• June 1, 2013
  • By Paul Greenberg, founder and managing principal, The 56 Group

The Fan Business

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Anyone who knows me knows that I love sports—which is a great deal different than saying I am good at them. What fascinates me beyond the game itself is how deeply involved the fans of a particular team are in the life of that team, its players, and even its management. I can't tell you how many times I've raged over how the Yankees' management spent "our" money on a free agent acquisition that I thought was incredibly stupid. I know that you all recognized yourselves in that "our," didn't you?

There are lots of explanations why fans have the passion they have for their teams. It could be childhood nostalgia, municipal pride, a love of play, living out a dream by proxy, a combination of some, or all of the above.

But despite this passion, we can't forget that professional sports teams are businesses first and thus have the same objectives of any business. They want to make money. They want to acquire and keep customers. Interestingly, most sports franchises are only midsized businesses. That surprises a lot of people. But they have the aura of the megalith, so they seem much larger than they are. Fortune magazine, in March 2013, said that the wealthiest franchise in all sports in the United States is the New York Yankees (I'm proud to say) with $2.3 billion. Huawei, a Chinese global information and communications technology solutions provider, made more than that in profit in 2012. But how many of you have heard of Huawei? Or root for them?

The successful core of a business that engenders the passion that sports does is the actual fan experience. How much does the team pay attention to the fan? The business model of a sports franchise is ticket sales (especially season tickets), merchandise sales, and concession sales. There are other parts to the business model—events among them. The Norwich City Canaries, a UK premier league football team, has seven distinct revenue-generating businesses.

But for a sports team to sell, they need to get and keep the fans engaged. That means the fans' experience with the team, whether it wins or loses, has to be memorable.

Much as I'm a New York Rangers hockey fan, the Rangers are by no means all that great at keeping fans engaged. But one of their rivals, the Philadelphia Flyers, has figured out how the fan experience needs to work—with incredible results.

How You Doin'?

The Flyers realize that they have to engage every single fan who attends a game well beyond the game. They have a program they call "How You Doin'?" (taken from Joey on Friends), which entails training their entire staff in helping fans and empowering the staff to do so. For example, that means that, at least in theory, every fan has to be greeted when they come to the Wells Fargo Center for a game and asked if they need any help. In 2012, the organization reached 87 percent of the fans that way. Each of the greeters, who are made up of any member of the stadium staff, have a card that they can give the fan that allows the fan to ask questions and rate the greeter. It also tests for satisfaction: How did the greeter do? What kind of experience did you have at the stadium? More than 97 percent of all the fans who responded said they were highly satisfied with the experience. Not satisfied. HIGHLY satisfied. Wow.

This is one small aspect of the program, frankly. There are giveaways and contests, and the staff goes above and beyond their standard duties to solve fan problems. What also distinguishes the program, though, is that the Flyers incentivize the staff to do this. They win stuff. They get cash. Meaning they have a self-interest in the success of the program, not just a generic "team interest" in its success.

But that's not the biggest part of this.

The Early Bird Catches the...Season Ticket Holder

The bread and butter of any sports team is its season ticket holders. The biggest reason, of course, is that these fans are shelling out thousands of bucks to buy a series of seats at a game. But there are two other advantages to getting season ticket holders to buy season tickets. First, it's revenue that you can count on. It's paid and the seat is filled. But second, the person buying it tends to be an uberfan—someone who loves the team, and is not just a casual attendee. They also don't use all their tickets, because many have to work and can't make every game. So they sell the tickets to their friends, who, often enough, become prospects. A blue chip network is made available to the Flyers to mine.

The Flyers spend a lot of time and effort designing an "Early Bird" experiential program. The idea is that if you renew or purchase by a specified date, you will get benefits that only the Early Birders can get. More on that in a minute.

For the past few years, the Flyers have had a client development group, which is responsible for the season ticket holder accounts. Each manager gets hundreds of accounts to handle. Each manager is responsible for each and every one of those accounts.

To personalize the experience of the account holders, the Flyers accumulate all data from all sources—demographic, transactional, profile, and even social data when they are able. They then send all the data to a sports analytics company, Turnkey, which, based on 10 categories of criteria, uses a five-star ranking system on every account to determine the propensity of that account to renew its season tickets.

The Flyers have specific programs designed for account holders based on how many stars they are awarded. For the two- and three-star accounts, they have a happy hour at the Wells Fargo Center. They serve beer, wine, and snacks in the Hall of Fame room, which has the history of the team adorning the walls. A player will show up to schmooze with them.

If you're a four- or five-star account, the rewards get way bigger. The team has well-designed experiences that will dazzle the season ticket holder by both their promise and execution. For example, you get an umbrella, picture frame, or some other tchotchke first thing if you renew early. Big deal, right? That's what I said. But as it turns out, their research shows people want stuff, and this is effectively the equivalent of the awarding of a key to the untold experiential riches of the future. Because the big payoffs are in what follows. Every early-bird renewal at this account level gets access to a barbecue with the entire team. They get the chance to win things like riding the Zamboni between periods, high fiving the team in a live situation as the team skates out—and so on, which for a hockey fan is manna from the heavens.

What is this? This is the actual contemporary model for designing fan engagement. The Flyers are providing a consumable set of experiences associated with products, services, and tools to create an overarching and memorable feeling of involvement and excitement, which, from a business standpoint, increases the propensity to renew.

Are they successful? Are they ever!

Look at these renewal numbers:

From 2010 through 2012, they increased season ticket sales levels by 1,000 or more each year.

In 2012, the one-star renewal rate was 83.7 percent; two-star was 87.5 percent; three-star was 84.3 percent; four-star was 89.2 percent; and five-star was 92 percent.

These numbers are staggering. But they reflect the intersection of how great customer experiences can provide measurable and exceptional business value.

Nonetheless, I'm still rooting for the Rangers.

Paul Greenberg (@greenbe on Twitter) is president of consultancy The 56 Group (the56group.typepad.com), cofounder of training company BPT Partners, and director of research for The Bullpen Group. He is the conference chair of CRM Evolution (www.destinationcrm.com/conferences/2013/). The fourth edition of his book, CRM at the Speed of Light, is available in bookstores and online.

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