Golf Membership Initiation Fees and How They Will Can Hurt Your Golf Club!
Private Clubs have historically structured their membership offerings to include a provision for the return or refund of all or some portion of the initiation fee/ new members pay to join a club.
This initial payment is subject to certain conditions and terms as set forth in the golf club’s membership plan and by-laws. A common scenario provides a refund to a resigning member based on some formula, such as for every 3 or 4 new members who join; one resigning member receives a refund. This formula continues until the club reaches its membership cap after which resigning members are repaid on a one to one basis. Additionally, sometimes the continuation of the payment of dues is required in order to receive a refund.
Can you answer the following question?
Every single week I speak to private clubs experiencing problems with membership. To gain an understanding of their situation I ask a series of questions that include the initiation fee required to join the golf club. The bulk of time, there is a provision for the return of a fraction or in some cases all of the initiation membership fee that is required. I then question the business reason behind the membership initiation fee structure that is in place and I typically get a response like, “I really do not know” or “that is a good question”.
The wrong kind of waiting list!
The return of an initiation fee can make a lot of sense if there is a sound business reason behind the plan and it works very well if the golf club is in a great market and is enrolling new members at a rapid pace. However, more often than not, membership velocity begins to slow long before the club has reached a full complement of members and members who have decided to resign cannot be repaid at the time they wish to resign.
And membership resignations will always take place. Even in the finest of golf clubs, attrition rates are six percent or larger as members in many cases, even if they are totally content with their golf club, resign due to relocation, problems with their health, change of employment, and other interests. And, as noted earlier in this article, they may even be required to continue to pay for dues in order to receive their refund.
This leaves the golf club in the unenviable position of having a waiting list to leave the golf club, which not only poses a considerable financial hurdle, but also is a deterrent to having new members join.
How can I get my club out of this mess?
Now, there are solutions to getting out of a situation like this including:
- Establishing new categories of membership.
- Providing refunds to resigning members at a reduced amount. This typically would necessitate member consent.
- Establishing a means for members to lease their membership or designate a beneficial user.
- Establishing a non-refundable membership.
- Making changes to the golf clubs by-laws.
- Creating a re-callable golf club membership.
However, caution must be exercised. Trying any new approach without systematically taking into consideration the many factors involved including undoubtedly understanding your current market and where your golf club fits in it, your competition, your approach to prospecting for new golf members and leads for events, your enrollment and attrition rates, what you are permitted to do legally, and the effects the changes may have on the golf club’s financial stability, may actually turn a bad situation into a worse one.
Get professional assistance now!
Does your golf club currently have a list of members waiting to leave the club? Are you just starting a new golf course and structuring your golf membership offer? Does you resort management company have a membership sales plan in place to preserve your current members as well as bring in new ones? Do not simply believe that the way golf membership plans have been set up for decades is the correct approach for you and your golf course. Do not fall into the trap of short term thinking or taking advice from well intentioned friends or board members who are not professionals with experience in the membership or golf club business. The decisions and plans you make and put into place today could have a significant impact on how successful or not your golf club will be in enrolling new members three or four years from now.
Tags: Golf Course Management, Golf Management, Golf Management Companies, Golf Marketing, Memebership Marketing, Private Club Marketing
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