“If your customer base is aging with you, then eventually you are going to become obsolete or irrelevant. You need to be constantly figuring out who are your new customers and what are you doing to stay forever young.” -Jeff Bezos
Context: The Panic 2014
Much has been written this year about the about the sickliness of the golf industry.
Fewer players. The National Golf Foundation said there were 400,000 golfers that left the game in 2013 as compared to the year prior, with 200,000 of the decline coming from Millennials (18–35 age cohort).
Pellucid, a consulting company specializing in the golf business, released an estimate that paints an even more dire picture. It found that in 2013, the game lost 1.1 million players. Further, it reported that the number of US golfers has dropped 24% since its peak in 2002, to about 23 million players last year.
Playing less. According to Golf Datatech, the 462 million rounds played in 2013 is the lowest since 1995, despite a 20% larger US population.
Courses feeling it. 160 courses closed, while 14 opened in the US in 2013. More courses closed than opened in 2013 for the eighth straight year.
Brands and retailers feeling it. Dick’s Sporting Goods laid off their entire fleet of 500+ PGA Pros in July. Golf Galaxy’s Same Store Sales have declined nearly 10% over the last year through October. TaylorMade-Adidas Sales are down 31% YTD through September, compared to the same time last year. TaylorMade also cut 15% of it’s global staff this year and closed the former Adams Golf headquarters in Plano, Texas.
Dozens of media outlets including WSJ, Bloomberg BusinessWeek, and even The Economist have run pieces on the topic this year. HBO’s Real Sports with Bryant Gumbel discussed industry woes and the Hack Golf initiative with former TaylorMade CEO and industry heavyweight Mark King (now President of Adidas North America).
Explanations: There’s 1 Everybody’s Missed
It’s first of all interesting to observe the “herding” of the narrative in the pieces referenced above. They tend to rightly identify the major issue we’re discussing: the weakness in the Millennial demographic in golf. And they generally make good points about drivers of this shortfall:
Star stimulus removal. Most point to Tiger Woods’ fall from glory (from physical, reputation, and winning standpoints) as a major reason.
Entertainment alternatives. A billion sites, games, and programs on dozens of screens. Social media. Content up to your eyes. Plus, you have the phenomena of fantasy football, music festivals, and Tough Mudders. The list goes on.
All of those make sense. But there is a fourth reason- one that has gone almost entirely neglected:
Golf course management market failure. Golf courses are set up to serve their predominant client segments, Baby Boomers (51+ cohort) and Gen Xers (36–50 cohort), first and foremost. While everyone seems to acknowledge that Millennials are important to the industry overall, the fact is Millennials are systematically under-served. Lack of explicit catering to Millennials fails to fully engage them, which explains some of the decline in their play, but also represents a substantial market opportunity.
Premise #1: Is There a Real Consumer Problem?
Golf course owners and managers recognize 2 facts:
Baby Boomers and Gen Xers are my predominant clients by far (perhaps 75% by volume of play);
Independent of #1, Baby Boomers and Gen Xers have more disposable income.
The conclusion that follows: “If I want my course to be successful, my number 1 focus has to be putting in place the conditions that make my Boomer and Gen X customers happy!”
What does that mean in practice for golf course managers? It means the status quo. Same course set up, same rules, same dress code, same behavior. Equipment has innovated, apparel has innovated, player fitness has innovated, teaching has innovated, but golf course culture and gameplay has not innovated relative to 20 years ago.
Let’s take a step back. Who are these golf course owners and managers? That’s right, they’re overwhelmingly Boomers and Gen Xers.
So let’s summarize the golf course marketplace:
Boomers and Gen Xers run the place, and they cater their services to other Boomers and Gen Xers!
The implication is Millennials are neglected. Golf courses are set up to serve Millennials only after Boomers and GenXers are served, and only insomuch as service to Millennials doesn’t interfere with service to Boomers and GenXers.
Millennials don’t like to be neglected. Actually, they quite like it when businesses design products with them in mind. That’s not happening at the course level. There’s a market failure.
Premise #2: Does the Problem at Hand Represent a Valuable Opportunity?
There’s a great comparable to help answer this: TopGolf. They unlocked the golf environment for Millennials. They made “driving range” about more than just warped range balls and alignment sticks. They took the traditional driving range experience and spliced in several other elements that Millennials care about:
Good drinks, good food, and good music. If those 3 sound like a party, it’s because it is.
Technology. RFID chips in the golf balls.
Gamification. Several game types with different challenges and different scoring systems.
Service. Well staffed and generally youthful.
No dress code, no pressure. You’re as likely to see people in tank tops as work slacks.
Girls. Can you believe it? How did they manage to do that?
On top of the 10 US and 3 UK locations currently operating, 11 more will open in the US over the next year. Now Shaq is dropping by. They are engaging Millennials, and they have the profits to show for it.
Premise #3: Do These “Millennial Elements” Carry Over to the Golf Course?
Whereas the last 2 premises were built on facts, this one is built on belief. And I believe…YES! Absolutely the “Millennial elements” referenced above would transfer to the golf course!
If you agree with the premises that the Millennials golf segment is grossly underserved, and that such a problem represents a valuable opportunity, then the question you have to ask yourself is, “What would an awesome golf experience for Millennials look like, and how can I deliver that to them?”
Can you imagine a course where speakers are attached to tree trunks on every hole?
Can you imagine a course where each green has a 15-inch hole AND a regular 4.25-inch hole, with a different point value assigned to each (tracked in an app via RFID chips in golf balls)?
Can you imagine a course where your whole round is gamified (birdie wins you a T-shirt, par wins you a beer, etc.)?
Can you imagine a course where there is no dress code?
Can you imagine a course where your attitude going in is, “I’m guaranteed to meet new people and have tons of fun”?
I really believe some combination of these, and taken together, a whole new Millennial golf environment, would work and will materialize in the next couple years. The difficulty in the golf course business is, of course, it’s hard to “fail cheap”.
Testing Premise #3
So how is one supposed to go about solving the problem of neglected Millennials today?
Well, you could go on Shark Tank and ask for $8M to build or buy a golf course and convert it into Millennial Land. That’s a hell of a tough sell though.
The more sensible solution, and the one I think we’ll see more of in 2015, is more “risky” testing by golf course managers for features that attract and engage Millennials.
Example #1: Dress Code. Let’s say a course thought Sunday afternoons were a prime time for Millennials. They could institute and advertise “No Dress Code on Sunday afternoons!”, offer free beer to anyone who shows up in themed gear, and throw a party with live music in the clubhouse at night. Instead of just loosening the dress code, you blow that out into a full stunt and fun event that people will want to tell their friends about.
Market it properly and see if it works. If it does, you’ve got new customers, an “it” factor, and competitive advantage. If not, you lose potential revenue from Sunday afternoon tee times and marketing dollars. You can bounce back from that.
Example #2: Music. This stems from a question I asked on Reddit a few months ago: “What are everyone’s thoughts on playing music on the course?” I referred to an interview with Rory McIlroy talking about the role of music in his life and how he regularly practices and plays with music. It got 37 comments.
It was interesting to see an almost exact 50/50 split of replies for and against the idea. Although it’s a small and potentially skewed sample, it’s indicative, I think, of the divide between Millennials and non-Millennials in terms of what they want from their golf experience as customers.
To cater to that Millennial demand for music on the course, a manager could test by investing in 12 bluetooth speakers and offering them free to groups that purchase carts. Advertise around that and see if it moves the needle. Again, a relatively small outlay with real upside.
As NYT’s Martha White points out, these tests are already happening at courses around the US. But what we’ve seen so far is just the tip of the iceberg. It’s an exciting time to be in the golf business as its’ “problems” make it ripe for disruption. That’s what we’re trying to do with the Hole19 app. Not disruption for disruption’s sake, but disruption that follows from being laser focused on user experience.
In the near future, I think we’re going to see a Millennial-oriented golf course management business emerge and scale. More golf courses will be taking risks out of necessity to inspire non-traditional Millennials to show up.
I’m not nearly declaring golf as we know it doomed. There will still be a significant place for competitive and semi-competitive golf played under traditional rules in the near future. But that’s part of the challenge golf course managers face: can these two groups, Millennials and non-Millennials, both get the experience they want at the same course at the same time?
I hope golf course managers will be bold enough to find out.
- Millennials are systematically underserved at golf courses
- That problem represents a valuable market opportunity
- It’s going to take innovation and creativity to captivate Millennials
- Micro-tests allow existing courses to “fail cheap”, learn what works for Millennials, and build a reputation
Golf, as a subject, is about as far from poverty as you can get, but the rhetoric around “solving the problem” from the top-down reminds one of Jeffrey Sachs-style policy prescriptions. The solution to declining play, particularly among Millennials, is really not a single solution at all. It’s a series of piecemeal, bottom-up tests and private market solutions that build upon one another.