So I was bored and cruising Amazon.com the other night and stumbled across Amazon's recommendations for me. $308.12 later I had items ranging from hockey pucks to camera lens' to even a litter of stuffed animal sheepdogs heading my way (story for a different time). Were these impulse buys? Sure, hard to say they weren't, but either way Amazon's recommendations were spot on, and the result was $308.12 headed their way.
One of the new "sexy" topics today is dynamic pricing - see my post Trending Conversations. However, a slightly less talked about topic is that of consumer tracking. Consumer tracking is even rarer than dynamic pricing in the world of sports. In case you don't know, consumer tracking is the idea of an organization understanding not only who their consumers are, but what their consumers are doing and spending money on when attending events. Simply put, understanding how to deliver more value to consumers while making more money in the process.
But why, you ask? Well, for any business, I imagine that having insight into who your customer is, and what they want would be pretty valuable. The same applies to sports teams. If I'm a team, I want to know who is showing up and buying tickets, when they're showing up and where they're spending their time and money throughout the game. Are the consumers coming to my game purchasing 2X the amount of hot dogs at the first intermission or between the first and second quarter than at any other point? Are parents more likely to buy their kids a jersey at half-time than at any other point in the game?
If you know these sorts of things, you can plan to not only streamline these sales points for the consumer, but you can also start to offer more value. Take our previous mention about hot dog sales being 2X more popular at the first intermission. If you know people generally buy a soda with hot dog purchases, then maybe you offer a discount on a hot dog soda combo purchase.
The other beautiful thing about consumer tracking is that there are a lot of different ways teams can go about it depending on how much they want to spend. Here are a few methods and examples of current consumer tracking strategies being used:
1) Season ticket cards
Instead of printing out every single paper ticket, teams are starting to move towards season ticket "cards". Season ticket holders will still have the ability to sell individual electronic tickets that can be printed out for games they can't attend, but for the games they do attend, all they need is their season ticket card. The beauty is that ticket is a win-win for organizations and customers alike. Ticket holders can earn discounts around the stadium by swiping the card before a transaction, and organizations all of a sudden have data-backed insights as to where people are spending their time and money.
2) Loaded tickets
The problem that the above season ticket cards presents is that organizations are only able to track those who have and use the card (i.e., season ticket holders). A way around this is the loaded ticket. Over the last several years, customers purchasing single-game and multi-game packages are presented with the option of "loading" their tickets with additional value that can be spent at the stadium. For example, I buy a $30 ticket for a baseball game, but am presented with the option to pay an additional $15 for $20 of value to spend at the stadium. If I know that I am likely going to spend at least $15 on concessions, etc, while at the game, this is a pretty good value for me. Much like season ticket cards though, teams are able to track what these individuals are spending their loaded tickets on.
3) Creative RFID ideas - Jersey implants
Thank you Tampa Bay Lightning for an incredible example of how to be creative. For those of you who don't know, the NHL's Tampa Bay Lightning literally put RFID tags into 10,000 hockey jerseys that they gave out to their season ticket holders a couple years ago. The season ticket holders would receive a discount for wearing the jersey to games, and in exchange gave the Tampa Bay organization the ability to understand more about their season ticket holders. I really think this was just an incredibly creative idea, and will not be surprised if the industry starts seeing more creative ways to track consumers similar to this. You can read more about the jerseys here.
4) Ticket implants or holograms
Although this has been prevalent in other industries, I haven't heard much about this in the sports industry. The idea here is similar to the above ideas in that you are able to track individuals through their tickets. The difference is that the technology has advanced to a point where tracking can be done through embedded technology in holograms that could be stamped onto tickets. One example I heard about was from a trade show in which tickets were embedded with this hologram. Instead of tracking where individuals were spending their money, they were able to track their movements around the entire trade show to determine what parts were most popular at what points throughout the day.
Okay this sounds great, everyone must be doing it right? Well, not exactly. Not everyone... well, not most... actually, an incredibly small portion of teams. So, why is it that only a few teams are implementing consumer tracking?
A) Don't have the capabilities or know how
Okay, everyone has to start somewhere, right? I think one of the biggest issues teams have in not going down the consumer tracking road is they don't see the ROI of the project being positive. Fair enough, but from the point-of-view of someone from the outside looking in (i.e., me), teams that have implemented this technology seem to sing the praises of how successful and how helpful it has been to implement. I can understand some teams not wanting to use dynamic pricing if they don't fill up their stadiums and thus probably won't benefit all that much, but I would think that knowing where your fans and consumers are spending their time and money in your arena is a no brainer.
B) It can be expensive
Yep, it sure can. From what I've heard, it can involve programs and systems costing north of $250k, or it can be as low-cost as having someone keep track of the data in an excel spreadsheet. Again, I believe that teams saying that it's too expensive is still a matter of them not seeing the ROI. If a system costs $300k but the revenue increase would be $500k, you bet everyone would be doing it. Again, this is an opinion from someone who is the outside looking in, but whether or not you come out ahead as an organization in your first year or two is not the objective. The objective is to come out ahead over the long-run and to provide a better service and product to your consumers by understanding them better.
C) Don't recognize the value in it
It might seem a bit odd that a team doesn't see the value in knowing more about their customers, but I have discovered that some sports teams don't even have marketing departments. The famous example here being the Miami Heat, who fired their entire ticket sales department after Lebron decided to go to Miami. To some degree they're right. Why do anything if they're selling out constantly? Why spend money on a ticket sales department or marketing department if there isn't anything else to sell? Let's argue on this if you want, but this is the type of lackadaisical, getting caught with your pants down attitude that has been the death of too many Fortune 100 companies.
Kodak is a great example of a company that actually invented the future (they were one of the first to create a digital camera) but rested on their "bread n' butter" product which soon went the way of the dinosaur. By the time they realized what was happening, it was too late.
Harley-Davidson (and I hate to say it since I own one) is a great example of a company that rested on their laurels for too long and all of a sudden woke up one morning and realized they hadn't done anything to appeal to younger demographics and that their target demographic was starting to literally die of old age. To their credit, they've made a strong push in the last several years to be more relevant with younger generations.
So things are going well, why change anything?.... why not at least get a head start on the future and have a good understanding of your consumer?
For anyone trying to break into the sports industry, I feel like this is just one example of a space that is probably going to continue growing in the sports industry over the next decade. Organizations are going to need people who can do the analytics behind these programs and transform the data into an easy-to-understand format... more importantly, they will need people who can clearly communicate to others what the data is saying.
In any event, I'm off to the drug store to get some film developed...
-Alex