The Cost of Third Party Distribution….

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Was called by a leading golf writer for a feature story.  His question to me was, “I’m doing a story on the PGA Tour taking on the Golf Channel for third party tee time services.   Could you please give me your take on the competitive situation that causes and what a course operator should do – either service? – both? – or try and use his own to sell tee times. I know there are several other services around but would guess they will be soon gone because of the size of the two big competitors.

The simple answer is that an efficiently managed golf course that proper builds and segments their database does not need the service of a third party distribution company for its core marketing efforts.   At the right price point and ensuring that the third party agrees with the NGCOA practice standards to include rate integrity, participation does make sense for the sole purpose of stealing your competitors customers. 

Third party distribution companies, like Golf Channel, have no customers.  They are merely channeling golfers from the worst operators to the best while making $120 million by doing so for themselves.  A byproduct of their service is that they are effectively lowering the average daily rate the poor operators generate.  Hence, they have the unbridled support of the leading managing companies because they understand the third party game and are leveraging it to their advantage.   That, in combination with the financial incentives that some management companies are receiving from the third party distribution companies, is why this predatory practice on the unsophisticated will continue. 

What started as a proposition to help you sell ‘off-peak’ inventory has morphed into a practice that is selling peak times at a significant discount, on tee times that historically golf courses have sold them.   It is my suspicion that these firms are liquidating up to 10% of a golf course’s tee times via barter.  Call centers, who promise to build you customer database, are probably booking less rounds than you think, yet offering their barter specials in direct competition to the course’s tee times.

Is that wrong?  Capitalism creates and capitalism destroys.   It is just part of life. 

At JJKeegan+, we offer a service with Mike Loustalot – a 20 year expert on the electronic distribution of tee times – that measures the cost of third party distribution.  We can help you mitigate the costs of third party distribution and accelerate your independence to creating value for your golfers on a foundation that optimizes the financial performance of your golf course.  Click here to gain your financial freedom.

That is what I think?  More importantly, what do you think?  Comment below.

 

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