Use Member Reward Programs to Benefit Your Members and Your Golf Shop

Today’s PGAmagazine.com Blog moderator is PGA Professional Chadwick Bain. Chadwick is the PGA head professional at Findlay (Ohio) Country Club, was the Northern Ohio PGA Section’s Toledo Chapter Golf Professional of the Year in 2004, and was the Toledo Chapter president from 2004–06, during which time he sat on the Northern Ohio PGA Board of Directors.

When I became the PGA head professional at Findlay in 2005, I launched the Member Rewards Program. The program has been very successful at generating revenue early in the season, maintaining a healthy profit margin and, most importantly, providing the best possible service to my members.  Recently it has even provided the added bonus of allowing me to forecast my sales during challenging economic times.

In 2009, the Member Rewards program consisted of:

• Par Level – The member pre-purchases a $100 gift certificate early in the season and is entitled to a 10-percent discount on all purchases made that season
• Birdie Level – The member pre-purchases a $500 gift certificate and is entitled to a 15-percent discount on all purchases made that season, as well as a complimentary clubfitting or equipment analysis, a $100 value
• Eagle Level – The member pre-purchases a $1,000 gift certificate early in the season and is entitled to a 25-percent discount on all purchases made that season, as well as a complimentary clubfitting or equipment analysis using our VectorPro launch monitor, a $150 value

I have 250 members; about 40 percent of them participate in the program, which generates about $75,000 in March of every year.  This year may have been down 30 percent, but it was still great for cash flow early in the year.  Apart from allowing me to be much more competitive with my pricing, the program lets me focus on those members who are active golfers and spending money in the shop.

As a seasonal operation, I find that after a long winter, people are very excited about the upcoming season.  I attempt to capture that interest and it is important to get that member to sign up early.  The end of March is typically the deadline for joining the Member Rewards Program, and the discounts and gift certificates are valid until Thanksgiving Day.  The member’s discounts can be added to any other sale offers throughout the season.

The program certainly helps me with my initial cash flow, generating a lot of money up front and allowing me to take advantage of all the discounts possible on the merchandise I bring into my store.

This year, more than any year in the past, the program has made it possible to indicate who my customers will be.  Our shop is no different than most other shops at private clubs, where 20 percent of the members account for 80 percent of sales.  My members’ level of participation is telling me “I am committing to spend this much,” and that has allowed me to forecast what I am going to sell.  Other golf professionals might say, “It’s going to be a tough year, but sales may be up.”  Member participation in this program pretty much dictates what my sales will be.  So when I call a rep and scale back an order by 30 percent, and the rep asks why, I can say, “I can tell you what my sales will be because my members have already told me.”

The program also identifies my customer base.  I’ve got a couple of members who wear XXXL golf shirts.  But if they don’t even sign up at the Par Level early in the year, I know not to even stock any XXXL golf shirts.  To take that further, we maintain a database with the members who enroll – sizes, brand preferences, etc. – allowing us to better predict what we need in stock.  It’s not just the member’s $1,000 gift certificate and 25-percent discount. If the member spends over $1,000, they still get the discount.  And I have members who spend $3,000 or more, and they do that because of their discount.

All of these things allow me to maintain my profit margin, minimize the amount of merchandise I need to carry, and provide the best possible service to those members who use our golf shop.

Comments

[Allan Belden, PGA Head Professional, Worcester (Mass.) Country Club]

Chad,

What about the snowbirds? Do you have a method of allowing them to participate? Possibly through e-mail? And one other question: Does the 25 percent apply to only soft goods? How do you handle maintaining margins on hard versus soft goods? Great idea, though. Seriously considering implementing this. Would love to hear more about the details. Thank You.

[Chadwick Bain, PGA Head Professional, Findlay Country Club]

I allow all the members to participate by sending an invitation via postal and e-mail with the necessary information required to sign up for the program. The 25 percent does apply to all purchases and all products are priced at MSRP. Although you sacrifice about 5 percent on the Eagle Level from MAP pricing, the margin is maintained with the purchases made at 10 percent, 15 percent and at retail prices. In fact, my margins are greater than they would be using MAP pricing. Please let me know via e-mail if you have any other questions I could answer. Thanks!

[Mark Beran, PGA Head Professional, Woodholme C.C., Pikesville, Md.]

This sounds very interesting to me. Now, for pricing you mark all your hard and soft goods at MSRP and then how do you keep track of what discount level each member receives? Do you get resistance from non-participants and do they try and beat you up for a discount without participating?

[Mike Moses, PGA Head Professional, Concord CC, Concordville, PA]

Chad:

I currently have a "Member Preferred Pricing" program that has been in place for 14 years, 10 percent off Hard Goods this gives members matching prices of the Golf Discount Stores and 20 percent off Soft Goods. How would you recommend implementing a program such as yours?

[Chadwick Bain, PGA Head Professional, Findlay Country Club]

Thanks for the question Mark. I keep a comprehensive list of participants behind the counter but also have the ability in my POS to set up a discount for each individual member account which makes it very easy to administer.

I have not had any complaints regarding those that don't participate. In the early stages I had a couple that waited until the end of the year to use up about $400 they had accumulated in couples events and were waiting for a sale. With this program I have no need for sales as everything is always "on sale" for participants. I told them it would not be fair to their fellow members if they were to receive a discount , not having participated in the program. I knew they had $400 that they had to spend and there was no need to discount. These purchases from the non-participants or outing players help to maintain the margin.

[Chadwick Bain, PGA Head Professional, Findlay Country Club]

Mike,

I would have to know a little more about your current pricing strategy, but the key to my program is the upfront commitment of purchases of a minimum of either $100, $500 or $1,000.

If you are offering this discount without that commitment I feel that you would have to come up with a way to market the fact that you are now offering an additional 10 percent off on a hard-goods purchase. I would recommend at least a $500 level (MSRP on a driver) to earn this discount and the program is optional. You would need to change your pricing strategy for those not on the program to help out with the margin.

Another option would be to offer a $500 gift certificate purchase by the end of March for a discounted amount of $450... a savings of $50 (10 percent) and then offer your current pricing strategy. Always nice to have the money upfront (cash is king) and it may help to better forecast your sales. Let me know how you make out with it!