An average fan at a Major League Baseball game pays about $15 per ticket and spends another $15.40 in non-ticket items.
First a national baseball strike, then a loss of several popular players. For the San Diego Padres baseball team, both events contributed to a defection of fans in 1996. To reconnect with disillusioned supporters, the ball club hired Essential Data Collection Systems Inc. (EDCS), a Phoenix-based technology vendor, to create a loyalty program to reward those willing to attend a majority of the Padres' home games. In the 1996-1997 season alone, the ball club signed 60,000 new fans and collected about $400,000 in revenues from new season-ticket sales.
Ever since Cro-Magnon man first tossed a rock over home plate, sports marketers have been trying to figure out ways to keep fans loyal to their home team. Today, a growing number of sports franchises are taking a page from the Padres' playbook. Major and minor league teams are only now beginning to use customer relationship marketing (CRM) strategies to stave off fan defection. Part of the reason for adopting a CRM approach is that franchises today face a double whammy. Consumers have more entertainment choices; even the most die-hard fans wince at the ever-increasing cost of attending a sporting event. Add to the mix a losing season, and a team is faced with a tough ticket sell and empty seats. â€œAlthough a team's first priority is always going to be winning, teams have to stay solvent during the losing years, too,â€? says Blaine LeGere, EDCS' director of client services and operations. â€œThe only way to do that is to create loyalty among the fans.â€?
CRM isn't bleeding edge. It's been the backbone of most consumer-oriented marketing programs for the past 20 years. But new technology is allowing developers of customer relationship programs to better manage the data they gather. It's also helping marketers enhance their recruitment of new customers and keep current clients. Until recently, sports teams have not had access to CRM strategies designed specifically for their use. Today, it's a different ball game. Aided by technology, sports-specific strategies are helping marketers reconnect with their fans. Even when a team is winning and stadiums are packed, CRM helps identify those fans most likely to buy season tickets or ticket packages in advance, by creating databases on fan attendance. A team can then target these prospects for season tickets the following year. Advance ticket sales are extremely valuable to sports teams, since they guarantee a certain revenue level for the season.
â€œClub cards,â€? similar to ATM cards, are at the heart of fan loyalty programs these days. Although programs vary slightly from team to team, the idea is pretty much the same: Each time fans use their card, they rack up attendance points redeemable for promotional coupons or items such as food, drinks, and souvenirs. The more points they compile, the more â€œrewardsâ€? they receive. In return, the teams get a database filled with information on their fans, which could lead to additional revenue streams. For example, when fans sign up for a club card with the EDCS Ultimate Fan Loyalty program, they must complete a form asking for their addresses, incomes, family configurations, and other basic personal information. And if teams want, the surveys could also include tailored questions like â€œWhat's your favorite soft drink?â€? or â€œWhat kind of car do you drive?â€?
Dave Auker, senior vice president of The Palace of Auburn Hills, a Detroit sports and entertainment complex, is counting on loyalty marketing to maintain a full house. The Palace hosts the NBA's Detroit Pistons, the IHL's Detroit Vipers, the WNBA's Detroit Shock â€” all of whom had less than stellar seasons recently. And, this spring, the 21,000-seat arena will also play host to a football expansion team â€” The Detroit Fury. Auker hired EDCS last year, and the company started the â€œMy Palâ€? program in January. So far, about 10,000 members have signed up to accumulate points by attending sporting or special events. From this membership database, Auker and his marketing team will create â€œmore personalizedâ€? interaction with the fan base â€” from individualized e-mails to, perhaps, video highlights of sporting or entertainment events.
STAY IN YOUR SEATS
The average price of admission to an NBA game is $48.30.
|Non-ticket $ spent per fan||$15.40||$18.20||$19.00||$18.25|
|Average ticket price||$15.00||$48.30||$45.45||$46.38|
|Non-ticket $ as % of ticket price||103%||38%||42%||39%|
|Source: 2000 Inside the Ownership of Professional Sports Teams|
Auker says this investment is critical to increasing profits in an environment in which consumers are beginning to dictate their experiences at an event. â€œDatabase management isn't really new to sports, since ticket information always â€˜kind ofâ€™ told you who your customers were,â€? says Auker. â€œBut our knowledge was primitive. The big difference today is now you â€˜really knowâ€™ who your customers are. That's a critical distinction, and it's due to technology. For anybody who wants to do a good job marketing sports by filling the stands, it's a no-brainer.â€?
In the wide world of sports, a fan in a seat equates to increased revenue generated from ancillary offerings such as food and merchandise. Loyalty programs can help generate millions in additional revenue. An average fan at a Major League Baseball game pays about $15 per ticket, and spends another $15.40 in non-ticket expenditure, a whopping 103 percent of non-ticket dollars (as a percentage of ticket price), according to Chicago-based sports marketing firm TMR's report, â€œ2000 Inside the Ownership of Professional Sports Teams.â€?
But you don't have to be a major league team to understand the economics of loyalty programs. The Nashville Sounds, a Triple-A baseball team, is changing its concession and entertainment offerings this year â€” based on research conducted last season. It turns out that only 65 percent of the 2,500 fans indicated an actual interest in baseball. Families, it seems, came to the ballpark for promotions and G-rated entertainment, not the action on the field. The Sounds also discovered that families disliked the team's concession choices â€” typical baseball fare like hot dogs, peanuts, and popcorn. Instead, they wanted healthier options. â€œFans told us they wanted peanut butter and jelly sandwiches, salads, and more vegetarian food,â€? says Kristen Taylor, senior sponsorship marketing manager. â€œWe're minor leaguers competing against huge players. We need to do everything that we can so that people don't forget about us. But who figured that fans would want a salad?â€?
Who indeed? Sports franchises are just beginning to repeat the mantra that most packaged-goods marketers have known for years: know your customer. Perhaps that's because the probability of selling an existing customer on another service has a success rate of about 60 percent to 70 percent, according to New York-based Marketing Metrix. A lapsed customer, say, one who now prefers a night on the couch to a night at the ballpark, is less likely to be sold on another service. A marketer only has a 20 percent to 40 percent chance of making a sale with fans in that group. And the new prospect? That's even more difficult, with only a 5 percent to 20 percent chance of successfully hawking a new service.
â€œA lapsed fan isn't going to go out and buy a team jersey, and a potential fan may not even buy a ticket,â€? says Jill Griffin, author of Customer WinBack and president of the Austin, Texas-based customer loyalty firm The Griffin Group. â€œA smart team wants to get to know its most loyal fan base and then stair-step them up to increasingly deeper levels of loyalty and involvement with the team. Your old prospect is always your best prospect,â€? says Griffin.
But even the most loyal prospect needs some pampering. And what better way than to take the pain out of the ticket purchase and that long, interminable wait in line to get inside a stadium. One-year-old San Francisco-based Justarrive, which creates loyalty programs for the college market, is banking its technology on a fan's need for speed. When fans purchase tickets online and offline, they don't have to wait by their mailboxes or stand in line at â€œwill callâ€? for their tickets at each game. Fans can have their tickets attached electronically to any card with a magnetic stripe in their wallet â€” a university ID, credit card, or specially issued team card. Any of these cards then function as the fan's â€œticket.â€? On game day, fans simply swipe their cards at a Justarrive entrance, a paper coupon spits out from the unit, and fans gain admission. Behind the scenes, the data from the card swipe, which includes the fan's name and attendance pattern, is automatically registered and organized in database fashion, allowing teams to market to prospective fans more easily. The paper coupon also provides teams and corporate sponsors with a marketing opportunity, since personalized messages and discounts for products and services can be printed on the reverse side of the â€œticket.â€?
Stanford was the first university to deploy this high-tech ticketing approach. In a Justarrive pilot program used during its 1999 basketball season, the institution doubled game attendance and almost doubled revenue in the student market by providing this type of convenience ticketing. It didn't hurt that the team coupled the convenience ticketing with a unique reward incentive: When students showed up for less popular games (Stanford vs., say, Cal State-Bakersfield), they earned 10 â€œfan-addictâ€? points. Students who accrued the most points received e-mails guaranteeing entrance to major games, such as Stanford vs. UCLA. So while less ardent fans are admitted on a first-come, first-served basis, die-hard enthusiasts are assured attendance. These students also received extra entries in the lottery for student tickets to NCAA tournament games.
NO SHOW, NO DOUGH
Unrealized revenue from â€œno-showâ€? fans is a big problem in major league sports.
|Non-ticket $ spent per fan **||$15.40||$18.20||$19.00||$18.25|
|Lost $ per league||$96.3M||$22.7M||$51.9M||$35.8M|
|Lost $ per team||$3.2M||$800k||$1.7M||$1.2M|
|1) *Source: â€œTaking Attendance: Examining MLB Attendance Figures,â€? Alan Snel, 10/2000|
|2)** Source: 2000 Inside the Ownership of Professional Sports Teams|
|3) NBA: Akron Beacon Journal, 6/1998|
|4) NFL: The Jacksonville Florida Business Journal, 8/1997|
|5) NHL: Estimate based on assumed similarity to NBA|
This year, Stanford will use the Justarrive technology for fans of its football and men's and women's basketball programs. The start-up tech company hopes to further improve a team's direct relationship with fans by allowing franchises and sponsors to personalize marketing messages on the back of coupons. â€œIt's all about personalization,â€? according to Kyle Critchfield, Justarrive's manager of marketing communications. â€œEvery customer, every fan, wants as exclusive and seamless an experience as possible.â€?
And every marketer wants data that translates to dollars. Using the database tools, the Padres determined that fans come to an average of three to five extra games per season due to the rewards club. Overall frequency of active members has increased from 6.5 games per season in 1996 to 10.5 games per season in 2000. Extrapolating a worst-case scenario, Brooke Govan, Compadres Club manager, estimates that if half of the team's 160,000 club members come to only one extra game (with tickets averaging $20 each), it would bring in approximately $1.6 million in revenue per season. With Justarrive entering its first full season this year, the numbers could be equally impressive in the college market. Says NFL Hall of Fame inductee and Justarrive board member Ronnie Lott, â€œThere's nothing a team likes better than a full stadium and happy fans.â€?