Double Bogey Blues

Why I quit my golf club...

and how it may be relevant to your business

I love golf. Im not quite the social player that many are, but I love the game. In fact, I often play alone
as a way to unwind and decompress.
So, six years ago, when I met Lake Presidential Golf Club in Upper Marlboro, I fell in love. So much so
that I bought a house overlooking the sixth green. What more could a golfer want than to see his course
on a daily basis from his deck?
The course opened as a high-end daily fee course. We hosted two U.S. Open qualifiers and a number of
other quality local events. People wanted to play the course and it was ranked as high as the #2 public
course in the state.
I wore my logoed shirts with pride. Id even go out to the green some summer evenings and fix divots
left behind by careless players.
And then it happened. The bad economics of the housing market impacted the development that
supported Lake Presidential and the course met a new set of challenges. The course began to change
and over the past three years has been in steady decline.
Last year, a new golf management company was hired to run LP. That experience was the final straw. Im
out...and heres why.
PLAYING FOR YOUR SLICE
If you play enough golf, one day you will see a guy who aims 100 yards to the left in an effort to
hit the ball in the fairway. Its a painful thing to watch. The reality is the further he aims left to fix
his problem, the worse his problem becomes. He makes no real effort to correct the problem and
it worsens until he becomes so frustrated that his clubs end up in the back of the garage buried
behind the lawnmower or at the bottom of a lake.
Meet the Lake Presidential Slice...
When the course felt the strain of the changing housing market, important elements to its success
saw cuts. Course conditions, quality control, food and beverage ,and the overall customer

experience declined as the spending noose was tightened.

These changes didnt go unnoticed by the public. Regular rounds of golf and events (the lifeblood of
any daily fee course) began to decline. The experience no longer warranted $99 price points.
TAKING A PENALTY STROKE
In an effort to access quick dollars, the new management company has turned to the internet for
help.
This past week, Lake Presidential
promoted its second round of golf
discounts on Groupon (the offer also ran
during the holiday).
Offering big discounts for weekday and
non-peak weekend times before June 1,
the course successfully sold more than
1,000 deals accounting for more than
3,000 rounds of golf.
Since Lake Presidential still has to split
revenues with Groupon, the advertised
price point doesnt necessarily end up
in the courses coffers. In fact, many
Groupon deals are 50/50 splits, but we
will give the course the benefit of great
negotiation, even a 70/30 split puts the
per round dollars at $25-$27.

10+90

Assuming that the business strategy of the management company is to play a very high number of
annual rounds on the course this year -- perhaps as many as 30,000 -- there is an enormous financial
short AND long-term impact from this decision.

1. COMING UP SHORT - 10% of the courses inventory has already

been sold at deeply discounted rates.

Rounds Per
Year

Groupon Rounds

Yes, the course has obtained somewhere between $55,000 and

$75,000 in revenue from the offer. And while one of the smartest
people I know in finance once told me the Golden Rule is a dollar
today is worth more than a dollar tomorrow, the amount of potential
revenue the course has left on the table is dizzying.

Remaining Inventory

But, how easy would it have been for Lake Presidential to obtain
the same amount of revenue without turning to Groupon?

The impact of choosing the more rounds approach to meet

the same revenue objective presents additional challenges to
the course. Specifically, more rounds means more wear and
tear -- more divots to be filled on fairways and tee boxes, more
pitch marks on the greens, more wear and tear on carts, more
traffic which slows play... all of which diminish the overall
experience at the course.

Regular Rounds
1100

To match the optimistic $66,000 in revenue from the Groupon

initiative, even an average rate of $60 would require just 1,110
rounds of golf to be played.

Groupon Rounds
2400 (3000 purchased)

Pretty simple actually.

Two Ways to Reach

$66,000 in Revenue

These usage decisions impact the bottom line. More rounds mean more repairs. More repairs mean
more money spent. Its a lose-lose scenario.

2. MIS-READING THE GREEN - Discount golfers are like Black

Friday shoppers, seeking deals and demonstrating no brand loyalty
One of the reasons businesses turn to
discounts is in an effort to introduce their
product and convert new takers into loyal
customers.
The problem is it rarely works.
82% of business customers
indicate they are unhappy with the
level of repeat business from
Groupon programs
But, its not just Groupon.
In fact, big discount loss-leaders like Black
Friday sales are proving to attract the wrong
kind of customers for businesses. The
customers they attract dont have staying
power to support the investment made in
advertising and discounted merchandise.
In fact, only businesses that can survive on

A successful model for high-end public course

discounting is shown here by Whiskey Creek Golf
Club in Ijamsville. One or two deep discounts
reward diligent shoppers without diluting the
courses brand.

thin margins and large volumes of sales can even make the business model work. If youre WalMart,
Target or Best Buy, these tactics fit your business culture.
But does Lake Presidential really want to be the WalMart of public fee golf? Perhaps. But its not a
path to survival or profitability.

Considering a discount program for your business?

Heres an easy read before you dive in:
http://blog.hubspot.com/insiders/should-i-discount-my-product

3. LOST IN THE WOODS - By choosing the wrong target audience,

Lake Presidentials next shot just got harder
What Golfers Want
Like many large metro areas,
the DMV offers up a variety of
golfers and a variety of golf
experiences.
From famous private courses
like Congressional and Robert
Trent Jones to County-owned
municipal courses, the number
of offerings is dizzying.

Pace of play
Cost of greens fees
Course conditions
Ease of scheduling tee
Time
Design
Weather
Quality of practice facilities
Score

With more than 100 options in

Maryland and Northern Virginia
all within an hours drive of
the most affluent communities
in the DMV, its important to
identify what sets the Lake
Presidential product apart from
its competitors.
After the courses opening in
2008, Lake Presidential received
high marks for its quality layout
and course conditioning.

Course Conditions
Design
Score
Cost of greens fees
Food & beverage
Service of staff
Locker room
Ease of scheduling tee
Time

Quality of carts

Quality of carts

Service of staff

Quality of practice facilities

Food & beverage

Merchandise

Locker room

Weather

Merchandise

Pace of play

Priorities Prior to
Playing a Round

Priorities After
Playing a Round

Golf Digest recently conducted surveys before and after rounds of golf
at public courses around the country to understand what motivated
golfers to like a golf experience away from their home course. The
opinions are not surprising. Memorability and value almost always
outweighs cost.
What does that mean for you as a business? Stop focusing solely
on cost and build an emotional connection that lasts.

Those high ratings drove traffic to the course and led to outings and events from businesses and
organizations that sought a unique experience. With the reputation growing from U.S. Open
qualifiers and other notable events, the course carved a niche for those looking for great conditions
and a challenging design (note once again that those two elements were rated #1 and #2 in the Golf
Digest survey).
Located ten minutes off the Washington Beltway, twenty minutes from Annapolis, and just 30
minutes from the Baltimore Beltway, Lake Presidential possessed the opportunity to build a regional
reputation as a convenient, high-end option for golfers with little price sensitivity.
While the course would argue that economic downturn of 2009 greatly diminished that audience
of golfers, other courses that claim stake to the high-end public market continued to turn a
sizable profit despite being even further away from the economic epicenters that surrounded Lake
Presidential.
What had once been easy suddenly required more attention to customer experience, intelligent
marketing spends, and creative awareness building campaigns to stand out from the crowd.
Courses like Whiskey Creek in Frederick County and the benchmark for all public courses in the
region, Bulle Rock, continued to charge between $100 and $160 for their golf experience. They
proved that the business model still worked even in trying financial times. Both courses continue to
turn handsome profits even today.
Lake Presidentials decision-makers chose another path.
Cuts were made in investments into infrastructure and
maintenance. The impact on course conditions was
devastating. Rather than focus on returning the course to
its very high level of conditioning, management chose a
new path that accelerated the courses decline.
Target the local community at a lower pricepoint.
Instead of facilitating stronger partnerships with the
blossoming National Harbor (which will soon house the
new MGM casino complex)... or do more to court wealthy
Anne Arundel, Montgomery and Northern Virginia
markets..., the course targeted the cash-strapped, house
poor citizens that reside near the course in Prince Georges
County. One of the wealthiest minority counties in the
country, Prince Georges County also led the DMV in
foreclosures following the collapse of the housing market.

KNOW YOUR AUDIENCE

A BIG POOL
29,000,000 golfers in the U.S.
EDUCATED
67% attended college
EXPENDABLE INCOME
79% with a net worth over
$100,000
APPRECIATE SERVICE
73% dine out once a week or
more
MAKE LUXURY PURCHASES
56% spent more than $30,000
on their last car

Prince Georges County is home to numerous mid-level public courses, many of which are managed
by the county itself. By choosing to target this market, the course was now in price competition with
courses that cost between $30-$50 to play, not high-end competitors like Bulle Rock or Whiskey
Creek.
MISSING THE CUT
Few courses in the Mid Atlantic region can handle high play volume and high price points.
Thanks to weather conditions that challenge course maintenance during the hot, humid summers...
combined with three to four months of limited growing in the winter months... keeping a course in
top condition in the DMV begs for prudence in projecting rounds played.
While golf rounds are the lifeblood of every public golf
course, each additional round brings more divots that need to
be filled, more pitchmarks that need to be fixed, more carts
that need to be charged or repaired.

40,000

With lower pricepoints also comes a different kind of golfer.

As a GENERAL rule, golfers who pay less also expect less.
Their attention to details like replacing divots or not driving a
cart right next to the green are often overlooked.

30,000

$140 Average

$110 Average

$90 Average

$75 Average

10,000

$50 Average

20,000

Rounds needed at each price

point to reach $2.25M in
gross golf revenue

Think about it. If you drive a 2002 Toyota Tercel thats missing
a front bumper, you simply dont put the same care into car
maintenance as you would your new BMW convertible.
If youve played at Bulle Rock, generally rated as the top
public course in Maryland, one thing immediately stands out.
A course employee is waiting for you at the first tee to lay out
the expectations the course has for YOU. You are presented
with a special green divot tool and given instructions on how
to repair your marks. Bulle Rocks investment in time and
resources pays dividends. There are almost no noticeable
pitchmarks on greens and most of the corrections are made
by the golfers who are taught to care enough to leave the
course better than they found it.

Failure to make player education and damage prevention is a very slippery slope. As more divots
and pitchmarks appear, the next golfer is overwhelmed and discouraged from going above and
beyond to fix the one he or she just left. Hot summers attack tightly mowed grass, melting it under
the stress of increased play, while divots and damage done in the cold winters take months to heal.
Two years ago, in another mind-numbing cost-savings move, Lake Presidential temporarily removed
sand from carts that was used to repair divots. Instead, players were expected to find their divots
and replace them.

Thinly veiled as a move to better the course, no player education outside of a quick chat with a
few members in the winter even presented the concept. So, as the year wore on and uneducated
golfers played the course, the course quickly decayed from the overwhelming number of blemishes
in fairways.
It didnt take long. The course lost its unique brand proposition and the experience matched the
discount price point. Its not just my opinion. Its the opinion of golfers rating courses across the
region. In just the past twelve months the course rating at Golfadvisor.com has slipped from 4.0 out
of 5 to 3.6.
Bulle Rock
Worthington Manor
Maryland National
Whiskey Creek
Queenstown River
Stonewall (VA)
Lake Presidential
Bowie
Compass Point
Glenn Dale
Ratings over the past twelve months on Golfadvisor.com.

DUFFING THE CHIP

The fact is, despite considerable chirping from their most loyal clientele, no one at the course
seems too concerned. Sure, there are the occasional messages about how they can fix it, but they
rarely contain any real specifics or any concerted plan. Using the elements from the Golf Digest, the
scorecard for Lake Presidential isnt a good one.
Before
Course Conditions -Design Score
Cost ++
Food & Beverage -Service of Staff -Locker Room
Ease of Scheduling +

Now

What Happened
Declined form 4.5 out of 5 to a 3-3.5 out of 5 in conditioning
Encroachment of new homes in sightlines has lessened quality of layout
LP is a challenging course and scoring is not easy, especially if players play
from the wrong tees
Cost has gone down
Numerous days without beverage cart, difficult to get food at turn, decline in
menu in dininig facility despite opportunity to grow in local community
Staff reductions and a lack of attention to the customer experience has
lowered the bar on service
Unchanged
More online offers makes it easier to book

Quality of Carts --

Removed GPS carts in cost-saving move - also impacted pace of play

Practice Facilities -

Removed markings to indicate yardage to practice flags

Merchandise ---

From Merchandiser of the Year to very limited inventory

Pace of Play -

Always a challenge due to the difficulty of the course. Has been made worse
by lack of effective marshalling.

TAPPING IN FOR DOUBLE

Negligence in what golfers indicate matter most in a golf experience has reached a critical tipping
point. As I recently received my renewal notice for the new golf year, the decision became easy. No
mention of any plan to move back toward a course of excellence. No conversation about improving
customer service. No bullet points of infrastructure upgrades that are becoming long overdue.
In fact, every online special discount offer suggests the contrary.
So I will simply wait for my 66% off deals and play from time to time. Since I could play 90 rounds
of golf under that Groupon deal and still be cheaper than my previous membership (as a business
owner, parent, and volunteer coach, playing half that many would be a great year!), its an easy value
decision.
I used to see my membership as an investment in my home and my community. Now I see it as just
one more bill.
Theres a powerful lesson to be learned. Even your most loyal supporters reach a breaking point.
Brand loyalty only goes so far in a competitive marketplace.
Maybe this will be good. Ive missed some of those courses I used to play before I moved to Lake
Presidential. Then I think about the view I used to love and the logo I wore proudly.
No, its definitely not good.

Joe Casalino is CEO of IQ Strategic, a data strategy consultancy in

Upper Marlboro, MD. He was the 14th member at Lake Presidential.

2012 at Lake Presidential