TIM FINCHEM

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TODAYS AGENDA
5 Minutes - Importance of Issues Ruffin
Beckwith - Golf 20/20 10 Minutes - Retention
Data Ben Blake - Links Corp 15 Minutes
- Frequency Programs Mike Capizzi -
Frequency Marketing Group 35 Minutes - Group
Discussion/Ideas 10 Minutes - Develop
Recommendations
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VISION ATTRACTION RETENTION
3.0 Million
3.5 Million
3.0 Million
2.5 Million
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WHY PEOPLE LEAVE

• Time 62
• Family 38
• Cost 29
• Health 18
• No one to 16 play with
• Too difficult 12
• Source 2001, Golf 20/20 Segmentation Study

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INDUSTRY REPORT-FRE QUENCY
Source 2002, National Golf Foundation
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ANNUAL CONTRIBUTION TO THE GOLF ECONOMY, BY
SEGMENT
Source 2002, SRI International
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RETENTION AND FREQUENCY

• Ben Blake
• President and CEO
• LinksCorp

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WHY IS RETENTION IMPORTANT?
The Environment Today - What Has Changed?

• Supply and demand imbalance
• More courses
• No growth in the number of roundsand players
• More recreation/entertainment choices
• Slowing economy/less spending

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WHILE ATTRACTION IS IMPORTANT Retention is Key!

• It costs up to five times as much to attract a
  new customer as it does to keep one
• A dissatisfied customer will tell 8 to 16 people
  about the bad experience
• A satisfied customer will stay loyal if you build
  a relationship
• The real value of a satisfied customeris how
  much that customer spends overa lifetime

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15 OF ALL GOLFERS ARE BEST CUSTOMERS
6.6 million Avid Golfers (25)
7.6 Million Best Spenders (1,000)
2.5 Mil
3.5 Mil
4.1 Mil
10 Million (40) are Important Customers 4
Million (15) are Best Customers
Source Golf 20/20
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LinksClub 2001 RESULTS

• Rds/ Spending/
• Members Members Rds Mem Rds Spending
• A - Medallist 4,742 5 15.5 549 28 29
• B - Reward 6,692 7 7.2 243 18 18
• C - No Reward 2 Rds 35,288 36 2.8 94 38 36
• D - No Reward 1 Rd 43,109 44 1.0 35 16 17
• E - No Rds 8,561 9 0 5 0 0
• Total 98,392 100 2.7 93 100 100

• 2001 - LinksClub Highlights
• 267K LinksClub Rounds Played at 17 LC Public
  Courses
• LinksClub Rds were almost 50 all Public Rds at
  17 courses
• 34.08 per round per member spending

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BEST CUSTOMERS DRIVE ROUNDS REVENUES

• The top 19 of members (A B) represent 54 of
  rounds and 56 of revenues
• Segmentation shows that the top 6 of members are
  extremely valuable to LinksCorp

Segment Medallist (A) Reward (B) No Reward 2
Rounds (C) No Reward 1 Round (D)
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RETENTION BY SEGMENT

• Medallist members maintaining a high year-1
  retention and 2-year retention rate

TOTAL MEMBERSHIP RETENTION
Segment Medallist (A) Reward (B) No Reward 2
Rounds (C) No Reward 1 Round (D)
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REWARDS PROGRAMS WORK
Positive Segment Migration in 2002
2001
2002
Segment Medallist (A) Reward (B) No Reward 2
Rounds (C) No Reward 1 Round (D) Total
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LinksClubWHAT HAVE WE LEARNED?

• You can influence customer behavior and retain
  your best customers!
• If we can get a LinksClub member to play his/her
  2nd round in 30 days or less, they will likely
  play 3 more rounds. If not, we may lose them.
• Highly efficient - marketing costs have gone down
  25 (2001 vs. 2000) while revenues have gone up.

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SUCCESSES IN FREQUENCY MARKETING

• Mike Capizzi, Vice President
• Frequency Marketing Group

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GLOBAL QUESTIONS

• We have national programs to promote Trial, do
  we need a national program to promote
  Retention?
• Should one organization have Retention as an
  objective?
• NewCo (a new organization similar toThe First
  Tee
• Existing organization(PGA of America, for
  example)
• Can we indentify and track our best customers
  on a national basis?

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GLOBAL QUESTIONS

• Would you be willing to help fund a national
  Retention program
• Fee added to each paid round
• Flat fee per course
• Ideas?
• If funding is an issue, would you be willing to
  sell the rights to a for-profit company to
  promote retention at your facility?
• Nike Golf Schools (for example)
• National Customer Loyalty Program (for example)
• Other ideas

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GLOBAL QUESTIONS

• What are the things we can do as an industry to
  impact frequency?
• Is it feasible to consider national frequency
  programs? State-wide?

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MICHAEL T. CAPIZZILoyalty Marketing Programs
Key Considerations for the Golfing
IndustryNovember 15, 2002
COLLOOUY
Presents
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A Lot of Jargon

• Frequency Marketing
• Relationship Marketing
• Loyalty Marketing
• One-to-One Marketing
• Customer Relationship Management (CRM)

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Definition of Relationship
The voluntary exchange of information and value
between the brand and the customer with the
mutual expectation of gain.
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What is Loyalty Marketing?
Loyalty Marketing is the effortto identify,
maintain, and increasethe yield from Best
Customers through, long-term, interactive,
value-added relationships.
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Why Bother?

• To identify
• In order to increase marketing effectiveness
• In order to re-allocate marketing expenses to
  improve efficiencies
• In order to learn who your customers are, what
  they want from you, what other courses to play
• To leverage the resulting database in partnership
  marketing agreements

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Why Bother?

• To maintain
• It is cheaper to retain than it isto acquire
• New growth without retentionis no growth
• The cumulative effect on profitabilityis proven

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Why Bother?

• To increase the yield
• By adding frequency of play to your course
  vis-à-vis other alternatives
• By adding incremental spend toeach visit
• By adding derived yield from guests who play at
  the invitation of your customers
• All of the above

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Loyalty Marketing Can

• Improve customer retention (LTV)
• Increase share-of customer
• from competitors
• via cross- / up-sell
• Provide a framework forrelevant dialogue

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Loyalty Marketing Cant

• Fix a fundamental problem
• Generate quick profits
• Bring in lots on newcustomers fast

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Where Does it Work?

• Highly competitive markets
• Parity is perceived to be high
• High fixed, low variable cost
• Perishable inventory
• Purchase behavior can be tracked
• Purchase (payment) cycles are frequent
• Management doesnt want tocompete on price

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Why Loyalty Marketing Works

• All customers are not created equal
• Share-of-customer is a more profitable pursuit
  than share-of-market
• Improve earnings by shifting resources
• Proactively manage relationships
• Relevant dialogue creates competitive advantage
• It builds brand loyalty, not sale loyalty
• It breaks the tie when all other things are equal
  or closes the gap when the differenceis small

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Loyalty Marketing Programs
Marketing programs that recognize and reward
customers based on tracking their individual
purchase behavior.
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Benefits
Man is an economic animal in search of
self-importance Brian Woolf Customer Specific
Marketing
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Benefits Soft vs. Hard

• Recognition (Soft)
• Emotional
• Intangible
• Exclusive

• Reward (Hard)
• Rational
• Tangible
• Free

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The Perfect Blend of Incentives
5 Factor

The Value Proposition
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Why Use Promotional Currency?

• To create the perception of value and take the
  focus off price
• To create a sense of equity and a barrier to
  exit
• To establish a relevant dialogue
• To provide funding flexibility
• Because they break

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Points vs. Discounts
1 Discount
1 Points
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Pursuing the Perfect Blend
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Closing Thoughts

• Loyalty programs will work in the golfing
  industry
• A shared cost approach is the best way to go
• Track and reward all behaviors across all payment
  methods
• Offer a strong value proposition for the golfer
• Some technology investments will be required
• Rapidly evolve to other peoples money via
  partnership marketing
• Measure, measure, measure and stay focused on the
  ROI

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For more information contact
Michael T. Capizzi 513.248.5630 mike.capizzi_at_collo
quy.com
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