Archive for the ‘Loyalty Economics’ Category

A few months ago, I discussed the customer corridor of a public golf course.  A customer corridor map can be a helpful tool that can help companies understand the needs of the customer. In this posting, I hope to help golf resort operators rethink the needs of their customers by mapping out the touchpoints of a guest visiting a golf resort. The goal of this map is to help resorts shift their focus on customer needs from an inside-out approach to an outside-in approach.

Bottom Line: There are many touchpoints at golf resorts that impact guest satisfaction. Although you may perform well at some of these touchpoints, if you fall short on others, guest satisfaction may suffer.

NGF’s golf engagement services help clients measure the customer experience, engagement of employees and perceptions of golfers in the local market. NGF’s systems deliver “Voice of Golfer” (VOG), “Voice of Employee” (VOE) and Voice of Market (VOM) intelligence. These systems identify individual factors that are most influential in creating satisfied customers, engaged employees and an interested marketplace. NGF is experienced building and executing these systems for golf course operators, management companies, resorts, retailers, equipment manufacturers and golf travel organizations.


To learn more about how NGF’s VOG, VOE & VOM systems can help your company succeed, click here.


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In my last post, I discussed the difference between satisfaction and loyalty. I alluded to a method that would allow operators to predict the future behavior of their customers by understanding satisfaction factors and their influence on causing customers to behave loyally.

At NGF, we have developed this method. Introducing the…

NGF Customer Satisfaction Index (NGFCSI)

The NGFCSI is a proprietary formula that links satisfaction with the economic value of a customer. Customer value is determined through a unique customer score for every golfer ranging from 0 to 100 (0 the worst, 100 the best). The customer value is determined through the amount of course rounds that the customer plays, the word of mouth referral value of a customer (both good and bad) and the likelihood that the customer will be retained a year from now.

Simply put, the NGFCSI tells golf operators not only how the course has treated the customer in the past, but how the customer will treat the course in the future. As the NGFCSI increases, the customer asset value of the course will grow. Through preliminary benchmarks, we have determined that for every 5 point increase in NGFCSI, a course will grow their customer value by an average of an additional $60 (assuming a $50 spend per round) per customer, through increased play and better word of mouth referrals. For a facility with 3,000 customers this translates to a growth of the customer asset of $180,000!

Through the NGFCSI, we have grouped golfers into one of five categories.

  • Super Advocates
  • Satisfieds
  • Apathetics
  • Hostiles
  • Assassins

The NGFCSI precisely predicts profitability through science. An operator that increases their NGFCSI score will financially benefit through increased rounds, improved word of mouth and reduced churn of existing customers.

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Most companies approach what their customers need from an ‘inside-out’ perspective. This type of thinking dates back to the acquisition or business development stage. Unfortunately most businesses use this inside-out thinking from the conception stage and it continues during the operations stage.

I was recently reading a great book1 that discussed the stories of Sony and McCulloch (chainsaw manufacturer). Both companies paid dearly by using an inside-out approach instead of an outside-in approach.

When Sony invented the Beta Max video recorder in 1975, they had a monopoly on personal video recording, and the recorders sold briskly even at a price point of around $2,000. A few years later, JVC introduced the VHS player. At the time of the introduction of the VHS format, Sony executives were unconcerned. The picture quality of the Beta Max format was far superior and they already had a head start on the VHS format as Beta Max was introduced a year earlier. Also the format of the VHS tape was larger and bulkier.

Yet, to the shock of Sony executives, the VHS format started to gain market share. By 1980, the market was split 50/50 and a few years later the Beta Max format was extinct. So why would consumers choose a format that was introduced later, had poorer picture quality and used heavier/bulkier tapes? The reason was that Beta Max tapes only recorded for one hour. The Beta Max was great for videotaping a sitcom episode, but not for videotaping a sporting event. The fact that Sony didn’t understand that consumers wanted a tape recorder that could record three hours, more than they cared about picture quality, cost Sony billions of dollars in profit.

If Sony used an outside-in approach to what their customers wanted, we may have never seen the invention of the VHS video format. The best ways a company can develop an outside-in approach is by developing a ‘customer touch-point map.’ This type of needs assessment is necessary for every type of business, from retailers to manufacturers to facility operators. A customer touch-point map will match up your offering to the needs of your customers.

In the 1960s, McCulloch dominated the marketplace of chainsaw manufacturers. Lumberjacks were the predominant buyer of chainsaws, and the McCulloch chainsaw was THE brand to own. The McCulloch chainsaw was extremely loud and spewed smoke everywhere. But these factors were not of concern to lumberjacks. The problem wasn’t that McCulloch didn’t understand their customers; they didn’t understand who their customers were! McCulloch completely overlooked the growing residential market of homeowners looking to trim a couple of branches and cutting some firewood. In 1963, Homelite entered the chainsaw marketplace with their XL12 saw, the first lightweight chainsaw, weighing just 12 pounds. In just two years, Homelite overtook McCulloch as the dominant chainsaw manufacturer.

My Take: America has changed tremendously over the past 30 years. I consider the three greatest obstacles to growing the game are time, difficulty and money, in that order. Fifty years ago, golf was a game for America’s elite, but not today. Today the game is more accessible to people of all income brackets than ever before. Yet the game is declining!

I think the reason for this decline is that many golf businesses don’t truly understand the needs of their customer. The private club sector is facing enormous pressures today, but most clubs are still operating with the same offerings and policies that they used 20 years ago. The needs of the customer have changed, yet the private club model has not.

The Sony story illustrates that businesses need to use an outside-in approach to understand the needs of their customer. The McCulloch story shows that businesses also need to understand not just the needs of the customers, but who their customers are. It is crucial that these concepts, although extremely basic, are not taken for granted. Both Sony and McCulloch thought they understood their customer and didn’t feel the need to actually ask their customers what they needed. So the question is: “Do you actually know who your customers are and what they need, or do you just think that you know?”
Source Notes
1Denove, C. & Powers, J. (2006). Satisfaction. New York: Penguin Group.

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The NGF customer loyalty awards are based on surveys fielded through NGF’s Voice of Golfer Program. Awards are given to facilities that had the highest customer loyalty and most improved customer loyalty. Multi-course operators are also recognized for outstanding customer loyalty across their entire portfolio of properties.

I would like to start by congratulating the management team that set the record in 2009 for having the highest customer loyalty score of all time for any one facility…


Honours Golf manages Farmlinks Golf Club. In 2009, Farmlinks broke its own record, of having the highest customer loyalty for any facility measured by the NGF! This is the third consecutive year that Farmlinks has achieved the best customer loyalty for a golf facility within its pricing category.

The NGF multi-course operator award has two categories, management companies and municipal golf system.

For the management company award, the NGF recognizes both:

Both Honours Golf & OB Sports won the award for having the highest customer loyalty across all of their managed properties.

For the municipal golf system award, the NGF recognizes the:


The Decatur Park District earned the award attaining the highest customer loyalty for a municipal golf system across all of their facilities.

For facilities within the $40-$70 price range, Sand Creek Station Golf Club in Newton, Kansas, earned the honors of having the best customer loyalty in 2009. Sand Creek Station Golf Club is managed by:

KemperSports also earned the most improved customer loyalty award at Highland Park Country Club (>$70 Peak Green Fee) and at Goose Creek Golf Club ($40-$70).

For facilities under the $40 price-point, Lake Spanaway Golf Course in Tacoma, Washington, attained the best customer loyalty in 2009. Lake Spanaway Golf Course is managed by:

The full list of award-winning courses, municipalities and management companies are:

First Category – Facilities with Highest Customer Loyalty Scores

Premium (>$70) (1) City State Company  
FarmLinks Golf Club Sylacauga Alabama Honours Golf Winner  
The Newport Dunes Golf Club Port Aransas Texas KemperSports Runner-up  
Peninsula Golf & Racquet Club Gulf Shores Alabama Honours Golf Runner-up  
The Wilderness at Fortune Bay Tower Minnesota KemperSports Runner-up  
Kelly Plantation Golf Club Destin Florida Honours Golf Runner-up  
Standard ($40-$70)  City  State  Company    
Sand Creek Station Golf Club Newton Kansas KemperSports Winner  
Rock Creek Golf Club Fairhope Alabama Honours Golf Runner-up  
Morro Bay Golf Course Morro Bay California County of San Luis Obispo Runner-up  
Tunica National Golf and Tennis Tunica Resorts Mississippi KemperSports Runner-up  
Value (<$40)  City  State  Company    
Lake Spanaway Golf Course Tacoma Washington Premier Golf Centers Winner  
West Seattle Golf Course Seattle Washington Premier Golf Centers Runner-up  

Second Category – Facilities with Most Improved Loyalty Scores (2008 to 2009)

Premium (>$70) (1) City State  Company  
Highland Park Country Club Highland Park Illinois KemperSports Winner  
Peninsula Golf & Racquet Club Gulf Shores Alabama Honours Golf Runner-up  
Longbow Golf Club Mesa Arizona OB Sports Runner-up  
Tijeras Creek Golf Club Rancho Santa Margarita California OB Sports Runner-up  
Standard ($40-$70) City State Company    
Goose Creek Golf Club Leesburg Virginia KemperSports Winner  
Falls Road Golf Course Potomac Maryland Montgomery County Runner-up  
Pipestone Golf Course Miamisburg Ohio KemperSports Runner-up  
Northwest Golf Course Silver Spring Maryland Montgomery County Runner-up  

 Third Category – Multi-Course Operators

Management companies:  City  State    
Honours Golf Atlanta Georgia   Winner  
OB Sports Scottsdale Arizona   Winner  
Municipal Golf Systems:  City  State      
Decatur Park District Decatur Illinois   Winner  
County of San Luis Obispo San Luis Obispo California   Runner-up  
Baltimore Municipal Golf Corporation Baltimore Maryland   Runner-up  

(1) Green fees are based on peak season weekend with cart.

The official press release announcing award winners can be found here.

My Take: Congratulations to all facilities that earned recognition from the NGF for customer loyalty in 2009. 2009 was a very challenging year for golf operators, yet the recognized facilities are overcoming market pressures by gaining wallet share, through customer loyalty.

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As we enter a new decade, we face many challenges: a depressed economy, an oversupply of golf courses and stagnant rates of player development. Yet today’s message is one of hope. In the face of all of these challenges, many operators may not recognize that a sizeable opportunity exists – the opportunity to convert your infrequent and regular golfers into diehards.

Through NGF’s Voice of Golfer system, we have been collecting information over the past several years from golfers about the courses that they play. Based on our analysis of over 200,000 surveys, we have found that golfers fall into one of four groups: Diehard, Regular, Infrequent and Transient. Understanding these groups is key to your opportunity to capture more rounds from these customers.

Golfer Segment Description Size of segment Facility Rounds
Diehard > 50% Wallet Share 22% 62%
Regular  <50% & >25% Wallet Share 23% 21%
Infrequent <25% Wallet Share 46% 15%
Transient  Play 3 or less market rounds, regardless of wallet share. 9% 2%


  • The lifeblood of a golf course, they play 31 rounds a year at the subject course and 39 rounds in the market, resulting in the subject course capturing 79% wallet share from these customers.
  • Account for a whopping 62% of all rounds at the subject course.
  • Represents the greatest risk to a golf course – lose some of these customers and rounds will plummet.
  • Since golfers like variety, the opportunity to get more rounds out of these customers is low.


  • These customers know your course well and it’s likely one of their top three courses in the market.
  • These customers give you between 25% and 50% of their rounds.
  • The opportunity level with these customers is still good: they play on average 17 rounds at other local competing courses.
  • 23% of all customers fall into the Regular category.


  • The group representing the most opportunity. These customers play 36 market rounds but only 3 at the subject course, resulting in a 10% wallet share and 33 rounds going to competitors.
  • The largest group, almost half of the population of customers at a golf course are infrequent.
  • Converting just 37 infrequent customers to Diehards would result in an extra 1,000 rounds as Diehards play 27 more rounds than infrequent customers do. This is very attainable: 37 infrequent customers represent only 2.7% of all infrequent customers for a typical course.


  • Customers who played less than four rounds in the local market in the past 12 months.
  • Either out-of-towners or very seldom players.
  • Very limited opportunity due to the fact they play three or less market rounds.

Below is a table that profiles these different player types for a typical golf course.

Player Type % of Customers Avg. Market Rounds  Avg. Wallet Share Avg. Course Rounds Played Annually Number of Customers Number of Rounds % of Course Rounds
Diehard 22% 38.7 79% 30.5 660 20,130 62%
Regular 23% 27.3 37% 10.0 690 6,900 21%
Infrequent 46% 36.2 10% 3.5 1,380 4,830 15%
Transient (Plays 3 or less market rounds) 9% 1.9 N/A  1.5 270 405 2%

My take: You need to be able to identify and communicate with all groups of your customers. My hunch is that most golf courses have databases that are comprised mostly of their diehards. If you want to grow rounds, it’s critical for you to market to your regular and infrequent customers. The opportunity to communicate with them is there. THEY ARE ALREADY COMING TO YOUR PROPERTY.

The infrequents have the opportunity to deliver many additional rounds to a course. Marketing your course to your regular and infrequent customers is vital as these customers have the capability to become diehards. THEY ARE FREQUENT GOLFERS – JUST NOT WITH YOU.

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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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