The Pellucid Perspective - January 2012 - (Page 2)

TEE TIME PROVIDERS Is the strategy change at GolfNow seismic or subtle? Apparent shifts underway in tee time Goliath’s strategic approach By Harvey Silverman im Koppenhaver noted in the Jan. 3 edition of Pellucid’s Outside the Ropes newsletter that several GolfNow employees had changed their employment status on LinkedIn. That got us curious as other news about GolfNow was circulating, including the possibility of purchasing a tee sheet company. Also, clients have told us that GolfNow was making new demands on the trade-time arrangement as well as offering new services available for more tee times. Add to that the considerable chatter on golf-related blogs, the myriad critiques in Andrew Woods’ publications, and the conversations on the NGCOA List Serv, and that got us thinking that a story must exist along the lines of changes in GolfNow’s strategy. Our research to date indicates that while GolfNow is not re-inventing their tee time service wheels, they are definitely changing some of the rules of the road, both internally and for their golf course customer base. It appears that most if not all of the “legacy” employees obtained when Golf Channel purchased GolfNow from Cypress Golf Solutions and Last Minute Golfer have left, either voluntarily or involuntarily. Cypress/GolfNow grew from a network of locally based, licensed operators who readily offered as many as 50 or more variations on the barter theme in order to build critical mass. The current GolfNow management’s emphasis is on running the company “corporately” rather than locally, and evolving from the wheel and deal frontier days to buttoneddown conformity. The emphasis for the current sales force will be on performance and compliance (with corporate philosophy, ideology, edicts, goals, etc). Anecdotally, many of the original (now former) company reps were focused on establishing rapport with new golf course customers, and perhaps more lenient in the deals offered and enforcement of strict barter time deliveries. Now that the GolfNow brand is well established, to say the least, and at least some customers have become dependent upon the rounds delivered by GolfNow, the terms (number of options, barter times enforcement and those times’ pricing) are apparently changing. New GolfNow sales people will be tasked to increase revenue by acquiring more inventory to sell in the form of trade (barter) rounds of golf in return for additional services such as websites. GolfNow currently values their total solution product offering at $50,000 if one was to pay cash rather than trade rounds. GolfNow is reportedly pulling back many of the tenured deals and simplifying its payment structure. It’s done easily because GolfNow does not have contracts with clients, something J it prides itself on, stressing that clients can walk away at any time. To GolfNow’s credit, simplifying the payment structure assures fairness across the client base. Yet one can argue that having a premium resort course on the same standardized revenue model as an executive-length value course is fundamentally flawed. We credit NGCOA and agree with their assertion that course operators must have a contract with any third party who controls such a valuable asset, like tee times. And those that don’t might be alarmed that some do, especially golf management companies. Along with having contracts, some management companies pay GolfNow on a commission model not available to single golf course operators. This model includes a minimum “service fee” payable if commissions don’t meet that minimum dollar value. One change occurring is what’s being called the “rolling 120.” Quite simply, GolfNow enforces the right to sell 120 rounds a month per course (equivalent to one foursome a day) and will internally adjust rounds to be “rolled over” when the course is closed for tournaments, events, and other reasons other than bad weather. This enhances the likelihood of selling more trade times and increasing GolfNow’s liquidation rate above the current 50-60%, resulting in more revenue for GolfNow while service to courses remains the same. (In fairness, if the course has agreed to provide a set number of tee times to GolfNow in its trade agreement, and is unable to offer those times due to an event or something other than weather, it seems reasonable that GolfNow should be compensated with replacement times). The change is that whereas GolfNow may have been willing to overlook occasional lost times due to non-weather-related course closures in the past, they will now be monitoring those much more closely. At the same time, GolfNow is offering an expanded array of services including websites, mobile booking, premier website placement, all for an additional tee time a day; and Deal Caddy, their answer to the GroupOn phenomenon, from which it takes 33% of gross revenue on all deals sold. They’ve borrowed a page from corporate owner Comcast by offering to bundle these services in return for more tee times that GolfNow can sell and generate more revenue (except Deal Caddy - since offers are purchased online, GolfNow gets its 33% right off the top in that case). Also available now is their “Revenue at Risk” program, where GolfNow provides an outsourced revenue manager to consult with course clients on a weekly basis and advises on pricing (discounts?) based on available capacity. It’s likely that January 2012 2 The Pellucid PersPecTive

Table of Contents for the Digital Edition of The Pellucid Perspective - January 2012

The Pellucid Perspective - January 2012
Contents
Is the strategy change at GolfNow seismic or subtle?
2011 a target-rich environment for (most) management companies
Marketing 101, Pellucid-style
Great Life Golf growing, adds franchise option
Show time!
December weather impact: A Christmas present for the golf industry
Milwaukee, WI Core Business Statistical Area (CBSA)
Ahwatukee group acquires Foothills Golf Club
Golf not “linked-in” to reality?

The Pellucid Perspective - January 2012