Updated: Feb 25
There’s gold in them thar tills!
I recently had a discussion with an estate manager tasked with addressing falling green fees’ revenues. In our discussion he expressed his concern in terms of the fact that the ‘numbers’ showed a decrease of just under 30% in the total rounds per annum from the previous year. When in reply I asked if he (and his members and management board) would be happy if he was able to leave the round numbers at about the same levels, but restore the full revenues he replied ‘heck yes!’
This conversation was then succeeded almost immediately by another with a board member of an HOA at a different estate.
This person’s concern was how to move the course from being a red line entry on every financial summary into a profit centre. I pointed out that the facility had no profit history and that the course and clubhouse was in fact a service to residents and homeowners. I then asked whether the board of directors be happy if the club was brought to break-even point in terms of the overall running costs of the estate? In this case the response was an even more unequivocal – ‘yes!’
Tackling these types of challenges and finding suitable solutions requires good business intel, which goes well beyond the number of rounds played per annum, in order to generate better revenue yields from each round played.
I use the word ‘played’ as opposed to sold, because it may be that in terms of a more creative sales’ approach you have decided to insert some of the course’s distressed inventory (‘un-saleable’ rounds discussed in parts 1 and 2 of this feature) into a package in which the round might actually be included at R 0.00.
To put ‘Yield’ into a clear context it is often very simply summarised in business terms as being; the return on an investment made.
Against the yield figures, the gross number of rounds achieved per annum, as a stand-alone piece of information, is a rather blunt instrument. It is particularly blunt when used in calculating a facility’s profitability (or the return a club might make on the investment it makes in the running and upkeep of its golf course), when the alternative intel provided by the total yield achieved per round can offer a number of useful insights including:
· The total amount achieved in sales terms against each green fee sold.
· From the intel in the previous bullet point – where and at what times there is a need to increase the revenues of the level 2 yield i.e. the additional sales that accrue such as the rental of a golf cart, ½ way house, competition entry fees, post-game F&B sales, etc. at various times.
· The types of value add-ons and or yield 2 services which are the most effective in sales’ terms.
This second and third sets of information can offer a number of additional insights. These will include information such as on what days and when the yield per round is at its highest and what element are driving this increased yield. All of this makes planning much easier and helps to ensure that the right strategy to raise the yield levels is implemented.
To return to the core narrative and as a specific response to the second conversation, I looked at the board member’s club’s unlimited rounds membership category and the revenue it was achieving for these pre-sold rounds packages.
The analysis was based on some hard intel and then supported by an educated guess as the pro shop staff had not been keeping full records of the rounds’ traffic. In addition the club’s booking system’s software did not have the capability to enable this type of information to be stored and cross-checked.
The average yield (in Rand terms – yield 1) per round was R 67.40 in the existing members’ unlimited rounds’ membership package.
In this membership type the second levels of yield (yield 2) in terms of additional spend were estimated to exclude golf carts revenues (it being calculated that 99% of members owned their own carts), ½ way at about a 50% uptake per round as being resident on the estate many members had their own water, drinks and snacks on their carts and, outside of official competition days, would often just play through.
The same 50% estimate was then applied to post game drinks consumption on the basis that, other than for official events and competition days, most of the resident members went home after their games, unless they were likely to feature in the prizes in which case many still went home and then came back to the club for the prize-giving.
Using this as a base we then constructed an offer for a corporate partnership for one of my company’s clients to interact with this same estate.
The package was designed to allow the four divisions within the client’s Group to use the club as corporate members and there were a number of interactive branding and event opportunities linked to the package, some of which traded distressed rounds’ inventory for further cash contributions.
In simple terms it provided the client company with 4 playing cards and then offered 16 tee times per day (1 four-ball per playing card) for the companies to use for their staff, customers and guests.
The cost per round was structured so as to offer the same rate to the corporate partnership as the unlimited rounds fee for individual members and then the full potential of yield per round (yield 2) was then conservatively estimated as follows.
With ½ way house at R 75.00 per person, share of rental cart at R 150.00 and R 50.00 for 2 post-game drinks the total revenues for yield 2 for this membership type was R275.00 per person. This compared with the yield 2 revenues for a single member within an unlimited rounds’ membership package of R 62.50.
Converted against this particular corporate membership’s maximum possible use per annum, this translates into additional potential yield 2 revenues of just under R 1.1 million per annum.
The Roman philosopher Seneca stated that “Luck is what happens when preparation meets opportunity.”
The opportunities to be creative (discounting your club’s green fees more than the next club does not count!) abound, but to be harnessed you will need to have good intel as the base from which to build the solution to match.
On that same theme and to paraphrase Mark Twain’s character Mulberry Hills’ original statement to; ‘there’s gold in them thar tills’ - you will need to mine your till’s data effectively and be prepared to be innovative so as to have good intel and be positioned to take advantage of the opportunities that are available and in doing so, largely remove the capricious influence of Seneca’s ‘Lady luck’!
The Discount Dilemma – part 3 by John Cockayne; Mobile - +27 (0) 73 8967931. Email; firstname.lastname@example.org. The contents of this document are confidential, may not be copied or activated without the express written permission of John Cockayne and remain the sole IP of the author.