Service Quality Perceptions’ Impact on Membership Renewal of Junior Executive Golf Memberships
This research addresses age based price incentives in private golf courses in South Florida. These membership options are often termed junior executive memberships and provide initiation and annual membership dues discounting for members under a set age, often 45. The evaluation is a comparison of family and nonfamily subgroups within junior executive membership categories. Due to the newness of this marketing strategy, insight into member perceptions is desired for retention efforts.
A survey instrument developed by Prier (2016) was distributed to 25 golf courses with age based price incentives in the South Florida region. The components relating to service quality and behavior intentions are addressed in this research. The service quality components of the survey instrument were selected from the SERVQUAL scale for measuring customer perceptions of service quality (Parasuraman, Zeithaml, & Berry, 1988).
Survey respondents provided expectation levels and club evaluation levels on a 5 point Likert scale and a resultant gap was also utilized in analysis. sport371 Family respondents, those indicating a membership size of three or more, had higher expectations of service quality, lower club evaluations of service quality, and thus higher negative service quality gaps than nonfamily respondents (membership size of one or two).
Additionally, family respondents had a significantly lower proportion of likeliness to continue membership to the next membership tier, willingness to recommend, and intention to renew next year. The combination of more negative service quality evaluation and less favorable renewal intentions by family memberships provides an alert that managerial efforts to alleviate these perceptions is necessary. The significant differences between family and nonfamily membership perceptions supports the need for recognition of subgroups within the junior executive membership category. Service quality enhancement, specifically in employee behavior, provides an actionable strategy to enhance junior executive membership renewal.
Keywords: Golf memberships, age based price incentives, market segment, service quality, membership renewal, customer expectations, and family memberships.
Many golf course managers are combating aging membership. A review of 39 private golf courses in the eastern section of Palm Beach County, Florida categorized over half (58%) of the courses as having an average membership age of 65 or older (Appendix A). This aging golfer scenario puts a strain on the usual management focus of retaining current customers versus attracting new golfers.
A specific population that some private golf courses have targeted is the junior executive membership segment (under 45 years of age). In 2010, the National Golf Foundation identified that over 45% (11.9 million) of golfers are between 18 and 35 years of age (Miller & Washington, 2010). By expanding the junior executive segment to 50 years of age or younger, this segment becomes 77% of all golfers, certainly a significant percentage.
Growing time constraints and increasing family activities have been cited as concern areas for member retention in golf (Graves, 2014). Constraints have also been found to prompt substitution of one location for another (Samdahl & Jekubovich, 1997, as cited in McGinnis & Gentry, 2006). Barriers such as work responsibilities, family responsibilities, cost of greens fees, and lack of time are examples of constraints that impact retention of junior executive members.
Private golf courses are in a competitive marketplace in which remaining stagnant is not an option. It is often visually obvious that golf membership is aging and this does not equate to a long term sustainable business model. For this reason, the longevity of private golf courses is tied to management’s ability to adapt and attract the next generation of golfers. This customer segment is price sensitive, time constrained, and family focused and requires specific marketing and product offerings to be convinced of membership value.
With insight into the next generation of private golf course membership, sport managers can more effectively cater to this particular segment. Golf course managers should recognize the revenue potential of adapting membership categories to include junior executive categories and have the understanding of expectation and sensitivities in service quality to effectively cater to the market segment.
This research adds to the body of scholarly research by adding insight into private golf course membership segmenting. Offering a junior executive golf membership option is a new phenomenon and has not yet been evaluated for effectiveness. Most service quality research has been on fitness centers, thus research related to golf course service quality expands research into other participant sport facilities.
Golf consumers are not identical and there is a literature gap on membership perceptions of junior executive aged golf members. There is a need to analyze this segment’s expectations and evaluation of service quality. Junior executive golf member expectation of renewal to the next membership tier will serve to identify the urgency of managerial efforts to convert junior executive members into regular golf members in order to capitalize on lifetime customer value of graduating junior executive members. The analysis of junior executive member perceptions through comparison of family and nonfamily memberships (membership size) can also guide programming and service quality delivery.
Service quality expectations and evaluations are the key assessment of this research and are influenced by individual perceptions. Both terms are outlined below.
Fogli (2006), defined service quality as the customer’s overall impression of the relative inferiority or superiority of the organization and its services (as cited in Srivastava & Rai, 2014). Further, Parasuraman, Zeithaml, and Berry (1985) defined the two components of service quality as technical (customer perception of the outcome of the service) and functional quality (the processes for delivering technical services). Gummesson (1991) asserted the importance of accessing both components for the assessment of quality (as cited in Srivastava & Rai, 2014).
Service quality was found to be positively related to readiness to recommend the company (Boulding, Kalra, Staelin, & Zeithaml, 1993; Parasuraman, Berry, & Zeithaml, 1991), willingness to pay more, and customer loyalty (Baker & Crompton, 2000; Zeithaml, Berry, & Parasuraman, 1996) as cited in Srivastava & Rai (2014).
Srivastava & Rai (2014) enhanced the understanding of the relationship between service quality and customer loyalty by looking at the effects of trust, switching costs, commitment and corporate image as moderator variables. Corporate image yielded a positive relationship with customer loyalty (better image increases impact of service quality on loyalty). Commitment also had a significant relationship and was a negative moderator (weaker effect of service quality on loyalty when commitment is present). Thereby, establishing customer commitment can provide a cushion for inevitable service quality gaps. Also, corporate image can assist in customer evaluation of services by providing a cue of trust and by mitigating long term uncertainty.
Perception is the process of evaluation and relates to how individuals cognitively place an organization into classifications (Lock, Filo, Kunkel, & Skinner, 2015). The Lock et al. (2015) study utilized perceptions to evaluate and judge organizational legitimacy of a community sport organization. Key considerations in interpreting perceived dimensions were whether judgments represented evaluations in alignment with self-interest, or social or cultural norms.
The Lock et al. (2015) results were nonhomogeneous in nature with these results serving as a reminder that perception is based on unique experiences and contextual understanding. Diversity in perceptions is likely to result in the evaluation of sport facilities and more specifically to this study, in the evaluation of golf course membership. Utilizing perception can provide valuable insight into individually, socially, and culturally based sport decisions.
Private golf courses are facing an aging membership concern. Coupled with this financial dead end is a decrease in rounds played since the peak in participation in 2005. According to the World Golf Foundation, the sport had 30 million participants playing 550 million rounds in 2005, compared to 25 million participants and 465 million rounds in 2013 (Picchi, 2014). The Professional Golfers Association (PGA) of America, the national governing body that certifies professionals for private golf course management and teaching, is well aware of this current state of decline and is in active pursuit of encouraging youth and family programming.