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Monday, 20 June 2011

How Profitable Are My Event's Guests?

The Pareto Principle, or 80/20 rule states that 80% of results come from 20% of sources. In marketing terms this means that 80% of revenue comes from 20% of customers. Sometimes this extends to 90/10, and 95/5.
For social events such as nightclubs, where there is a balance between alcohol sales and door entrance fees, the Pareto Principle makes things interesting. This also applies to other social events with a similar balance of expenditures for attendants and guests, such as corporate socials with high margin alcohol sales.

First I must differentiate between the 20% of guests and the 80% of guests. 20% of your event’s guests result in 80% of your event’s revenues. For nightclubs, this also means that 20% of guests purchase 80% of the alcohol.


Note that the graph above compares the “value” of guests compared to the time into the event. The “value” of guests is not only profitability, it is rather profitability and other factors that result in other guest’s profitability. For example, in this case, a guest coming into the club for free at the beginning of the night who does not purchase any alcohol throughout the night has high value, as they are filling the venue’s dance-floor and getting the party started- which results in other guests coming in and purchasing alcohol. However, if this same guest came into the club much later on in the night, his or her value would be much lower, as at this point the dance floor and venue is already packed with people, so he or she is adding less and less value as time goes on. This is in a sense, diminishing value, as time goes on.
Now, for the 20% of guests who purchase 80% of the liquor, they are bringing the same value into the venue no matter at what point of the event they enter the venue. This is because it is assumed that the value they are bringing with them is constant alcohol purchases throughout the night.

So how can this information be used? Very simple. Providing guest lists at the beginning of the event brings in valuable guests, and making these guest lists expire after a certain amount of time ensures that these guests only enter when they are “valuable”. This feature is available on VenueWize. At the same time, it is critical to identify the 20% of guests who purchase 80% of the alcohol. VenueWize is working on a recognition system so that your door manager can do just that, from his iPhone.

Cheers,

Sunday, 5 June 2011

Managing The Girl to Guy Ratio at Your Night Club

It’s common sense to keep your (straight) clubs girl to guy ratio fairly even. But how? Of course, not letting in a group of 12 guys at once is equally as wise as letting in large groups of girls. But not letting in certain groups leads to opportunity costs such as missing a chance to let in a group of guys who are planning on throwing down hundreds of dollars that night on drinks, perhaps to increase their chances of getting girls. So the key is to know when to limit the entrance of guys.
The way to do this is by tracking your girl to guy ratio throughout the night, and as a result you will know which groups to let in. One possible way is to have one clicker for guys, and one for girls. However this process is very difficult and frustrating. To make this simpler, this can be done with tracking one line up only, as it is simply taking a “sample” from the general population in the club, based on the assumption that this "sample" is representative of the mix in the club. However, this is still tedious, and will be very difficult in the rush of the middle of the night to calculate the ratio based on some numbers on two clickers.
Luckily VenueWize lets you track the girl to guy ratio by letting you track your guest list line-ups girl to guy ratio with two buttons, and gives you live girl to guy ratio on demand on your mobile device. The benefits of this include not missing out on any big male spenders at the door.