The headline story in my John Wall Street email newsletter this morning proclaimed, "Sports Properties Should Focus on Core Fan Base to Maximize Revenues."
The article focuses on an interview with the Mets Head of Data & Analytics, Craig Swaisgood. I don't know him, but I'd like to hug him for some of the things he says:
“We have deeply valuable data on about 150,000 to 200,000 fans,” Swaisgood said. “Those are the people that we have real insights into. That’s where we make our money.”
I love this statement because it confirms a point I made during my fan loyalty presentation at the National Sports Forum last month. As the slide below illustrates, for loyalty programs to be profitable, I believe they should focus on fans known to spend money directly with the team; And the number of (such) fans is relatively small compared to total number of fans a team may have. (It's a pure coincidence that the Mets have 5 million fans, and I happened to use that same number in my illustration).
Bottom line, teams should design their loyalty programs around fans that spend money. I showed the graph above to help my audience visualize breaking down fan bases into "spending buckets." Once again, Mr. Swaisgood (unkowingly) backs me up as he describes the Mets spending buckets:
50-75% of team ticketing revenue typically comes from the sale of season ticket packages.
20-30% will originate from single game ticket sales. Clubs that understand that audience, target, and meet them where they are have the potential to add $5mm to $10mm in incremental income.
Savvy organizations can grow their group and premium businesses too with a highly targeted approach, and some hand-to-hand combat.
“Nearly everything we see in our models of how you get somebody to buy, or of who is going to buy, [comes] from primary data we collected on previous fan behavior,” Swaisgood said.
Past purchasers are the most likely to spend more money in the future. And how much they spend can be influenced by team tactics. That's where I think team loyalty practices should focus, developing strategies and tactics that add value to high spending customers in such a way that they keep spending and even increase their spending.
I'm not saying teams shouldn't focus on their "long tail" fan bases. But I do think teams that are trying to increase revenue should not only focus on fans that spend, but tailor their loyalty tactics to the various fan "spending levels."
Broadly speaking, premium buyers are top tier. They get personal service and experiences befitting their status. These are your Gold, Silver & Platinum fans.
Single game buyers are the core group where "rewards" can be a primary tool to drive incremental spending.
And for the rest, the group I call "long tail" fans, community is the primary strategy I'd recommend. That is, create a team branded online space where fans can connect with each other. The more your fans connect with each other, the stronger their bonds to the team will become. And the stronger their bonds to the team, the more likely these fans will (eventually) spend money.
“The narrative is typically how do we expand the pie, how do we bring more people in? And you need to keep your eye towards that,” Swaisgood said. “But if you’re talking about maximizing revenue, that’s not going to be the most lucrative play.”
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