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Archive for December, 2009

Word-of-Mouth Marketing Impact Continues to Rise

NGF has measured the impact of word-of-mouth referrals regarding the golf courses that golfers play, and the frequency with which they issue referrals (both good & bad) to their friends. During this time we have seen the impact of word-of-mouth referrals continue to increase. Our latest benchmark update on the impact of positive and negative referrals is shown below:

The first box shows the percentage of golfers who have issued at least one positive referral from customers who are promoters (green) or the percentage of customers who have issued at least one negative referral from customers who are detractors over the last year (red). The “Number Referred” box shows the average number of referrals that these customers made in the past year. The ‘Conversion Rate” box shows the percentage of times that these referrals have converted to a new customer gained (green) or lost (red). The last box indicates for every customer at a facility, on average, they will deliver an additional 1.32 new customers per promoter and they will chase away just about 1 customer per detractor.

This latest benchmark update has significant financial ramifications for improved customer loyalty. The chart below shows that now, with a 10 percentage point improvement in customer loyalty for a typical golf course, a facility will increase their total customer worth by $236,755.

However, this bump in customer worth ($220,478) is almost solely attributable to the spike in the positive referrals that these more loyal customers will make. This referral improvement represents 93% of the increased total customer value at this facility.

 You may be asking yourself; “why is the ROI of improved customer loyalty so large?” The reason is due to the enormous referral impact that promoters and detractors have on a golf course. An average golf course has 3,000 customers. Improving customer loyalty by 10 percentage points can be acheived by a:

 5% Gain in Promoters         ► 150 More Promoters

5% Reduction in Detractors    150 Less Detractors

= $220,478 Increase in Customer Worth Through Word-of-Mouth Referrals! 

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Who Defines Your Brand?

Recently, I talked about an unpleasant round of golf that I had and how the golf course failed in customer service. In the past week I have been thinking a great deal about this golf course which had just reopened after a renovation. I realized that the one constant thread involving every memorable bad experience I have had at a golf course is that it always involved the staff. Without fail, some staff member was always at fault in my memorable bad experience. Even if a golf course is in poor condition, such as just after an aerification, if the staff communicated this to me before I arrived at the course, my expectations are set to see an aerified golf course and I am still capable of being a promoter after that day’s round. If the conditions aren’t communicated before my arrival, that is when there is a problem, because the experience is not going to live up to what the brand promise is of the facility.

But does the marketing that management put forth, define the brand of a course? Well as you can see from my recent bad experience at this course, absolutely not. The brand of any golf course is most defined by the frontline employees at the facility. This is the outside operations staff, the golf shop attendants and the food & beverage staff. Like the Alanis Morissette song goes, isn’t it ironic that these are the lowest paid staff at any facility. These are the people that define your brand, not the General Manager, not the Director of Golf, not the head Chef, and not the Marketing Manager. Management can create the vision of the brand, but it’s up to the frontline staff to execute this vision. This is where most brands fall apart. The best brands are not comprised of just a marketing message; they are brands that have the total alignment of all employees with the customer in pursuit of their brand image. Yet this doesn’t happen for many courses.

Why??? Research suggests that less than one in three employees are truly engaged in their career. Can your course fulfill its brand promise with less than one in three employees engaged?

An engaged employee is one who believes the company cares about them, cares about the customer, and as a result is motivated to go the extra mile for the company and the customer at all times.

Without employee engagement, everything else falls apart. The customer experience does not meet the brand promise, which results in low customer satisfaction and loyalty. The employee sees their job as just that, a job. They are there to collect a paycheck, and are not willing to put forth extra effort to achieve the goals of the brand. The company suffers because employee turnover will always be a problem and they will have challenges in recruiting good talent. They will have very few hires as a result of referrals from existing staff and there may be a great deal of negative word of mouth about working for that company. Also, employees will be more likely to be absent and they will be more likely to file a workers compensation claim.

One statistic that I found interesting was that the electronics retailer Best Buy found that stores which can increase employee engagement by a 10th of a point (on a five point scale) will realize a $100,000 increase in sales for the year.

Bottom Line: For your course to fulfill its brand promise it all starts with your frontline staff. Disengaged employees will rarely provide a satisfying experience to the customer. A key ingredient of having high customer loyalty is employee engagement. Only when your course has the entire staff working towards the common goal of the brand will you be positioned to have high customer loyalty. We at NGF have spent a great deal of resources in researching what employee engagement is, why it’s important and how it should be measured. If you’re interested in learning more about our research into employee engagement, contact Ben Fowler at 561-354-1628.

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