Which operating metrics really matter?
Taking a long look at the numbers you navigate by
Management expert Peter Drucker gets credit for the astute observation, “What gets measured gets managed.” In certain aspects of the golf business—customer care, for example—you might evaluate your operation more by watching and listening than by referring to numbers. Mostly, however, it’s the metrics that tell us whether operating strategies are well planned and well executed, or in need of revision.
Within the industry there can be valid differences of opinion about which performance indicators deserve a manager’s closest attention. The important point is to get your team on the same page about which ones matter most and what priority they receive.
The GolfNow Plus group studied this question over time, evaluating various possibilities and viewpoints. The team regularly operates by a list of metrics that would most accurately reveal the health and growth of a golf operation. The process was fairly deliberate, because once you settle on a go-to metric and fine-tune it in a particular way, you want to be able to stick with it over time. Otherwise your course’s year-over-year comparisons—which provide a valuable map to navigate by—will contain mismatches that foul up long-term tracking and decision-making.
Choosing the No. 1 metric in the list was straightforward, according to Mike Hendrix, vice-president of GolfNow Business Services. “No matter what course we’re looking at, we will always start with bottom-line profitability,” says Hendrix. “It won’t provide details and specifics, but it’s the overall yardstick of business success and there are important goals attached to it.”
Off and running with his top data points, Hendrix elects to pause and specify a metric that can be overemphasized—average green fee paid, or average rate. “It’s overrated,” he suggests, “because you could average $99 per round but only attract six golfers that are okay with your pricing—now your day’s golf revenue is under $600.”
The GolfNow Plus approach favors a close cousin of average rate, which is revenue per available tee time, or RevPATT. This is a number that neatly combines capacity with actual dollars in the door, providing what Hendrix calls “a more complete way to look at your business.” He values the flexibility offered by RevPATT. A course can readily apply the stat to a full season of play, or to a single day of the week, or even to one four-hour block on the sheet that needs some extra attention. “We like to monitor RevPATT specific to green fee plus cart, as a basic readout,” he says, “but there are times when you want to run this number so that food-and-beverage sales are included, or maybe merchandise sales, if it’s one of your major demo days.” In those cases it’s best to have cost-of-goods-sold factored in for food, beverage and merchandise.
Rounds of golf sold gets a lot of attention within GolfNow Plus, but it also gets sub-divided—initially into 18-hole and 9-hole rounds. And for some courses the title on this stat is simply “starts,” a tally of how many golfers showed up and teed off, regardless of the number of holes they played. With time, as 6-hole, 3-hole and even by-the-hour golf gains popularity, that simple term “start” could become fairly standard. Gross revenue is another universal yardstick. Again it’s not a drill-down type of metric that tells the story in detail, but you pretty much live and die by it, so accuracy on this one is ever-important.
In the heart of the list is golfer acquisition cost (see The Index post titled Golfer Acquisition: Benefits and Cost for more detail), which is not something a majority of courses seem to track. If you’re one of those courses, you may want to get started monitoring your acquisition cost by running a campaign on a set timetable and then auditing the results. “You could decide to try and grow your email database by 15 percent over the next 90 days,” Hendrix suggests. “You would run Facebook ads and perhaps radio ads telling golfers that if they opt in they get a certain benefit. You would note the total cost of all the benefits you provided to get your new names, along with the advertising expenses and divide by the total.”
Supposing the cost number comes out to $2.37, you may want to simply repeat the process for another 90 days, or you may hold off. “The decision may be, ‘hey I can do this cheaper at the counter than I can do it online,’” says Hendrix. “If you go the in-person route, just be sure and do the math so at the end you have your answer about which acquisition method was more cost-effective.”
Next on the list is number of available rounds, which of course is a fluid number, compared to the number of available seats for, say, an NBA team’s 41 home games, none of which are ever postponed. Sending golfers onto lightly puddled fairways puts a strain on your turfgrass, but some courses probably declare washouts too liberally. Either way, a key piece of advice Hendrix would offer is to record your rainouts on the digital tee sheet. “Some courses don’t take the time to load in the data about tee times lost to weather,” he says. “That creates problems, because you’ll do a year-over-year comparison and you’ll see improvement that isn’t valid, because during that day-part in the previous year you were closed.”
Rounding out the list is a metric that is growing in importance, days-in-advance per booking. Like a lot of business stats, this one was conceived with the desire to see it trend up. To Hendrix it’s a classic “everybody says X” data point—the kind you absolutely need to capture because the force of the accepted wisdom is very strong, yet there’s much to be gained if that wisdom is faulty. “People always said you can’t convince golfers to book earlier,” recalls Hendrix. “We said if you’re right about that the numbers produced by objective testing will back you up. Meanwhile there really hadn’t been any concerted attempts to move the needle on days-in-advance.
“We’ve measured this number, and managed it,” says Hendrix, “and the reality is that people will book earlier if you give them good reasons to.” We’ll explore this topic more fully in another post, but for now here’s a tip: Emphasize the superior level of choice a golfer gets by booking early (as opposed to emphasizing lower price).
That rounds out our list, but on top of that we offer a bonus metric—one that earlier came in for criticism—and that’s average rate. “Yes, average rate can be problematic,” Hendrix says, “but of course it does matter. It establishes the window or range you can generally move your rates around in, so you need to recognize it and track it.”
The great strategist Peter Drucker, who kicked off this discussion, helps us close it out. “The definition of management is doing things right,” Drucker wrote, “and the definition of leadership is doing the right things.” In part that means choosing the metrics that are truly most critical to long-term business success, and paying close attention to them.