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Loyalty in sport

The ultimate customer 'lock in' or an 'own goal' waiting to happen?

With the growth of multi-channel television and other media such as the Internet sports fans in Europe have never been better served to follow their team and experience the highs and lows of their choice of personal punishment. The typical fan may switch their shopping habits between Grocery, Petrol and Department store Retailers with big brand loyalty ebbing but allegiance to their team just never gets put to the test. Or does it?

Whilst most Senior Retailers would trade their executive share options for the kind of 'blind' customer loyalty displayed by sports fans to their team, and with the number of expensive and failed CRM programmes that are now in the market they arguably have already, the assumption of unfailing fan loyalty may be changing with unpleasant consequences for the professional sports clubs involved.

Some early signs of the way things may be changing are being seen in the sports loyalty programmes now being launched by clubs in the English professional soccer divisions, especially the Premiership (Professional Soccer Clubs such as Manchester United or Liverpool FC) teams and some lower division clubs. Scotland has its own Premiership and similar developments in football and golf but we decided for this article to concentrate on what was happening south of the border.

Top division UK football clubs are now public companies quoted on the stock market and their finances are causing concerns to their investors. As they seek to generate greater income from the fan base whilst controlling costs the idea of understanding and then targeting offers at their fans is now a trend affecting everyone interested in the 'beautiful game' that is for the majority currently an unprofitable business proposition.

In order to understand what is going on and why, we interviewed some key individuals of the Clubs, Software and Hardware suppliers and Fans involved in these CRM programmes at Premier Division clubs in the UK. Are the programmes 'loyalty' propositions in the way that a traditional retailer applying this marketing would understand, do they deliver a return on the investment involved and what is in it for the supporters and clubs?

A recurring theme of the meetings was the increasing turnover that sport generally has experienced but this has not been benefiting the clubs in a way that might be expected. The average turnover for an English Premiership club is around £40 million and they have doubled, trebled or quadrupled in size over the last five years. The income in football is generated from three equally balance revenue streams, ticketing one third, television one third and the remaining third from merchandise sales. Corporate hospitality has also been an important driver of this growth but the massive increase in player wages has soaked up much of the increased revenues and although the annual turnover of English football is about one billion pounds most clubs are losing money!

The Clubs have spent a lot rebuilding their stadium, they do not suffer brand switching from their supporters in the same way that retailers such as supermarkets suffer and they can pile a lot on a fan, they are fanatics. The seating load factor in the Premiership is around 92% but any club lower than the top half of the Premiership is still trying to fill its seats and contribute straight bottom line profit from marginal revenue via the surplus seats capacity. Competition comes from armchair sports viewing due to the cost and hassle of getting to the actual stadium and we can also see a slight trend to fans seeking a more 'pure' experience by switching from the big clubs with their brand new stadiums back to smaller clubs in lower divisions where the fan can experience the game with a greater level of engagement. Competition is from any alternate way for a family to spend £50 pounds on a Saturday afternoon, a leisure park or bowling alley and indoor ski slope are all potential alternates for some supporters.

The Software4Sport CRM package that is installed at Chelsea Premier Division club offers fans loyalty points for each match attended. An away game or mid-week match gets more points awarded than a weekend home game to reflect the greater effort being made by the fan to attend these games. Details on the members of the programme are held in a database and used for third party promotional offers, priority for allocation of tickets for the really big games and other personalised mailings.

The loyalty card concept is a 25 year old idea outside of sport but has only been a 5 year old concept in football. Historically clubs did not know who their fans were or how often they supported the club. As the business side becomes more important in professional football then no revenue opportunity can be left explored and that is where the CRM focus is relevant. Fans want the club to know who they are and understand their loyalty.

This thought was echoed in an interview with a long standing supporter of Manchester United. He was not impressed with the idea of a card based programme as a symbol of his loyalty but did immediately perceive the benefit of a programme that made more transparent his loyalty to the club. This positive reversal of the usual retailer justification for running a customer loyalty programme is perhaps an insight into CRM applications in sport that deserves greater research?

Loyalty in sport is still developing models and seeking what Software4Sport describes as the relevant 'killer applications', it is not so far down the loyalty learning curve as Airline FFP's or supermarket and petrol company loyalty programmes but based on the feedback from interviews for this article it is learning fast.

As sport embraces CRM, not just in English football clubs but across a global market that is focussing greater attention on the principles of customer retention and supporter loyalty, the models that do emerge will have subtle differences even though they may employ the same technology enablers. Everyone that I spoke to felt that sports loyalty has a long way to go to realise its full potential to refine the business model and maximise club revenues whilst giving the fans a better 'experience' for their loyalty. A recurring theme from the suppliers of these systems was that the business tools are similar to those already familiar to marketers in retailing. The relationship between a sports team and its fan base will dictate a different emphasis and approach but the key business drivers are very much the same as with other customer loyalty and retention programmes.

What may also be evident in these developments is a polarisation of loyalty programmes as markets mature. Getting and keeping the attention of customers is going to become an increasingly difficult business for all brands through the overwhelming 'noise' of modern advertising in our lives. The role that sports with its implied 'permission' from the fan to interrupt them with team news and relevant offers may be an indicator for the future of loyalty programme management?