Ideally, golfers would always like to play with the newest clubs available, since technology and design innovations can provide that little bit of extra “oomph” that improves a golfer’s game. By implementing a subscription-based upgrade program that helps customers finance their purchases of new clubs, TaylorMade Golf boosted conversion rates 30% over a six-month period and increased average order value (AOV) by 5%.
The program, named “The Turn,” after the turn for home that occurs after the ninth hole, gives TaylorMade customers an 18- to 30-month financing option for drivers and irons. After 12 months, golfers can trade in their driver for a newer model; payments on the old club stop and those on the new club begin. For irons, which typically have a longer lifecycle, the trade-in option kicks in after 24 months.
“For a while we had been talking about different ways to speed up the purchase cycle for our products,” said John Gonsalves, VP of Digital and Direct to Consumer for TaylorMade Golf. “The top players are constantly moving into new equipment year after year to take advantage of product improvements. Consumer behavior doesn’t mirror that, whether due to price considerations or performance; the average purchase cycle for a driver is 3.5 years, and it’s more than five years for irons.”
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TaylorMade partnered with Klarna to provide a simple, customer-friendly financing option that the retailer launched in April 2017. Since then, conversion rates have climbed 30% on a year-over-year basis, and “revenue growth has increased considerably,” said Gonsalves in an interview with Retail TouchPoints. “It’s definitely contributed to the top line.”
Much of the revenue increase has come from higher-end irons, which are priced in the $1,300 to $1,400 range. “The program has been contributing more than 20% for those products,” said Gonsalves.
“The initial adoption rate for The Turn program has exceeded our goals; the next key thing for us is to measure what the upgrade rate is going to be,” noted Gonsalves. The first participants will be eligible for trade-ins in April 2018. “We don’t have hard data on what it will be, but we have been surveying our customers and we’re seeing a fairly high intent to upgrade,” he added.
“This is a new concept for the golf industry and we see that it’s been perceived well by consumers in general,” said Gonsalves. “Golfers want to use the new equipment. One of the things we’re seeing is that our Net Promoter Score (NPS) for people in the program is significantly higher than for our general customers.”
Fast Financing Approvals Are Critical
Gonsalves credits the fast, simple user experience as a key part of the program’s success. “It’s two simple steps; customers provide their birth date and the last four digits of their Social Security Number, and they get an approval right away,” he noted. “It’s not a lengthy process, and they can do it on a mobile phone fairly easily.”
“It takes 0.4 seconds to take an application and provide a response, and we don’t push the consumer to a third-party web site to complete their application,” said Jim Lofgren, Klarna’s CEO for North America. “Everything happens within the ‘four walls’ of TaylorMade.”
Klarna uses the birth data, SSN and customer address data along with three-factor identity verification and risk modeling to provide rapid approvals or turndowns. “We use more than 180 different variables from a risk/fraud perspective to approve a customer, including their good standing in making payments,” said Lofgren in an interview with Retail TouchPoints.
The program currently is available through TaylorMadeGolf.com in the U.S., the retailer’s biggest market via online sales. TaylorMade’s brick-and-mortar presence in the U.S. is relatively limited. It includes nine factory outlet stores and sales at “green grass” pro shops at major golf courses, as well as through retailers such as Dick’s Sporting Goods.
The company is considering expanding the subscription program, possibly by allowing more of its products to be eligible for the trade-in option. Alternatively, TaylorMade could expand the program globally where the retailer already has a presence, including Europe, Japan, Canada and Korea.
“We’re looking at expansion, but since drivers are changed out the most often of all types of golf clubs, we wanted to start with them and learn a few things,” said Gonsalves.
An added bonus for TaylorMade is that The Turn program gives it access to used, but still usable, golf clubs for resale. “Typically a driver that has been used for a year tends to be in very good shape, and there’s a broad secondary market for products like this,” Gonsalves reported. “These are good premium products that could be put back into the market.”
