GolfNow – Are You Getting Value?

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GolfNow – Are You Getting Value?

A simple question with a complex answer.   Most golf courses don’t know.

On a recent East Coast trip, based on data the client provided, we compared trade (barter) rounds sold that solely benefited GolfNow versus rounds booked for the benefit of the client. The results as noted below were stunning:

2015 Calendar Year

Rounds

Dollars

Trade (Barter) Rounds Sold

1,182

34,042

Course Rounds Sold

530

18,430

Trade Rounds > Courses Rounds

223.02%

184.70%

Golf Course Value Benchmark

20.00%

20.00%

Golf Now Fees Received In Excess of Value

198.02%

164.70%

As illustrated above, GolfNow sold 2.23 rounds for their benefit for every 1 round sold for the golf course’s benefit. In 2016, GolfNow is selling 3.36 trade rounds for every 1 round sold for the golf course’s benefit.

It should be noted that in addition to the trade round, GolfNow also receives additional compensation via booking fees for every round sold for the course’s benefit.   It was rumored that GolfNow earns over $30 million annually in booking fees.  We heard that this represents the sole growth area within their business having missed revenue targets for the past five years.

It is our opinion GolfNow should be entitled to sell 2 rounds for every 10 rounds booked for the benefit of the golf course. A 20% commission is generous but perhaps appropriate considering the diverse array of software provided.

What is your ratio of trade rounds sold vs. course rounds?

Vote now (click here) in the July JJKeegan+ Poll.

 

Let us collectively measure if GolfNow is producing the value for you.

This analysis produced two further insights of concern.

First, the course rounds sold were only at 60.45% of their rack rate for weekend prime time or 74.32% of their weekday rates. The client’s course is a fabulous test of golf is a remote location that no one is traveling 45+ minutes to get a discount.   They are driving the distance because of the quality of the course, not the price.

Second, it is critical that you track trade rounds sold vs. those trade times allowable as shown here:

Days in Month Times Allowed to Sale Trade Times Allowable Trade Rounds Sold
January

31

8 248

32

February

28

8 224

18

March

31

8

248

92

April

30

8 240

140

May

31

8

248

140

June

30

8 240

85

July

31

8

248

140

August

31

8

248

140

September

30

8 240

110

October

31

8 248

111

November

30

8 240

88

December

31

8 248

86

365

24

2,920

1,182

Trade Rounds Sold Vs. Allowable

40.47%

Estimated Revenue Per Trade Round (note 1)

$28.80

Cost of Technology

$34,041.60

Note 1: Estimated Value Per Trade Round determined based on 80% of the effective revenue per round which represents 60% of the highest posted green fee. In this example, the client’s highest rate is $60.

 

A Midwest GolfNow sales representative indicated on June 27, 2016 that on occasion that GolfNow may sell trade time in excess of the contractually agreed amount.   Though GolfNow’s software has a filter to preclude their occurrence from frequently happening. However, when identified, a refund will be immediately sent to the course.

We are informed several years ago by one multi-course operation that EZLinks would inadvertently oversell rounds contractually agreed also. When the audit was done and reported to them, corrective action was implemented by EZ Links. In other instance, when EZ Links was receiving three tee times per day (1 for POS software, 1 for hardware, and 1 for call center), it was until 12 months after the hardware was fully paid for that it was noted EZ Links was still selling a tee time per day for the hardware. When the variance was noted, EZ Links immediately sent a check to the golf course for the overbilling.

What are the lessons for the golf course owner?

  1. It is important that the POS is set up correctly to track accurately trade rounds sold for GolfNow’s benefit vs. those rounds sold on behalf of the course.
  2. Monitoring the ratio of  trade rounds vs. golf rounds will help determine value.
  3. Confirm that the number of trade rounds sold to ensure it does not exceed what you contractually committed to them for the services they are providing.
  4. Golf18/Course Trends, EZLinks/TeeOff and GolfNow’s current contracts all have automatic one-year renewal” clause unless you indicate in writing your desire to cancel 30 to 60 days in advance. The NGCOA, through the inspired efforts of Jared Williams, has put a big spotlight on the termination and renewal clauses in the proposed standards they are bringing forth to the Coalition Board for review/approval.  They are seeking approval of the “Online Agent will send a formal reminder to the Owner, no later than 60 days prior to the date an Online Agent requires written notice of an Owner’s intention to renew, or terminate.”  You should have that date firmly set in your calendar and if you are not receiving value, cancel.

These suggestions are echoed by Jay Karen, Executive Director of the National Golf Course Owners Association who believes “that the true value of a marketing partnership like this cannot be determined without knowing three things:  1) the cash value of the services/equipment received in the partnership, 2) how many rounds sold through barter came to the course solely on account of that third party (true incremental business), and 3) how many third party rounds came to the course, which would have come even without the third party (revenue sacrificed), such as loyal customers who happen to switch channels to save on hot deals or get reward points.”

That represents very sage guidance for the golf course owner to consider.

 

 

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4 comments

  1.    Reply

    JJ,

    What an exposure! A couple of years ago I calculated that a Clearwater, FL golf course was giving away up to $48,000 a year in trade times (remember those are 100-cent dollars). Budgeting 1/2 that amount in smart advertising/marketing could add over $250,000 in new 100-cent dollars – without giving away a single tee time.

    Great article!

  2.    Reply

    Jim,
    Thanks for keeping the spotlight on!
    Mike

  3.    Reply

    Very enlightening analysis and makes me wonder how many courses that buy in to the Golfnow pitch actually perform this type of analysis. I know we did a similar exercise three years ago and quickly determine that the only winner in the relationship was Golfnow.

    I’m going to pass this along to a good friend for her comments.

    1.    Reply

      I agree the only winner in barter times is Golfnow. All courses should go through the exercise and they would soon learn that it may not be the best solution.