Inbound Marketing Strategy

How Las Vegas Nightclubs Influence Buying Behavior for Record Profits

Brad Smith
June 24, 2013
The top Las Vegas nightclubs brought in over $80 million in revenue this year. Here's how they influence buying behavior to generate record profits.
Abstract: The top Las Vegas nightclubs brought in over $80 million in revenue this year. Here’s how they influence buying behavior to generate record profits.

XS and Marquee, two Las Vegas hotspots, brought in between $80-90 million in revenues this year. (That’s more than the Milwaukee Bucks NBA franchise!)

Seven out of the top ten highest grossing nightclubs, including XS and Marquee who tied for #1, are located in Las Vegas.

Years ago, people went to Las Vegas to gamble. But not anymore. Today about 65% of hotel & casino revenues come from nongaming activities like restaurants, shows, and nightclubs.

These things are cash cows – literally printing money faster than you can count it. Despite requiring a high capital investment to build initially, the operating costs are minuscule. And the revenue markups are astronomical (resulting in fat profit margins for successful operators).

But they’re not just fun and games. Popular nightclubs are also an incredible example of human behavior, social psychology, and marketing persuasion at work.

2PM — Picking Tonight’s Spot

During the dog days of summer, most people are slow to get up and stumble out towards the pool in the early afternoon.

Nothing quite beats a long night like soaking in the sun. The next few hours are filled with reminiscing (about last night’s debauchery), and preparing (for tonight’s festivities).

Picking and choosing the next spot is an art – not a science. People choose with their hearts – not their minds. We buy based on emotions – not on logic.

Branding has a lot to do with this. The most successful nightclubs have big, bold brands. They promise a mental shorthand for both recognition and communication.

Of course, the top ones are also the busiest. Consumers instantly understand the difference between a 5-star nightclub and a 3-star one – even if they’ve never been before.

These are the excellent ones. They have the best DJs, the hottest celebrities, draw-dropping design, and are always the most in-demand.

And for their trouble, they get to charge the highest prices. But that’s ok. People – the ones who are interested in this sort of thing – don’t mind. As long as their investment is worth it. As long as they get their money’s worth.

10PM — Trying to Get In

The first thing you notice about most nightclubs is… the lines!

There is a mass of people around the entrance like a sea of bees surrounding a hive. And then a never-ending line up of people strewn throughout the resort like an Amazon snake slowly floating through the abyss.

By the door, there are a few mammoth bouncers blocking a closed-off, red velvet rope. Accompanied by a few beautiful women in cocktail dresses to both attract and keep the crowd at bay.

You have two choices at this point. You can either (1) get there early and wait in line (for hours), or (2) pay (extra) to get preferential treatment.

Instant exclusivity. If they simply let everyone in and made it easy, then no one would want to go. But if they put up barriers and only allow a select few to be chosen, then we’re going to work that much harder to get in.

If you’re wealthy (or lucky enough), then you can roll like a VIP (the only way I roll) and get bottle service with your particular brand of vodka (more on this later).

They’ll let you skip the line entirely, and your entire group can walk right in.

This creates polarization. You’re either in or you’re out. A cool kid, or not.

And when you finally cross the threshold, the real fun begins.

Midnight — Walking In

Nightclubs don’t sell a product. Otherwise no one in their right mind would wait several hours and pay big bucks to hang out in a cavernous empty room with a bunch of strangers.

Instead, they sell an experience. A solution to kick back, relax, have some fun and feel like a celebrity.

So the minute you walk in, you’re the center of the party. The main attraction. And almost anything is permissible.

But one of the first things that catches your eye – wherever you look – is how beautiful everyone is. The bartenders and cocktail servers are all knockouts. The rhythmic movement of the dancers elevated above the crowd is hypnotizing.

This is a place to see and be seen. Social proof at it’s finest. It tells us everything is OK – we made the right choice.

We are where we belong. We are where we aspire to be.

2AM – At The Club

Vodka is one of the most popular drinks in America. And probably the most popular in a nightclub.

When it’s getting late, you can always turn to a Red Bull and vodka to keep going.

But here’s the funny thing…

By definition, vodka is tasteless and odorless. So all vodka is basically the same thing. The ultimate commodity.

Yet we have our own tastes. Or so we think. You’ll probably order it with Grey Goose or Belvedere by name. At least Skyy. Maybe Kettle One because you vaguely remember that one commercial with the cool guys in suits.

In any case, you’re easily throwing down between 200% – 500% for a label. (Remember the part about brand value?)

But it comes down to pride. To vanity. To ego and peer pressure. We don’t want to watch a performance tonight. We are the performance.

We’re among the best. We are the best.

Therefore we can afford the best. We deserve the best.

4AM — End of the Night

At around 4:00am (or later), the music begins to fade and the lights begin to come on.

The night is winding down. Some are heading home, and others are heading back out; determined to see the sun rise or simply to get lost for a few more hours.

But the nightclub experience isn’t over. It stays with us.

We remember it. Bits and pieces at least.

We recall the million-dollar chandelier, the million-dollar celebrity sighting, or the million-dollar rooftop view.

That little extra that gets us talking.

That helps us tell a story. Helps us brag to our friends who weren’t there. Helps us reminisce with our friends who were fortunate (or lucky) enough to be there.

And helps us make plans to go back later, after lounging by the pool.