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Rewards Program

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Market Analysis

Over thirty million North Americans play at least one round of golf per year. Approximately half of these are “core” golfers who play more than eight times per year. Core golfers account for about 90% of all rounds played. There are 13,000 golf courses in North America open to public play. The vast majority operate as unaffiliated independent businesses.

Over the past several years, the growth in supply of public golf courses has out-paced the growth in consumer demand. The National Golf Foundation estimates that since 1990 there has been an annual growth rate in the supply of public golf facilities of 3.5%. During the same period the number of golfers has increased at a rate of less than 1% per year.

Fragmentation within the golf industry combined with the over supply of tee times has resulted in a highly competitive marketplace characterized by discounting. Discount marketing by golf courses has led to a general deterioration of price integrity and a significant loss of revenue. Revenues losses are compounded by the fact that “savings” offered to consumers are not normally reserved for, and therefore not normally spent on, subsequent golf purchases.

Rewards marketing offers an alternative to discounting that will assist golf courses in protecting their prices. Increased revenues result when, instead of discounts, rewards are offered to consumers for non-discounted payment. Further benefits ensue when the redemption of these rewards is reserved for subsequent golf purchases. Improved revenues can be achieved without an increase in the customer base or the amount of golf played.

Virtually all golf courses offer credit/debit card payment options to their customers. The terminals used for card payment can be inexpensively enabled for rewards marketing. The web, now accessible by virtually all golf courses and golfers, provides a cost efficient means for communicating rewards and redemption offers.

It is feasible for a golf course to initiate its own swipe card rewards program. There are, however, several disadvantages to “one facility” programs including the high cost of entry and the limited appeal to public golfers who play at several golf courses each season. A broader “industry led” rewards program has advantages associated with economies of scale and consumer appeal. There are also advantages that serve the industry as a whole. These relate to “grow the game” benefits that would be reaped from partnerships with other loyalty programs and from the participation of non-golf course merchants.

Golf is a powerful reward motivation. It is, however, under-represented in the redemption options of most rewards programs. The introduction of a North American golf rewards currency will enable a wider inclusion of golf as a motivator for other loyalty and rewards programs.

In the course of investigating swipe card technology partnerships, the business models of other companies that are offering or intend to offer a golf rewards program have been thoroughly investigated. Currently these companies are in early stages of market penetration.

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