Not long after it opened last year, Horsefeathers nightclub in Louisville , Ky., achieved a moderate level of success. During the week, happy hour crowds kept revenues at a steady level. But when it came to late night clubgoing, the crowds chose to go elsewhere.

To change that, Flautt Properties, which also runs four other Horsefeathers in the U.S. , sought the help of the Enterlink Co., a Houstonbased firm specializing in marketing research and consulting for the nightclub industry.

David Townsend, president of Enterlink, conducted computer-assisted surveys and focus groups with customers and employees. In conjunction with the research, he performed a market analysis, reviewed club operations, suggested design changes and guided increased promotional efforts.

Popular promotions such as Thursday night alligator races have helped Horsefeathersnightclub achieve a 250% increase in monthly sales.

"We brought him in because we felt like we were missing the boat somewhere. We weren't analyzing something right," says Yern Heitzenrader, general manager of Horsefeathers.

"We wanted to see what he could do with this club because we needed something to happen. With his consulting, it happened."

The club was designed to resemble a Ralph Lauren Polo shop, decorated with horse paraphernalia, polo equipment, and brass curios, surrounded by light pine wood and touches of green. In the beginning, the club was advertised as "The den of your dreams" because of its plush, cozy surroundings—which went well with the more relaxed pace of happy hour but not with the more hectic late-night scene.

"We had tried to put something in that the market didn't want," Heitzenrader says. "David came in and changed it to what the market wanted. He said 'You need to be a dance club.'"

Using information obtained from the customer research and market analysis, the club has repositioned itself in the marketplace. Monthly sales figures have risen more than 250%.

"Our goal was to increase the happy hour business, the base that we already had, and bring in new people for late night, to let them know that it wasn't just a happy hour place, it was also an energetic, high-energy dance club that could be fun late night," Heitzenrader says.

Meeting that goal wasn't as difficult as it might have been because the biggest problem facing the club was a lack of awareness on the part of late night customers, rather than a negative image, which is a difficult obstacle for a club to overcome.

"The good news was, they hadn't alienated the market," Townsend says. "People hadn't come to the club and not liked the product and gone someplace else. They just had never given it a try. Because of the name or the advertising or the image, the late night market just didn't think it was a place for them."

Conducting the customer survey

To get a representative sample of customers (frequent and infrequent, weeknight and weekend) and day parts (happy hour, transition and late night), Townsend typically conducts the computer survey at least three successive nights, either Wednesday-Thursday-Friday or Thursday-Friday-Saturday.

At the door, cards redeemable for a free drink were handed out, explaining that a survey was being performed and inviting the patron to take part. Those that did were seated at a computer to take the 54-question survey.

At Horsefeathers, approximately 800 customers participated. Along with supplying ZIP code and other demographic information, customers answered questions about their perceptions of Horsefeathers' food, music, service, and decor, their specific likes and dislikes about the club, their awareness of promotions, and how they initially found out about the club.

They also provided information on club-going habits: Why do they go out? How often do they go out? How much do they spend? What types of promotions do they enjoy most? What radio stations do they listen to and when? What is the most effective way of hearing about a club?

Similar questions were also asked in the focus groups. The responses were broken down by age, sex, daypart preference and club-going frequency (for Horsefeathers and clubs in general).

Strengths and weaknesses

The customer research identified the club's strengths and weaknesses, according to its various customer segments, resulting in design and music format changes. It also aided redevelopment of the club's in-house, direct mail, and radio advertising.

A large percentage of frequent customers indicated that they went to Horsefeathers mainly to meet friends and relax after work, choosing to go elsewhere to dance. Some cited dissatisfaction with music selection and DJ performance. These findings were important because they indicated that if the right changes were made, these frequent customers would probably attend the club more often and stay longer.

Male respondents said they went to clubs primarily to meet new people, while a large percentage of females indicated that they went to clubs for dancing. This made it clear, Townsend says, how important the music, sound system, and light show were to Horsefeathers' female target market. Catering to this segment of the market is crucial, he says, because if a club can attract women, the men will follow.

Radio and direct mail

Overall, radio advertising and direct mail were cited as most the most effective promotional tools. Awareness of Horsefeathers' radio advertising was much higher than in most surveys Enterlink has done and the club's billboard campaign also proved effective.

32% of the respondents said they first heard about the club through word of mouth, which is about half of the typical response, Townsend says, indicating that either the club's radio, billboard and newspaper advertising had been extremely effective, or that the word of mouth was not very good. Townsend ventures that a combination of the two reasons is probably the most likely explanation.

Analyzing the research data, the promotion efforts of the club's competitors, and past Horsefeathers promotions resulted in a barrage of new in-house promotions, mail-outs, and flyers for events like the Monday night "Eats and Grins" comedy show, Ladies' Night on Wednesday featuring lobster on the buffet, and Thursday night alligator races. Other

promotions to increase repeat business were also undertaken, such as Bounce Back cards, which are given out on a Saturday night, for example, entitling customers to reduced drink prices the following Wednesday.

Responsive to radio

The research showed that two important groups—females and 21 to 25 year-old customers—were most responsive to the club's radio ads. Coupled with the information supplied by customers in that age group on their radio station preferences and listening habits, the club was able to make its radio advertising hit the right audience.

"We were spread out through the market on the radio and weren't using one particular station, and that station came up as being most popular with the people we wanted, so we started to use it and it brought us success," Heitzenrader says.

One trap that nightclub management can fall into, Townsend says, is the belief that radio is the antidote for sluggish sales. Often they invest in a massive ad campaign when they should be taking a hard look at the concept behind the club.

"You can spend a lot of money on radio and get people to come down to the club," he says, "but if the product's not right, you're just throwing dollars away. In the surveys we do, asking people how they heard about a club, the majority of the people say 'word of mouth.' Less than 10% say the radio. But what the radio can do is start the word of mouth up. If somebody hears about lobsters on the buffet at happy hour, for example, they're probably going to talk about that at work. Radio is necessary, but it's definitely not the cure-all, especially in the club business."

Once they felt they "had the product right," the club took a new approach to the content of the radio ads. Previously, the spots had focused on upcoming promotions, but more recent spots have emphasized the music, to show that Horsefeathers is a place for people who love to dance.

"Hot Mix"

This idea was further conveyed by a promotion called the Hot Mix, which began this spring. From 10 p.m. to 2 a.m. every Saturday night, radio station WDJX broadcasts four hours of uninterrupted dance music live from the club with no advertising, except for occasional voiceovers on upcoming club promotions. Sales doubled on the first night and the promotion continues to do well.

In addition to enticing people to the club, Townsend says, the Hot Mix has helped reposition the club in the eyes and ears of the market. Hearing the Hot Mix, even those who don't go to the club get a definite idea of what kind of a place Horsefeathers is—and isn't.

"One of the problems we had with Horsefeathers was the club's name," Townsend says. "Some people in the market thought it was a country-western place. By hearing the radio show, they know immediately that we don't play country and western music!"

Townsend says that along with increasing club sales in the other markets he's worked in, the Hot Mix concept frequently brings the radio station's ratings up, because the show is something new and different, and it gives those under the drinking age a chance to hear non-stop dance music.

"Radio stations also like it because it's tough to sell air time between 10 p.m. and 2 a.m. on a Saturday night, and if they've got a client that's going to buy it every Saturday for three months, they get pretty interested."

It also has another benefit: it locks out the competition from advertising on that station during that time period. "They can't run ads, so if somebody is driving around looking for a place to go, all they're going to hear about is our club, they won't hear about any of the competitors."

Design changes

In response to customer comments and also to accommodate increased late-night business, design changes were made to maintain the comfort level of happy hour while adding space for dancing.

Stand-up drink rails were installed in the front of the club to alleviate a problem caused by people congregating near the dance floor, which is located near the back of the club.

"If you walked in the front door, even if there were a hundred people there you wouldn't see any of them," Townsend says. "It looked like the place was dead. People would walk in, look around and walk out. So by putting the rails in the front, we now have people in the front of the club interacting, so when you walk in now you see some people."

Employee survey

Townsend also conducted computerized interviews and focus groups with employees, because he believes that if the staff is happy and enthusiastic, and they can communicate that feeling to customers, it can do a great deal towards giving the club a positive feel and ensuring a lengthy lifespan.

"The key to longevity is having a great staff that's really involved in promotions and marketing and can make the place feel different and be different, without repainting, changing the name, or moving the dance floor. Every club that I've ever seen that had a long life had this—employees   that were involved, that knew their customers and would tell them about upcoming promotions, and really get the customers excited about coming to the place."

The employees were asked what they liked most/least about their jobs, what their level of job satisfaction was, and how they rated relations with management. While most employees were happy, some cited a need for increased communication with management, adding that they felt their ideas on promotions and service were being overlooked.

"Party Squad"

To increase management/employee communication and give employees a stake in the club's success, Townsend introduced what he calls the Party Squad, a small group of creative-minded employees who are shown basic brainstorming techniques, given a budget, and then put in charge of organizing a promotion from start to finish. Managers are also involved, but it is a group decision-making process; a manager has no more say than a bartender.

In addition, the group is given 10% of any increase in sales to do with as they see fit. They can divide it up among the employees, for example, or put into an employee party fund. Not only does the Party Squad concept totally involve the employees, Townsend says, but because they create and implement the promotion, it gives them a strong sense of ownership of the promotion and a real interest in its success.

"Employees have to feel like they're a part of the place and that they make a difference," Heitzenrader says. "Our people work real hard but they have a great time. A lot of them were here when it wasn't a very successful club, and to see it turn around and know they were a part of it is great."

Another reason this concept can be successful, Townsend says, is that employees are often of the same age and income levels as the target customer, so they have insight into what promotions their peers might find fun and exciting.

Aggressive approach

Heitzenrader says that the employees and management have responded to Townsend's aggressive approach to promotions.

"His philosophy is that you need to have at least one promotion a week that lets you own that night in your city. Because of the Hot Mix, we own Saturday night now without a doubt—we've got a line until 2 o'clock in the morning. We've taken that philosophy and gotten very aggressive with it and said 'We want to own two or three nights a week.' And right now we own two nights for sure, and there is a third that (gives us) as heavy a market share as anyone else."

Heitzenrader credits careful planning, based on analysis of the research results and cooperation between Townsend, the employees and management for the club's resurgence.

"We're where we are right now because we created a marketing plan with realistic time frames and executed it very well. I think one of the problems with the club before was that plans weren't made far enough ahead of time to make things happen. "

The research confirmed feelings that staff and management already had about the direction the club should take, he says. "But until it comes out on a piece of paper, you're just not sure."