Month: July 2018

Board Priorities: Add Brand Management to Your Fiduciary Responsibilities

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There are typically three priorities that command the attention of private club boards: (1) developing and using sound strategy; (2) ensuring the financial security of the club; and (3) governing the club responsibly.  However, in these days of over-supplied markets and the ongoing regeneration of many clubs, brand management has become massively important to clubs.

Some board members claim that a private club is “private” and, therefore, not a commercial brand. These outdated beliefs are a sure-fire plan for damaging the long-term brand health of the club.

Private club board members share several fiduciary duties, which include the duties of care and loyalty, such as good faith, confidentiality and disclosure.  Directors’ duties also expand to the responsibility to protect the identity—which may include its trademarks, intellectual property and public-facing images.

Brand Planning and Security

What is your club’s brand? And how is it being protected?

A brand is a small piece of real estate “owned” in the mind of the consumer, according to Al and Laura Reis, authors of “The 22 Immutable Laws of Branding,” a marketing classic on branding commercial companies.  Some board members claim that a private club is “private” and, therefore, not a commercial brand.  These outdated beliefs are a sure-fire plan for damaging the long-term brand health of the club.

Brand health, which means admiration, trust and desirability, is an important duty for private club leaders.  Social media proliferation and unending public awareness and scrutiny of private clubs require the club board to pay attention to the club’s brand.  Club leaders should routinely execute a brand audit to validate the club’s market impact.

Strategic Planning

The club’s strategic plan is its long-term direction and scope of operations.  The plan helps the club stay focused on its priorities, and to fulfill stakeholder expectations.

Board members are responsible to fellow members to ensure that the club has a sound strategy and that the strategy is being faithfully enacted.  Directors are duty-bound to know the club’s strategy and ensure that it is preserved and routinely used.

A sound strategic plan extends for a period of three-to-five years and should be fully reviewed annually.

Financial Security

Directors are responsible to protect the financial resources of the club.  This means that directors must carefully measure the future financial needs of their clubs; plan for the sources and uses of funds; and ensure the economic sustainability of the club.

Economic sustainability requires that the club generates revenues adequate to pay the costs of the operation and to fund future capital needs of the club.

Board members must fully understand the club’s financial capabilities and limitations.  A key tool used to report the financial profile of a private nonprofit, tax-exempt club is a Department of Treasury Form 990, which each director should also understand.

Club Governance

Every club director should strive to provide sound governance to their club.  Effective club governance is built on the regular usage of the strategic plan and a board policies manual (BPM).

A BPM documents the methods that will be used in governing the club.  It also includes a description of the organization, the authority of the board and the manager, and the relationship of the board with the manager/COO.

The BPM is as fundamental to effective club governance as the strategic, financial and brand plans.  It must be developed and used on a regular basis.

Today, governing a private club is a bigger and broader job than at any previous time.  Brand knowledge and management have become just as important to the overall health of the club as other fiduciary duties, such as strategic planning and financial security.

GGA’s Henry DeLozier penned this article for the National Club Association’s Club Director Magazine.

Financial Indicators to Monitor

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What are the financial indicators that the club leadership should monitor to stay strong?

Canaries in a coal mine were the early-warning system that saved miners’ lives before technologies for detecting noxious gases came along.  Just as careful miners took caged canaries underground with them, club directors are wise to protect the club by implementing early warning tools—or Key Performance Indicators (KPIs).

Stephen Johnston, the founder of Global Golf Advisors and a former KPMG senior auditor for major accounts, explains, “The number one duty of every club director is to protect the assets of the club.”  To Johnston, the canary to be watched is full member equivalents (FME) of a club.  FME represents the total annual dues amount divided by the amount of a full-member’s annual dues.  Johnston warns directors that when FME metrics begin to slip, directors should beware.

Future attrition rates and the successful conversion rate from potential new members follow the FME metric.  Attrition signals retention success or concern while conversion rates presage new member recruitment.  Keep these KPIs singing a happy song.

Successful membership recruitment follows a 10 percent conversion rate—from bona fide member lead to accepted new member.  Therefore, this ratio instructs the board and management that the roster of prospective members must be ten times the number of membership openings.  Says Johnston, “If you want to add 30 new members, you will do well to develop at least 300 trustworthy leads.”

In addition to FME metrics, Johnston emphasizes the power of the cash flow statement.  For a club to be truly economically sustainable it must generate revenues adequate to pay the club’s bills and fund its future capital needs.  Johnston advises club directors that the annual “spend” on capital assets should be 7 to 9 percent of annual gross revenue.

The impact of the recessionary cycle caused most clubs to fall behind on capital replacement and maintenance so the cash available to catch up on deferred capital maintenance is a critical early indicator of future financial stress or security.

For the miners, early-warning was the difference between life and death.  For private clubs, monitoring early-warning KPIs is similarly crucial.

GGA’s Henry DeLozier penned this article for the National Club Association’s Club Director Magazine.

Agronomic Planning – Avoid Canine Brunch

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Those who know our firm are aware of the value we place on plans that focus resources and actions against strategic goals and objectives. But too often our plans turn into something resembling a dog’s breakfast: a mess of opportunity, necessity and happenstance. To avoid agronomic plans that are similarly inconsistent and random, here are three steps that will give an agronomic plan order and purpose while showcasing the author’s professionalism.

1. Educate

Golf course superintendents are agronomic experts with scientific training and specialized knowledge. Club and course managers are similarly well-educated professionals. They are keenly interested in the results supers produce, but not so sure how they pull it off. Therefore, superintendents’ plans must educate, providing the knowledge and understanding that help course owners, club directors and fellow management professionals see the inherent logic and forethought.

An informative agronomic plan:

States standards of excellence. Mowing and trimming frequency, height of cut and fertility programs need to be explained beyond frequency or fertilizer blends so club and course managers understand how the superintendent’s tactics connect with the facility’s overall goals and objectives. Once they do, they can become supporters of the plan.

Environmental objectives should be considered in this same context. Elements of the conservation plan should be described to help club managers understand the use of pesticides and standard practices for water taking. Information about beekeeping, bird and bat houses, and milkweed cultivation for butterflies, for example, also reinforces the facility’s overall sustainability efforts that can be passed along to members and customers.

Explains importance of standards. Many become confused when asked, “Why is that practice so important?” The superintendent who uses the agronomic plan to educate helps golfers be even more supportive and understanding.

Quantify needs. Measure everything and see that every line item in the budget is backed up with specific data points for acres or square feet being mowed, irrigated, fertilized and kept. Every number in the budget should have support tied to key data points. For example, labor – including wages and benefits – is increasing significantly in most markets across North America. Fuel prices are likely to remain volatile with the risk of sudden increases driven by geopolitical events.

Express aspiration. Describe your vision for the golf course. Be brave in setting higher standards for your facility. Describe improvements that can enhance the reputation and earning power of your course.

2. Organize

While there is the need to educate, club managers can become weary reading about unfamiliar agronomic standards and practices. Help hold their interest by organizing your plan. Starting from mission critical, first cover the most important topics – care and upkeep standards, expense and budget management, and expected outcomes. Then describe routine matters and needs that preserve working conditions and standards of excellence. Last, address matters such as storage needs and practices, staff training and break-room amenities.

3. Paint a Picture

Photography, video and other graphics can be highly valuable support tools for your audience. People who are not scientific experts need the additional understanding that imagery provides.

  • Show intended results. Teach readers of the plan and what they should expect in terms of denser turf, deeper color in maintained turf, reduced pesticide use and reduced water consumption.
  • Provide graphics for such details as mowing patterns and explain why your crew mows greens from different alignments.
  • Show how carefully your usage of manpower is planned. Help others understand that you command your category of expertise with knowledge and experience.
  • Support budget projections and expense trends with graphs and third-party data sources. Show the actual expense history of your course and how your own trend tracks local, regional and national patterns.

GGA’s Henry DeLozier penned this article for Golf Course Industry Magazine.

The Influence of Online Reviews

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With 90% of consumers reading online reviews before visiting a business, and 84% of people trusting online reviews as much as a personal recommendation, perceptions are forming earlier in the customer journey than ever before.

Reviews have become part of the fabric of everyday life, whether it be assessing your Uber driver’s performance through to the suitability of a recent Airbnb host.

For customers, if they know what to expect, they can have confidence in their decision and know their (increasingly important) time and money will not go to waste.

Visible at every turn

Google searches will now routinely uncover customer ratings and reviews for your club, via various platforms, and this can often result in prospective customers consuming this information before actually clicking through to your website. That means a first impression may well be determined by other customers.

While this lack of control can be daunting, reviews also represent a vital source of information and intelligence of what your customers are thinking and experiencing. This not only allows you to address immediate concerns, but feed them into performance indicators, and they can help to inform future strategic decisions.

Broaden your insights

Depending on the review platform, you may have the opportunity to engage with the reviewer and ask for more feedback about their experience, which is important for two reasons:

  1. To distinguish the validity of their initial review and, if valid
  2. To provide more insights into the particular aspects of their experience

This can apply for both positive or negative reviews and, in the case of the latter, the willingness to engage on the club’s part demonstrates proactivity and a commitment to improving the customer experience. More than that, it represents an opportunity to gain a competitive advantage over other clubs, who typically may find it difficult to monitor and respond to reviews – especially during busy periods.

Although the impact to the bottom line may not be significant, establishing a voice for your club in this space, as with social media, can boost the credibility and perception of your brand.

Keep an eye on the competition

Intrigued to know how your competitors are faring? Or looking at ways you can improve your customer experience?

Taking the time to examine reviews of your competitors not only offers a very recent insight into how they are faring, but can provide invaluable intelligence to how they are developing their product or service.

Analysis can uncover clues to which aspects of the customer experience your competitors excel in. So, where instances of this exist, ensure there is a mechanism to capture this intelligence and look at ways to make the necessary changes and enhancements to the customer journey at your club – with the intent to go beyond the level of your competitors. You may well find online reviews of your competitors an unlikely or untapped source for developing a meaningful competitive advantage.

Harnessing the power of online reviews – takeaways

– Engage with online reviewers by responding to both positive and negative comments
– Capture insights from online reviews and incorporate these into performance indicators for your club
– Examine competitor reviews to gain intelligence on the customer experience they offer and develop ways to exceed it

For help and advice on the role of online reviews in future strategic decisions, connect with Bennett DeLozier, Manager at GGA.

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