Despite a minor reprieve from the weather the outdoor golf season is effectively over for 2014 in Eastern Ontario, Ottawa, and the Outaouais.
It’s that time then when golf courses take stock of their year and begin to play for the year (s) ahead.
It can a stressful time for operators who face increasing, costs, competition, and regulations.
Having chosen to be in the golf business, dealing with those factors is something that cannot be avoided.
It’s at this point I’m happy to let any of you golfers off the hook – this blog piece may not be for you, but please continue to read if the golf industry interests you.
This week many of the course owners who are members of the National Golf Course Owners Association are meeting in Montreal for their annual conference. The smart ones spend less time on complaining (a hobby for many whether they are in the golf industry or not) and focus on education, training, and planning.
A hot topic will be pricing – a critical part of business success.
With growing pressure on the market some golf courses have chosen a penetration pricing strategy using discounted prices to attract customers. Often this is not an actual intended “strategy” but reactionary to an offer by a local competitor. The panic brought on by the thought of losing market share often makes operators forget about the long term effects it may have on their business.
But does this lower pricing grow business or simply erode business, both in profits and ability to operate at an acceptable standard?
Unfortunately many are finding out that increases in the numbers of rounds played have not been forthcoming, with the only result being a decline in revenues.
What many fail to realize is that heavily discounted pricing may attract some customer base it is likely not sustainable over a long period of time. When they consider the cost to operate their business, the discounted price does not often compute into enough revenue for their business to survive, let alone thrive.
Sure, when asked, customers may point out price as a determining factor of how they decide where to spend their golfing dollars, but who doesn’t want to buy a Porsche for a dollar? Rarely does anyone admit they would pay MORE for a product or service.
Recently a golf course owner wisely stated to me – “golfers have more needs than a low price, we need to deliver that.”
Price is but one factor is attracting and maintaining a customer base – it may bring a customer in the door and keep some of them coming back but of the most part there are more things that provide a long-term connection between a business and a client.
Customers seeking only a low price are unlikely to be loyal to a business in the long term. If they’re gone as fast as they come then consider that the business will have to spend even more money attracting replacements. It’s a vicious, and expensive, cycle.
Long term customers (the ones you want) want value, not just a low price. Providing strong customer service, food and beverage amenities, and quality golf course conditions requires revenue, as does staffing, marketing, taxes, and so much more.
The best “success” stories of 2014 I am hearing about among golf courses (and yes, there are many) are operations that do not discount heavily but take a wise approach to their product, how they operate, and how they market to attract customers.
Stripping product down to be nothing more than a commodity to the transient golfer does not hold a lot of long term promise.
Operators need to be better for their identified customer but can’t be afraid to charge fair market value for that.
Following a “competitor” into a place from which they may never return is not wise.
They must be brave and resist the urge to overreact to rogue pricing changes.
Yes, they may have to sell themselves a little more to get the price they NEED to thrive but they’ll be better for it in the long run.
Their future depends on it.
Scott MacLeod is the Associate Publisher of Flagstick Golf Magazine and Ontario Golf News. He has a keen interest in the golf business having worked in the game since 1985