For the past several years, we have seen the world of sports business overwhelmed with a bunch of business practices that are detrimental to the long term health of sports as a business and act decisively to destroy the brand equity that has been created over the years.
Some of the worst business practices that seem to have become “best” practices throughout the sports industry, but which have been discarded by many other industries include:
Using cold calling in place of almost all other marketing and selling tactics and strategies.
Discounting aggressively and constantly, even when that flies in the face of trying to promote higher value products and services through the inside sales efforts.
Trying to price according to unscientific data and unscientific data points as a means to “defeat” the secondary market, even when the actual data flies in the face of actual results.
An almost total disregard for digital best practices like email list building, digital selling, and other digital distribution best practices.
I could list several more business practices that have outlived their usefulness, but this is a short primer. Which led me to an interesting discover at the end of last week, a Facebook group that was founded by unhappy San Jose Sharks Season Ticket Holders that are unhappy with the team and have specifically turned their anger towards the team’s Chief Marketing Officer as the point of focus for their anger and their vitriol.
While the Sharks have made a big deal about how they have been restructuring their pricing and their benefits to their Season Ticket Holders, this has rubbed a lot of people the wrong way and led local media to call the timing “ill-timed at best.”
Businesses in all industries have to make these types of decisions at their own time and in their own way, but in the case of the Sharks, I think that their decisions and the backlash from the media and fans is illustrative of some of the areas of concern that any of us that work in or with sports should be feeling and where some of the sports business “best” practices fall short and need to be improved before its too late.
Need To Refocus On Long Term Customer Value, Branding, And Community
One of the big issues in sports business is the fact that most decisions are made on a yearly basis.
While a team’s GM and team side may have a 3 or 5 year plan for returning to prominence, in most of the teams’ business efforts, the cycle is year to year.
There are several reasons for this:
First, in too many cases, executives, managers, and team members have very short shelf lives with a team or a market. My colleague, Kathy Burrows, wrote about this challenge recently with a post about the revolving door of sports business professionals.
Why is there a constant flux of executives, managers, and professionals?
I think there are a lot of reasons that this occurs and not many of them are good for the industry.
For one, as an industry, we’ve sold people on the fact that it is an honor to work in sports and that you should take under fair market value to follow your pursuit of sports business.
While it is trumpeted as all about making sure that the really “competitive” people get the jobs, what is actually does is acts as an incentive for some of the best and brightest to take their talents into other industries.
While there are many very talented individuals in the sports industry, the question becomes “with these multi-billion dollar assets, can we afford to hire on the cheap?”
Second, we’ve done a pretty terrible job of building long-term fan loyalty. Or, I should say that we’ve allowed brand loyalty to deteriorate to a great extent.
I’m sure if we were to poll a lot of the veterans of sports or a lot of long term sports fans, we could ask them some variation of the question: “What drew you to your team or sport?”
Likely the answer would be some version of, “I grew up a die-hard Mets’ fan because of my dad.” Or, something similar.
Team loyalty used to be something that was passed down from generation to generation, but not any longer.
In too many cases, the loyalty is transferred from player to player or there isn’t much strong connection to the team at all.
This does two things, it means you are constantly having to ratchet up your efforts to educate and grow your customer base, but you don’t have as strong of a base from which to start. This has the effect of making everything feel like a hard sell.
Finally, over the last several years we have seen a building boom in sports and more and more seats have become “premium.”
Trust me, I love the premium experience. My whole career is like one long love song to the premium experience, but this obsession with different levels of “premium” experience has come at a cost.
One, we have lost the sense of community that creates magic in our buildings.
This magic is what today’s consumers demand from their entertainment dollars. Because if you aren’t building a great experience, the in-home experience has gotten so tremendous that it is tough to tear people away from their homes.
Second, in the rush to make things more “fancy,” we have actually commoditized the premium experience to the point where it is pretty meaningless.
As an industry it feels like we have lost touch with what real premium experiences are and have instead confused that with luxury amenities or low value features.
The thing about a true luxury experience is that it isn’t driven by free Bud Light or a buffet. It is driven by connections and experiential aspects that can’t be gained anywhere else.
All of these issues have led to an environment where even the most rabid, long-term fans feel like transactional participants.
One of the big gripes in the Unhappy Sharks group is that fans that have been with the team for 26 years feel neglected or unimportant. That’s a big challenge on so many levels because for one, the first rule of business is that your only job is to build and keep customers. But if someone has committed to spending money with you and being loyal to you for 26 years, they deserve some respect.
This is a pretty dire situation, but it can be turned around…with the right commitments and the right ideas.
First, think about your customers from the POV of their full lifetime value.
I talk consistently about this with my own clients. Getting new customers is expensive and time consuming. So you want to minimize the time and cost of customer acquisition. The best place to start is with the people that are already on your side.
If you take the step back and look at your customers from their full life cycle, you are going to make many different decisions.
Because looking at the long term value is going to change the approach.
The current approach to pricing for tickets and concessions is the kind of spreadsheet, algorithmic mumbo jumbo that is great in an MBA course, but which when applied to the real world makes fans feel like they are being gouged and turns them off to your product and experience.
In other words, just because you have a formula that says you can charge a fan $14 for a 16 ounce Bud Light that doesn’t mean you should do it.
A much wiser way is to ask, “what can I deliver for my buyers so that they are happy and I can capture the most valuable?”
Second, put some effort into the branding of your team.
The strength of sports brands is strong in some places, not strong in others. But one universal is that in too many areas, the brand’s strength or weakness rises or falls with winning or losing.
That’s pretty much a formula for a boom or bust cycle.
Think objectively for a moment and ask yourself how many teams have a tremendous and consistent brand that has been built over the long term?
How many brands if mentioned immediately bring to mind a specific image? A specific sense of place? A specific sense of purpose?
If I’m being honest with myself, not nearly as many as used to be the case.
I can think of 3-5, but the rest are just some jumble of more of the same advertising, uniforms, and brand personalities.
The thing about this, and it holds true for any business, is that if you don’t stand for something, you stand for nothing.
If you don’t stand for something specific and unique, you are just a jumble in your customers and prospects minds and you can easily just be discarded for whatever is new and shiny.
So as an organization, it makes sense to come up with a mission and a brand that is unique and relevant to your organization.
For me, I think that the Raiders of old created a tremendous brand identity around their mission to “Just Win Baby” and their logo and uniforms and their fans and experience.
The thing is, with effort, that is available to all of us.
It isn’t easy work but it does have a tremendous payoff.
Third, get back into the community building business.
The joy of attending a live event, concert, or game is that its communal. Bob Lefsetz writes fairly often about the way that a great concert can transport you and take you away. In too many of our venues, the experience has been watered down, sanitized, and sterilized to the point that there is no sense of there there.
I remember specifically being a 24 year old, young professional that bought Seattle Supersonics season tickets in the 5th row of the upper deck at the Key Arena, behind the Sonics’ bench.
During the next two years that I lived in Seattle and attended Sonics’ games, the Sonics worked hard to create community both in our seats and for all STH holders by having a membership rewards program that rewarded fans for going to games, special STH holder events, pick up games on the practice floor with team members and STH holders, chances to network and meet your other people from the neighborhood.
The list goes on and on, but the thing was that the Sonics and Howard Schultz put a great emphasis on community and the team and the business was stronger for it.
We have to get back into the community building business, so that are teams and venues are gathering places that draw people in. I don’t think it was a coincidence that Howard Schultz was the owner at the time that the Sonics were focusing on community building around the team since Starbucks is so famous for its “third place” philosophy.
What would it take to make our stadiums and arenas a third place?
Start Treating Fans In A Manner That You Would Like To Be Treated
Another pretty compelling set of posts in the Sharks group is the number of times that the team acts in a manner inconsistent with holding their STH’s as some of their most important customers.
There are the 50-75% increases in certain seats…especially when the team is playing to a lot of empty seats.
There is the sever discounts that make it cheaper for fans to buy single game tickets in better locations that STHs are getting for their full seasons.
These are two examples that popped up several times in the Sharks group, but combine it with some of the other prominent practices that have been tried, and it adds up to an environment where we could be accused of treating our fans and customers in ways that we wouldn’t accept if the shoe was on the other foot.
There are simple reasons that are spelled out in consumer psychology not to do some of these things. Discounts destroy brands and when you open up the door to deep discounts, that’s a door that can’t be shut for 7 years. Martin Lindstrom did one of the most expensive consumer psychology studies ever and detailed it in his book, Buy-ology. The point of which is that psychologically and deeply in our brain, discounts make us feel like something is lesser.
By radically changing your pricing and/or benefit structure, you should explain that in a way that makes it clear to your buyers what the rationale is for the decision making process.
You might think that you don’t really owe anyone an explanation, but as we see with the Sharks’ group, word of mouth is the most powerful form of marketing. If you lose the battle for word of mouth, you lose the argument period.
That’s why even when you raise prices or cut them, make the explanation clear and sensical.
Don’t couch your explanation in a bunch of buzz word and marketing speak. Talk to your people like people.
This kind of thinking needs to jump into every decision and idea that we offer up because we have to start treating our guests the way that we would want to be treated if we were on the other side of the transaction.
Start at the first contact we make, which is usually before a fan ever enters the building.
What do we want our marketing and advertising to say about us?
If you go back to the point above, you know we need to work on making our branding about creating a specific feeling and environment around our team, our fans, and our building.
Does our marketing and advertising really say that?
How about the buying process?
I know that I’ve been frustrated by the buying process going through a primary point of purchase on any number of occasions.
I’m in the industry and know what I am doing.
How do you think that fans that have no clue must feel?
How about the pricing of food and beverage?
I know that a big deal is being made about the Falcons’ decision to make their prices “fan friendly.”
But the thing is, shouldn’t we all be making our prices fan friendly?
If you look around at so many of our buildings, the empty seats are glaring. Which means that some of the following things aren’t happening:
We aren’t doing a good job of selling the value of our experience.
Our pricing is out of line with the value in our buyers’ heads.
We aren’t creating a good enough experience or a good enough community to compel people to turn off the TV and come to our venue.
Some of the pricing decisions we make make me think that some version of all 3 are at play.
This goes not just for food and beverage, but for tickets and merchandise as well.
Like I said above, you may have a spreadsheet that says you can charge your fans $14 for a Bud Light, but does that mean you should?
The thing about it is that creativity can open up tremendous paths to new revenue and an enhanced experience for your fans.
FC Barcelona makes over $100M a year from merchandise alone because they realize that they can offer up their fans many variations of the standard jersey, t-shirt, etc and their fans will be happy to have it and happy to pay for it.
Compare that to the standard team that maybe has one or two alternative jerseys or has pretty much kept the same jersey design year after year.
Granted, part of the variance and ability to generate 9 figures in merchandise sales comes from having a wider global audience, but see the points above…branding is a big freakin’ deal.
Finally, let’s get to the idea of pricing our tickets and inventory.
It sometimes feels like not a day goes by where don’t hear of another team implementing a 20%+ price increase on some seats. Usually this increase is framed as “fair-market” or some other nonsense term that just means, “we’ve seen our tickets listed on the secondary market” at that price and we want to get into that game.
The problem with this way of trying to price is that no one outside of the brokers that hold the inventory and are buying and selling the tickets knows exactly what the sale price for the tickets is.
Trust me, Darren Rovell and a lot of these other sports business “reporters” are touting some bogus statistic from StubHub or TicketsNow, but the average listed price is a pretty meaningless statistic and tells you only which way the market is moving on the sites.
What this has done is created an environment where teams and executives feel justified to raise tickets to astronomical levels. The rationale being to “beat” the secondary market.
But what has happened is evident in so many panning shots of arenas and stadiums around the country, empty seats.
This idea of pricing correctly relies on several pieces of thought:
First, you can either price for the revenue or to maximize attendance.
If you are just driving revenue, go ahead and price the things at the point where you are going to have lots of empty seats, but someone will pay at some point.
You may have a few sell outs over the season, but they aren’t going to be consistent.
If you are pricing to maximize attendance, that’s going to mean you are going to likely leave a little money on the table for brokers. And, that should be okay because if you are smarter about your experience and merchandising strategies, you can make up much of that revenue in these areas.
But also if you are driving attendance, over time the experience will improve and that will enable you to push up the prices because attending is a much more valuable proposition.
Second, the secondary market provides a valuable service to teams and leagues because brokers actually have different markets and customers than the team might have. Or, they open the door for teams and leagues to reach markets that they aren’t currently communicating with effectively.
The other thing that the secondary does that can’t be understated, they invest in your product in a substantial manner that mitigates some of the risk that a team faces in the form of not being able to sell all of their tickets.
Finally, you have to price better because its a marketing drain to have sky high ticket prices that you have to deeply discount. This is true for a number of reasons.
Discounts destroy your brand.
By poorly pricing at the start, your first impression on your market may not be what you want it to be.
Changing someone’s mind after they have had a bad first impression can be expensive, time consuming, and fruitless.
You don’t give fans an incentive to buy early, causing your risk level to increase.
Again, these aren’t insurmountable challenges.
They do require thought and consistent focused action.
Start by designing the entire experience from pregame to postgame and beyond in a way that shows you care.
With all of the digital technologies available, it is and should be much easier to communicate with your ticket buyers before, during, and after a game. This kind of high touch experience is what is demanded of most of our modern customers, but it is also a tremendous opportunity for our teams to wow our customers and turn them into long term fans, which should be our ultimate objective anyway.
Next, instead of being myopic in the our business models, we should think more strategically and globally about our pricing, selling, merchandise, customer service, and F&B strategies.
I like to frame this as: “What does success look like for us?”
If we are following along with business 101 ideas, we want long term customers. We also want to create experiences that people will talk about and we want to build strong brands that travel the globe for us.
That means that we have every incentive to do some of the following things:
Communicate with buyers and prospects in a manner that they want to be communicated with.
Providing a great customer experience from the moment they get to our parking lots or our metro stops until they get home and beyond.
Give our fans the tools and opportunities to make their experience shareable.
Work with other partners and vendors that have already gained our fans trust to help piggyback off that trust in a manner that will allow us to get some of the halo effect of our and their efforts.
Finally, don’t look at the customer experience and customer path as transactional.
Again, I tie this into the idea that we need to be focused on long term customer value.
You don’t get to long term value by accident. It is deliberate and it is consistent.
Don’t Get Trapped By Old Business Models
Right now TV money is blowing up the world of sports.
What that means is that probably too much of the thinking and best efforts of teams, leagues, and people is spent on making sure that the TV money keeps flowing, even to the point that people aren’t spending enough time focusing on what’s next.
This means that the declining ratings are the alarm bell that has driven everyone to action, but the clearest indicator that something wasn’t right with some of the aspects of sports business was that real attendance was down.
I’m thinking of the conversation that Roger Goodell had with the Steelers about ways to bring their fans into the stadium because the empty seats were a bad look on TV.
The empty seats and the declining ratings are symptoms of a larger issue. Which I’d define as not enough emphasis on long term fan development.
Its tough to convert fans to your sports and games if they haven’t been introduced to the games, arenas, and experiences earlier in life.
The idea that people are just going to move into loving your sport later in life is sort of like a Hail Mary.
In Chuck Klosterman’s recent book, What If We Are Wrong?, he talks about the decline of participation in team sports, which is a pretty strong feeder system for long term sports viewership.
What is driving that change in participation?
Probably a lot of things like costs, changes in society, and competition for attention from other activities.
The cause is irrelevant.
The bigger issue is that by not investing in early childhood exposure to sports and teams, the teams and leagues are in danger of not having a customer base later on. Which will mean that the costs of marketing and selling will increase tremendously and the effectiveness will go down.
This is an issue of needing to revisit the business models from time to time.
Feeding fans into the games is one area.
Having so much revenue generating specifically from one area like TV, that’s another.
Relying on the old ways of selling and marketing the sport, that’s another.
Only revisiting the customer experience and experiential nature of the in-game experience around stadium remodels and rebuilds is another.
Not finding ways to enhance the community aspect of the games because fans only care about winning is another.
The key here is that thriving industries and businesses are constantly disrupted and if they are doing a good job, they disrupt themselves consistently so that they aren’t caught off guard by some upstart or startup.
A few of the easier ways to get started on this path include:
Asking how you can expose more new people to the games or experiences? Are there leagues that you can support? Programs that you can offer in schools?
Looking at trends and try to map out a several year strategy for fan development, customer development, and marketing strategy that is focused on the idea of expanding your reach in your community.
Revisiting your revenue models. In any business if too much of your money comes from one source, that’s problematic. While any revenue structure might have an imbalance, it is possible to act to secure and strengthen revenue from other sources so that you have some security and balance to your revenue generation.
Figure out how you can more readily adapt some of the new tools and technologies that will be meaningful to your customers and potential customers.
The big point here is that you have to always be looking a few steps down the road. If you don’t, you can end up in a similar position to the Sharks. Where your credibility is being questioned by the media, fans, and customers. Where you have business side executives being ridiculed in the open on social media and where you struggle to fill your venues.
The challenge is that even if you do everything right, that doesn’t mean you are guaranteed anything.
The opportunity is that if you do take action on some of these ideas is that you are less likely to be in a position where you have an open revolt among your customer base.
What say you?