The golf industry continues in an economic malaise, such a malaise that it seems many in the industry have adopted the attitude of Eeyore from Winnie-the-Pooh.  Many cite uncontrollable factors—the economy, weather’s harsh 2011, and the fact that supply continues to exceed demand in many markets.Even the superficial observer can see that rounds havedecreased 3.8% in 2011, evidence that the woes of golf courses are beyond their influence. 

With course closings a frequent headline and with the plethora of discounting that has failed to stimulate rounds, it would be easy to succumb to the industry’s negative “group mentality.” Following the herd, whether in  stock market trends, fashions, or business practices,hasrarely proven to be the right strategy. 

Fortunately, there are somededicated business professionals that achieved success in the golf industry during 2011withinnovative thinking.

As this new year begins, celebrating those facilities that increased revenue, increased operational efficiency, and enhanced customer service in 2011 canshine the light on the factthat profits are achievable with a focused vision, discipline, and consistency ofexecution.

Private Club - Revenue:  82 New Memberships, New Clubhouse Opened, Spectacular Course Enhanced.  Course:  Colorado Golf Club, Parker, CO – Home to the 2013 Solheim Cup, Coore/Crenshaw Architects 

Membersof Colorado Golf Club acquired the club in the spring of 2011 through an innovative fund-raising program designed totransition the club from developer-owned to member-owned facility.

Thirty members participated in a $7.5 million loan program in return for modest club benefits.  Additional members purchased second memberships for resale at the attractive rate of $50,000. 

To stimulate greater member involvement, the club created a strategic plan that included conducting member surveys, creating new membership categories, and communicating frequently via member meetings, fireside chats, and written correspondence designed to encourage members to fully utilize the club. 

The Club invitedBill Coore to visit the facility in September, 2011, to confirm his firm’s original vision for the course when it was built in 2006.  His goal was to ensure that the course remain a challenge for the accomplished player and a fair test for the less skilled.  Upon completing his review, Coore wrote, “Please express my appreciation to the members and staff for their support, patience, and persistence in getting CGC on sound footing and moving forward with what I believe willbe an extraordinary success story.”

All of these efforts resulted in revenues that increasedby 20% under the guidance of Marshal Brereton, General Manager.

Private Club  Raises More Than $10,000 for First Tee – Oakland, CA Chapter (Youth Development Charity) by Opening Course to Public on Four Mondays.  Course:   Sequoyah Country Club, Oakland CA. 

Founded in 1913, Sequoyah Country Club is located high in the Oakland hills and offers spectacular views of San Francisco Bay. It is one of the best golf and social clubs in the Bay Area. The course’s tree-lined fairways, picturesque views, and challenging greens made Sequoyah a PGA tour stop in the 1930s and 1940s, attracting legends such as Babe Didrikson Zaharias, Sam Snead, Ben Hogan, Byron Nelson and Jimmy Demaret. Sequoyah hosted the PGA Tour Oakland Open for many years.

For the first time in nearly a century, Oakland’s Sequoyah Country Club opened its historic course to the general golfing public on four Mondays to raise funds for a nationally known youth golf and life-skills development organization calledThe First Tee of Oakland. Over $13,000 was raised to fund the 2011after-school session of youth development programs for at-risk students in the Oakland metropolitan area.

Sequoyah Country Club General Manager, Tom Schunn, partnered with www.GolfNow.com to post available tee times and reservations in order to reach the most golfing donors. Golfers were charged for green fees and carts $75 per player, with an additional $20 requested for a donation to First Tee.

Daily Fee Golf Course– Revenue Up 10%due toIntroduction of Unique Programs and Activities.  Course:  1757 Golf Club, Ashburn, VA, Managed by Billy Casper Golf Management

1757 Golf Club’s par-70, 6,600-yard layout is routed through gently rolling terrain that features dramatic views of Broad Run and the majestic Virginia landscape. One of the most unique features of the facility is the practice area, which includes 56 hitting stations on state-of-the-art SportTurf with 12 covered bays for all-season practice. The lighted range features premium Callaway balls, simulated fairways, and several target greens. An expansive short-game teaching area includes tees, mini-fairways, bunkers, and greens for short-game practice and instruction

To leverage thesefacilities, innovative programs were introduced:  music on the range, range mat bar service, cigar and scotch tasting at the Golf Academy, high-end instruction clinics (featuring Carl Rabito and Gary Koch), Hawaiian Luau themes, Casino nights, and Kids Play Free.

Daily Fee Golf Course - Charity:  $75,000 Raised for Local Charities through Six Theme Events.  Course:  Sand Creek Station, Newton, Kansas, Managed by Kemper Sports

Opened in 2006, Sand Creek Station is located on the South side of Newton, Kansas, population 19,000. This 7,400-yard Jeffrey Brauer Design provides a combination of Scottish Links Style and traditional layout. Some of itsfeatured holes replicate famous courses, including the National Golf Links, North Berwick, and the “Road Hole” at St. Andrews.

Sand Creek Station hosts six themed tournaments throughout the year. These tournaments provide a fun experience for all  golfers, with decorations, after parties, great food, accompanying music, and various prizes. The main initiativefor these events was to raise money for local non-profit groups.According to Chris Tuohey, Regional Manager, Sand Creek raised more than $75,000 for local charities and alsodropped off 1,000 pounds of non-perishable food to three local charities: Harvey County Homeless Shelter, The Salvation Army, and Our Sister of Guadalupe Church, all accomplished with  golfer donations.

Because if its contribution to the local community, Sand Creek Station was asked to facilitate several customer service training classes forCity of Newton employees and for several members from the Chamber of Commerce. More than 300 individuals attended four training classes including the Mayor of Newton, the City Manager and Officials, Presidents of local banks, and other community leaders.

Daily Fee Golf Course:  Revenue – Single-DayRecord Revenue Led toProfits ”Sniffed”for the First Time in Course’s History.  Course: Four Mile Ranch, Canon City, CO – named 2009 Golf Magazine Best New Course

The Canon City course, located in a town of 18,000, at the gateway to the Rocky Mountains, is 45 miles from Pueblo and Colorado Springs and 100 miles from Denver.  With over $10 million invested and having opened in 2008, Four Mile Ranch went through receivership in 2009 and emerged in 2010 under the guidance of a local management company.The philosophy in 2010 was to discount,with the hope of attracting golfers from near and far. That philosophy of discounting resulted in a $200,000 loss in 2010. 

The key to the course’s 2011 reversal was protecting the integrity of the rack rate.  Additionally, Superintendent John Feeney launchednumerous email campaigns that emphasized the superlative experience of playingthe unique Jim Engh-designed course. 

One of the marketing campaigns demonstrated how great creativity can boost revenue.  On October 1, 2011, the coursesponsored an attempt to set a Guinness World Record for the most holes-in-one and the lowest “ringer” score on one day. The Par 72, 7,033 yard golf course was set up with pin positions set in the bowl of each green, making the course conducive to low scoring. The event was marketed via e-mail to 12,000 golfers along the Front Range in Colorado.  The 144-player field filled quickly at full rack rate.

The reaction of the participants was uniformly, “I had so much fun.” Parenthetically, one hole-in-one was recorded andthe ringer score was 52. More importantly, it was one of the highest revenuedays for the golf course in itsfour-year history.This course, by maintaining itsrack rate and avoiding discounting, will turn a small profit in 2011.

A Daily Fee Golf Course:  Created Significant Incremental Golf Revenue at Off-Season Course:  Cog Hills Golf and Country Club, Lemont, IL 

Chicago, November, and golf are three things that usuallydon’t combine to generate meaningful revenue at a golf course.  Cog Hills sponsored three events that led to surprising incremental revenue:  The Turkey Shoot on November 12 -13, the Cold Turkey Open on November 25, and the Frosty 3-Club Open on December 11. 

For each event, the Club generated special interest through a novel approach to creating entertainment.  For example, in the Cold Turkey Open, extra-large cups (6” diameter) were used in a two-person Shamble format. 

According to General Manager Nick Mokelke, the feedback was positive as “team after team told us that the 6” cup was as easy as they expected but they found putts longer than five feet very ’missable.‘  There was a learning curve with pace and break to temper what became a more aggressive putting style.

International Daily Fee Course:  Leveraging Technology to Increase Operational Efficiency and Enhance Customer Service; Carr Golf Services, Dublin, Ireland.

Carr Golf Services is a management company based in Dublin, Ireland, which manages a total of 7 golf facilities.  Prior to 2011, online booking at these facilities was almost non-existent.  In 2011, Carr Golf partnered with Golfnow.com to embrace online booking, resulting in 10% of all visitor roundsbeing booked online.  This increased operational efficiency and enhanced customer service.

While introducingonline booking, Carr Golf Service concurrently implemented dynamic pricing across all his facilities on a single booking platform and created Websites for each course.  In 2012, Carr Golf Service will add golf leagues, lessons, and membership sales to itsonline portfolio. 

What Are The Lesson from Which You Can Benefit

Many in the golf industry look to others, such as trade associations, to provide the leadership and education needed to solve the challenges for each golf course.  Such belief is falsely placed.  Others in the golf industry focus on the uncontrollable factors as being the sole source of their woes.

The success stories evidenced in 2011 demonstrate golf course operators can thrive.  The vision and creativity of successful golf courses have many common traits.  They understand their local market and their customers, have integrated technology adeptly, and comprehend how their financial performance compares to industry benchmarks by participating in PGA PerformanceTrak..  In addition, they continue to invest in their facilities and are cognizant that a golf course represents an “assembly line” of key customer touch points.  Most importantly, they  appreciate that success in the business of golf is predicated on their dedicated and consistent effort and rarely anything else.

The proliferation of technology in its diverse forms (desktop, laptop, smartphone, and iPad) has transformed the American culture. Facebook, texts, and tweets dominate, consuming our leisure. We truly have become a time-crunched digital culture.

In 1899, Thorsten Veblen wrote, “Golf is a game of the leisure class.” Veblen felt that while sportscould be advantageous to the community, the true reason for the popularity of sports wastheirusefulness as a means of displaying conspicuous leisure.

When the essence of each of our popular sports is considered, (people running with a ball to a goal, shooting a ball into a hoop, hitting a ball and running around a diamond, or flailing with sticks at a sphere hoping that it drops into a 4 ¼-inch-wide hole some hundreds of yards from the starting point) sports, at their root level, are inane. However, regardless of their elemental merit or lack thereof, they provide entertainment to the masses and have evolved into big business.

That makes us ponder that assuming the availability of leisure is a fundamental criterion for the sustenance of a sport, has our evolution into a digital society effectively capped the potential for golf? Alternatively, does the digital age provide an opportunity to more effectively serve the consumer by leveraging the new media it has created?

It’s a Mad World- Digitally

First, let us consider how pervasive technology has become. comScore, Inc.,the nation’s leader in measuring the digital world, just released its “2010 U. S. Digital Year in Review.” It reported the following:

The average person spends 4 ½ hours per month on Facebook. The top five Websites (Facebook, Google, Yahoo, Microsoft and AOL) generate 45% of all activity as consumers purchase $227.6 billion in goods from the leading categories: 1) Consumer electronics; 2)Computer Hardware; 3) Books and Magazine; 4) Flowers, Greetings and 5) Gifts and Jewelry & Watches. Three out of every five Internet searches are made using Google. Facebook now accounts for 12.3% of total time spent online in the US.

Facebook reports that among its 500 million members, 50% log in on any given day. An average of 10,000 new Web sites integrate with Facebook every day, and more than 2.5 million Web sites have now integrated, including 80 of the top 100 U.S. Web sites. Does anybody have a life?

How can a golf course, which is a small business that most often generates $2 million or less in revenue, keep abreast of thesweeping changes necessitated by an unwritten update mandate? In wrestling with this challenge, the golf course owner surely can identify with the lyrics from the song “Mad World” which are so prescient:

• All around me are familiar faces
• Worn out places, worn out faces
• Bright and early for their daily races
• Going nowhere, going nowhere.

• I find it kinda funny, I find it kinda of sad
• The dreams in which I’m dying are the best I ever had
• I find it hard to tell you, I find it hard to take
• When people run in circles, it is a very, very
• Mad world, mad world

The Implications for the Golf Course Industry

Golf course owners have developed a yoga-like mantra, “The economy is bad, the market is oversupplied, there is no credit, the golfers are gone, woe is me.” The brand image for the industry has become Eeyore from Winnie the Pooh.

With the rapid deployment of new functionality by leading software vendors featuring email marketing, online reservations through third parties, and social media integration, the sense is that golf courses may becoming overwhelmed with the pace of new technology introductions. Golf courses are constantly wrestling with the integration of the tee sheet with the POS system, developing a meaningful online presence, optimizing SEO key words, developing effective marketing campaigns, and debating whether Facebook, Twitter, Linked-In and Google Adwords are relevant to their business or actually distractions.

With the forecasts for 2011 reflecting an increased enthusiasm for the game, how are golf courses going to allocate scarce resources?

In looking ahead to 2011, comScore provides a clue, stating, “Businesses that have no social media presence in 2011 are likely to be left behind. However, social media may not necessarily be worth significant investment for every company or brand. It is important to understand how your consumers may or may not use the medium.”

The insight posed by comScore about how social media will continue to be used prompted us in early March, 2011 to conduct a national survey of golfers to ascertain if their use of social media is significantly different from that of the mainstream consumer and whether golf courses were responding to recent trends.

The results provided fascinating.

Rather than focusing on the obvious of spending efficiently, optimizing effectively, and growing exponentially, golf course owners are skipping from new idea to new idea like the beginning golfer trying to find a swing. Golf course owners are hoping to trip upon a new business solution as a panacea for their woes.

How Was That Conclusion Derived?

Fifty percent of owners feel social media is essential, while 48% are unsure as to its use. Only 2% expressed that social media at their facilities had no value.

The survey conducted (available in full at www.golfconvergence.com) asked golfers 25 questions and course operators 37 questions regarding their use of technology. Question included the following:

Golfers:

• % of golfers who book online
• Whether they are supportive of “permanent tee times”
• Where they look for special prices
• Are they willing to pay a premium for GPS?
• How much of each email they actually read
• % who use Facebook, Twitter and Linked-In
• The computer device (desktop, laptop, Ipad, or smartphone) they rely on most
• % of work day spent on a computer

Golf Courses:

• Median cost to install a golf management solution
• Average annual upgrade and support fees
• % who licensethe software and % who own
• How long they have used their current vendor
• Size of customer email databases
• Number of golf courses using Facebook and Twitter
• Their opinion on the value of Social Media at their facilities
• Day and time,they send email to customers (intuitively right - but very wrong!)
• Impact of 3rd-party tee time companies on their business
• How they would like to pay 3rd-party tee time companies

The Technology Habits of Golf Courses

As background, 60% of golf courses license software, spending a median $8,636 to initially acquire and $3,664 annually to support their golf management software platform from a vendor they have utilized for more than four years.

Surprisingly, the majority of golf courses use a different vendor for their primary management software, the creation of their Web site, and for communicating with customers via email (the average course maintain 3,664 emails in their database). The integration between these primary systems still lags.

Golf course operators also impale themselves in their email marketing practices. Tuesday at 11 a.m. is the most typical time courses communicate with their customers. Based on a detailed analysis of over nine billion emails sent via Mail Chimp, while that might be intuitively the best time, in reality it is the worst. Tuesdays produce the lowest click-through rate and the highest amount of unsubscribes. The best time? Saturday morning at 6:00 a.m. provides the highest open and click-through rates.

Another interesting insight provided by golf courses, despite the railing against third parties by the NGCOA, as most recently reflected in the February, 2011 column by Executive Director Michael Hughes “The Right Combination” , is that while only 32% of golf course use a third party to help sell tee times, 58% feel that these firms either increase revenue or have no revenue impact. Only 42% of golf course operators feel that revenue is decreased. It should be noted that the NGCOA is conducting a survey of its members on similar topics. The results should be available in April 2011 and may vary based on the maniacal and pedantic preaching of some of its vociferous members on Listserv.

Despite this lukewarm endorsement for third parties, 64% would prefer to negotiate an annual fee for such a service rather than trade bartered tee times.Still only 11% of tee times are reserved online, according to the survey. Thisbegs the question, how can third party intermediaries be the primary cause of the industry’s demise?

Finally, golf course operators spend 40% of their day on the computer. That makes us wonder who is serving the customer?

Lessons Learned from the Golfers

While golf courses have clearly responded to social media, surprisingly their adoption has outpaced the use of such technology by golfers. Seventy-four (74%) of golf courses have created Facebook pages but only 57% of golfers have done so. More amusing is the statistic that 35% of golf courses tweet while only 14% of golfers have Twitter accounts. Both of these examples underscore the fact that course operators are investing in social media at a faster pace than their clientele is adopting social media.

In answering the survey, golfers provided other valuable insights from which golf course owners can benefit. Respondents’ use of iPad and Kindle is low, at 24% and 21%, respectively.

Eight-four (84%) percent have made a tee time reservation online, and they spend 24.89% of their day at a computer, primarily a desktop or laptop. Smartphone as their primary communication tool lags at 10%.

A majority of golfers forward emails at least daily to associates and family. The vast majority of golfers read the sender, subject line and at least 50% or more of the message. For the golf course operators who craft a meaningful email, the probability that it will be fully read and forwarded is very high.

Eschewing permanent tee times, golfers first search for specials on the course’s Web site before branching out to distribution avenues, third-party sites, newspapers, etc.

Low Hanging Fruit

In thefast-paced society in which we are immersed, we are prone, to our disadvantage oftentimes, to want to adopt the newest, the fastest, and the best.

Having travelled to 41 countries and visited more than 4,000 golf courses, I can’t help but feel that allowing others to be on the bleeding edge of social media is the optimum strategy, for I have yet to visit a golf course where there isn’t some very low-hanging fruit available that would increase revenue, bolster operational efficiency, or enhance customer service. It is my humble opinion that a focus on the basics would produce far greater returns than chasing the latest craze.

About the Author: As Managing Principal of Golf Convergence, J. J. Keegan has traveled in excess of 2,300,000 miles on United Airlines visiting more than 250 courses annually and meeting with owners and key management personnel at more than 4,000 courses. Having successfully combined his passion for golf with his business acumen, his direct knowledge and interaction with the golfing community makes him uniquely qualified to offer expert opinions on trends and issues facing golf courses today. In July 2010, Keegan published the ING award-winning book, The Business of Golf—What Are You Thinking? How to Increase the Investment Return of a Golf Course, which has been purchased by astute golf course managers in eight countries to date.

On March 1, 2011, we crossed the threshold asthe 500th copy of “The Business of Golf” was purchased. On March 15, 2011, the 600th copy was sold. Amazing, I am so grateful to you.

The GCSAA sold 50 copies in its Bookmart in two days during the Golf Industry Show. Keiser University College of Golf just adopted the book as its capstone class for graduating seniors, and theUniversity of Wisconsin – Stout PGM Program adoptedthe book for its Fall, 2011 class, purchasing 70 copies.Wow! I am deeply indebted to the GCSAA and the universities. Thank you.

What has been driving the book sales that you can learn from?

Word-of mouth is the primary driver of sales. While I continue to passionately market via email, advertisements in Golf, Inc., Golf OperatorMagazine, and rented targeted lists from the National Golf Foundation, you telling others about the book is having a substantial impact on sales

Our passion is to listen, learn, help, and lead you as you optimize the financial return of your golf facility. Truth be told about publishing, if you sell out the first run (1,000 books in this case) you might breakeven. This is a labor of love, this desire to ensure that your vision becomes reality.

The lesson learned for you? Your customers’ word of mouth has a significant influence on your results.

I still like the idea of giving away complimentary bag tags with your course name and brand message to each golfer. That bag tag becomes a marketing message that your customers carry to the 4 to 7 other golf courses they play annually. Personally, I always look at the bag tags of my playing partners and ask, “Did you enjoy your experience at that course? Is that a place I should play?”

What That Means to You – Free continuing education!

We believe that the successful formula for the operation of a golf course is value = experience – price. To the extent that the experience exceeds the price charge, customer loyalty is created.

Therefore, we will continue to provide a flexible approach to our independent thinking in providing a vision for the operation of golf courses. To do that, we are offering the following complimentary resources.

Webinars

To ensure that you are receiving full value from the book, we have launched a complimentary Webinar series. As a purchaser of the book, you are guaranteed a seat at each presentation. If you miss a seminar, the Webinars are available for download at: http://www.golfconvergence.com/library/webinars.

The webinars presented so far focused on:

• February 1, 2010 Strategic Planning
• February 10, 2010 Geographic Local Market Analysis
• February 22, 2010 Leveraging Weather to You Advantage
• March 8, 2010 Technology: An Investment or Expense

At each one of these Webinars we are offering value-priced opportunities to get customized answers for each of your courses.

PICTURE

Our next Webinar on March 22, 2010 will focus on financial benchmarking: valuable or inconsequential. We will conduct a national survey of golf course operators integrating the results in the Webinar, just as we did for Technology.

The National Labor Study and the Technology Survey of Golfers and Golf Course operators can be downloaded at:

Blogs

We remain prolific in writing and have posted blogs http://golfconvergence.com/blog/ that you might find of interest. They focus on the following:

• Do These People Have Lives? Social Media Adoption by Golfers
• What Are the Best Options for Discounting?
• The Golfer Ultimately Determines the Price
• The Surge in Privatization of Municipal Golf Courses

If you want to keep really current with new perspectives as we travel, follow us at twitter.com/golfconvergence.

Operational Tools

We have posted the resources discussed in the book online for your FREE download at: http://golfconvergence.com/interactive-content-gc. These tools include:

• Valuing the Golf Experience – what is the correct green fee price?
• Green Fee Calculator – set prime time Saturday and the rest of your fees are automatically calculated
• Calculating deferred capital expenditures
• Determining if your maintenance labor hours are appropriate
• Assessing whether your equipment fleet can produce the proper playing conditions for your designated tier

Speaking Engagements

It is always a pleasure to speak in front of a live audience. This month we are featured at the Atlantic Golf Symposium on Prince Edward Island for HollandCollege and the Canadian PGA Pros. We are also speaking before the PGM class at theUniversity of Colorado.

If your local chapter of the CMAA or the NGCOA is looking for a speaker, it would be my pleasure to customize an interactive session based on your perceived goals.

The Vision

As for Golf Convergence, we are very pleased to be emerging as one of the leaders in education for the golf industry. This education component complements our strategic consulting practice, which is based on our philosophy of “listen, learn, help and lead.“ We empathize with the challenge large associations have in creating and updating meaningful curricula in a timely manner.

Our Webinars are complimentary and provide the registrants operational tools that can be implemented immediately at their facilities. With each class filled to capacity, we are thrilled to be guiding golf course owners as they seek to ensure that their vision becomes reality.

Please call us when we can help you on your journey. We excel at solving problems and finding answers that are easy and cost-effective to implement. We hope to have the opportunity to work with you to develop solutions to your problems.

Thank you

Known Facts

These are very challenging times within the golf industry. The game has peaked. Supply exceeds demand. Revenues are soft. Expenses are fixed. Rounds are too long. Lifestyles have changed. Ours is a time-crunched culture. All of these factors have a direct impact on the business of golf.

For the next decade, the golf industry is projected to be flat. The demand/supply imbalance of 8% will take that long to reach equilibrium, as increases in demand from golfers will only mirror the growth in the population.

Supply will constrict slowly. The National Golf Foundation forecasts that 500 to 1,000 golf courses will close during the next five years . Private to public conversions are now in vogue. “More than 400 private clubs have opened their doors to public play in the past decade. Although course closings tend to generate more headlines, there have been 10 of these private-to-public conversions for every private course that’s gone under,” says NGF President Joe Beditz.
With golf in a blustery swirl, often vision is clouded and execution dulled. Today, many courses are implementing operational and tactical changes that lead to strategic failure.

Among those operational changes, discounting is the new norm and will be a dominant factor in the golf industry until demand and supply become balanced.

Many Forms of Discounting Green Fees Have Emerged

While masked as yield management, discounting has been a prevalent practice for nearly 100 years. Many golf courses offer over 100 different rates by time of the year, day of the week, time of the day, and the age of the golfer – all forms of yield management. Banquets, weddings, tournaments, and outings have been long subject to flexible pricing.

What has changed in the last five years is the plethora of methods by which discounting of green fees occur. Historical charity coupon books are accompanied by sports section advertising, golf magazine discount cards, PGA Tour Player’s passes, third-party,online tee time sites, and Groupon email promotions to list merely a few.

All of these programs have the single focus of trying to capture theattention of golfers and motivate them to play a specific course. A few of these programs are prudent. The rest represent a slow death for the golf course operator. How do you determine which ones to choose?

A Basic Primer

Before selecting which discount programs to participate in, an understanding of the basic principles of yield management is beneficial.

Marketing programs are designed to stimulate revenue-attracting customers at desired price points. Unfortunately, most marketing programs are created without accurately answering a simple question, “What customer segment are we trying to target?” Golf courses have historically used a shotgun rather than a rifle approach to target the various unique segments. This shotgun approach has been necessary, as few courses effectively identify golfers by marketing segment:

The message and the medium for each one of these customer segments varies greatly. When golf course operators fail to identify the target market, discounting programs applicable to all become the marketing program by default.

In melding these diverse interests, operators become myopically focused on numbers of rounds and lose focus on the more important statistic—gross revenue. Finding the balance between the revenue and rounds per round is essential. The objective is simple: maximize revenue. The only benchmark that truly matters is noted below:

Many golf course managers are lulled into the economic trap of believing that selling more rounds, albeit at slight discount, is a best practice. Discounting is a slippery slope. The following chart highlights the perils:

During these difficult times, which discount program is best?

The simple answer is that the best programs are those that:

1. Are sold at the least discount, i.e. 4 for 3 promotions.
2. Generate upfront revenue and are unlikely to be redeemed, i.e.  Groupon, which has only a 20% redemption rate, or annual pass programs that have a break-even exceeding 75 rounds.  Yes, the course will get “beat” by some golfers, but not in total based on the yield per round achieved (total revenue from season passes/total rounds played > revenue per tee time).
3. Sell tee times that are otherwise unlikely to be sold, i.e. Monday-Thursday between noon and 2 p.m., coupon books, newspaper advertising.
4. Attract new golfers to the facility, i.e., third-party tee time providers.

Unfortunately, none of the most popular discount programs meet all of those achievements.

What are the downsides to each program?

Coupon books are attractive, as the redemption rates are low, can be structured for off-peak times, and can attract new golfers.  However, those programs most often favor thepublisher over the golf course.

To illustrate, in 2011, a Colorado regional magazine is generating (for the magazine) $399,750 from selling 5,000 passbooks at $79.95 each.  The golfer receives the opportunity to play 53 different courses, including three private clubs and nine resorts, at average green fees of $41.33 inclusive of cart.  Green fees range from $9 to $99.  Thirty-eight courses allow weekend play, of which 12 courses provide for unlimited play at an average discount of 40%.

While the above program may be onerous, coupon books can be structured that are beneficial to the course.

Another discount medium that can be beneficial is third-party tee time firms.  They often provide software services including email blast capability and development of web sites, affording access to a large database of golfers.  The proper use of these tools can clearly generate incremental revenue, often from new customers.

While riled against by many for getting between the customer and the golf course and lowering effective yields, a negotiated agreement with firms that specified the following would be mutually beneficial to both parties:

1. Defined value of the marketing services to be rendered by the third party.
2. Specified minimum price for which the bartered rounds could be liquidated.
3. Customer data for bartered rounds provided to the golf course.
4. Commitment by the golf course operator to pay in cash annually the differential between 125% of the services rendered less the cash derived by the third party in liquidating tee times.  The differential represents the risk assumed by the third party in selling the tee times consistent with the golf course operator’s restrictions.

A recent phenomenon that is drawing much attention is Groupon, a coupon emailed daily to subscribers.  According to Joe Assell, President and CEO, Co-Founder of GolfTEC, CEO of GolfTEC, “The jury is still out.”

GolfTEC has used Groupon in 49 different markets, offering only a 30-minute swing diagnosis, in essence, a quick teaser for $35 (59% discount), or a 60-minute swing evaluation for $60 (60% discount).  For each promotion, about 350 coupons are purchased.Despite proactive follow-up with coupon purchasers, the redemption rate is amazingly only 10-15%.

The key for GolfTECis that Groupon is selling introductory programs during the fall/winter when they have plenty of capacity.  Only 30% of their lessons given by GolfTEC occur during September to February.The additional revenue has been welcome during the slower part of the year. The coupon offered does not offend their current customers, many of whom purchase 25+-lesson packages.

The downside, according to Joe Assell, “Groupon is very difficult to work with.  They bump you if they have another promotion they believe will generate greater revenue, and they pay you over 60 days.”

Though Groupon has assembled massive databases in nearly every metropolitan market, extreme caution in utilizing Groupon’s services, in addition to the caveats advised by Joe Assell, is recommended.

Groupon requires the golf course to sell its goods or services with at least a 50% discount from the rack rate.  Groupon’s commission is 50%.  Thus, the golf course nets only 25% of retail.  If a golf course were selling rounds of golf, they would have to increase play by 400% merely to break even – highly unlikely.

HighlandPacific, a new investor group, recently purchased Victoria, British Columbia.  Seeking to attract new customers, the new owners tried Groupon with amazing success – sort of.  Their coupon was for 50% of two green fees plus power cart and range balls.  The program was suspended when 600 had –sold–the morning of the second day.  A small group of their Loyalty Program members complained that Highland Pacific did not let them know and participate—a customer service problem out of the gate.

A more amazing example of the perils of Groupon was seen over the 2010 Holidays in Denver.  A promotion for eight rounds of golf and 10 one-hour lessons valued at $1,080 was offered for $189, an 83% discount.  The golf course manager specified that a cart was mandatory and that the tee times were only valid on Monday – Thursday, and Sunday after twelve.

Unfortunately, Groupon failed to list the restrictions until four hours after the promotion had been displayed. At that time, 543 coupons had been purchased.

Groupon’s response upon learning of their mistakes was they would only refund the monies of disgruntled customers.  No consideration was provided to the golf course and to the potential public relations nightmare created.

During the two-day promotion, 1,643 individuals (3% of the Denver database) purchased the coupon, representing $460,040 in tee times ($11.81 per round) and $924,188 in lessons.  The revenue generated ($310,527) was allocated as follows:  $155,264 to Groupon, an estimated $50,000 to Jintu, a marketing agency, and $100,000 to the City and County of Denver.  Incredible profit for Groupon for little work.
Are rounds at any price a solution? Clearly not. Discounting, while a short-term fix, is a long-term path to failure.

Studies done by Golf Convergence conclude:

• The golf course that discount lowers the “average daily rate”by 31%.
• The golfer who receives a discounted round will spend less than $10 in the pro shop.
• The golfer who receives a discounted round has only a 16% probability of returning to that course and paying the rack rate.
• Sixty-four percent of golfers who redeem a coupon usually bring only one other player.

The winner in this game of discounting is already known, although not formally announced.  Those golf courses that create value and protect their brand for the price charged will prevail.  As for the others, they will be among the fodder of the 500 to 1,000 golf courses forecast to close over the next 5 years.

Golf course owners throughout the world are seeking solutions; in fact,the book is in its first six months of publication and the book has already been purchased in 11 countries including Australia, Germany, Holland, Ireland, Italy, Slovakia, and South Africa.

To ensure that the net operating income surges in 2011, we are conducting complimentary webinars. The schedule appears in the left hand column.

As each class is limited to 100, we suggest you enroll early if you have an interest. Note that the introductory class, held on January 25, 2011, was fully subscribed. Some very well-known golf course owners and management companies were in attendance. Four countries were also represented in the Webinar. Thus, we are having an encore presentation of this webinar on February 1, 2011. If you would like to attend, you can register here:

The goal for each Webinar will be straightforward. Most people are too overwhelmed by data to discover the details.These sessions will script carefully, clearly, and crisply the vital moves golf course owners need to make in 2011. They will create a vivid picture as to what is possible and engage the creative energy of your management and staff. Together, these educational sessions will create the path to execute a series of small changes that will make a substantial positive impact.

At each Webinar, participants will be provided complimentary operational tools that can be downloaded and implemented immediately.

This is our fourth email providing updates on lessons I have learned while marketing the book that may benefit you.

Lesson 1 – Hubspot.com: The Hubspot webinar titled, “Optimizing your Web site” is a must for every golf course operator. It is simply fabulous. From learning about title tags, the optimum keywords, placing your phone number and call to action on every page, this seminar will reveal the weakness in your Web site. You might ask, “Why are title tags and keywords important?” They serve as the “index markers” by which Google, Yahoo, Bing and other search engines find and identify content. It is important to use these tools properly to obtain a front page listing on customer Internet queries.

How you will Benefit: Go to www.hubspot.com and register. The visibility of your golf course will soar on the web if the suggestions are fully implemented. Further, in addition to getting front page listing, the popularity of your site is also important. Wonder what your current rank is? Go www.alexa.com and type your url and your competitor’s url. You will learn if your site is more frequently visited than your competitors. Here are some industry benchmarks for comparison:

Also go to www.webgrader.com and obtain a free evaluation of your Web site. Enter your #1 competitor’s site against yours to determine how your site compares.

Lesson 2 Email Social Media: Email marketing is more important than social media. Facebook, Plaxo, Linked-In appear to have limited applicability with respect to business-to-business relationships. Unless you are operating a large business, such as Best Buy, United Airlines, etc., social media may consume significant resources with little short-term investment.

How you can benefit:

Time is a precious commodity, and you are already overburdened. It is our suggestion that you be a follower and not a leader in these social forums unless you have a very large business-to-consumer presence. Let others determine if these marketing methods prove fruitful.

Lesson 3: Groupon is Very Dangerous and Unlikely to Produce ROI: Groupon is very dangerous for a golf course. See my blog: for the details on how the ROI for liquidating tee times just doesn’t pencil and the basic rules for selecting a discount program. You might also want to see my blog: regarding how the consumer controls the price at your golf course and why individually negotiated tee times may become a reality.

How you can benefit: Unless you think you are going to increase your rounds by 400% from the promotion offered, boycott Groupon.

Summary

We have been very fortunate to have several clients see significant positive reversals in their net income in 2010. One went from a loss of $450,000 to a profit of $250,000. Another changed a $100,000 loss to a $900,000 gain. The credit belongs to the management and staff at those courses for execution of the plan. Together with them, we created and shaped the path, provided motivation, and tweaked the environmentto help them build the habits for success.

Like a researcher at a University, we have a hypothesis on how to increase the net income that has been proven “true” in early “laboratory tests.” Working together, we will fine tune the formulas, improve the benchmarks, and create a system that each of you can easily implement and benefit from.

We look forward to your presence with us on this journey.

Hello – Brave New World

It’s a beautiful day,the tee sheet is largely empty, there are only a few groups on the course, and in walks a foursome. They confirm that the rack rate is $75 including cart. They offer to pay $50 per player with lunch included. Do you take their offer?

The need for golf course operators to maintain rate integrity by properly conditioning a course, developing a customer database, and deploying integrated TTRS/POS technology to efficiently market to thecore, acquired, and defectors has been chronicled. However, those practices have only been implemented by the adroit to stem the tide of falling rounds and yield throughout the industry.

With supply forecasted to exceed demand for the next decade, until market forces become balanced, golf course operators may be subject to a new —trend—negotiated pricing of individual tee times. Which offers do you take or decline?

Negotiated Transactions Dominate the Commercial Landscape

Consider how prevalent negotiable pricing has become. Cars, houses, airline tickets via Expedia or Orbitz, hotels via Priceline, and stocks via limit orders are merely a few purchases for which negotiation/bargaining is commonly used. While haggling dominates in the U.S. for infrequent high-end purchases, it is common on most purchases throughout the world. Would you ever pay retail for any item in Asia? Not likely.

Discounting, affinity, and customer loyalty programs are pervasive in nearly all industries. Ranging from Starbucks Gold Card (1 free drink for every 15 purchased), to Office Depot’s quarterly credit on purchases, to merchandise and travel rewards from American Express, or cash back on Costco and numerous other credit cards, paying the asking price for a commodity is the exception rather than the rule.

Revenue Management has not escaped the golf industry, as it has been a prevalent practice for nearly 100 years. Many golf courses offer over 100 different rates by time of the year, day of the week, time of the day, and age of the golfer – all forms of discounting. With banquets, weddings, tournaments and outings long subject to flexible pricing, is negotiation of every tee time not far away?

Impaling Themselves

If negotiated tee times appear at golf courses, that practice will be introduced because many golf course managers eschew effective marketing and rave against third-party companies. They will have narrowed their opportunity to attract and retain golfers through these viable alternatives.

Marketing by golf courses has largely been ineffective. Golf courses are often reluctant to spend money on marketing because they can’t or don’t track the efficiency of the dollars spent to determine a return on investment.

As a result, golf courses delegate their marketing efforts to third-party companies in exchange for bartered rounds. In turn, golf course managers get upset when these firms liquidate the bartered times earned for the marketing efforts.

With the increasing resistance to third-party marketing companies golf course owners will have no option but to assume the responsibility for negotiating every time out of frustration for their declining financial plight.

Readily Accessible Information Will Accelerate Negotiated Pricing

The thought that golf will become a negotiated transaction is perhaps an inevitable result of current price pressures that will be compounded by another market force – greatly enhanced information available to the consumer.

Evolving technology is enabling the consumer to find the lower price for a commodity instantly.Recently, Blackberry launched shopsavvy.com. A consumer merely scans the bar code or the QR code of the product, and the price of that itemat neighboring stores is displayed.

An IPhone application, savebenjis.com, provides“a comprehensive price comparison” in your hands. The strength of this app is its ability to compare a product across multiple vendors. You can search by product name, bar code, manufacturer, keyword, and a half dozen other criteria. It also has the ability to add product reviews. ^[1]” Google Search offers an identical service.

Thus, superior information is allowing the consumer to make an informed decision. Currently, the numerous third-party tee time sites are, in essence, providing a comparable service by displaying theprice of various golf courses on a single screen. Thus, golfers can learn the “instant pricing” within their market.

One of the historical key tenets of capitalism is based on the inefficiency of the market place. The informed can leverage superior information to the disadvantage of the uninformed. With the introduction of new technology, the balance of power in purchasing decisions is switching from the vendor to the consumer.

Determining the Proper Rate

Fair market value is defined as “the price for which property can be sold in an ‘arm’s length’ transaction; that is, between informed, unrelated, and willing parties, each of whom is acting rationally and in its own best interest.” ^[2]

In theory, if the green fee were properly set for each individual tee time, it is logical to assume that 100% of the available times would be sold.

Some golf course owners establish green fees based on cost plus desired return on investment. Others set the green fees based on market value of nearby courses. Still others base their fees on some subjective perception of the value of the golf experience. This subjective valuation method results in one facility charging over $125 per round competing against another course that charges less than $30, yet both are between 6,000 and 7,400 yards, have 18 holes, and take roughly 4½ hours to play.

None of these three methods works well long-term. None of these will give you any clue on whether you should accept a negotiated price from a golfer.

Golfers are Value Driven

There is a formula, often invisible to the golf course operator, that determines the correct green fee rate – the value perceived by the golfers.

Golfers are very astute. They subconsciously decide where to play based on a simple formula: value = experience – price.Golfers measure their experience based 90 percent on the course (slope, strategy, conditioning, grass texture, ambience, and amenities) and 10 percent on the service standards encountered.

To the extent that the experience received equals or exceeds the price paid, customer loyalty is created. To the extent the experience received is less than the price paid, customer attrition occurs.

A Golf Course’s Proper Focus: Matching the Price to the Experience

A golf course’s ability to create a consistent experience, while manageable, is limited by the positive cash flow available for reinvestment plus additional capital, debt or personnel committed.

What is totally controllable by the golf course operator is the price. The green fee rate can be adjusted at whim based on numerous subjective or objective factors.

The golf course operator who adjusts the rate subjectively or intuitively is likely to influence rounds at the expense of yield per round. The correct price based on value created can be measured, in advance of the golfer’s arrival, not based on a rate that will generate a return on investment, a competitor’s pricing, or some subjective criteria, but based on an objective standard of value that measures the 34 key components a golfer subconsciously considers in assessing value. (See www.golfconvergence.com/library/interactivecontent to calculate the value your golf course creates.)

Why Negotiated Tee Times May Become A Reality Within Five Years

Having traveled to 41 countries where I visited more than 4,000 golf courses, it is my opinion that golf course managers and staff are more largely reactive than proactive. In their defense, perhaps they are so consumed with operational tasks that the more valuable strategic and tactical planning tasks get short-changed.

However, even though it will be challenging to train counter staff on which deals to accept and how to record them within the industry’s ill-suited POS systems and thereby accommodate individual pricing, negotiated tee times are likely to appear soon.

Golfers will have superlative information as to current rates in a local market and a plethora of choices, while golf course operators become even more focused on rounds at the expense of revenue. Golfers will control prices by voting with their feet.

Golf course operators would be wise to know the value of the experience they create and take all offers that equal that price.

At the 2010 PGA Show, the leading industry research firms, the National Golf Foundation, Golf Datatech, and the PGA of America confirmed that in 2009, rounds and revenue had decreased 1% and 6% respectively, and that up to 1,000 courses may close in five years

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