Over the past decades businesses have increased their investments in the customer relationship management (CRM) area. The investments range from strategy development to implementing software and other applications which will help attract new customers and keep and grow existing ones. In short, companies are trying to make us loyal, trying to get us to come back and do business with them over and over again, because they all know that it is much more expensive to attract a new customer compared to enticing an existing one back into their store, their bank or onto their airplane. But are we becoming more loyal? What would it take to convince a customer to switch airlines? A cheaper ticket? A more appealing loyalty program? A different departure time? Most customers would likely be convinced because of one of these reasons and make the switch. In today’s world with the vast array of competitive offers available on the market, it is an almost impossible task to create and sustain customer loyalty. Nevertheless companies are investing and dedicating a lot of their focus and resources to trying to get us to come back for more.
In one industry, however, loyalty is a well-known phenomenon and has worked effectively. Think about your favourite sports team – or if you are not a sports fan, think of someone who is. What would it take to change from being a NY Yankees fan to support the Boston Red Sox? Some might switch simply because of change of location but that does not explain the affection people have for sports clubs and teams. Consider the teams that are located within the same city for example. What would it take for you to switch from being a Real Madrid to an Atletico Madrid fan? What would it take for you to switch between the two teams in Hamburg; St. Pauli to HSV? What would make you switch from being a Chicago White Sox supporter to a Chicago Cubs supporter?
From Loyal Customer to Fan
It is not loyalty itself that is unique to the sports industry but the potential degree and level of passion and loyalty that can be achieved, a level which arguably cannot be matched within any other industry. No matter what a mobile telephone company does and no matter which customer category you may reach with an airline, it will always be more likely that you will switch providers or airlines than it would be for a Manchester United fan to start supporting another club.
Given these characteristics particular to the sports industry it is quite striking to see that the industry has not adopted a clear leadership stance within the world of CRM. In some cases the industry is even lagging behind and is currently facing many of the same difficulties in adopting CRM that other industries have dealt with in the past. The sports industry is simply the most “appropriate” of all industries in terms of creating, maintaining and developing strong customer relationships and it is thus also the industry which has the potential to reap the greatest benefits from CRM initiatives and focus. Some clubs have undertaken CRM projects and have invested in customer strategies that will make them strong local and even global players. Yet in looking at the sports industry as a whole – amounting to $213 billion alone in the United States every year,- it is clear that we have only seen the tip of the iceberg when it comes to CRM initiatives and exploring ways in which CRM can change sports businesses. The potential for growth in this area is vast.
If we consider sports clubs’ financial situation, the past few years have seen a tremendous growth in revenue and income from broadcasting and advertising. However, even today’s biggest clubs and hence the ones that reap the highest incomes from television rights rely heavily on the traditional income of clubs, namely match day attendance and merchandise sales. As an example, consider Manchester United and Glasgow Rangers who earn more than 40% of their annual revenue from match day income alone, and add to that the merchandise sales that are affected by people having watched a game live. Smaller clubs must proceed on the assumption that that match day revenue is even more critical for their smaller organisations. It is therefore clear that fans – the club’s customers – are indeed a club’s most important asset. This applies irrespective of whether a club seeks to grow its fan base, match attendance from 38,000 to 42,000 or whether it plans to reach an average attendance of 2,500. The fact that attendance – and in particular repeat visits by spectators and fans – is key to a club’s income and revenue stream is what makes CRM and loyalty management so critical to any and every sports club in the world, regardless of its size or popularity.
As already mentioned a range of sports clubs and organizations are already involved in CRM investments ranging from loyalty card programs to more sophisticated marketing and sales strategies. Interestingly, however, it is very often generic CRM frameworks or software and tools used in other industries that are being applied to the sports industry and only rarely is the uniqueness of the sports industry given special attention in relation to these investments. As such the majority of sports clubs rely on conventional marketing such as standard advertising, ticket price reductions and specific event offers to attract and retain customers. However, in failing to take into consideration the specificity of the sports industry, many of these initiatives do not take full advantage of the fact that data on customer actions and behaviour is readily available (e.g. through ticketing systems and fan membership databases) nor do they capitalise on the fact that sports customers often are more than willing to share their voices and opinions with the club than are customers in many other industries. The majority of vendors in the market offering software applications and other tools to support a business with its CRM initiatives have not done any specific modelling of CRM to the sports industry, so in order to get the full advantage of CRM-related initiatives sports clubs must acknowledge and incorporate the industry specifics to CRM.
Figure 1 – CRM and Sports
In an industry where a whole other level of loyalty and affiliation to a club and its product (e.g. a team, a player) exist, it is key to ensure full alignment between the characteristics of the industry and the tools and strategies to support any CRM initiative.
Besides the above-mentioned differences in loyalty level, customer intimacy, and customers’ willingness to share their opinion about products and services, it is essential to consider how marketing initiatives can have a long term effect – even if team or player’s performance dips or goes down. If spectators and fans do not show up at the games when the team runs into trouble on the field, how much were the marketing initiatives actually worth? What type of fans or spectators do the specific marketing initiatives attract? Can the purchase of a superstar player lead to anything beyond a novelty effect or amount to more than a short-term revenue impact? These are all factors that must be considered as part of any CRM initiative, including marketing, sales and service initiatives for a club or a team. One must not forget that sports is the industry where you fans will wear your company’s logo and even pay extra for the product in order to do so – all the more reason to ensure you have a CRM strategy and focus that can support these characteristics.
Winning isn’t Everything
“If we could just play better or get some better players our financial performance as a club would increase”. Statements like these are very often heard in interviews with sport managers, owners or even journalists or analysts covering sports clubs and their performance. Although winning games and championships very often lead to increased interest and support for a club, it is not the performance on the field that is the most essential to a club’s well-being but the strategies and their implementations off the field. The performance off the field is simply up to a club’s management and leadership – adopting and rolling out the right CRM strategy can make a club or a team win off the field even during times when it is not winning on the field. Looking across the spectrum of countries, cities or even sports it is not difficult to prove that support and attendance cannot be explained by population, demographics, performance, historic achievements or super stars on the team alone. One of the best examples of this is Borrusia Dortmund in Germany. The club is far from the most renowned in Europe but still draws the highest average attendance to their home games, namely 72,300 (in the year 2003-2004 the club went even higher and managed to attract 78,808 spectators on average – a European record that still stands today). This puts them ahead and at par with clubs such as Real Madrid, Bayern Munich and AC Milan.
It is time that all sports clubs jump on the CRM bandwagon, however, it is essential that they acknowledge the particular characteristics of the sports industry and determine which experience and initiatives have an impact on their current and future fan base. These considerations – combined with a strong performance on the field – form the optimal mix of strategy and will help to lead the club towards success on as well as off the field.
- Loyalsticity – A Business Concept for Sports Clubs
- “Balance the Field” – CRM Success in Sports
- Attention: Any Sports Clubs Looking for Higher Attendance Figures? (to be published shortly)
- Can American Professional Sports Really Expand to Europe? (to be published shortly)
- Know Thy Customer – The Sports Club’s Customer Mix (to be published shortly)
- Which CRM Application is Right for a Sports Club? (to be published shortly)