Dollars & Sense - Customer Loyalty

Over the past week or so at my internship at Comcast-Spectacor, I was working on the task of researching customer loyalty programs in sports.  To be completely honest, I wasn’t truly sold on the thrill of the assignment to start, but I have actually found it quite helpful and intriguing.  In doing the bit of research that I have so far, I quickly realized that there is a huge gap between the best in the business and those lagging behind.

Customer loyalty programs are quite a grey area in sports.  Some teams don’t even have one at all.  It is a tough line to walk.  The reason loyalty programs are so fragile is that a team can easily come off as gouging information or more money.  The key is to make the fans feel like it is to reward, have a plan to use what you get, and make the different levels reachable.

Essentially, there are four different types of loyalty programs: attendance based, years based, purchase based, and a combination of the three.  Attendance based loyalty programs are used to drive attendance to games with lower demand.  Usually teams use a points system that season ticket holders can accumulate over the season.  The way they drive attendance is by assigning more points to the “worse” games.  Think of it like this example for the Sixers.  If a home game versus the Miami Heat is worth “X”, then a game against the Houston Rockets would be worth “2X” and a game against the Charlotte Bobcats would be worth “3X”.  This system gives the season ticket holders an incentive to attend the games that they would usually skip.

Teams need to avoid this...

The years based loyalty program is used to reward season ticket holders for sustained loyalty over many years.  The Washington Wizards use this type of system and they reward season ticket holders every five years with rewards such as paid trips to away games and dinner with the team.  I think this is a solid practice because fans that spend their money with a team year in and year out do deserve some recognition every few years.

The final type of loyalty program is a purchase based loyalty program.  A purchase based program rewards fans for buying different dollar amounts of concessions and merchandise.  Teams need to be careful with this types of program because it can easily seem as if they are blatantly trying to get people to spend more money.  Also, does spending the most money really mean that a fan is more loyal?  Typically purchase based programs are not used on their own but worked into other types of programs in some sort of combination.

One element that needs to start getting worked into fan loyalty programs is different elements of social media engagement.  Social media engagement is a great way to keep those loyal fans talking about the team.  I think that there can also be ways to work the social media engagement into some sort of points to be worked into the season total.  The example that I used in the presentation to my boss was a team game face Twitter hashtag prior to every game.  I imagine it working something like fans use the hashtag “#SixersGameFace” and tweet a picture of their best game face.  Each person who tweets earns points that go to their season total.  For further engagement and even more incentive to be the best, teams can retweet the best game faces for everyone to see.

How can you say no to people tweeting these...

Some teams that run these types of programs have found another way to involve fans that are not at the game.  While the games are airing on television, teams will show a TV code for season ticket holders to enter straight into their account and redeem points.  Similar to the social media engagement, the TV code allows teams to keep fans engaged even when not physically at the game.

There are different ways to work the redemption of points accumulated, but I think the easiest way to do it is with the triangle approach.  Basically, the bottom level on the triangle is relatively easy to achieve and is also the lowest reward in terms of value.  The bottom level must be relatively easy to achieve because it needs to get fans to want to participate.  If it is too difficult, then fans will just disregard the program and continue their usual habits.  As fans move up the triangle towards the narrow top point, levels get more and more difficult to achieve but rewards get more and more valuable.  The ultimate goal is to keep levels within reasonable reach to keep fans on board.

There are huge benefits in customer loyalty programs.  These programs are frequently used as an additional source of revenue (use caution), drive attendance to low demand games, gain valuable customer purchasing information, and recognize the most loyal and engaged fans among other benefits.  Perhaps the biggest benefit is the information on customer purchasing habits.  This is an area that teams are always looking to improve in.  Until recent years, purchasing habits had not been followed too closely.  Now, trying to predict what customers are going to do is one of the biggest goals of an organization.  The more insight teams have into their fans, the more efficiently the team can run.  For any business, efficiency is always a good thing.

This is not a product of hometown bias; the Philadelphia Union truly have the best customer loyalty program in North American professional sports.  They have done a superb job incorporating elements of in-game engagement, at-home engagement, purchasing bonuses, and driving attendance to lower demanded games.  The one thing that I would love to see them incorporate into their program is some kind of social media engagement.  Being that they are already ahead of the curve, it would be great to see the Union continue to innovate further and continue to lead the way. 

The Dollars and Sense

To me, fan loyalty programs are a no brainer.  I think teams would be crazy not to have one, especially teams that have trouble drawing fans.  However, I would approach a fan loyalty program with some cautious optimism.  Teams must be cautious because simply having the program is not an end-all-be-all solution.  Teams must be very careful not to scare fans away with seeming to be too greedy.  Fans will sniff out greed in no time and stay very far away.  The program must infer a genuine interest in rewarding loyalty and increasing engagement with the team.  A well-done customer loyalty program can become a huge asset for a team. 

Do you think that customer loyalty programs in sports are beneficial?  What’s on your mind?

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