Making Consumers Pay to Join a Loyalty Program; Golf Course Marketing Test Results

CHALLENGE
Golf's tough. And so is the golf business. There are
too many golf courses and not enough new golfers. The logical
consequence: Discounting wars.

Kimberly LaVasseur, Western Golf Properties Business Development
Director, says, "What we've seen is more and more third party
discount-type programs coming out, and it's creating a price war
in most of the markets we deal in."

To increase loyalty while coping with consumer demand for fee
reductions, Western Golf started a discount loyalty card program
for the 2002 season at their high-end StoneTree Golf Club
property.

LaVasseur notes, "We just signed them up and they got a card,
which was non-interactive - just a form of identification. They
received discounts at checkout and that's it."

This simple program worked well enough, that LaVasseur wanted to
ramp up her investment for 2003 really aggressively. She yearned
to spend more on three things:

o Heavier offline advertising promoting the program
o Building a new relationship marketing database and adding
bar codes to all the member cards to feed POP data into it
o Targeted email campaigns to members

While excited by these ideas, her boss was underwhelmed at the
idea of paying for all these improvements. LaVasseur's solution: She would try to make the program pay for itself by charging a
membership fee.

Can you really charge customers to access discounts in an over-
supplied market? LaVasseur hoped she could.

CAMPAIGN
First LaVasseur and her team decided on the offer.

In 2002 Player's Club members were able to get basic green fee
discounts. Now their benefits would be expanded to include:

o bring a friend to play at the same reduced rate
o 20% discounts at the club shop and restaurant
o member only events (see below)
o play X rounds, get one at no cost

The old program was no-cost, all you had to do was fill out a
brief registration form to get your card. The new program would
cost, gulp, $250 per year, which is the amount a member would
save with the program after playing five rounds of golf.

After setting up their new tech backend (which combined
transactional and demographic data for each member; and enabled
the team to send email campaigns based on that data such as "last
time played golf", birth date, zipcode, or "rounds left until
qualifies for free round"), the marketing team launched two
member promotions in December 2002:

-> Promotion A: Converting no-cost members into paying members

To jumpstart the program, LaVasseur sent all previous members an
offer to pre-purchase the 2003 card at a $50 discount, as long
as they did so by January 31st 2003.

If she had both an email address and permission to use it, she
sent members an emailed offer. Otherwise, she relied on direct
postal mail which was sent to everyone (email or no email).

Then, immediately after the Jan 31st deadline, LaVasseur sent a
second email plus postal mail promotion, this time introducing
the new referral program, where members got an extra no-cost
round of golf for every new member they referred to the Players
Club.

-> Promotion B: Promoting the loyalty program to newbies

LaVasseur also ran an outreach campaign, offering a no-cost round
of golf to all new members who signed by Jan 31st, via multiple
media, including:

o local radio and print ads
o direct postal mail to a rented list using three selects:
Zipcode (up to a 15 km radius of the course), income > $100k
and an interest in golf
o on-site promotion

She knew her best prospects for the program would be golfers
already visiting the course, and the best way to convince them to
join would be in person. LaVasseur held a regular training
meeting with course staff.

As golfers check in to the course, staff ask whether they are
Player Club members. If not, they explain the benefits and invite
the golfer to sign-up there and then (prior to January 31st, the
golfer would then have played that day for no cost).

The registration form was very simple. Just a name, street
address and requested permission to email.

To overcome consumer wariness about giving out their email
address, staff used the incentive of email-only promotions and
also reassure members that their email address would not be
rented out or used for any purpose other than course-related
communications.

Why do course staff not get more data at the initial sign-up?

Two reasons, says LaVasseur. First, they do not want to scare
people away from signing-up because they are asked for too much
personal information (the overriding goal is to get sign-ups;
extra data is a secondary objective).

Second, once at the golf course, golfers want to play, they
do not want to waste time filling in forms (or waiting in line
while someone else does).

Next LaVasseur's team sends new members a welcome package by
snail mail, containing:

o a letter from the Director of Golf at the facility
welcoming them to the program
o their personalized bar-coded membership card
o a piece of information regarding the specifics of the
rewards component of the program
o a profile card they are asked to fill in and send back with
details of household income, etc.

LaVasseur says people do generally send the profile card back,
and the data gets entered by hand into the loyalty program
database.

So far, LaVasseur has tested the following three tactics to keep
members satisfied and returning frequently:

Tactic #1: Email alerts

If the course gets a large group canceling at relatively short
notice, LaVasseur's team sends out an email alert to the Players
Club only, offering the newly opened tee times at a discount.

She notes that they are careful not to overdo it on the alerts,
"We don't want to send them the wrong message by offering too
frequent discounting. By doing it in a limited fashion we're
incenting more loyalty with those people because it is such a
special, limited event."

Tactic 2#: Loyalty club tournaments

The course holds tournament events for Players Club members-only
once a quarter, typically held around midday on a Sunday.

LaVasseur says that boosts loyalty though the exclusivity and
special rates offered, plus it lets the course fill up an
otherwise quiet tee time.

Tactic 3#: Regular HTML email communications

Player Club members get a monthly overview of club events or
special offers, such as Mothers Day specials and equipment offers
from the pro shop. A second email reminder goes out just prior to
club events as well.

RESULTS
Although only halfway through the 2003 golf season loyalty club membership compared with 2002 has already risen 45%.

In 2002, Players Club members accounted for around 4,000 18-hole
standard weekday and weekend rounds. By mid-June, 2003, Players
Club members had already completed more than 5,500 such rounds.

LaVasseur says the yearly total should exceed 12,000 rounds and
notes that adding the loyalty component to the discount card has
meant the average 2002 Players Club member now plays more rounds
in 2003 than they did in 2002.

More results:

- Roughly 50% of players club members renewed their membership
in direct response to the initial renewal campaign.

- LaVasseur estimates that TV/radio campaigns and DM to rented
lists pulled in new revenue equivalent to about 3.5 times the
costs. However, she predicts the value of offline marketing will
fall in future years, once the low-hanging fruit signs up for
membership. She will look to focus more on online retention
marketing.

- 40% of initial sign-ups came from on-course promotion alone,
18% were directly attributable to the email promotion, 9% to the
direct mail promotions and a further 33% from the on-course
promotion in combination with prospects having "seen or heard an
ad somewhere."

- LaVasseur says that the lowest cost per acquisition was from
(obviously) on-course promotion, but of the other promotional
vehicles, email brought in the most new members at the lowest
cost.

She is already so convinced of the value of the revamped program
that she's started similar programs at three other public-access
golf facilities in her care.

She adds, "We believe only your most loyal customers should
receive your best offers. Sometimes we see golf course operators
hesitant to give the customers that do play frequently a deal,
because they think they are leaving money on the table. The fact
is, you need to give these folks a reason to stay loyal. If you
don't, someone else will."

Useful links:
Western Golf Properties http://www.wgolfp.com

StoneTree Golf Club
http://www.stonetreegolf.com/playerscard.html

SiteWire: The vendor responsible for developing and implementing
the database and email marketing tools http://www.sitewire.net/