Tag Archives: business thinking

Golf Economics And You

Here we are at Monday again and of course I spent a chunk of the weekend playing golf.

United States Golf Association

 (Photo credit: Wikipedia)

As you know, I think we can learn an awful lot about business (and life) from the game and I came across an article this morning that’s a perfect example of that. It’s on the USGA website and was written by an agronomist about course care in challenging times.  What caught my eye is that he writes about a new business model for the game and of course that sort of thinking is exactly what we try to do in this space.

If you’re not familiar with what’s going on in the golf business, it’s a mirror of many others.  The number of folks playing (the customer base) is down, those who do play are playing less (consumption), and the costs of maintaining and operating the business are always going up.  Sounds like a lot of other industries.  So let’s see if what he suggests might help some of those businesses.

First, he talks about making a difficult game easier.  The USGA has a “tee it forward” initiative which encourages players to play from tees more appropriate to their skill level (which also speeds up play).  The piece also gets into removing long rough and getting rid of many bunkers (sand traps) that make it hard for less-skilled golfers.  While I have mixed feeling about that as a golfer, I do think that any business needs to take a hard look at barriers to usage.  Playing golf badly is no fun just like spending hours trying to decipher a PC problem or fix an issue with your car can make veins pop out of your neck.  Game manufacturers have long known this – almost every game offer the ability to set the difficulty level.  How can you do that in your business?

Next he talks about controlling costs.  In golf’s case it’s actions such as not cutting grass in some areas – there are out-of-play areas adjacent to tees that are mowed, irrigated and fertilized and acres of turf can be removed from many golf courses without altering the golf experience.  It reminded me of a legendary story about the early days of Capital Cities Communications and how they were so cost-conscious they only painted the sides of the buildings that faced the roads.  Where can you look at costs without impacting your product?  It needs to be a regular evaluation.

Finally, he talks about using alternative grasses which will cut maintenance and stand up better to heat, etc. which provides a better play experience.  This too is a great point for any business.  While the product may not change (the game is the game!) making it a better user experience is a constant.  No one likes to play a burnt-out golf course jut like no one likes any experience that doesn’t meet the brand promise that got them to the product n the first place.  Lt’s put that on our “to do ” list as well.

What else can you come up with?  Do you like what the author is saying?

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Taste

 

It’s always a challenge cooking for others. For me it’s not really the quantity of food or even timing the meal so that all the dishes are ready for the table at the same time. The hardest part is anticipating people’s’ tastes. For example, when I make jambalaya, I like a kick beyond that of some good andouille sausage. Finding a well-seasoned chunk of tasso along with a fairly liberal dose of cayenne can do it for me but there are very few people for whom I cook that like that sort of heat. A splash of hot sauce at the table isn’t the same thing – it’s a sharp “forward heat while cooking the spices into the dish is a slower, more mellow burn. Still, one has to know one’s consumer (as I always remind us here) so I tone it down in most cases.

Taste isn’t just something that applies to food.  It’s easy enough to season a dish in a way that makes you happy as a cook, but unless you’re a well-known chef who has developed a palate that others find appealing, you’re probably going to under-season and let people add salt, pepper, hot sauce, or whatever else makes them happy (I just shuddered as I recalled a niece pouring ketchup over a delectably spiced dish years ago). As businesspeople, we have to assess our tastes continually and remember that there are as many permutations of it as there are people.

Very few business leaders can impose their tastes on others.  Even a guy like Steve Jobs failed to do so from time to time (remember the antenna debacle on the iPhone, which was a design issue?  Customers got fed up with the dropped calls even if it looked pretty).  Listening to the social sphere, reading your data, getting regular customer service reports, sentiment analysis, and lust plain talking to people is a critical part of assessing taste.

How’s your palate these days?

 

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Love The One You’re With

One of the trends I hear discussed all the time is that of chasing the next shiny object.  As it turns out, that’s not something that occurs solely in the tech space.  A recent study from Adobe – The Adobe Digital Index – shows that online retailers are ignoring the 80/20 rule by ignoring current customers in favor of attracting new ones.  Maybe today’s screed should have been titled “You Always Hurt The One You Love.”  Their summary:

Online retailers spend nearly 80% of their digital marketing budgets acquiring shoppers (new visitors), but does this focus make sense? To find out, Adobe Digital Index analyzed 33 billion visits to 180 online retail website in Europe and the United States from April 2011 to June 2012. Our data indicates retailers should shift spend to returning and repeat purchasers, two existing customer segments that drive a disproportionately high share of revenue, exhibit higher conversion rates, and really step up in the Christmas holiday season and tough economic times. Migrating just 1% of shoppers to returning purchasers could generate as much as $39 million in additional revenue per retailer.

In other words, we’re spending way too much time and money chasing new customers while we ignore a lucrative user base that’s just waiting to be asked to the dance.  40% of revenue for online retailers comes from returning or repeat purchasers, who represent only 8% of all visitors, according to the study.  In other words, you have to attract five to seven shoppers to equal the revenue of one repeat purchaser.

Having run an online retail business I can tell you that the vast majority of our thinking was about attracting and converting new customers.  It wasn’t as if customer service was an afterthought and we did allocate a good deal of our marketing to up-selling our existing customer base.  However, this study opened my eyes to the fact that we probably could have done more with those who’ve already demonstrated a desire for our products and I’ll keep that in mind as I work with clients going forward.  How about you?

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