TODAY’S 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

VISION: ATTRACTION & RETENTION 3.0 Million 3.5 Million 3.0 Million 2.5 Million

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

INDUSTRY REPORT-FRE QUENCY Source: 2002, National Golf Foundation

ANNUAL CONTRIBUTION TO THE GOLF ECONOMY, BY SEGMENT Source: 2002, SRI International

RETENTION AND FREQUENCY Ben Blake President and CEO LinksCorp

WHY IS RETENTION IMPORTANT? The Environment Today - What Has Changed? Supply and demand imbalance More courses No growth in the number of rounds and players More recreation/entertainment choices Slowing economy/less spending

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 customer is how much that customer spends over a lifetime

15% OF ALL GOLFERS ARE “BEST” CUSTOMERS 6.6 million Avid Golfers (25+) 7.6 Million Best Spenders ($1,000+) 2.5 Mil 4.1 Mil 3.5 Mil 10+ Million (40%) are “Important” Customers 4 Million (15%) are “Best” Customers Source: Golf 20/20

LinksClub 2001 RESULTS 2001 - LinksClub Highlights % 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

“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 % OF MEMBERS % OF ROUNDS % OF REVENUE Segment Medallist (A) Reward (B) No Reward 2+ Rounds (C) No Reward 1 Round (D)

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)

REWARDS PROGRAMS WORK Positive Segment Migration in 2002 2001 2002 Medallist (A) Reward (B) No Reward 2+ Rounds (C) No Reward 1 Round (D) Total

LinksClub… WHAT 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.

SUCCESSES IN FREQUENCY MARKETING Mike Capizzi, Vice President Frequency Marketing Group

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 to The First Tee Existing organization (PGA of America, for example) Can we indentify and track our “best customers” on a national basis?

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

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?

COLLOOUY Presents MICHAEL T. CAPIZZI Loyalty Marketing Programs: Key Considerations for the Golfing Industry November 15, 2002

A Lot of Jargon Frequency Marketing Relationship Marketing Loyalty Marketing One-to-One Marketing Customer Relationship Management (CRM) COLLOOUY www. .com

Definition of Relationship: “The voluntary exchange of information and value between the brand and the customer with the mutual expectation of gain.” COLLOOUY www. .com

What is Loyalty Marketing? Loyalty Marketing is the effort to identify, maintain, and increase the yield from Best Customers through, long-term, interactive, value-added relationships.® COLLOOUY www. .com

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 COLLOOUY www. .com

Why Bother? To maintain It is cheaper to retain than it is to acquire New growth without retention is no growth The cumulative effect on profitability is proven COLLOOUY www. .com

Why Bother? To increase the yield By adding frequency of play to your course vis-à-vis other alternatives By adding incremental spend to each visit By adding “derived” yield from guests who play at the invitation of your customers All of the above COLLOOUY www. .com

Loyalty Marketing Can … Improve customer retention (LTV) Increase share-of customer from competitors via cross- / up-sell Provide a framework for relevant dialogue COLLOOUY www. .com

Loyalty Marketing Can’t … Fix a fundamental problem Generate quick profits Bring in lots on new customers fast COLLOOUY www. .com

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 doesn’t want to compete on price COLLOOUY www. .com

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 difference is small

Loyalty Marketing Programs Marketing programs that recognize and reward customers based on tracking their individual purchase behavior. COLLOOUY www. .com

Benefits “Man is an economic animal in search of self-importance…” Brian Woolf Customer Specific Marketing COLLOOUY www. .com

Benefits – Soft vs. Hard Recognition (Soft) Reward (Hard) Emotional Intangible Exclusive Reward (Hard) Rational Tangible Free COLLOOUY www. .com

The Perfect Blend of Incentives 5% Factor Compelling Hard Benefits Promotional Currencies Tangible Rewards “I get my money’s worth” Defining Soft Benefits Recognition Personalization “They know I’m important” The Value Proposition COLLOOUY www. .com

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” COLLOOUY www. .com

Points vs. Discounts $1 Discount $1 Points COLLOOUY www. .com

Pursuing the “Perfect” Blend Perceived Value Marginal Good Ideal Actual Cost COLLOOUY www. .com

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 COLLOOUY www. .com

For more information contact: COLLOOUY For more information contact: Michael T. Capizzi 513.248.5630 mike.capizzi@colloquy.com COLLOOUY www. .com