Fight Sports Revenue Erosion Read online

FIGHT SPORTS REVENUE EROSION

  By Troy Kirby

  Tao of Sports, LLC

  Copyright ©2014 by Troy Kirby

  www.sportstao.com

  ISBN - 978-0-9835184-3-3

  All rights reserved, which includes the right to reproduce this book or portions thereof in any form (electronic, paper, audio, video, cloud, etc) whatsoever except as provided by the U.S. Copyright Law.

  *****

  1-THE ATTENDANCE ISSUE

  One of the hotter topics in sports sales is how to convert customers for the long-term buy. This is where the rubber meets the road, because a lot of teams that are generating a sales-focus tend to rely on scripting. Scripts are a wonderful idea presented by a bunch of contracted-sales consultants during a 3-day seminar in which every account executive writes down every word as if it were the Holy Writ.

  Then, two weeks later, the account executives forget everything, while the sales consultant has fulfilled the contract, cashed your check for services rendered, and headed down the road to the next job. These scripts cause their own harm by assuming one size fits all not only for the account executive, but also for the prospective customer. As if a magic phrase will open a wallet and bring out the credit card, without the customer's needs being met beyond a few sentences strung together in the right way.

  I question this sort of tactic. I don’t believe that implanting each of your sales staff with the idea that for every ten phone calls they make, one sale will generate. Even if it does, that’s more of a telemarketing shotgun approach than a refined ticket sales rifle shot. Mass blanket calls will generate some hits, because there will always be people out there interested in a telemarketing call in the same way that shop-at-home channels still exist on the television: there is a component, though small, of people who will buy anything just to continue talking to a person on the other end of the line. But that isn’t true ticket sales, and is harmful to rely on in the long-term.

  That doesn't even address the reliance on beat-down, run-over call lists that have taken green, wet-behind-the-ears account executives and transformed them into telemarketing staff, instead of sales staff. There is a difference, especially when teams seem to shrug off poor conversation rates. That’s right – its not the number of calls you make that matters, it’s the number of sales. The shotgun approach, blasting as many calls as possible, hoping to hit something at some point, is wrongheaded. Whether it be random prospecting or even chatting with folks who have bought the product in the past, the goal should be on call quality. A numbers game is simply that – the goal is that it doesn't matter who buys a ticket, as long as someone does. Until it comes to renewals, and you find out those who passively used the sports product aren’t reinvesting, because the team never invested in them in the first place.

  I tend to value season ticket holder conversion rates on renewals a lot higher than single game buyers who usually forgot what they liked about the game they attended six months earlier by the time your staff calls them. Of course, a lot of clubs believe that season ticket holders don’t need to be continually converted. Once you have them, they’re yours, right? I disagree. A season ticket holder relationship with a team is much like any marriage. If both sides don’t reinvest, then the relationship suffers and eventually there is a divorce. Either it's an ugly breakup of unkept promises or a passive separation, but if the team doesn’t do its part, the season ticket holder drops out quickly.

  Season ticket holders, or even multiple game buyers, are seen by a team as a passive component of the system. We already have them locked in for the upcoming year or expect them to renew. If they don’t, they get measured statistically as an 85 percent renewal, instead of being examined for why each individual season ticket holder did not decide to rejoin you for the upcoming season or the next three seasons beyond that.

  There’s always a fight going on to convert single game buyers into multiple pack buyers, but there’s never as much of a battle toward retention once the multiple game buyers have made their side of the financial commitment. That is where the team almost considers the work done on their end, and expects an automatic renewal the following year. That's the reason there is continually less than 99 percent renewal from the following season.

  Season ticket holders or multiple game buyers invest in the sports product beyond small trinket distribution games, beyond enticements such as dollar dog nights or special experience promotions. And teams who devote whole divisions to accumulating more single game buyers, hoping to convert them into multiple game buyers will only reserve 2-3 people for season ticket retention. It suggests to me that teams take season ticket holders for granted, treating the retention side with a lot less effort than continually attracting those single game prospects.

  While season ticket holders invest in the sports product through thick and thin, a lot of single game buyers do not. The latter only support your product when the chips are stacked in their favor – it has to be a heavily discounted game, or a giveaway Bobblehead fest, or the team is on a winning streak. These are the same “fans” who jettison their loyalty the second that the team loses, and who end up preventing more prospective fans from seeking out your product through their poisonous internet commentary.

  Single game buyers are the independent voters of national elections. There is no “there” there. And I’m not suggesting that it's a bad thing to prospect single game buyers with the aim to bring them up the sales escalator, either. But I think it's easy to lose sight of those customers, especially long term ones, who have already bought into your product. Often, they shoulder the burden of your Tuesday night games and they typically lose out on half of the giveaway promotions simply by not beating the single game buyer through the turnstiles.

  Which raises a great question: Why provide giveaway items to single game buyers when you're trying to promote long term sales?

  Think about that for a moment. If the goal is to make them long-term buyers, why allow them to beat the system for the giveaway product gain? Why not specifically promote that all season ticket holder and mini-pack buyers will receive a giveaway promotion? Why not also sell more multiple game packages? Wouldn’t this prevent a shotgun approach and instead focus it on with a rifle’s aim on the target? Imagine the outraged calls by single game buyers to the sales department. I’d think that would be a great opportunity to upsell on the benefits of becoming a multiple game buyer.

  Here’s my issue with conversion rates of season ticket holder renewals. Clubs seem to be satisfied with getting an 85 to 89 percent renewal rate from those long term buyers and asking questions as to why that’s an ideal number.

  Perhaps it is my ignorance or that it has “always been that way,” but we need to ask: Why is it acceptable for any team to lose 11 to 15 percent of its season ticket holder base annually?

  Based on those calculations, in six to nine years, the entire season ticket base could be turned over. That means Year One season ticket buyers are by Year Eight no longer supporting the product long-term. That suggests extensive problems with an 85 to 89 percent renewal rate of season ticket holders. And yet this margin of renewal has been accepted by the powers-that-be.

  Those powers also spend countless dollars trying to attract single game buyers with promotional activities. And, beyond the seating options, what exactly do those teams do to work on retention of the season ticket holder? Perhaps this raises another question: Why would someone WANT to be a season ticket holder over a single game buyer?

  Often, the answer is that they get to see multiple games at a discount. But does that work if the added value is simply based on a price point initiative? But what does it say to the customer when the season ticket holder must buy an entire s
eason to receive a discount, while the single game buyer can receive heavily discounted tickets to some games, and free premium items as an enticement to others?

  This is how long-term buyer erosion occurs. While single game buyers might be encouraged to move up the sales escalator toward a season ticket in a few years, the season ticket holder at the top of the escalator may be moving down. Are the premium item freebies for the single game buyers giving them reasons not to buy season tickets? They are being rewarded for showing up only when heavily discounted or free tickets are available, and not for committing in the long term. That's if they choose to show up at all.