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Why the membership business model has to change...and quickly!

golfbusiness


It has been quite a year for the golf industry, with a lot of positivity around the increase in membership and number of rounds played, but as the dust settles and with a long winter ahead, what has the true impact been?


Since golf reopened in May, I have experienced first hand the impact of over 150 new members at a local golf club where I have been assisting in the club office. Most importantly it has led to a net increase of around 90 members and a good increase in membership revenue. Clearly, the battle now turns to retention!


Since the inception of Sam Poole Golf Management at the start of September, my initial mission was to speak to as many golf clubs as possible to get a broader perspective on the current golf club landscape. The conversations have given me a fascinating insight into a range of different types of golf clubs and how they have responded to the pandemic as a business.


From those conversations, one of the key conclusions, which I have long since suspected is that the “traditional” membership model is simply broken.


Allow me to explain…


For many many years, the business model was simple, you have the cost of running the club, you have a set number of members and you would divide those costs by the number of members. If your current members didn’t want to renew you would simply dip into your waiting list and invite the next golfer into the club.


Obviously, times have changed significantly, particularly in the last 20 or so years and the membership model in its intended form is now very few and far between. Whilst it would appear that so much has developed such as the members' expectations, time constraints and club running costs, golf clubs are still insistent on trying to squeeze golfers into a completely outdated membership business model.


Whilst the global pandemic has created a strangely positive impact on golf club membership numbers, for many golf clubs it has proven that the “traditional” membership business model is simply unsustainable.


I accept that the levels of play have been unprecedented in recent times but that said this is the business model we have chosen so how is it possible that clubs are incredibly busy yet they are not seeing the financial benefit? There has to be a fundamental flaw in the business model itself.


Firstly, you have those clubs whose demand for tee times has been so great that they have not allowed visitors back onto the golf course. With such demand, you would certainly expect membership numbers and more importantly membership revenue to be at a level which is sustainable, covering the cost of the lost green fee revenue and allowing the club to make a surplus. In reality, many clubs are still falling way short, so how can we possibly persist with a business model that when demand is at its peak we are still struggling to simply break even?!


Secondly, the increased number of full members at clubs playing more regularly has led to some clubs having to cap full membership levels. This number for many clubs is well below how the original membership business model was supposed to operate, yet the fees being charged are not proportionate to either the costs of running the club or the level of access they receive. Even before the pandemic, clubs had issues with access to weekend competitions and meeting member expectations of those who could only play on the weekend. 


"If we could invent more Saturday morning tee times we would be fine" has become a very common phrase.


Thirdly, despite many clubs experiencing a lot of competition in their catchment area, they all persist with exactly the same business model and offering. This further exacerbates the above problems by negatively affecting membership pricing facilitating the dreaded race to the bottom and so the cycle continues over and over.


Golf clubs absolutely have to find a way to differentiate themselves from the competition and one way which few clubs understand is they can actually differentiate themselves by operating a different membership model. 


The golf industry in general is desperate for innovation, a new way of thinking and an acceptance of the change required to deliver a model that is more in line with modern society. Through Sam Poole Golf Management I am committed to finding a sustainable membership business model for clubs to adopt, that will build a brighter future for struggling golf clubs.


There absolutely has to be a fundamental change to the membership business model and some of the areas of focus will be;

  • Competitive vs Casual membership - not everyone is as obsessed with competitive golf as the clubs themselves so is it possible to charge a premium for a competitive membership vs casual golf?

  • Monthly vs Annual membership - we are not talking direct debit schemes, we are talking actual monthly memberships that can be cancelled at any time. Many golfers won’t join a club as they do not want to play in the winter, are we missing an opportunity to get a premium from these golfers for the summer months?

  • Seasonal memberships - similar to monthly memberships but for a set time period, again is it possible to charge an expensive premium for summer months but still below the full membership charged to attract those put off by the annual price?

  • Flexible/Lifestyle membership - clubs need to better understand how these kinds of memberships fit into the business model. Given the type of golfer these memberships attract, perhaps monthly or seasonal membership would be equally attractive for double the price?

  • Base Level membership - a pay & play membership that acts as an introduction to club life and engages nomadic golfers

  • Membership benefits - rather than having membership benefits that extend across all categories of membership be more defined with benefits the more of premium the member pays

  • Building a membership factory - there is a huge market for clubs who invest in beginner programmes and put in place a solid player pathway to take a new golfer from complete beginner to club membership

Ultimately, all golf clubs have a desired level of revenue generation that would allow them to cover costs and make a surplus to reinvest in their facilities. At Sam Poole Golf Management our ambition is to find a new formula so clubs can reach this desired level.


Change in the membership model doesn’t just lie with the product itself, there are also huge improvements that can be made in the systems of recruitment, onboarding, integration and wider membership retention in general.


Many of the clubs that fall into the bracket of the above struggles have long since done away with proposers, seconders and formal interviews. However, they have not replaced the main purpose of these rituals that help to seamlessly onboard and integrate new members into club life. 


Technology has a huge role to play in more modern membership recruitment and retention systems, with the opportunity to automate many key processes involved; this could also have a profound effect on the productivity of the club office. Any club has the opportunity to set up 12 months worth of automated communication with every new member at the club, simply by adding their email address to a pre-created email automation sequence. Just one of the hundreds of examples!


This is simply scratching the surface of what is possible when golf clubs open their minds just a fraction to what may be possible when developing a modern business model for a modern society.


There will be plenty more to come on this subject starting with a video series on modern membership retention strategies. The series will be launching next week so watch this space.

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