Better means customization
The Canadian division of Callaway, the golf equipment manufacturer, has improved customer service by setting up a sleak program of golf club customization
Professor John Haywood-Farmer of the Richard Ivey School of Business (University of Western Ontario) has studied the success of Callaway, a leader in the golf equipment sector. He summarizes the success as follows: “Callaway is an example of an innovative manufacturer which succeeded in redefining its sector and is now also competing on the basis of superior service.” In particular, in Canada, Callaway decided to up its service by offering customization of its golf clubs to high-end buyers.
In 2004 the Canadian division of Callaway created the concept of the Mobile Performance Team. The team comprised Mobile Performance Consultants whose mission it was to meet with private club members and fit them out with tailored head-shaft-grip combinations. The consultants were excellent golfers (some were certified professionals) with some business training. The process at the clubs was organized as follows: the consultants would first schedule a demonstration day at the club to present the Callaway product line and let members try the equipment. Subsequently, they would organize a fitting day to meet individually with interested members.
On a fitting day the consultant would meet with approximately 10 members for 20 to 40 minute sessions. Using a swing analyser, the Accusport Vector launch monitor system, the consultant would produce a fitting sheet (listing head, shaft and grip specifications), given to the customer and the club professional. The member could order the customized clubs on the spot or later through the club professional and receive them a week after the order was placed. Callaway claimed an impressive conversion rate of 75%.
In Canada, Callaway employed 20 consultants who were paid C$100 per day plus an expense budget. They typically worked 6 days a week during the 5 month Canadian golf season and met 200 customers a month. The cost of the MPT program to Callaway Canada was approximately C$500,000. Assuming a conversion rate of 50% and an average sale of C$500, the Mobile Performance Team would generate C$5,000,000 in sales. Even cutting that figure in half, the return on sales investment would be excellent. Professor Haywood-Farmer assesses the MPT program as follows: “This is a successful program because it is consistent with the rest of the company’s marketing efforts, it meets the needs of the target group and it pays for itself.”
Indeed, in this consolidated industry where product innovations are now more limited, customization has become a driving force in the industry and Callaway's competitors are building their capacities in the area. As the Canadian division of Callaway pursues its strategy of superior customer service through its MPT program, Professor Haywood-Farmer notes that it has a number of improvement options: “One option is to hire only certified professionals as consultants – the consultants could then offer not only fitting specifications but also swing tips to the customer. Also, Callaway could use a more advanced and costlier version of the Accusport Vector machine which provides more advanced swing mechanics data and thus assist the customer with his or her swing. A third option would be to reach out to public course players, a larger albeit less wealthy customer base, which would entail increasing the size of the MPT, thus increasing the sales budget and sales growth but no doubt at a lower conversion rate.”
In its advertising campaign, Accenture advises its clients to be a Tiger, but being a Callaway might also be path to success. This case shows it to be a company that rose to the top on the back of product innovation and is now proving itself adept at service innovation.
Reference: ECCH 9B08D005, Richard Ivey School of Business (University of Western Ontario), Brett Jackman and Professor John Haywood-Farmer
