By Steve Eubanks
By anticipating customers’ needs, the staff of D’Andrea Golf Club has weathered the economic tempest
The key to success in any business is anticipating customer needs and predicting future trends. Nowhere is that more evident than golf. If every operator could go back in time a couple of years, prices and budgets would more accurately reflect the realities of today’s economy, and words like “tradition” and “exclusivity” would yield to terms like “value” and “openness.”
Michael Jory, director of golf at D’Andrea Golf Club in Sparks, Nevada, didn’t have a time machine or crystal ball, but he and his team did see what others did not more than two years ago, when they anticipated a softening of the market and restructured the club’s business model accordingly. “We realized that the price-value perception simply didn’t work anymore,” Jory recounts.
It wasn’t that D’Andrea was experiencing a serious decline in rounds, or even a change in the income of its customers. However, Jory and the other managers did sense a shift in the psychology of their golfers.
“People have most of their net worth tied up in real estate, especially their homes,” he says. “And with property values declining the way they were, suddenly people felt like they’d lost half of their net worth even though their income might not have changed. For them, the whole price-value perception changed as well. People who once were willing to pay $95 to $100 to play a round of golf were no longer willing to do that.”
Today, these observations are obvious, but that wasn’t the case in 2007. The recession hadn’t yet taken hold, and many people were still relatively free-spending with their discretionary money. But Jory and his staff began watching and listening to customers a bit more closely and realized expectations were changing.
“I think a lot of clubs get so many different rates going on that they lose track of what they’re doing and it confuses the customer,” he says. “You get into a situation where one guy checking in at the counter might be paying $49 while the guy behind him in line is paying $89, and he’s saying, ‘What’s going on here?’”
Jory and his managers eliminated this problem and increased the perceived value of D’Andrea by lowering and simplifying the course’s fee structure. Rather than a half-dozen rates depending on the day of the week or the time of day, the club went to a two-rate system. Members of the course’s Players Club (regulars who live within a 60-mile radius) pay a joining fee of $49 and are able to play for $49 any time of day, seven days a week. Everyone else pays $69, regardless of the day or time.
“We found that we were running so many promotions to fill our tee sheet that our rack rate, which used to be $95, was meaningless,” Jory notes. “So we looked at our average daily per-player yield, given all our discounts, and that became the rate for everyone.”
The results were profound. Overall rounds increased, and distribution of that play evened out. Rather than hosting a few rounds at the more expensive early times and seeing a rush to the tee when the twilight rate kicked in, players were more receptive to playing an hour earlier or an hour later. This, in turn, helped improve the pace of play and added to the overall sense of value.
After implementing the changes, rounds increased from 30,000 in 2007 to 34,000 in 2008. In 2009, the course hosted 37,000 rounds and is on track for 39,000 in 2010, even with bad weather in the spring.
But the D’Andrea team wasn’t finished restructuring. Once the lower rates were in place for golf, they performed a price-value analysis for every item in the golf shop and restaurant to ensure prices in those departments would appeal to a $49 golfer.
“We knew that if we were charging $4 a beer, that person was going to bring their own and not buy from us,” Jory says. “So we adjusted all our pricing, and sales immediately went up.”
To be fair, Jory and his managers beefed up the promotions to generate interest and drive some of those sales. For instance, they now have a regular happy hour in the grill, offer $13 six-packs, and run a special where golfers can bring in their scorecard and pay what they shot for their second beer.
“People see this and think the value is there, so they’re actually spending more with us,” Jory says. “Instead of going home for lunch, they hang around the club and eat and drink with us. And they come back because they believe they’ve gotten a fair deal.”
Unfortunately for other courses in the area, Jory isn’t growing the collective pool of golfers; D’Andrea’s gain is the competition’s loss. “It’s affected them because we’re a little lower priced and the course is in better condition,” he says. “The price-value perception is great.”
As such, the moral of the D’Andrea story could easily read “simpler is better.” But Jory thinks there’s more to it than that.
“You have to understand what your customer is thinking and anticipate what he [or she] perceives as value,” he says. “And you have to be ready to react to those conditions.”
Steve Eubanks is an Atlanta-based freelance writer and former golf course owner.