The Biggest Sports Site You've Never Heard Of
04.16.09, 5:25 PM ET
When Chris Russo began his gig as head of new media for the NFL in 1999, he noticed the league had done little to capture the fantasy football craze on its Web site.
With Commissioner Paul Tagliabue's blessing, he built NFL.com's fantasy business into a cadre of 2 million users by 2005, his last year with the league. His secret: Utilizing a handful of small, independent football sites catering to hardcore fans. Sharing stats and other content with micro sites drove the first waves of fans to the league's Web site to play fantasy football, and the push was on.
"It made me realize there was a world of niche sites out there," says Russo, who proceeded to jump on that knowledge in building his new business, Fantasy Sports Ventures, kicked off in 2006. Through a buying binge of 30 sports Web sites, along with promotional and revenue sharing agreements with some 400 affiliates, Russo has built FSV into the fifth-most popular sports Web business, with more than 10 million unique viewers a month, according to Nielsen Media Research.
That's more than AOL Sports and MLB.com. A year ago, the company forged a deal with USA Today that gave the paper a minority stake along with its sports content on FSV sites. Annual revenue exceeds $10 million (Russo won't get more specific than that), with Russo predicting the company to turn its first operating profit this year.
An estimated 25 million Americans play fantasy sports, with the average player spending more than $150 per year on fantasy games and related products. That adds up to a $3.8 billion industry, which, Russo figures, doesn't all have to be ceded to the likes of
The FSV stable includes footballguys.com, an all-encompassing site for football fans and fantasy geeks, whose numbers figure to perk up in front of the April 25 NFL draft. The company also owns baseball-reference.com, the go-to spot for current and historical data sought out by baseball nuts.
His big bet: Convincing advertisers they'll get bang for their buck by keeping users engaged with games and other interactive fun, which sports freaks tend to eat up. That way, there's no need to charge subscription fees, something he does on just two FSV sites--Baseballhq.com, a fantasy baseball site, and thehuddle.com, popular with fantasy football players.
"Fans are used to free content on these sites, and it's hard to start a subscription in this environment," Russo says.
Critics have their doubts. Lacking a brand name like Fox Sports or ESPN leaves FSV without valuable promotion. With the rocky economy already making it tough to further grow a sponsorship list, the dual revenue derived from advertisers and subscribers becomes that much more important, says Lee Berke, a sports business consultant who specializes in new media.
"A passionate fan should be willing to pay a reasonable price for access to these sites," he says.
Russo isn't convinced. He believes that the relative anonymity of his company can be used as an asset to make the business more about the sponsor's brand than his. That's not going to happen with ESPN. For example, he's partnered with Gillette to create an online car racing game for Nascar aficionados.
What Gillette likes is that the game actually lives on its own Web site, with FSV's sites handling the promotion. So far, Russo's strategy of pushing people right onto sponsors' sites in exchange for cash seems to be working, given that traffic and revenue have roughly doubled over the past year.
"It suggests our model is very effective," he says.
Soccer Clubs: Big Money, Growing Woes
American billionaires George Gillett and Tom Hicks were in the vanguard of sports investing when they shelled out $310 million in 2007 to buy Liverpool FC, one of England's biggest and richest soccer clubs. Money was easy, so they took on $500 million in debt to build a big new stadium and cover the team's operating costs. The payout looked promising.
Then the global credit crunch hit and the math started to fall apart. The stadium was postponed and the Americans finagled a six-month extension on their loan. But the $500 million comes due in July 2009, and refinancing in the current climate seems implausible. Instead, Gillett and Hicks hope to sell the club for as much as $700 million—still not a bad return on investment—to Middle Eastern buyers.
Investors Back Off "Football"
So it goes these days in the high-stakes world of professional soccer. Despite revenues last year that topped $270 million, Liverpool's financial predicament is becoming an all-too-familiar tale for soccer clubs across Europe, especially in the world's most lucrative domestic championship, the English Premier League (EPL). Spiraling player salaries, uncertainty over future corporate sponsorship deals, and the deteriorating global economy have made many investors wary of owning a piece of the world's most popular sport.
For some, the economic pressure has become too much to bear. Alexandre Gaydamak, the Franco-Russian owner of Portsmouth FC—currently languishing near the bottom of the EPL—wants to sell out for as much as $85 million. Mike Ashley, owner of the similarly beleaguered Newcastle United, tried to find a buyer but eventually took the club off the market when none appeared. Rumors abound that others, including Icelandic businessman Bjorgolfur Gudmundsson, the owner of London-based West Ham United and the largest shareholder of nationalized Icelandic bank Landsbanki, soon could follow.
To quote a famous saying: "The way to make a small fortune is to start with a big one and buy a soccer club."
Winners Take All
That's not to say soccer isn't still a very lucrative business. Indeed, consultants Deloitte reckon revenues in the 2007-2008 season for the world's top 20 clubs—all located in Europe—totaled $4.9 billion, up 6% from the year before and three times the take of a decade ago. According to Dan Jones, a partner in Deloitte's Sports Business Group, club revenues today on average come 41% from broadcasting rights, 33% from commercial deals, and 26% from game-day sales. "At the top end of the market, things are going O.K. But lower down the league tables, clubs are suffering more," he says.
That means the likes of Spain's Real Madrid and England's Manchester United, rated first and second, respectively, in Deloitte's ranking of the world's top money-making franchises, should weather the economic storm without much trouble. They enjoy multibillion-dollar broadcasting deals that help guard against economic ebbs and flows, and their sponsorship deals are with big, rich partners such as Nike (NKE), Adidas (ADSG.DE), BT Group (BT), and Gazprom (GAZP.RTS) who are unlikely to walk away from contracts.
If anything, the bigger clubs are even managing to tighten their grip on the commercial market as they lure secondary sponsors. Liverpool has snagged a multimillion-dollar deal with Danish brewer Carlsberg (CARLB.CO), while No. 6-ranked Arsenal in London has expanded its deals to include sponsors such as French automaker Citroën (PEUP.PA) and Swiss watchmakers Ebel.
Shrinking Sponsorship Deals
Smaller, less economically diversified clubs, including some listed in the top 20 worldwide, are more at risk. They could suffer from a drop in corporate hospitality revenue and commercial sponsorship as companies look to trim costs. "Every investment is being scrutinized," says Steve Bradley, director of sports marketing and sponsorship at media consultants Hill & Knowlton. "What's appropriate now is very different from 12 months ago."
Deloitte's Jones cites jersey sponsorship as a key indicator. After ailing U.S. insurer American International Group (AIG) said on Jan. 21 it wouldn't renew its $80.6 million deal with Manchester United after the 2009-2010 season, most analysts expected a number of blue chip names, particularly from the retail and telecom sectors, to offer top dollar to fill AIG's shoes. Yet after tour operator XL Holidays, the sponsor of English club West Ham, went bankrupt in September 2008, it took the club more than three months to find a replacement. Another English team, West Bromwich Albion, currently at the bottom of the EPL, has yet to find a jersey sponsor for the 2007-2008 season.
"Everyone is looking very hard at their sponsorship deals," says Bob Mitchell, head of sports and sponsorship at London law firm Harbottle & Lewis. "Football remains a strong sports property, but we could see some [sponsorship] nonrenewals."
Record Salaries for Top Players
This pressure on earnings comes just as clubs are spending record amounts to attract the world's best players. According to Deloitte, EPL teams spent $227 million during the January 2009 player transfer window—a month-long period halfway through the domestic season that allows clubs to bring in new talent. That's $14 million above last year's previous record total and a staggering $142 million more than in 2007.
"The level of transfer spending is far in excess of spending by clubs in other European leagues," says Paul Rawnsley, director of Deloitte's Sports Business Group.
Much of the largesse is due to the Abu Dhabi United Group, the new cash-rich owners of Manchester City, who paid a reported $284 million for the northern England club. City's previous owner, former Thai Prime Minister Thaksin Shinawatra, was forced to sell after Thai officials froze more than $2 billion of his assets due to corruption allegations. Abu Dhabi United already has forked out a record-breaking $46.3 million on a four-year contract for Brazilian striker Robinho. The owners plan to spend similar amounts on other global stars in the near future.
Yet for every billionaire willing to bail out a club like Manchester City, there are a number of teams, including many in Europe's top leagues, that may struggle to meet their soaring financial costs in a deteriorating market. Says Deloitte's Jones: "For now, there's a flight to quality where the biggest brands will outperform the less well-known names."
Scott is a reporter in BusinessWeek's London bureau .
Manchester United centralises fan management
By Miya Knights, 2 Nov 2008 at 16:15
Premier League team Manchester United is developing a better understanding of its growing fan base by updating its customer relationship management (CRM) capabilities to handle new, international data sources.
The club sees developing a better understanding of its supporters as a key component of its business growth strategy and has taken on marketing software and services from multichannel marketing software company, smartFOCUS.
Steven Falk, Manchester United commercial services director said: "We constantly strive to improve the relationships we enjoy with our fans and sponsors to ensure they get exemplary customer service and stay connected to the club.
The new investment will provide campaign management and marketing analytics technology, alongside consulting services to help the club build a single view of the supporter across all Man Utd related transactions.
"Our fans represent a growing and vibrant global community and with smartFOCUS we can better communicate and cement relationships with them, keeping them at the very heart of our success both on and off the field," added Falk.
A key element of the system, for instance, is the management of international data and in particular double-byte characters for data sourced in Asia.
The vendor said the evaluation process put particular stress on seeking a long-term business partner that could assist the cub in meeting its CRM objectives.
The club wants to centralise its CRM systems to manage and enhance relationships with supporters on a global basis. It said the information about supporters and how they interact with the club will act as cornerstone in achieving these objectives.
New Business Management System Helps Soccer Club Drive On and Off-Field Success
FC Köln is one of the best-known professional soccer clubs in Germany. As one of the original members of the Deutsche Bundesliga, FC Köln still claims a growing regional following. Despite its reputation on the pitch, the club’s business management systems struggled to support its growing fan base and increasing sports merchandising turnover. In early 2004, it implemented Microsoft Dynamics™ NAV, with additional features suited to a modern soccer club.
Business Needs
FC Köln is one of Germany’s best-established soccer clubs and a founder member of the Bundesliga (premier league). With a membership of 35,000 fans and average home crowds of 40,000, the club earns revenue of between €30 million (U.S.$43.5 million) and €50 million a year depending on league membership. As a business with 80 staff, excluding players, FC Köln needed to modernize its enterprise management systems to serve its supporters with a wider range of services including merchandise. Like other top-flight German clubs before them—Borussia Dortmund and Bayern München—FC Köln also changed its governance to become an association limited by stocks.
Previously, the club relied on a whole series of isolated business applications with data stored in different locations. “Our various departments such as bookkeeping, ticketing, membership, and club administration all had disparate systems,” says Oliver Leki, Commercial Director, FC Köln. “Part of this range had been developed in-house with limited interface features. As a result, the amount of time spent carrying out manual operations was very high.”
Among the challenges faced by staff were:
- The club’s IT system was failing to keep pace with increases in membership, merchandising opportunities, and the administration needed for the new professional structures.
- Data was not centrally available—collecting it was time consuming and error prone, and sometimes produced conflicting information.
- Managing IT in-house was diverting employees into non-core activities unrelated to the main business of running a successful European soccer club.
Solution
In 2003, FC Köln decided to introduce a single integrated business management system for the club. It chose Microsoft Dynamics NAV, having seen it in operation at Borussia Dortmund. Instead of developing the software in-house, FC Köln opted to outsource its IT to Pironet NDH, a Microsoft® Gold Certified Partner in Germany specialized in software as a shared service. The club agreed a mixture of standard hosting with Pironet NDH—the transfer of the club’s own systems and leased components within the Microsoft software-as-a-service contract.
“IT is far from being one of our core skills,” says Leki. “Outsourcing to a service provider is not only cost effective for us, but provides peace of mind through a guarantee of reliable and better data security.”
Implementation began in early 2004, and took six months, with a major challenge around integration with existing systems. “For advance ticket sales, we added an interface to Microsoft Dynamics NAV to transfer daily sales into the accounting system,” says Leki. With merchandising, the club decided to outsource the purchase, storage, and dispatch of goods to a logistics services company. It also needed a special component for Microsoft Dynamics NAV to provide comprehensive process integration across the whole range of operations.
“The structures in our accounts department were not designed for professional soccer,” says Leki. “That’s why we reorganized our overall system along the lines of those used by other clubs and associations. Microsoft Dynamics NAV is the ideal solution.”
Benefits
With around 40 workstations using the new system on several different sites, including three shops, the club is enjoying higher productivity and greater efficiency. Recently, FC Köln added 15,000 new members. The number of season ticket holders also increased to more than 20,000. “Without automating our processes with Microsoft Dynamics NAV, we would never have been able to cope with the growing volume of work. We used to have to get by with just a few reports,” says Leki. “Now we can deal with special questions such as the distance between our fans’ home addresses and the stadium, at the click of a mouse.”
Benefits of the new hosting partnership experienced by the club include:
- Flexible and scalable system—the club says that due to Microsoft Dynamics NAV and the hosting concept it can quickly react to any changes in the business.
- Improved commercial data—the club benefits from better and richer data not only on marketing, but also on routine financial management, such as having a clear picture of receivable income.
- New point-of-sale (POS) system—the three shops selling club merchandise to supporters now automatically send POS data to head office through fast and secure connections.
- Higher productivity through automation—key staff are freed from carrying out routine IT manual processes so as to concentrate on handling higher volumes of customer demands from soccer fans.
- Additional modules for administration—the club has expanded the standard business software in Microsoft Dynamics NAV with additional modules for the administration of members, sponsors, and royalties.
- Tight integration with the Microsoft Office package—staff can now create tailored documents and communications based on data exported from Microsoft Dynamics NAV, using Microsoft Office Word and Microsoft Office Excel® 2003 spreadsheet software and sent by using the Microsoft Office Outlook® 2003 messaging and collaboration client.
All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.
Loyalsticity – A Business Concept for Sports Clubs
Over the past decade investments in customer relationship management (CRM) strategies, applications and tools have primarily been driven by businesses within industries such as telecommunications, banking and manufacturing. At the same time we have witnessed a growing trend in the sports industry with sports clubs adopting the tools and tactics from the CRM world as they increasingly, and at all levels, are run more and more like other businesses. One reason for this trend within sports clubs is due to the competitive environment they are faced with as the entertainment industry offers a growing number of options and alternative ways in which a sports fan or a spectator can spend his or her money. On the other hand, businesses in other industries are focusing increasingly on finding ways to develop loyal customers as a means of differentiation, in an attempt to capture what has laid at the heart of the loyalty and affiliation of sports clubs and teams for decades, if not centuries.
The fact that sports clubs are increasingly run like traditional businesses also means that their key assets are not their strongest players on the field but rather the people who bring in the revenue week after week and through merchandise purchase: the spectators and the fans. The percentage of revenue derived from match day attendance and merchandise varies from club to club but there is no doubt that these sources of income are vital for any club – whether they are managing a fan base of 1,500 or 75,000 spectators a game.
There seems to be a common understanding within the CRM community that in order to achieve success with CRM, companies, sports clubs, vendors and consultants need to consider and understand industry-specific elements and adapt any new initiatives and technology implementations accordingly. Therefore, rather than merely adopting generic CRM tools, a sports club is strongly advised to consider the specifics of the sports industry in relation to CRM as matching the two properly will lead to a more optimal result and will avoid many of the same problems or mistakes that businesses in other industries have faced. There are numerous of unique elements within the sports industry that need to be considered and addressed accordingly, such as differing loyalty levels, their specific customer segments and respective customer intimacy possibilities
As a starting point it is suggested that all clubs look to one clear characteristic of the sports industry: the fact that support for a club and hence revenue of a club can, to a certain extent, be related to a club’s performance on the playing field. In the English Premier League in football it is a rule of thumb that each position gain in the league is worth half a million pounds in prize money alone and although this is an indicator which also takes into account commercial and broadcasting revenue, the impact of position gains or decreases on the fan base – and hence the most important revenue generator for most clubs, varies greatly from club to club.
The on-field performance is only indirectly impacted by the management of a club (in terms of player purchases) and sport marketers and other functions in a club have only very little control over this. Management, sport marketers and other staff are responsible for all off-field activities and at the core of these functions and of strategic importance to any club in the world is to seek to reduce the revenue consequences of poor on-field performance and cash in - the most optimal way possible - during successful times. In other words, a club which can maintain its supporters and fan base during bad performance periods or which can increase its base during upswings or even average performance is a true winner in the world of sports today.
These statements are generally accepted in the world of sports - in particular in sport management literature and research - but what has been missing has been a concept to identify how a club is performing in relation to this and in particular how to improve. This paper introduces a method to handle this particular situation and provides sports clubs with a concept which should be used as the basis for any customer relationship management strategies and activities.
Loyalsticity
In order to describe the correlation between a club’s or team’s performance and the support of the spectators and fans we introduce the concept of Loyalsticity. Loyalsticity is derived from the term elasticity, an economic term used to describe the correlation between price and demand for a product. When the price a product or a service decreases it is assumed that demand will rise but it is noteworthy that the change in demand depends on many factors related to the product and service. As such, the term elasticity of demand is often used to describe this correlation and to understand the effect a price increase or a price decrease can or will have on the demand for a product or a service. Loyalsticity is defined as demand (i.e. support for a team) based on performance of a particular sports club.
Loyalsticity is thus not connected to price of the game tickets. Rather, given the fact that a club’s or team’s performance is often of greater importance to the demand on tickets – and oftentimes, more so than price – this parameter is used in relation to Loyalsticity. Loyalsticity is unique to sports as it is the only industry where customers truly care about the performance of the business. In most other industries the majority of consumers do not know the details around how the business is performing but in sports the customers are informed and reminded of this performance through news and even in the programs they receive when entering a stadium, rink or other sports facility.
Think about which other business actually informs their customers about how they are doing on such a regular basis! Understanding Loyalsticity is essential for all sports clubs as it simply is the founding pillar to the clubs’ or teams‘ CRM strategy. The Loyalsticity curve is illustrated below. For illustrative purpose the example of Borussia Dortmund and VfB Stuttgart – both teams in the German Bundesliga, are included in the depiction.
The situation Borussia Dortmund has achieved with their fan base is spectacular and one that thousands of other sports clubs would like to obtain. It simply does not matter if Dortmund has a temporary dip in performance; the fans (i.e. the customers) will only be slightly affected and even after a poor performance in the 2007/08 season (13th place) the club retains its spot at the top of the attendance charts in Germany and amongst the highest in Europe. Prior to the current season, the club was able to sell more than 50,000 season tickets, more than any other Bundesliga team.
This level of club success is not unique to the team of Dortmund or to the sport of football, however. It doesn’t take much searching to find the equivalent in American Football (NFL) where teams such as the Green Bay Packers and Cleveland Browns are renowned for having very loyal fans who will follow and support their teams even when they go through a year with a record of 2-14. Other teams would face a significant or maybe crucial attendance drop if they went through the same dip or fluctuation in performance. A good example of this is VfB Stuttgart, who like Dortmund is also a German Bundesliga club, but where attendance varies more significantly over the past few seasons, very much driven by the performance of the team on the field.
Loyalsticity can be measured by means of the following formula showing the percentage change in attendance based on one drop in position in league standings:
Loyalsticity = | (% Change in Number of Spectators) |
(% Change in Position in League) |
Clubs with small changes in spectators when results change have a low level of Loyalsticity (e.g. Borrussia Dortmund) whereas clubs whose attendance varies greatly depending on their performance are characterized by a high level of Loyalsticity. When analyzing Loyalsticity it is the absolute value that is essential to know, thus any negative value is ignored – this is similar to how economists use elasticity. The closer a Loyalsticity level is to 0 the less impact does a change in performance on the field or in league standings have on the number of spectators at the games. The actual measurement of Loyalsticity is most relevant when compared to other teams in the league, but can be extended to compare with other leagues or even other sports.
Understanding where you come from but more importantly where you can go is a prerequisite for any CRM strategy. Analyzing and understanding Loyalsticity provides a strong guiding principle to any sports club or sports associations’ CRM strategy in order not to “blindly” pour money into conventional marketing strategies and hope for wonders.
Loyalsticity – One Level Deeper
The concept of Loyalsticity should not be seen as something unique or an isolated measure as it integrates well with for example two of the most well adopted terms in the world of sport fans research today; Basking in Reflected Glory (BIRG) and Cutting Off Reflected Glory (CORF). BIRG and CORF were developed in the 1970s to describe the effects of a team’s performance on its fans. Whereas BIRG refers to people jumping on a team's bandwagon because they believe that associating with a winner makes them a winner, CORF refers to the situation where one distances oneself from an unsuccessful team for fear that such an association would also reflect negatively. For clubs it is essential for their long term sustainable success to limit the CORF as much as possible.
The direct link between CORF and Loyalsticity is simply that fans do not show up for games or buy team merchandise when teams are not performing well, some of these due to CORF but others simply due to dissatisfaction with them or even simply the lack of BIRG. If a club can enhance [the] BIRG through marketing initiatives and combine that with a strategy of trying to keep these BIRG fans even if performance dips over time, it is proof of a strong CRM strategy. Research has found that BIRGing and CORFing become less likely as fans identify more closely with the team – relating this to Loyalsticity explains that teams with low Loyalsticity simply do not witness the same degree of BIRGing and CORFing as other teams. When measuring and analyzing Loyalsticity it is important to not only look at the actual numbers but if possible include unique number calculations. One reason for this is that no club will ever reach a situation where the number of fans only consists of repeat spectators. Understanding the mix of customers provides great insight into the more detailed level of Loyalsticity as well as a basis on which CRM strategies can be built.
Doing this sort of analysis is not practically possible for all clubs but many clubs are capable of doing this today due to unique identifiers associated with tickets sales, club cards, seats allocation or match day purchases. With today’s technology clubs can manage these unique identifiers and take full advantage of two key components which are important monitoring elements of any CRM strategy: retention rate and churn. The retention rate illustrates the percentage of the customer base that the club retains, whereas the churn rate indicates how many customers a club loses on an annual basis. Without retention rate and churn figures a club is only able to identify that with strong performance their annual attendance is X whereas with sub normal performance their annual attendance is Y. They are not able, however, to identify if Y is a complete subset of X or characteristics of the remainder group Z which is a sum of X-Y. Clubs that can measure churn and retention rate can add great insights into the Loyalsticity analysis by understanding fully what type of customers make up X, Y and Z and hence take appropriate action. In addition, they can get an understanding of how stable X is as well as if Y stays the same over many seasons or if the churn rate even from the most loyal fans is significant.
Only looking at the actual numbers in relation to Loyalsticity might thus give a club a somewhat false understanding of the actual number of loyal fans as it doesn’t identify who the supporters are that are present at each game. It should thus be in every club’s interest to move towards being able to uniquely identify its customer and fan base – something which is possible by integrating most of today’s standard software applications with the club’s CRM strategy (for a categorization of people attending sports events and the respective correlation to Loyalsticity, please click here)
Change the Game – Move towards a More Sustainable CRM
Strategy As mentioned previously the most critical thing to understand is the level of Loyalsticity and to act accordingly. Let us take a look at a few examples:
Club with high Loyalsticity: The key focus should be on lowering Loyalsticity prior to putting any big spend or efforts into increasing performance on the field (e.g. purchasing better players) or increasing attendance at games through marketing initiatives. The reason for getting to a low Loyalsticity level prior to any big marketing push is to allow for the greatest possible return on the marketing initiative and to create long term benefits to the club. This exercise should be a key element of a club’s CRM strategy. Simply understanding why people attend the games and, in cases where attendance is based on high BIRG, a critical element of the CRM strategy should be to lower the BIRG as much as possible for people who have already attended games by identifying what else would trigger them to attend games more regularly.
Conventional marketing mechanisms such as new marketing initiatives, gathering information about current and future spectators, lowering ticket prices for a single or for several games will not lead to any long term effect unless a club understands which of these triggers impact Loyalsticity as well. For illustrative purposes the case of VfB Stuttgart has been depicted below – showing that focus should be on moving the Loyalsticity closer towards 0 – all possible through a focused CRM approach on ensuring higher loyalty amongst spectators.
Club with low Loyalsticity: Having already obtained a low level of Loyalsticity the next step is to understand the reasons behind this. Based on this analysis, a club can assess how the same low level of Loyalsticity can be applied to new fans or spectators that show up for games based on better performance on the field or based on marketing initiatives. Following this analysis the next step is to consider the actual numbers that are to be worked with, i.e. the number of fans a club can potentially attract. Even if a club’s highest spectator number was 23,000, does that mean it can’t be higher? Does it require a better performance on the field or can marketing initiatives lead to a positive return on investment?
In this regard it is important to set a visionary goal, one which is comparable to either other clubs’ spectator levels, competing sports’ spectator levels or to the spectator levels of other types of entertainment in the area or region. Having analyzed Loyalsticity in comparison with the number of fans in the league, a club will get a good indication of the potential room for growth that exists. For illustrative purposes the case of VfB Stuttgart has again been used – showing that when relatively low Loyalsticity level has been achieved it is time to increase the number of spectators through various initiatives and campaigns – offsetting any dip in performance by the team with a strong understanding and approach to CRM.
Loyalsticity on its own only explains behavioral or transactional elements of loyalty and not attitudinal or relational, which should also be included in the analysis. Obtaining the data to conduct such analysis is possible for a sports club due to the fact, as previously mentioned, that sports spectators and fans are often eager to express their opinions not only about the performance on the field but also with regard to the club’s overall performance.
Understanding Loyalsticity and thereby the behavior of spectators and fans, should be the foundation of any CRM strategy in sports. Sports clubs who manage to integrate the concept of Loyalsticity into their strategy will win in the long run. Sports today is big business and a sound economy, including increased revenue and profits, are required to take on competition and to purchase the right players. Clubs who don’t actively engage and include Loyalsticity in the running of their business risk being overtaken by other clubs who do – first financially and later on the sports front.
CRM Success in Sports: “Balance the Field”
Answering this question not only creates a better understanding of the current situation but also enables a sports club to better determine which steps are the most appropriate to take on their CRM journey rather than “blindly” pouring money into conventional marketing strategies [and hope for wonders]. In order to truly understand which where a club finds itself on this path, a detailed analysis is required – one which will necessarily include an analysis of sports-specific concepts such as Loyalsticity [for more details click here]. As a starting point, however, an overall assessment can provide some good insights into the current situation as well as potential next steps. One way of doing this is simply by addressing a number of questions related to three areas of interaction with new and existing fans:
1. How does the club attract new fans?
- Through which channels are new fans attracted?
- Have the ways in which you attract new fans developed recently or are you using the same strategies as you did ten/several years ago?
- Have insights been gained into how other businesses attract new customers?
2. How does the club retain fans?
- Do fans receive any communication from you other than through purchases?
- Is it up to the fans to stay up to date with forthcoming events or does the club proactively communicate with its fans?
- How is information about fans used in relation to targeted communications?
3. How does the club develop existing fans?
- Does the club have an overview of each fan’s purchases at games?
- In the event fans have questions or specific requests, is that data captured somewhere and kept for future communications?
- What sorts of up-sell and cross-sell activities have been carried out?
Are the answers to the questions in one category easier or more straightforward to answer? If that is the case there is definitely an imbalance in relation to the focus, time and money spent on attracting new fans versus keeping or even developing existing fans. Many clubs are often better prepared to answer questions in the first category whereas the answers to questions regarding fan development are a bit more vague or unclear. The more in balance these elements are, the further a club can consider themselves along on their CRM journey.
A Balanced Approach and Focus Ensures Success
First and foremost, it is essential that a club come to terms with any imbalance among the three areas and then, based on agreed approaches to each area, rethink the current goals set out for the club. If a club is in great need of more spectators it is not uncommon that a temporary focus is placed on this element but it can be disastrous for a club to neglect or down-prioritize other areas in the meantime. There are many ways of achieving success in each area which are based on conventional marketing. Increasingly, however, there are best practices and lessons to be learned from within the sports industry itself. A good example of this is Arizona State University (ASU) that began to communicate differently with existing fans, an initiative which lead to developing fans through data enrichment and thus, deepened the understanding of their needs and preferences. For this initiative ASU explored the unique feature of the sports industry, namely the fact that fans and spectators will more readily share information and personal preferences with the club [for more details of unique characteristics of sports club click here] than would customers in other industries. As an example of positive feature of the sports industry, ASU fans were invited to create their own profile on a website, to inform the club about which information they are interested in receiving, and what their preferences are. This gave ASU enriched data from which they could execute much better and more targeted initiatives or marketing activities. The program and its spin off activities are credited as being the key contributing factor in increasing attendance by 20% and reaching 55,000 spectators at ASU football home games in the 2006 season!
One step further – Cross Segment Initiatives
With the right balance amongst the three focus areas and the agreed goals a club may now be ready aim even higher. Traditionally, an initiative to attract new fans or one to retain existing would only have had an impact within that particular focus area. As such a marketing initiative designed to get people who had never been to the stadium to show up would normally not affect existing fans’ behavior or satisfaction level, yet today leading clubs are integrating activities to affect more than one focus area. A good example of how this has been done successfully is Norwich Football Club which has managed to recruit new fans through communicating and developing existing ones, basically nurturing their existing relationships while at the same time recruiting new spectators. Instead of offering new season tickets to new customers through mass marketing or other push marketing means, they “invited” new fans to join through people who were already season ticket holders. Norwich Football Club simply analyzed the seating arrangements at the stadium of their current season tickets holders and promoted additional season tickets at a cheaper price to people who had “empty seats” next to them in the stadium. This led to existing fans bringing friends and family members to the games and turned them into raving fans – a concept that has been a key contributor to Norwich attendance growth over the past ten years which has grown from 14,000 to 25,000 per game.
Tools Can Make it Possible if a Club Decides What the Tools Should Do
Sport clubs throughout the world each year spend large sums of money on marketing initiatives. Traditionally the large majority of this money has been spent on attracting new spectators but in today’s world more and more clubs are pursuing strategies that are based on a more balanced focus between new and existing fans. This has become possible through both the increased focus on CRM within the sports industry but also because today’s technology supporting CRM has reached new heights. It is now possible for even small clubs to acquire the right technology that enables them to conduct sophisticated data analyses, marketing campaign activities and other initiatives that can ensure that the expectations of both new as well as existing fans are met and the right relationships developed. Sports clubs can harvest significant benefits from pursuing strong CRM strategies – and can often reap even higher results than what has been seen in other industries [for more details click here]. In order to do so, however, it is essential to understand the club’s current situation and marketing, sales and service focus followed by clear initiatives to “balance the field” between the three areas outlined in this article. One of the key tasks in order to pursue such strategy is to integrate the various parts of the organization by aligning the strategy with the business process flows rather than according to departmental silos. With this in mind – and only then –sports clubs can start utilizing the CRM technologies and software applications which can take them down the path towards CRM success.
