By Steve Graves, President, Creative Golf Marketing
In the 1990’s then Federal Reserve chairman, Alan Greenspan, stated in a speech during the dot-com phenomenon that the philosophy of the consumer was based on “irrational exuberance.” This iconic phrase was a warning that the stock market might be overvalued. People should have heeded his warning.
Golf is almost a monopoly at this time because it is one of the few safe leisure activities available. Basically the only element of a private country club that can be safely and comfortably utilized by a private club member over the past few months is the golf course.
Right now there is a “false and dangerous exuberance” at almost every club nationwide simply based on the record number of rounds of golf being played by the members of the Club. Notice, the words “members of the club.”
The tee sheets of clubs are so full that club leaders are not allowing much if any guest play. Unfortunately, with guest play comes the all-important budgeted “guest fee revenues.” Guest play also introduces friends of members to the benefits of membership and produces potential new membership applications. Both of these opportunities are literally non-existent at this time and more than likely throughout the rest of the summer and year.
Peculiarly, many are taking the attitude of, “We have too many members.” because of how full they’re finding their golf course and/or tee sheet. This short term phenomenon has been extrapolated to a philosophy of “no need to market our club or contemplate membership growth strategies” because the golf course is over utilized at this time.
Club leaders are misjudging rounds of golf played with the financial health of their club. Every club that is talking about record golf rounds are also simultaneously lamenting the loss of food and beverage revenue, banquet revenue, wedding revenue, green fee revenue and outside golf tournament revenue. These cash flow and net profit losses can be astronomical at many clubs. It is not a short term phenomenon either.
There is also a “seasonality exuberance” that is being ignored by private club leaders at this time. The Covid-19 crisis essentially hit at the beginning of spring. Spring and summer are not when people quit private clubs. Spring is when everyone has winter cabin fever and can’t wait to get out on the golf course, tennis courts and swimming pool. When combined with Covid-19, consumers were sequestered in their homes even longer by government orders. Again, this unanticipated set of timing circumstances is producing the record golf play nationwide.
On the other hand, fall is when private club members quit their clubs. When the massive amount of golf begins to wane at the same time as the weather changes and clubhouse operations have their own limits, combined with the reality of the loss of revenue during November and December, it is logical to expect higher than normal resignations nationwide.
A common instinct of many club leaders as they enter the fall budgeting process, will be to increase dues or impose an operational assessment on the members to overcome budget shortfalls. This tactic is commonly viewed as necessary and without fear of significant membership loss.
GGA Partners, in their recently released “A Member’s Perspective” report revealed that an astonishing 50% of those members surveyed stated, “The number one factor that would cause them to leave their club would be a dues increase in an amount exceeding that of a typical annual increase.” That statistic should be frightening to club leaders as they contemplate the simplicity of a dues increase to balance the budget.
Club leaders need to focus their attention on the two most powerful income sources available to them: joining fees and dues income from new member growth. However, now’s not the time to slash your initiation fee. As a matter of fact, that is exactly the wrong instinct to follow. The same report also reveals that 57% of those surveyed stated they, “oppose the idea of their club offering membership specials to prospects during this crisis.”
The best and most effective alternative is to proactively focus on the comprehensive marketing of the entirety of your club. The Covid-19 crisis occurred in an instant. The virus identified the vulnerable nature of our industry for where club leaders felt they were immune. Overcoming the virus will take time and while that time goes by private clubs should be implementing comprehensive internal and external marketing channels to showcase the overall benefits of membership at their club. These efforts will help to minimize attrition and maximize recruitment.
Right now, you cannot have too many members at your club. The initiation fees and dues from a growing membership are the revenues necessary to offset the under budget revenue sources. Don’t let the amount of golf being played right now give you the excuse for not being proactive in protecting the short and long-term future of your club. It would be false and dangerous exuberance.
Steve Graves is the President of Creative Golf Marketing, a highly specialized consulting and marketing agency that provides membership solutions for the private club industry