The average cost of taking a family of four to an NBA game passed $280 this year, according to Team Marketing Report. When you drop that kind of money for an event, sports is about more than the thrill of victory.
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If you've attended a sporting event recently it's likely that you paid $7 for a 12-ounce cup of domestic beer and $5 for a hot dog. You probably muttered about the high prices under your breath before returning to your $40 seat to wave your $12 foam finger and root for the home team, all while wearing a new $26 T-shirt from the team store. But who cares? It's bobble-head day.
The average cost of taking a family of four to an NBA game passed $280 this year, according to Team Marketing Report. It is the most expensive event for a family in any sport. When you drop that kind of money for an event, sports is about more than the thrill of victory. It's about the fan experience.
A winning season or a star athlete like Michael Jordan is often enough to draw a packed house, but most sports organizations are finding that they need a little help to keep filling the stands when the team's performance is less than stellar. "Value like beauty is in the eye of the beholder," says Ray Artigue, senior vice president of marketing for the Phoenix Suns. "In these tough times its takes more than a tchotchke or promotion to gain fan loyalty."
For many teams, including the Arizona Diamondbacks, the Carolina Hurricanes, the Phoenix Suns, the Pittsburgh Pirates, and the San Diego Padres, the secret weapon for winning that loyalty is customer relationship management. "CRM helps even out the highs and lows," says Steven Hank, CRM development director at Arizona State University. ASU's CRM program, called the Devil's Domain (after the school's Sun Devil mascot), includes a Web site, a rewards program, screensavers with customized messages, discounts at the team store and on future ticket purchases, and coupons for free food and beverages.
Hank is riding a new wave with sports franchises. He is one of the few executives with CRM in his job title, but industry-watchers expect that to become more common as more sports teams adopt CRM.
CRM Is Rewarding
The San Diego Padres was among the first professional teams to implement a CRM program and was the first to start a fan-loyalty rewards program, in 1995. Since that time attendance has never dipped below 2 million per year, according to Brook Govan, the Padres' manager of fan programs and new ball park technology. The Padres also have seen the average number of games attended by loyal fans increase to 10.7 per season in 2002, up from 6.5 in 1995.
Through its reward program, which gives fans a card to swipe at stadium kiosks, fans earn discounts on future tickets, food, beverages, and items from the team store. Discounts are dependent upon points accumulated by game attendance and specific purchases. In return the Padres get detailed demographic information about fans, and to track spending habits at the game. As a result, the organization says it is able to deliver a more enjoyable fan experience, while increasing its revenue.
The Padres database has approximately 185,000 members. Via its data collection strategy the Padres also found that a significant percentage of its 681,000-strong fan base is just over the border, in Mexico. The Padres now offer a special reward card for residents of Mexico, and target Hispanic fans on both sides of the border with radio and television campaigns. "We had no idea about any of this before we started this CRM effort," says Govan, who adds that on average the Padres get a 6 percent return for each email campaign it offers, which is twice what the team experienced using direct mail.
Although CRM is helping to increase revenue for some teams, many of those efforts begin strictly as a service to fans, according to John Walker, vice president of business development for the Phoenix Suns. This year the Suns began allowing its ticket holders to resell tickets via the team's Web site. "This is part of a larger customer service effort," Walker says. "If you think that fans are not going to be standing outside the box office trying to get rid of tickets...you're wrong. They are going to do it, so why not make it easier for them?" The Suns' Artigue says that it's another way to draw Suns fans to the Web site, where the team sold 60 percent of its mini-package plans in 2003.
The Golden State Warriors also offer online ticket reselling, but according to COO Robert Rowell, the basketball team takes a different tact. The Warriors let season ticket holders resell tickets on a special part of its Web site, but "we don't want to compete with our own season ticket holders, so they cannot sell tickets for less than face value or for more than one-and-a-half times the value of the ticket," Rowell says. "We want to offer a service, not run a scalping business."
Hitting for the Fences
Some organizations are seeing initial gradual changes, but for the Chicago White Sox implementing CRM has dramatically changed the way the team does business.
"Before CRM it was like the old stories of walking up hill 10 miles in the snow to get to school," says Tom Sheridan, manager of ticket sales for the White Sox. "Now we are generating birthday cards that are automatically sent to season ticket holders. It's amazing."
The White Sox uses CRM in its community relations, marketing, and suite-holder relations departments, and manages season ticket holder relationships by using GoldMine to transfer information stored in the Ticketmaster system. Today there are more than 30,000 records in the main ticket sales database, and more than 100,000 in the direct mail database. The Sox' inbound and outbound call teams use these databases to solicit season tickets, group sales, company outings, suites, and events for the party areas.
The CRM system also helps keep track of the 10,000 lost items that are left at the stadium every year. Julie Taylor, director of guest services for the White Sox, had a systems analyst at the White Sox customize GoldMine's interface so her interns could log found items using the system. GoldMine now tracks the date an item was found, what it looks like, and where White Sox staff picked it up. The items are then labeled and stored in a bin. Taylor estimates that since April 2002, when the software was deployed, her department has been able to return 50 percent more items than the previous year.
The Carolina Hurricanes are also finding creative ways to capitalize on CRM. Howard Sabel, director of new media and graphic communication for the Hurricanes, is using wireless technology to boost fan interest in the National Hockey League team. The Hurricanes and the RBC Center are billed as the "home of wireless hockey." The program comprises wireless access to the team's Web site and an interactive wireless hockey game played during the live games from fans' personal PDAs or cell phones. Sabel is working on bringing wireless prepaid parking and wireless order placement for in-seat food and beverages to the stadium and team.
Most organizations are willing to share their CRM secrets, because other sports franchises are not really their rivals for fan dollars. In fact, most cited television, movies, dining out, and other forms of entertainment as the biggest competition to filling the stands. Still many teams haven't caught on to CRM.
"There are a few teams out there on the leading edge, but mostly there are people making up their own CRM," says Bobby Whitson, vice president of retail, sports, and venue sales for SmartDM, which provides CRM marketing services and data warehousing software.
Whitson says his first contact is usually with the vice president of ticket sales, but that CRM is brought in through the marketing department. "They are usually looking to do both streamlining and increase revenue," he says. "Everybody sees the glamour of professional sports, but these are businesses that are run on limited budgets."
That means that many sport franchises are not willing to pay for expensive enterprise CRM systems that often require a great deal of customization and a team of IT people to maintain. This is also why many seem to be opting for mid-market solutions from Onyx, E.piphany, GoldMine, and others that focus specifically on the sports vertical.
Other vendors, like AIM Technologies and Essential Data Control Systems, are among those that offer turnkey client-server hardware and software systems for running fan-loyalty reward card programs. However, Denis Pombriant, vice president and director of CRM practice at Aberdeen Group, doesn't believe that catering only to sports teams is enough of a business model for a CRM vendor. "It's a tiny market. You could corner the entire market and go broke," he says.
That's not the way some others see it. There are four major sports leagues, each with 20 to 25 teams, plus other sports like soccer, tennis, golf, and NASCAR racing. Factor in college sports, and the market is much larger than one might think at first glance.
Street & Smith's Sports Business Journal estimates that the total sports industry is a more than $213 billion market including advertising, equipment, retail trade, and travel, to name a few categories. By comparison, banking is a $266 billion business and transportation is a $256 billion enterprise.
"Sports is big business," says Bill King, a senior writer at Sports Business Journal. "And CRM is now a big part
Creating a Winning Strategy
Steven Hank, CRM development director at Arizona State University,
says the school's CRM program is used to achieve seven primary goals:
identify and establish the definition of profitable customers;
understand online/offline customer behavior;
increase sales and affinity though real-time, one-to-one marketing campaigns;
help retain the "right" customers;
help increase fan loyalty and affinity;
maximize overall revenue generated per customer through all channels;
target and increase value for sponsors through data mining.
To achieve those objectives ASU uses:
analytics n targeted interactive campaigns
data mining techniques n contact management
campaign management n interactive customer data support
Contact Senior Editor Lisa Picarille at lpicarille@destinationCRM.com
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