Copyright © 2012 KCS Golf. Snowblind theme by c.bavota & Juan Gordillo. Powered by WordPress.
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 terms and conditions as set forth in the 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 golf 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 a private club having problems with membership. To increase my understanding of their particular situation I ask a series of questions that include the initiation fee obligatory to join the golf club. The majority of time, there is a provision for the return of a fraction or in some cases all of the initiation golf membership fee that is required. I then will question the business reason behind the membership initiation fee structure that is in place and I typically get a response like, “I am not sure of the reason” or “that is something I have never really thought about”.
Your golf resort has the wrong kind of waiting list!
The return of an initiation fee can make sense if there is a sound business reason behind the plan and it works very well if the 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 occur. Even in the finest of golf clubs, attrition rates are six percent or greater as members in many cases, even if they are totally satisfied with their golf club, resign due to relocation, health issues, 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 payment.
This leaves the club in the unenviable position of having a waiting list to leave the club, which not only poses a significant financial hurdle, but also is a deterrent to having new members join.
How can I get my club out of this situation?
Now, there are solutions to getting out of a situation like this including:
- Establishing new categories of membership.
- Providing the refunds to resigning members at a reduced rate. This typically would require member consent.
- Establishing a means for members to rent their membership or designate a beneficial user of the membership.
- Establishing a non-refundable golf membership.
- Making changes to the golf clubs by-laws.
- Creating a re-callable golf club membership.
However, caution must at all times be exercised. Trying any new approach without carefully considering the many factors involved including clearly understanding your market and where your golf club fits in it, your competition, your approach to prospecting for new golf members, 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.
You need to get professional assistance now!
Does your golf club currently have a waiting list to of members wanting leave? Are you just opening a new golf club and structuring your golf membership offer? Does you golf management firm have a golf membership sales program 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 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 today have a considerable impact on how successful or not your golf club will be in enrolling new members three or four years from now.