock to your club. Make it
cheap, tacky or fake and watch everyone give your club a wide birth. The
average Joe doesn't know much about martial arts but they will see straight
away if your club is of a poor standard and belts given out easily and cheaply.
Your reputation in the community will not last long.
Now here is the surprising thing. It is non-commercial
karate clubs who often fail to grasp this point. I have trained in packed dojos
with over 30 or 40 members and a single instructor. Non-commercial karate clubs
do not necessarily think about, or assess the workings of their club, from the
perspective of marginal costs, customer satisfaction and projected growth - they
should! (In a similar way to a charity or school). However, I do wonder if for
certain instructors there is a certain ego boost that is received from standing
at the front of a large class. Such an ego boost might massage the instructor’s
vanity but does not help the club, the club members or karate. And in fact, is
ultimately detrimental to the instructor themselves.
Of course, I am talking here about the day-to-day running of
a club. It is entirely appropriate, given the exceptional skill and talent of a
top instructor, and in consideration of their high marginal cost, to run a one
off seminar with a top instructor and have many people in attendance. It simply
isn't possible most of the time to have a high profile instructor teach a class
of only 20 or 30 people.
Large, commercial clubs can, therefore, actually be of a
very high standard and run in a way that ultimately makes commercial sense. It
is not the case that you must accept lower standards of karate in order to be a
financial success.
