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Seven Reasons Why Your Local Golf Club is Software Gold

20 December 2016

By Jakob Sand, 28 November 2016

You won’t notice it, but your trip around the local golf course, including from the 18th green to the clubhouse could well be happen alongside vertical software companies. Something illustrated by a recent deal that BDO Denmark advised on between the Danish company GolfBox and the Australian company MPower MSL Solutions.

I recently had a look at vertical software companies, including their business and M&A strategies. You can read that article by clicking here. This article is about a special sub-sector of vertical software companies that target membership and community-driven clubs, organisations and industries.

Here are seven reasons why these software companies’ market is so promising.

  1. The sheer market size

Demarking the exact boundaries of the membership/ community space is not easy. There is a good argument for it encompassing anything from local sports clubs, over large stadiums, to organisations like universities and / or international sports federations.

The Australian vertical software company MPower MSL has calculated that their potential global market consists of more than one million organisations and clubs with a total of more than one billion members.

  1. The unique needs

While membership organisations range from tiny to large, they all have specific, often complex, needs when it comes to software. For example, many sporting clubs rely on a changing group of volunteer staff to control most or all aspects of day-to-day business and financial matters.

“One of the qualities that encompasses all clubs and organisations is that they want maximum focus on their members and their community. That includes in relation to the software they use. Delivering intuitive, plug-and-play enterprise software solutions that cover a broad range of functions requires a very acute understanding of the their industry, how to engage with members and how to best support community building,” Craig Kinross, Managing Director and CEO of MPower MSL, says.

  1. Understanding the industry

One example of this deep understanding is GolfBox. The Danish company started by designing a software solution for a specific golf club. First came a booking system, then a member/handicap service and finally a scoring/tournament solution. From there Golfbox’ software has moved into the clubhouse and today also covers more or less every kind of applications related to golf. From a solution for one golf club, the company software package is now in place in golf clubs and golf federations across the globe.

 “We quickly found that booking tee times and handling tournaments is very different in the golf world to what you find in other sports. There are even major regional differences within golf. This has an effect on the way that you design your systems,” Christian Færgemann, CEO of Golfbox, explains.

  1. Knowing you cuts costs

This level of industry understanding requires constant contact with professionals and organisations in the space. As I mentioned in my article on the general outlook for the vertical software industry, a positive knock-on effect of this approach is lower sales and marketing spending. It also boosts organic sales.

“Our marketing budget has more or less consisted of free golf balls with our logo on it and attending relevant conferences. What has happened is that golf clubs and golf federations have shared their good experiences with our software with their peers. That is essentially how we have generated strong, organic growth,” Færgemann says.

  1. Room for growth

Both Christian Færgemann and Craig Kinross see large growth opportunities in the membership space, both on the federation/large stadium/university level, and on the local sports club level. An observation I agree with.

Some organisations and clubs have software solutions like those from MPower MSL and GolfBox installed, but many do not. These vertical software packages bundle systems like general finance, membership fees, booking systems and food and beverage software. At a price that leads to a very short ROI, while making life easier for people in charge of running the clubs and organisations.

Once that message gets out into the various local club communities, there is great potential for rapid, organic growth.

  1. The possibilities keep growing

The growth potential is boosted by the development of new features, such as data-driven business intelligence.

One example is how MPower MSL collaborated with the Golf Australia handicap system and Emirates on a nationwide engagement programme, where golfers were sent a congratulatory message when beating their previous best score. Golfers were engaged when on an emotional high after beating their handicap, and analysis showed that these communications had a 300% better effectiveness than standard marketing messages.

“My vision of the future is that we get to a point where the club manager can run the entire business from a tablet device. Member interaction is going to become better through mobile devices. The platform will be driven by open APIs – which ours already is - so it can keep pace with technological developments and importantly provide more choice and flexibility for the business,” Craig Kinross says.

  1. The acquisition tempo is high

Right now the industry looks like it could be heading for a two-stage round of M&A.

The first is ongoing consolidation, mainly driven by inter-industry mergers and acquisitions aimed at bolstering market shares and solution/application portfolios. MPower’s acquisition of GolfBox fits well within this category. Together, the two companies can offer a unique solution within the golf industry.  At the same time GolfBox’ software augments MPower’s existing service portfolio and boosts its technological foundation.

The likely scenario is that this consolidation period will be followed by acquisitions made by bigger companies looking to establish themselves in the space. This mirrors what we have seen in other parts of the vertical software space.

Both rounds of M&A will likely boost competition in the space, which in turn will lead to development of new services and solutions. More services and solutions means a broader market, leading to bigger sales.