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Archive for August, 2009

Last week I wrote about apathy. Many employees in the golf industry just don’t care. This may be surprising given the current recession. Staff should be showing a greater sense of urgency and commitment to their profession today more so than ever before. But for many staff members, this is not the case. They are completely disengaged from their career.   

Recently Businesweek wrote an article “It’s Not the Economy Stupid.” In this article the authors discuss research from Gallup showing that less than 30% of workers are truly engaged in what they do. Can you succeed with just 1-in-3 engaged?

To improve the customer experience, it may be instinctive that you should focus solely on your customers. But that approach is not correct. Why? A key element in the customer experience is employee engagement. Low employee morale can be an absolute killer to the customer experience. The Service-Profit Chain, published in the Harvard Business Review in 1994 illustrated the linkage between employee engagement and the customer experience: “Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal and productive employees.”

So, why should you care about your people? Because employee engagement pays. Current research shows a strong link between engaged employees and profitability:

  • Gallup has found that organizations ranking in the top quartile of employee engagement had earnings per share growth of 2.6 times the rate of organizations that were below average.
  • Best Buy found stores that could increase their employee engagement by a tenth of a point (on a five point scale) will see a $100,000 increase in sales for the year.
  • JC Penny has found that stores with top quartile engagement scores generate about 10% more in sales per square foot than average and 36% more operating income than similar sized stores in the lowest quartile.
  • Molson Coors has found through their Global People Survey that their steps to improve employee engagement saved them over $1.7 million in one year alone. Molson Coors has found that teams with low employee engagement are:
    • Five times more likely to have a safety incident than a person in the top 25%
    • Seven times more likely to have a lost time safety incident than a person in the top 25%
    • Cost the company $392 per safety incident versus $63 for a person in the top 25%

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Do you feel this way?

Last time I checked, we were in a recession.  Competition for the public golfer’s wallet has never been more fierce.

I think Sam Walton said it best “There is only one boss.  The customer.  And he can fire everyone in the company from the chairman on down, simply by spending his money somewhere else.”

So would it surprise you when I told you that I have heard multiple times from key staff members at golf courses tell me that they don’t care what their customers think. I just heard it this week.  I was speaking with a Director of Golf for a multi facility operator who told me “The last thing I want to know is what my customers don’t like!”  He went on to say that “we play a lot of rounds and just received an award for our golf course, so why would I want to know what my customers think?”

Nice… My hunch is that this Director of Golf probably has a sweetheart job and the last thing he wants to learn is that he has a major problem with customer loyalty.

The first post of this blog was more subtle as I discussed If Word of Mouth is So Valuable Why Does No One Invest?

So now I am not going to be as subtle.  One of the greatest problems in the golf industry is… APATHY.  Many key department heads at golf courses just don’t care.  They don’t.  Possibly the person I spoke to today was having a bad day.  But I have to give this gentleman credit for at least telling me candidly the way he feels.  The sad thing is I have heard this from others before.  It makes you wonder if people actually are telling me that they don’t care what their customers think, how many more thousands of employees in the golf industry also feel this way but just don’t say it?  Actions speak louder than words, and if your course is not investing in your customers, then maybe you hate your customers and don’t care what they think?

To learn more about how NGF’s VOC system can help your company succeed, click here.

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This year rounds played are up 0.2% year-to-date according to the national rounds played report from Golf Datatech and NGF. Unfortunately, gross revenue per facility is down 5.1% year-to-date according to PGA PerformanceTrak. This five percent drop in year-to-date gross revenue is indicative of something most of us already know; competition has never been fiercer and discounting has never been more prevalent.

So, what should the answer be to this pricing pressure in your market? Do you need to respond by discounting your round of golf, so that you’re working harder for less money?

I was reading a recent article on cnbc.com, “3 Stocks Poised to Gain From Customer Satisfaction”, with great interest last Friday. The article talks about consumer spending in the current market rally has been focused on consumer discretionary stocks, as these stocks are up over 60% since March. But where those dollars go will depend in a large part on how companies have treated the customer.

Recently the Strativity Group published their 2009 Customer Experience Consumer Study. This study continues to validate my assertions that the number one way to grow your business is by increasing customer loyalty.

Detractors responded in the study that, in return for their continued business, they expect a discount.

52% of detractors say that they will continue doing business with a company only if they offer a discount of 5% or more. Conversely, promoters not only don’t require a discount, they actually responded that they will pay more, as 40% of promoters said they would pay 10% or more to continue doing business with the companies that they are promoters of.

Customer Spend Chart

Source: Strativity

Strativity also found that detractors are 10 times more likely to cease doing business with companies within the next year than promoters are.

Customer Churn

Source: Strativity

Lastly, more than 70% of customers responded that if the business exceeds their expectations they are willing to spend 10% or more with them.

Exceed expectations

Source: Strativity

By growing your customer loyalty, your golf business will benefit through decreased customer churn, the ability to charge higher prices than your competitors, and increased wallet share. Clearly, the empirical evidence demonstrating the link between customer loyalty and profits is a compelling case. If your golf business is serious about growing customer loyalty, then you need a serious voice-of-customer system.

 

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I had previously posted 10 weeks ago how Word of Mouth is on the Rise. Guess what… It’s still rising. I have recently updated our benchmarks on the average rate of referrals that golfers issue and the number continue to increase. Below are the new updated benchmarks on how frequently golfers issue positive and negative referrals.

Impact of Positive Word of Mouth Referrals Before Recent Benchmark Update

Impact of Positive Word of Mouth Referrals Before Recent Benchmark Update

Impact of Positive Word of Mouth Referrals After Recent Benchmark Update

Impact of Positive Word of Mouth Referrals After Recent Benchmark Update

Impact of Negative Word of Mouth Referrals Before Benchmark Update

Impact of Negative Word of Mouth Referrals Before Benchmark Update

Impact of Negative Word of Mouth Referrals After Recent Benchmark Update

Impact of Negative Word of Mouth Referrals After Recent Benchmark Update

I have previously commented on how a drop in customer loyalty can translate to a significant drop in total customer worth. Now, after our recent benchmark update, a 10% drop in customer loyalty translates to a $226,388 drop in total customer worth!

I wanted to demonstrate how frequrently golfers talk about the courses they play compared to consumers in other industries. The results are very interesting. Satmetrix recently published their data on the rate of word of mouth referrals that customers issue by industry. I have combined their data with NGF’s. The below chart shows the referral rates of consumers in different industries versus the rate of referrals that golfers issue.
Impact of Word of Mouth Referals by Industry

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