In the information age, you would think location matters less. In fact it matters more. Demography helps you understand how to be in the right place at the right time which is often the key to success in business. We will illustrate this with a case study that shows how Richmond Football Club became one of the top three clubs in the AFL for membership size by employing demographic evidence to inform its strategy.
2. Knowledge of “place” can convey a
powerful strategic advantage.
Strategic direction can be informed by
observing broad demographic trends.
Successful implementation will be
determined by understanding local
nuances.
3. For the last twelve years I’ve been working with largest team of
demographic experts in Australia.
Their job, and their passion, is to understand how demographic
change will affect every part of Australia -
– the nation, every state, region, and city; each suburb,
neighbourhood and city block.
We call this their “knowledge of place”.
My job is to use their “knowledge of place” to answer our
client’s strategic questions.
Like Richmond Football Club.
Who wanted to double its membership …
In five years …
In a highly competitive landscape.
4.
5. You are strategists
I’m a demographer
Strategists often employ demographers to tell them about the
broad trends occurring in society …
…and the opportunities and threats that these pose for
business.
6.
7. Any demographer worth their Salt … can tell you Australia is in
the midst of a population boom the likes of which has not been
seen since the gold rush.
2006 was a watershed year – when long-held demographic
patterns and cycles changed – seemingly overnight.
Demographically there is a new reality which has important
implications for all businesses.
These changes are being driven by both economic and social
events.
They are reshaping our society.
8.
9. On the economic side, there has been a step change in levels of
overseas migration to Australia, driven by good economic times.
The pre-2006 reality has migration adding, on average, 100,000
people to the population each year.
The post-2006 reality has migration adding, on average,
200,000 people to the population each year. DOUBLE the old
reality.
Despite the end of the mining boom, we are unlikely to return to
pre-2006 averages.
However, the end of the mining boom is leading to a
redistribution of growth – back to Sydney and Melbourne.
After decades of playing second fiddle, Melbourne is seriously
challenging Sydney for the dominant position.
10.
11. On the social side, Australia is in the midst of a baby boom, the
like of which has not been seen since the post WWII boom.
And think what a massive impact that boom had on every aspect
of society.
Since 2006 there have been 50,000 more children born in
Australia every year than long term averages (the orange bars).
The first of these kids started primary school in 2011. They will
start high school this year.
By 2026 there will be 705,000 more children in our schools than
there are today.
Think how many new schools that translates into…
And the business opportunities for children’s products and
services …
12.
13. Several years ago we presented this growth scenario to our clients,
the Catholic Education Office – responsible for all Catholic schools
across Victoria.
First they asked us to check our numbers.
Then they had to completely rethink their “business as usual”
strategy, and start planning for new schools and acquiring land.
The state system is yet to catch up.
Jeff Kennett may well rue the day he closed 220 schools in Victoria
based on a trend rather than recognising the low point in a cycle.
14.
15. The combination of these economic and social drivers means that
the dominant population group– the aging baby boomers – has been
caught up by two other groups.
There are three growth markets to focus on – retirees, home-builders
(driven by migration) and children (driven by the baby boom).
This is good news for Australia.
This means growth.
This means opportunity.
Often strategists think this is all the demographic information they
need to get started on their strategic work ….
17. And it is an important starting point.
Understanding broad demographic change helps you answer three
important strategic questions…
Who should I provide my products and services to?
What services should I focus my efforts on?
How will I build the business to take advantage of the changes
afoot?
For our client, Stockland, the property developer, it means
diversifying from building housing estates on the urban fringe, to
adding retirement villages and medium density housing to their
product mix.
Answering these three questions helps you set your strategic
direction.
19. BUT, the success of these strategies can be determined by
answering two more questions.
Where should I locate my business activity/retirement villages?
When is the best time to enter and exit a location?
Location and timing matter.
20. Strategy
of Place
This piece of the strategic puzzle is referred to by Harvard Business School
professor, Juan Alcacer, as the strategy of place.
21. “Many companies don't understand that what works in one
location may not work somewhere else.”
“Geo-mistakes sap energy out of an organization and cause it to
lose focus on what it was doing well in the first place.”
“…especially when it means siphoning time and attention away
from an existing successful business.”
“…take a long-term, strategic view of location decisions.”
Juan Alcacer, Professor of Business Administration, Harvard Business School
22.
23. Our client, a large retailer, places strategic importance on being
first to market in new residential growth areas.
If they build too late, they lose their first mover advantage.
But if they build too early, and there’s not enough population to
support their store, it can cost them upwards of half a million
dollars per annum.
Timing is critical to strategic success.
24.
25. What makes location decisions so tricky?
After all, most organisations provide their products and services to
people from a place.
Schools, for example, provide education to children in suburbs.
The problem is that places respond to broad demographic trends
differently.
Remember those 705,000 additional school children?
Despite the huge growth in school-age children nationally, not all
suburbs will be affected by the baby-boom in the same way.
Some suburbs will actually experience a decline in this age group.
Knowing where and when to respond requires a detailed
“knowledge of place”.
26. So how can you feel confident that you are investing in the right place at the right time?
Demographers study how broad demographic trends will play out in each suburb,
neighbourhood or community. Watch the video to learn more…
27. There’s a bit more to that video, but I hope that snippet gave you an insight into
the “knowledge of place” that demographers can bring to those tricky where
and when questions.
28.
29. Now that we’ve set the scene, here’s how we applied our
“knowledge of place” to give Richmond Football Club a strategic
locational advantage.
30.
31. Football in Australia is not a typical sports market.
It’s not like in the USA where each elite team “owns” the fan base
in a whole state.
32.
33. In Victoria there are ten clubs in one state, all competing for fans.
This is a strategic challenge for the AFL.
How do they encourage clubs to grow the total membership pie
rather than taking fans from each other?
It’s a strategic challenge for each club.
They have to decide where to build their fan base in this highly
competitive landscape.
Do they focus on areas where support for the AFL and their club is
strong? OR…
Do they look for areas where AFL is not strongly supported, and
build a new fan base – a longer term strategy?
34.
35. In the last five years, Richmond has been the most successful club
in the AFL at building membership.
How did they do it?
36.
37. We need to go back to 2008 to a decision made by the previous
management team.
Richmond’s home ground at Punt Road was not available for
training during the cricket season.
The club was looking for an out-of-season training ground.
The location of alternate training grounds is an important strategic
decision for a club.
It’s an opportunity to engage with people in a new location.
The management team selected Craigieburn in Melbourne’s
northern growth corridor.
They hoped to tap into the rapidly growing population and a brand
new facility, provided by the council and property developers.
38.
39. A bit about Craigieburn.
Craigieburn is on Melbourne’s northern fringe, 35 km’s from the
CBD.
It sits in the centre of a fast growing residential area.
Forecasts show it will grow by 78,000 people by 2031.
Sizeable growth – and very attractive to those looking to grow with it.
Many of the new residents will be young families with children – kids
the right age to make their allegiance to a football team.
And they were in the right socio-demographic bracket to be able to
afford club membership.
It all looked very good.
40.
41. But fast forward several years and this decision was not
bearing fruit.
People in Craigieburn were not supporting the Tigers.
It looked like it was going to be a long, slow burn to build a fan
base there.
It was disheartening AND expensive to take a full, elite football
department out to training six times a year and only 300 people
to turn up to watch.
42.
43. In 2010 a new, progressive management team started at Richmond.
Headed up by CEO, Brendon Gale with Cain Liddle as his GM of
Consumer Business.
They set an aggressive growth strategy to double their membership
in five years.
They decided to revisit the Craigieburn decision.
But if they were going to convince their Board and the AFL to support
a new strategic direction, they needed strong evidence to support
any change.
45. They started mapping members by suburb across Melbourne.
Mapping your data is powerful.
Straight away you can see a strong spatial pattern of membership in
the east and southeast.
(The gap around Dandenong can be explained by the large numbers
of migrants from non-English speaking backgrounds there.)
And you can see that despite all the effort, very little inroads had
been made into Craigieburn.
So now they have a map showing where current supporters live –
but it doesn’t tell them where to build their future fan base.
Football is generational – you tend to support the team your parent’s
supported.
Low hanging fruit are the children of past and current members.
So the question is, where are they?
46.
47. Cain had been to a talk by demographer, Bernard Salt, and realized
that demographics may be able to answer his question.
He wanted to work with a firm who could take the broad
demographic trends Bernard had talked about and apply them to
their business and local market.
.id started work with the club in 2011.
49. We were immediately struck by the Craigieburn decision.
Why would Richmond, a club with a long history in the inner
southeast, go north?
To a demographer, it was clear why Richmond were struggling to
gain traction there.
But, unless you had demographic expertese, it would be an easy
mistake to make.
The northern growth corridor is one of the fastest growing parts of
the city. AND it was full of young families.
Why wasn’t it working?
50. Strongest net movements of people between 2006 and 2011, Melbourne
Source: ABS, Spatial Analysis & Research Branch of the Victorian Department of Environment, Land, Water & Planning (Research Matters Bulletin, Issue 64)
51. Each of us makes individual decisions about where we will live at
different times in our lives…
… as students, when we start a family, when we retire.
This feels personal, but as the video showed, collectively it creates
predictable and measureable patterns.
These patterns are shown clearly in this map of where people went
when they changed their address.
What an incredibly clear pattern it is. Demographers get very excited
about this sort of thing!
You can see how strong the north-west (green arrows) versus south-
east (yellow arrows) divide is in Melbourne.
People who live in the southeast, do not tend to go north or west
when they move house.
53. Richmond’s traditional fan base is in the inner southeast.
As each generation of Richmond fans grows up and starts their own
families, they are most likely to look for a house they can afford, on
the same side of the city as they grew up.
Demographers call this outward sectoral migration.
Here you can clearly see people who live in Richmond strongholds
fanning out across the east and southeastern suburbs.
The next stop on this outward journey was Cardinia.
54.
55. A bit about Cardinia.
Cardinia is on Melbourne’s southeast fringe, 55 kms from the CBD.
The main town is Pakenham.
It is fast growing residential area.
Forecasts show it will grow by 80,000 people by 2036.
Many of the new residents will be young families with children – kids
the right age to make their allegiance to a football team.
And they were in the right socio-demographic bracket to be able to
afford club membership.
It all sounds very good. It all sounds very familiar.
It sounds a lot like Craigieburn.
BUT there are three important differences…
57. First, there is low hanging fruit…
People in Cardinia like AFL.
It ranks in the top three areas for AFL participation. Craigieburn,
featured in the bottom three.
Added to that, people in Cardinia already like Richmond.
Existing residents of Cardinia support Richmond at a higher rate
than other teams in the AFL.
This indicated that fan engagement would provide a fast return on
investment.
59. SECOND - There was a generational advantage.
Migration data confirmed that Cardinia was gaining its new
population from areas where Richmond already had a strong
following.
These are the children of past and current supporters, setting up
their own homes, and bringing up the next generation of potential
fans.
This bodes well for the future.
60. Areas with more people than average from non-English speaking backgrounds
61. THIRD - Cardinia does not gain its population from new migrants to
Australia, who would take longer to bring into the footy fold.
We knew from previous work with the AFL that areas, where many
families come from non-English speaking backgrounds, have the
lowest membership rates.
In Cardinia, only 7% of the population came from non-English
speaking countries.
This compares to 24% across Melbourne in general and 27% in
Craigieburn.
Richmond does have a longer term strategy involving new migrants,
but that’s another story.
62.
63. The evidence was clear and compelling.
The biggest future opportunity to attract fans and revenue were in
and around Cardinia.
64.
65. But, with the lessons from Craigieburn still fresh, the Richmond
Board needed to be convinced of any changes in direction.
Having the evidence presented by people who could view their
business through a demographic lens gave them the confidence to
proceed.
They could see how patterns in the way people live in different parts
of the city, clearly explained the patterns they were seeing in their
own data.
It gave them the missing part of the story.
The hardest thing was convincing the players to make a 50km
journey on a bus to go to training!
66.
67. Next, the evidence ensured that the AFL supported re-engineering
the boundaries for compulsory player clinics and school visits, so
that Richmond focused on the southeast growth suburbs.
This was an important acknowledgement from the AFL that they
were supportive of the decision.
68.
69. Richmond also needed the Shire of Cardinia to partner with them –
Cain recalls,
“When Brendan (Richmond CEO) called the Shire CEO, he had a
strong narrative and compelling evidence – so the conversation
quickly turned to how they could help each other meet their
objectives…”
70.
71. For the council the advantages are clear:
Football brings people together and strengthens the community.
It can enhance the health and well being of residents who
participate.
And if offers families an affordable and fun entertainment option.
72.
73. So how did it go?
I guess I gave the punchline away at the beginning…
The club broke membership records every year for the last five years
growing 9% per annum.
In Cardinia membership has grown 26% per annum since 2012.
As a result, membership doubled from 36,000 in 2010 to 72,000 in
2015.
Richmond is now the third largest club behind Collingwood and
Hawthorn, despite not having finals success (there’s always this
year…)
First year member retention is the highest in the league and overall
retention ranks consistently in the top three.
77. And the players are happy.
When the team goes out to Cardinia for training, 4000 people show
up to watch.
Which makes that 50km bus trip all worthwhile.
By understanding local demographic patterns, as they related to
their business, Richmond ensured that their effort was being
channeled into the right place.
Organisations are often looking for technology or innovation to
deliver the big win. Richmond got a 100% upswing from
understanding place.
79. Knowledge of “place” can give you a significant competitive advantage.
Strategic direction can be informed by observing broad demographic trends.
Successful implementation will be determined by understanding local nuances.
Not all growth is the right growth. You need to understand what is driving it.
Change happens in cycles, not trends.
Mapping your data with demographic data provides powerful insight.
Evidence presented as narrative can convince others to support you.
80. Should you talk to a demographer?
“If they’re with another AFL club – I’d say don’t do it!!”
“But if I ever went to another club, it would be one of the
first calls I’d make.”
Cain Liddle, GM Consumer Business, Richmond Football Club
81. Download a copy of our ebook, Three
Growth Markets in Australia, for an
overview of broad demographic
changes.
Speak to an .id consultant to understand
how local nuances can provide a
locational advantage for your business.
82. Thank you to Brendon Gale, Cain Liddle and RFC
and Go Tigers in 2016!