The Pellucid Perspective - June 2011 - (Page 5)

PRICING PLAY The price is right By Harvey Silverman Value, not discounting for discounting’s sake, is the key P ellucid’s Sharper Edge Marketing service helps a num- with an ample number of golfers living within a 25-minute drive ber of public golf course clients around the country mea- time. But at the same time its higher priced competitors, most of sure their weather-adjusted performance and improve them newer and with higher cost issues, embarked on an areatheir marketing capabilities. Our clients cover the gamut from wide discount death spiral. The client course was suffering from muni’s to Premium daily fee facilities, and have in common in- top-down price compression and struggling to sell rounds. It too telligent and capable general managers who rely on Pellucid to jumped into the discount fray, sending multiple “specials” emails help them be more capable and more intellieach week. The results? Not pretty. gent as they work to compete in increasingly In the fall of 2010 we discussed with the The rate structure tougher market conditions. This is the story general manager ways to stop the bleeding, was made simple, of two clients who made gutsy and similarly and decided upon a new pricing and marketing strategy to be instituted under a “windrastic pricing decisions that have proven to with the only ter rates” experiment. The rate structure was be very effective. remaining rack made simple, with the only remaining rack The first is a Premium daily fee facility in the Dallas/Ft. Worth market. The facility’s rate being Saturday rate being Saturday mornings. The remaining rates were lowered to what were thought owner built what he felt should command mornings. to be levels that customers would perceive a $100 greens fee, and for a time it did. But as good values. The marketing message was the General Manager was acutely aware built around the idea that good values were of the changing market conditions as the economy faltered and third-party providers available every day, and customers did not drove the market into a discount frenzy. This GM declined to have to wait for emails to get the best “deal.” In fact, they were participate with the third-party providers and remained com- told that the course would no longer send “specials” emails. mitted to a pricing structure that increasingly became out of The results jump off the page of the monthly Performance touch with what competitors were charging, and what the mar- Scorecard: ket would bear. Year to date weather (through May): Down 2%, and down The decision was made to experiment with lower greens 4% from normal fees for the winter months, and to market the value of superior Green fee per round: Down 15% (due to repricing) conditions and layout at affordable prices. Pellucid’s monthly Rounds: Up 25% tracking enabled the GM to monitor results and make changes Weather adjusted course utilization: Up 28% quickly, if necessary. As they’ve moved into summer rates, the Greens fee revenue: Up 7% numbers jump off the page of the monthly weather-adjusted Greens fee revenue per available tee time: Up 9% key metrics report: Cart, range, and even merchandise revenue followed in tanYear to date weather (through May): Down 5%; and 21% dem (the facility leases out its Food and Beverage operation). It below normal is clear to see the strategy is working even with a small price inGreen fee per round: Down 9% (due to the repricing) crease for Spring rates. Another small rate increase for Summer Rounds: Up 15% has just been instituted and we’ll follow up with this sometime Weather adjusted course utilization: Up 22% in the Fall. Greens fee revenue: Up 6% In both cases the general managers made bold decisions Greens fee per available tee time: Up 11% backed by the data and tracking provided by Pellucid. They deThe verdict: The client marketed the new rates as “Value”, not livered a message of value, not discounts. They knew that any “Discount”, and customers responded positively. It is succeed- failure would quickly make its presence clear in the monthly ing despite poorer weather, and is likely taking some rounds reports, enabling them to make smart and rapid mid-course from its competition. corrections if needed. What they may not have known is that The second client is a Value facility in northern California, they were managing in ways similar to sophisticated hospitality and its story is more remarkable. Here, the sense was that cus- and retail managers, who rely on monthly comparison reporttomers were not perceiving the rates as a good value for the ing to assist making both strategic and tactical decisions. Just as product offered. This was confirmed by Pellucid’s monthly Cus- importantly, they let their customers tell them what works and tomer Satisfaction Tracking survey, which was fielding about 75 what doesn’t, and in the end became more of what the customn responses a month. This course has a great location going for it, ers thought they were. The numbers don’t lie. The Pellucid PersPecTive 5 http://WWW.PELLUCIDCORP.COM

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

The Pellucid Perspective - June 2011
PGA, USGA Back Adams’ ‘Tee It Forward’ Initiative
The Price Is Right
Acushnet Transaction—Big Deal?
Reality Setting in for Course Buyers, Sellers
May 2011 YtD Weather Impact, Apr 2011 YtD Utilization
San Francisco/Oakland, CA Core Business Statistical Area (CBSA)
The Warrior Way
Comings & Goings
A Step ‘Forward’ for Golf?

The Pellucid Perspective - June 2011