The Pellucid Perspective - July 2015 - (Page 8)

golf marketing Golf gets a seat at the multi-billion dollar gift card table By Jim Dunlap a t long last, golf is gaining a seat at the $124 billion gift card table with the acceptance of the Go Play Golf card by major retail distributors including Blackhawk and InComm and placement at their more than 29,000 retail outlets throughout the U.S. While still in the early stages of market penetration, acceptance by golf course operators and technology development, company investor Don Rea said that over 3,100 of the Go Play Golf cards have been redeemed since the first of the year at over 1,500 courses, accounting for over 8,800 rounds of golf at participating courses and more than $180,000 in course revenue. Other than the more global challenge of reversing declining participation in golf, there is no bigger hot button topic among golf course owners and operators than the utilization of third party tee time companies to sell golf tee times. Led by category leader GolfNow, most third party tee time marketers (3TM) rely on barter tee times from their golf course customers for the majority of their revenues. The marketing pitch of the 3TM companies revolves around "We'll bring business to your course and all we ask in return is a tee time or two per day that you're probably not going to sell anyway, so it's basically free for you." Over time, concerns among owners have evolved over the depth of the pricing discounts offered for those barter tee times and the control of the customer data from golfers booking times at their course via the 3TM booking engine. The Go Play Golf card erases both of those concerns: cards can only be redeemed for full price or rack rate rounds, and all customer data is transferred to the course where the cards are redeemed. The Go Play Golf card is the brainchild of Loralei Abels, a former co-director of the Northern California Golf Course Owners Association and the president/CEO of the Fairway Rewards loyalty card program. The small group of initial investors includes Rea, the owner of the Augusta Ranch golf course in Mesa, Ariz. and a past president of the Southwest Section of the PGA of America. "One of the beauties of this card is that we're getting money from non-golfers for golfers, which courses have never really been able to do in any major way," Rea said. "A friend or family member looking for a gift for a golfer can go into their local retail store and buy one of our gift cards and the golfer can choose from any of our participating courses to redeem it. There's no charge for the transaction to the golf course, and the cards can only be used for full fee rounds booked either through us or the golf course. A golfer can't, for instance, go to the course and use the card to pay for a discounted tee time they found on one of the third party tee time sites." In addition to retail outlets, the Go Play Golf cards are also 8 The Pellucid PersPecTive being offered to major or local corporate businesses for use as employee incentives, best customer rewards, etc., a strategy employed by numerous other industries such as hospitality, travel, restaurants and a host of other products and services. An additional feature, and one which will gladden the hearts of teaching pros anywhere, is that the cards can be used to pay for instruction and other services as well as greens fees. Given that courses which opt only for listing on the Go Play Golf web site terminal pay nothing for that, and pay nothing for golf fees redeemed at their course, one of their first questions is "How does Go Play Golf make money if we're not paying you?" There are a number of different answers to that, but one way is that card recipients booking through Go Play Golf at courses which are neither a Partner nor Preferred Partner Course of Go Play Golf, but are merely listed on the register, pay a booking fee of either $3 for future or $5 for same-day tee time bookings to Go Play Golf, which is deducted from the value of the gift card. Another is the Partner or Preferred Partner designation on the Go Play Golf terminal, which identifies such courses with a different color dot on the site's map of area courses. Partner courses are identified with a green dot, and they are enabled with a Go Play Golf POS setup that registers the customer redemption as a sale, and Go Play Golf deposits the amount directly into the course's bank account, saving on credit card transaction fees. Preferred Partners receive the same benefits, and are also guaranteed top placement on Go Play Golf 's golf course search engine for the area. Partners are billed monthly for 10 percent of the gift card amounts redeemed, while the Preferred Partners pay 20% commission monthly. Partners pay commission only for the gift card amount redeemed, not for the full price of the tee time if that exceeds the card amount. A third factor, as all gift card purveyors are aware, is that inevitably there is "breakage" when gift cards are not redeemed, which essentially means that the gift card company keeps the initial purchase price and doesn't have to distribute it to a participating course. That aspect is complex, however, as many states forbid expiration dates on gift cards and the IRS rules are difficult to navigate in terms of when a gift card can be considered revenue if it's unredeemed. Rea and his fellow investors are optimistic that as more courses join the Go Play Golf network, more retail outlets offer the card and more corporate partners add the cards to their incentive or promotional offerings, the card will make an increasingly significant contribution to golf course revenues. And, perhaps best of all in this age of industry-wide angst over the pros and cons of third party tee time marketing, the words "discount" and "barter" are not part of the gift card conversation, and courses retain the customer data for every card redeemed. n July 2015

Table of Contents for the Digital Edition of The Pellucid Perspective - July 2015

TOC
2015 rounds up but revenue trailing
Golf course threatened by latest in series of reverse discrimination complaints
NCGOA’s no-go decision on tee time sales wise, but more controls needed
Golf gets a seat at the multi-billion dollar gift card table
Millennials seek answers to what golf offers to them
June golf weather impact: A second core month of “neutral”
Potential for Nirvana, but grungy performance slowing Seattle operators
Trumped?

The Pellucid Perspective - July 2015