Yielding Rates. Dynamic Pricing, A lot of big words but no real strategy.
Yielding Rates. Dynamic Pricing, Demand-Based Initiatives… A lot of big words but no real strategy, especially in the Golf Business.
I’m guilty. I’ve used those fancy words above, and I am sure I will again. Unfortunately, just dabbling in these practices with no real strategy on how combine or blend Pricing, Packaging and Promotions will lead you to minimal success.
However, a Customer Focused Pricing, Promotions and Packaging Strategy (P-Cubed) will increase rounds, Average Green Fee and Customer Loyalty.
For many years we have worked on various techniques to yield correctly and we’ve focused on hotels and airline pricing models. Although it was a great learning experience, there were some snags in just duplicating what they did to make yiled management effective in the golf business. For instance we found the following inconsistencies:
- The buying patterns for golfers are unique. With the increase in tee time inventory in the United States, golf is more impulsive than travel and more local in reach.
- Having tee time inventory available in intervals of 8 to 10 minutes all day long, in contrast to the much more limited inventory within the airline and hotel industries, creates much more complex inventory variables for golf courses. Factor in daylight and weather, and the complexity only increases.
- Golf experiences vary dramatically from course to course. Quality, difficulty, location, aesthetics and amenities all contribute or detract from the customer experience. Although some airlines are better than others, after you choose where you want to go and when you want to go there, the choices are limited. Hotel inventories are more similar to golf than airline inventories, but it is much easier to have your team differentiate your course from your competition.
So who determines what your product is worth?
Answer: the market, of course! Many owners and managers price their products and services based on what they feel it is worth. In actuality, you should ask for the highest price that your customer is comfortable, willing and able to pay at any given time (of course good salesmanship goes a long way here as well). Good record keeping and an acute awareness of trends will inform price too. Does this mean you need to discount? Not necessarily. In many cases you are not charging enough and you could be leaving major revenue on the table!
When coming to grips with the differences listed above, we took a less global approach and started looking into the following two factors:
- Historical Data- When is the highest demand? What was the rate and who is playing at these times? Hint: Your most utilized times may not be from 9am to 11am on Saturday AND it may not just be because of rate. Review your source reports (and if you don’t keep track of where your customers are coming from, start now). Don’t just rely on the basic report that comes from POS, ask your team, your customers, review how many days the tee time was booked etc…
- Customer Expectations- In many markets there is a great diversity of customers – Resort/Vacation, Seasonal/Snowbird, Local/Regular. These groups have different expectations. This doesn’t make any of them cheap, poor or less valuable, just different. The challenging part, and where the real expertise comes in, is identifying the different buying patterns within each separate group.