Golf Pro Advisor: Who Are Your Best Customers?
You’ve probably heard of the 80/20 rule. That’s where 80% of a business’ revenue comes from 20% of its customers.
That 20% is a customer segment. And those customers need special attention.
Golf operations have customer segments, too. Most head golf professionals have a mix of customers (members). Some spend a lot of money on lessons and equipment. Others spend little or no money.
It’s important to break your membership into customer segments. You want to tailor programs and communications for each segment. You also want to give each segment the appropriate attention.
Your “Customer Segments”
I’ve created a model based upon a hypothetical club: The Fictional Golf and Country Club (FGCC) with 500 golfing members. I divided the golfers into five segments:
- Heavy Hitters –Play at least three times a week, take numerous lessons, and spend a lot in the golf shop.
- Enthusiasts – Play at least once a week, take some lessons and clinics, and spend a bit in the pro shop.
- Occasionals – Play at least twice a month, take a couple of clinics a season, and spend a small amount in the pro shop.
- Low Spenders – Some may play a lot but this group spends relatively little money on lessons/clinics and in the golf shop.
- Juniors – Play a lot during the season and take lessons and clinics. Parents are willing to fund improving their children’s golf games
Don’t take this too literally. The segments and numbers are for illustration purposes only. You can create your own assumptions.
What does matter is the logic behind the assumptions. I’ve created an Excel sheet (click here) you can use to build your own segmentation model.
Who Are Your Best Customers?
Here is a snapshot of FGCC’s customer segments.
For instance, the Heavy Hitters represent 10% (50 golfers) of the golfing membership. Yet, they represent 28% of the golf operations’ revenue.
On the other hand, Low Spenders represent 30% of the golfers but only 13% of the revenue.
Why is this chart important? First, it tells you who your best customers are. Second, it tells you where your risks and opportunities are.
The risk is that you’ll lose Heavy Hitters. The opportunity is that you can move golfers up the food chain. Enthusiasts become Heavy Hitters, Occasionals become Enthusiasts etc.
The other point is that you couldn’t even compile this chart if you didn’t have detailed data about each member: Number of lessons and clinics taken and amount spent in the golf shop. That requires a tracking system.
If you used QuickBooks for your invoicing, you’d already have the necessary data for a segmentation model.
What Differentiates Your Customers?
What differentiates a Heavy Hitter from an Enthusiast? Heavy Hitters are willing to invest more money in their games.
Here is the data per golfer for each segment. For instance, a typical Heavy Hitter during a six month season will take 12 lessons, visit the range 24 times, and spend $1,500 in the golf shop.
Now, let’s look at the revenue each segment generates (see next chart). Here’s how the math works for Heavy Hitter lessons, as an example.
Golf – Total – $66,000
- 50 Golfers x 12 lessons each = 600 lessons
- 600 Lessons x $100 Lesson Fee = $60,000
- 50 Golfers x 24 range visits each = 1,200 visits
- 1,200 Visitis x $5.00/Visit = $6,000
- Shop – 50 Golfers x $1,500 each = $75,000
What Are Your Customers Worth?
The two charts below show the relative worth of each segment. In total dollars, Enthusiasts are the most valuable segment. They spend $195,000 (vs $141,000 for Heavy Hitters)
However, on a per golfer basis, a Heavy Hitter is worth almost twice an Enthusiast ($2,820 vs $1,560)
The Next Step
Once you’ve built your segmentation model, it’s time to take action. You need to build programs for each segment
That’s the subject of the next Golf Pro Advisor.
I am happy to review the segmentation model for up to 30 minutes on the phone with any golf professional at no charge. If you’re interested, please email me at paul@hermancpa.com.