The Pellucid Perspective - January 2011 - (Page 8)

MARKETING Is Groupon Good for Golf? By Harvey Silverman O ne thing the Great Recession has created is a blitz attack of Internet discount sites. Along with those we have seen specifically for golf, such as GolfNow, Click4 Tee Times, Golfer’s Guide, and others, are general consumer sites that are now knocking on the doors of golf courses and golf businesses. Groupon is the “Mother dough,” with many clones being spawned, and more quickly now that Google has valued Groupon at $6 billion, which makes Comcast’s $41 million purchase of GolfNow look like chump change. With these companies seeking to add golf to their menu of discounted fare, Pellucid and other industry marketing consultant firms are being asked by clients whether it’s a good deal, or too good to be true? As is frequently the case, the answer is, “It depends,” but here are some factors to ponder. Try Googling “Is Groupon good for my business?,” and be prepared to read for hours. There are many well reasoned and well written articles from a variety of sources that cover both sides of the debate. We’ll attempt to summarize some of the pros and cons in this article and provide links to articles from MORE CHANNELS THAN BASIC CABLE, BUT WITH THE SAME PROFIT POTENTIAL. Introducing Visage, the first mobile golf information system. See what one touch of our 10-inch screen can do for your operation. To learn more, visit visagegolf.com. Visage is a joint development from Club Car, Inc., and GPS Industries. which we pulled some of the information, so that you can go read them in their entirety. For these purposes, use of the trade name “Groupon” refers to it and any clones using the same business model. Let’s start with a quick primer on what Groupon is and what it does. Groupon is advertising. It offers a deal a day in local markets to a subscriber base. That “deal” offers a substantial discount from a local merchant, usually 50% or more on a product or service. Groupon sets a minimum for how many buyers there must be for the deal to “tip,” or become active. Groupon relies on the social network of subscribers to take the deal viral, attracting more potential buyers. If enough people do not buy, the deal is dormant but some residual advertising value remains. Groupon keeps as much as 50% of the sales generated by the coupon sales. There are reports that Groupon will take less Try Googling “Is than 50%, but their busiGroupon good for ness model has been built on that amount. my business?,” So what does this mean and be prepared to for golf courses? First, 77% of Groupon subscribers read for hours. are women, and 68% are people aged 18-34. Not exactly your most obvious golf market. And while Groupon is advertising, the difference is that instead of writing a check for an ad, you are risking losing money on sales. Wait… lose money? How can that be? One of the best articles we found was on a New York Times blog written by Jay Goltz. You can find it at http://boss.blogs.nytimes.com/2010/11/23/doing-the-math-on-a-groupon-deal/. Just as we’ve advised Pellucid clients to do the math before they jump onto third-party tee time sites, Goltz takes you through an eight-step procedure to determine if Groupon is a good idea for your business. And part of that is “doing the math.” As a simple example, if your greens fee is $50 and you offer a 50% discount on Groupon, and they keep 50%, you are left with $12.50. If that adequately covers your cost of producing that round of golf, you might be okay with the deal. (As a point of reference, in virtually every instance where Pellucid has been asked to determine a client course’s actual, weather-neutral cost to deliver a round of golf, that figure has been significantly north of $12.50). Aside from the math, which Mr. Goltz examines in more detail in his article and which will vary for each deal and your own particular cost structure, other issues are present that must be considered: First, how many of your current customers will find or be alerted to the deal and purchase the coupon, thus diminishing the value of the advertising to attract new customers and putting January 2011 8 The Pellucid PersPecTive http://www.boss.blogs.nytimes.com/2010/11/23/doing-the-math-on-a-groupon-deal/ http://www.boss.blogs.nytimes.com/2010/11/23/doing-the-math-on-a-groupon-deal/ http://www.visagegolf.com http://www.visagegolf.com

Table of Contents for the Digital Edition of The Pellucid Perspective - January 2011

The Pellucid Perspective - January 2011
Contents
Municipal Courses Face Major Property Tax Challenge
Dec YtD Weather Impact, Nov YtD Utilization
2011 Equipment News Highlighted by Acushnet Fate
Is Groupon Good for Golf?
Symposium Examines Varied Aspects of Affordability in Golf
Dallas, Tx Core Business Statistical Area (CBSA)
Yes! Golf the Recession’s Latest Victum
Year of Change for Golf, for Better or Worse?

The Pellucid Perspective - January 2011