It is critically important that the market “gets” your pricing. Make sure it is easy to explain and understand. Too many clubs in the golf business have their pricing all over the map which confuses consumers. Confused customers get upset or procrastinate in making a purchase at all.
PLAYING THE DISCOUNT GREEN FEE GAME!
Too many golf clubs think that the only way to react to their competitors is to cut prices. In the low-price game, there is only one winner — the company that can sell at the lowest possible price. People who shop only by price have no loyalty. As soon as another course in town lowers prices, they switch and play somewhere else! In the retail business, low-cost stores like Woolworth’s, Ridgeway, Montgomery Ward, and Toys R US are already gone even though their prices were low! Sears, JC Penny, and UK giants Debenhams and House of Frazer are on life support.
Develop a value philosophy will help keep your prices higher. How much is it worth to a golfer to be greeted by name? For staff to be sincerely happy to see him. Think of the service you receive at a fine restaurant. People can buy food in thousands of places but are willing to pay more for great ambiance and service. Everyone wants to feel special. If you can do that for your customers, you can be their favorite upscale course.
In any discount war there can only be one winner, usually the business with the deepest pockets. When you’re competing by discounting, you are overemphasizing price. Other intangibles like service and building relationships with customers are ignored. The more price becomes the focus of your club’s marketing efforts, the less attention any other factor gets, and price soon becomes the only dimension on which you are judged. Instead, look for other ways to get an edge over your discounting competitors — like service, ambiance, tournament history, great greens, food, follow up, quality, design, and fun.
By not focusing on factors that would differentiate you in your marketplace, you become a commodity judged solely on price. Discounting is easy! Being creative, REALLY increasing service, and building relationships is not! It takes time, it takes effort, it takes work!
Before Considering Jumping Into The Discount Game Do The Math
First of all, your odds of long-term success are low. For instance, in the Orlando and West Palm Beach markets, multiple clubs have closed in the past year and several more are about to. All were discounting heavily. Most were the lowest price in town. There is usually only one winner in a discount war. If you are not absolutely certain it will be you, forget it!
Second, consider this, 100 clients at $25 is the same as 50 clients at $50, or 25 clients at $100. It’s a lot easier to give great service to 25 golfers than to 100 and you make the same money with less wear and tear on the course. Is there another option that might net you the same profit other than discounting?
Third, have you exhausted all the possible positions and marketing strategies that would give you an edge in your marketplace without discounting? Like adding service, value, ambiance, and follow up!
When Is It Okay To Discount?
You can sometimes use make your offer appear at least as good, albeit different, without discounting. For example, offer a two-for-one green fee at your regular rate but make the second round only usable in less popular time slots. You keep your price integrity in that the customer still paid the same 50 bucks like he always did. You may think I am splitting hairs, but I assure you there is a significant psychological difference between paying $50 and getting a second-round free or paying $25 twice. It’s a difference that can have a huge effect on your club’s future.
As you can tell, I’m against the growing practice in the golf industry of discounting yourself out of business, i.e., you log 40,000 rounds and lose $200,000 in the process. Discounting frequently destroys your club’s price integrity in the marketplace. The $100 club only has to offer a $50 rate a few times before it’s not regarded by the golfing public as a $100 club anymore.
The way savings is communicated is very important – don’t ever sell discounted tee times without sharing that they are discounted.
This does a few things:
- It does build loyalty “I like those guys because sometimes they offer great specials.“
- It reminds the buyer, the course is not a $29 course, it’s a $45 course, on sale for$29. Go look at grocery stores (Walmart is doing quite well is the savings space) they cross out the ‘rack’ price and highlight the discounted price. They do not simply sell at a discount and not remind the buyer. The book Priceless, does a nice job explaining this and helps pricing managers to see that there’s a tremendous amount of psychology included in smart pricing strategy.
Here are a few additional times when discounting is acceptable:
- You have a team monitoring your demand and will lower or raise your rates based off of it. They actually KNOW when to discount or RAISE your prices using dynamic pricing, and they have a proven track record of doing this at golf courses all over the country.
- Off-season you can discount without fear of destroying your price integrity. Everyone knows that golf in Florida and Arizona is cheap in July and August.
- You can discount when you have a legitimate reason for offering lower prices that is credible to your customer — like the greens have just been punched or it’s cart path only!
- You are willing/able to raise rates in your times of high demand.
- You have a much larger database of customers than your competitors.
- You have lower costs than all of your competitors. Is your club is paid for?
- You have some kind of back-end strategy that will allow you to up-sell something else to your golfers once they’ve been to your course. A resort might give away golf to sell rooms. Myrtle Beach has been doing this for years! A real estate development may give away golf to sell lots or homes.
- You can discount anytime if you are making the money up-selling something else like rooms or real estate! But remember, one day the real estate will run out!
- You have much deeper pockets than your competitors and can wait a few years before you need to see a profit.
- You can discount all you like if your positioning is to be the lowest price, highest volume club in town. Someone has to be the cheapest and as long as you can survive and make a profit taking this stand, so be it!
Discounting works fine; in fact, it is a great strategy if…
you’re doing it strategically!
Do NOT get caught in the vicious circle of discounting just because the course down the street dropped their rate ten bucks! It’s a suckers’ game and one you cannot win unless being a low-priced course is your positioning — and even then, you need low debt, low overhead, and deep pockets just to play the discounting game.