SBJ/May 2-8, 2011/Opinion

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  • Cartoon: Stadium shopping


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  • Market segmentation delivers better efficiency, more sales

    As those working in the sports and live-event industry know, competition in today’s crowded entertainment landscape is growing fiercer by the day. Teams trying to position themselves as the best recipient of consumers’ discretionary spending budgets must contend not only with other clubs but with diversions ranging from Justin Bieber concerts to the iPad, on top of an easily distracted market.

    How can they respond to this challenge, cut through the clutter, and identify the keys to continued business growth? For many, a logical first step is to gain a better understanding of both fans and potential fans via market analysis and segmentation.

    Database in market segmentation

    Market segmentation is the act of parsing customers and potential customers into subgroups by identifying each group’s unique characteristics and traits. Teams and organizations can use that information to leverage the value of each segment and connect with segment members in an efficient, customized and personal way.

    In a recent study executed by Turnkey Intelligence, 80 percent of team-side respondents working in the NBA, NFL, NHL, MLB or MLS identified CRM and database management as an “extremely” or “very” valuable component of their organizations’ daily business practices.

    This finding illustrates the increased understanding of the importance of segment-based marketing. No longer do teams perceive all fans as leads for the exact same things. Rather, there is a shift toward using customized approaches to pitch small groups or individuals specific products or experiences they’re likely to find appealing.

    Targeting sales, marketing


    Sales representatives are motivated by success, and, as such, it’s imperative for managers to ensure that the representatives are best positioned to succeed. A simple way to accomplish this is to use defined database segments for marketing and product matching. This will lead to more efficient mail campaigns and sampling programs, customized sales calls, and elevated close rates.

    Russell Scibetti, senior manager of database marketing and CRM for the New York Jets, has spent the past 18 months putting a detailed customer management system in place at his organization and is seeing results. “Thanks to the breadth of data stored in our CRM system, we are now able to analyze our customer base down to the individual. By segmenting our prospects and customers based on a variety of factors, we have improved the efficiency of our sales and marketing efforts and are now building customized programs to deliver a better experience to our current customers,” he said. “As part of our most recent club seats sales campaign, our client relations staff called a hand-selected group of prospects that had been winnowed down from a much larger database based on a combination of demographic and behavioral attributes. This increased our efficiency, and ultimately, our conversion rate.”

    Segment profiles also help inform decisions about what new leads to pursue by identifying which consumers most closely resemble current product buyers. Arming the sales team with these “look-alike” leads helps representatives engage and close at an above-average rate, increasing efficiency and saving money.

    “Identifying the characteristics and affinities of our current buyers and fans, and then using that information to segment out our consumer profiles has helped us frame our sales and marketing efforts, enabling us to cut through the clutter,” said Robert Rardin, interactive marketing manager at the Orlando Magic. “Learning as much as possible about our consumers and modeling that information out allows us to mirror those aspects in new leads and lists and thus have a better chance of appealing to them in the right way. It makes more sense for us, and saves both time and money.”

    Unique marketing partnerships

    Database segmentation also benefits sponsorship sales teams by arming them to offer opportunities to nontraditional potential partners, as the Baltimore Ravens do in conjunction with their official female fan group, the Purple Club.

    BALTIMORE RAVENS
    The Ravens’ Purple Club events for women help draw support from nontraditional sponsors.
    The Purple Club offers two membership levels: standard and VIP. The club’s 15,000 standard members gain access to special events and information for free. VIP membership, which is limited to 125 “Lavender Ladies,” provides exclusive benefits and costs members $250 annually.

    According to Gabrielle Dow, vice president of marketing at the Ravens, her club has successfully attracted nontraditional sponsors like Celebrity Cruises to the Purple Club by touting member demographics. Dow noted that the Lavender Ladies (predominantly middle-aged professional women without children at home) are especially appealing to partners. “When we told Celebrity Cruises the Lavender Ladies demographic was ages 45 and up, they loved it,” said Dow. “They absolutely understand the power of this segment.”

    Dow affirmed that these partnerships are often “wins” for both sides: They give teams a chance to leverage an existing asset to tap into new categories and increase revenue, and enable participating companies to associate with the team’s brand and gain direct access to a valuable consumer subset.

    The Washington Capitals also target nontraditional marketing partners by highlighting a very specific segment of their consumer base: members of the military. By offering niche businesses like technology and innovation companies the opportunity to get involved in the club’s many military-focused programs (theme nights, ticket giveaways, etc.), the Capitals are able to open new sponsorship categories, establish connections with companies highly relevant to a core market segment, and deliver new partners access to an extremely specific target market of armed forces personnel.

    Market segmentation will enable an organization to operate more efficiently, forge new partnerships, tap into new niches and opportunities, and increase revenue. It’s a simple, cost-effective way to identify the assets that already exist within a customer base and use them to create opportunities.

    Emily Huddell (emilyhuddell@turnkeyse.com) is senior vice president of client sales and service at Turnkey Intelligence. The Capitals, Jets and Magic are among Turnkey’s 70-plus professional team and league clients.

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  • B-to-B companies make sports sponsorships work for them

    List the companies you think of when I say “corporate sponsorship.” Budweiser, Visa, McDonald’s? My guess is your choices were influenced by the recent commercials you have seen for these brands on broadcasts of the Super Bowl, college sports or other major telecasts. They are consumer-based companies leveraging sports to build awareness, drive differentiation and create activation at retail.

    But a new day is dawning as business-to-business companies throw their hats into the ring. Recently, I watched the PGA Tour’s Waste Management Phoenix Open; spent time at Olympic sponsorship meetings with GE, Dow Chemical and Deloitte; and marveled at the incredible season that Manchester United is having as its players wear the Aon brand on their shirts.

    As media fractionalizes and sponsorship costs escalate, there seems to be a drive toward deeper sponsorship engagement. This has motivated consumer companies to look beyond awareness measures to incorporate such elements as employee involvement, business client engagement and internal communication into their sponsorship mix. In striving for the Holy Grail — ROI — they have started to adopt the very parts of the marketing mix that B-to-B companies have been doing all along.

    “We have seen a move towards developing new and exciting ways to reach customers, build relationships, enhance sales approaches — and it is clear that sponsorships are helping many B-to-B companies accomplish this,” said Gary Slack, chairman of the Business Marketing Association.

    I learned my lesson in 1996 in Atlanta. While at the U.S. Olympic Committee, I was once given the task of calling the president of a B-to-B-focused financial services company to apologize that The Wall Street Journal had just done a story on Olympic sponsor awareness and his company had been recognized by less that 1 percent of the survey. To my amazement, he laughed and told me, “As long as it is the right 1 percent, I am delighted.”

    He explained to me how they were using the sponsorship as a business brand-building initiative that had led to enormous gains in company perception among potential clients, and that his sales incentives were assuring him a three-times return on his Olympic sponsorship. No ads, no consumer promotions, just solid marketing focused on measurable business results.

    Now, 15 years later I am impressed with GE’s plans to generate a positive ROI by selling equipment to organizers and sponsors at each Olympic Games. And I was intrigued that Waste Management’s golf event website linked to a business campaign offering case studies on how it has helped companies such as BMW and Alcoa to “think green.” In addition, I have had the chance to see Deloitte develop programs that have led to 76 percent of its personnel believing the company’s USOC sponsorship enhances its brand. I have seen the company deliver on a tour that brings Olympic and Paralympic stars to speak at campuses, a program that 98 percent of students who attended said was an effective recruiting tool.

    “There is no doubt that we have focused our Olympic engagement on achieving measured results in four key areas: Our people, talent recruiting, client focus and global branding,” said Doug Bade, Deloitte Consulting’s lead client service partner for the USOC. “To date, this disciplined approach has yielded strong results.”

    GETTY IMAGES
    An Aon exec says its metrics show the $120M Man U deal is proving to be a wise investment.
    Quite possibly the largest business sponsorship now in execution is the Aon sponsorship of Manchester United. Reported at a price of about $120 million over four years, the sponsorship would at first blush look exorbitant for a B-to-B brand. However, with more than 300 million Man U fans worldwide and a weekly audience of 88 million viewers watching every game, Aon’s brand (which is more prominent on the jerseys than the team’s logo) has moved to the forefront for the company’s customers and potential customers around the globe.

    “We chose to engage with Manchester United to achieve three objectives: Unite the company, maximize the efficiency of marketing spending and generate new business,” said Phil Clement, global chief marketing and communications officer for Aon. “In all three areas we have put metrics in place, and initial results show we have made a wise investment.”

    Moving forward, IEG estimates that U.S. sponsorship spending in 2011 will increase 5.9 percent overall, to $18.2 billion. Sports will continue to be the largest segment and is projected to increase 6.1 percent. While there is no doubt that the spending will continue to be dominated by the household consumer brands that have driven the category for years, look for a continuing trend as B-to-B companies see sports sponsorships as a way to differentiate their brand, motivate their employees and engage their clients.

    Gordon Kane (victorysm@comcast.net) is the founder of Victory Sports Marketing and has consulted for companies such as Deloitte and Aon on sponsorship maximization.

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  • How doing good worked well for Denver basketball

    Denver is a sprawling metropolitan city home to more than 2.5 million people. As evidenced by lengthy sellout streaks for local professional teams, the residents of Denver and the surrounding areas have demonstrated a historical propensity to loyally support the city’s athletic teams. Paradoxically, however, the Division I university bearing the city’s name has consistently struggled to draw fans for men’s basketball games despite boasting a beautiful arena in a convenient location.

    Several challenges were apparent when this problem was first addressed. First, the University of Denver Pioneers men’s basketball team, while improving, was a traditionally marginal Division I product. Denver’s membership in the Sun Belt Conference also meant a conference schedule filled with teams in Southeastern states that, despite their successes, have small alumni bases and followings in Colorado. Moreover, DU has historically been dwarfed by the presence of professional sports and larger universities in the area. Finally, the university has widely been known as a hockey school due to its national championship tradition on the ice. While it is certainly a source of pride for the institution, the success of hockey has also commanded a great majority of the attention given to DU athletics.

    Despite these difficulties, emphasis was placed on growth of the men’s basketball program because of the tremendous exposure a successful team can give the institution. In spite of the challenges, DU has potential because of its position in the middle of one of the largest cities in the country. The solution quickly became obvious: Embracing the surrounding communities was the key to realizing the athletic department’s potential.

    COURTESY OF UNIVERSITY OF DENVER
    One new program recognizing elementary pupils attracted more than 10,000 additional fans.
    The Denver market is saturated with nonprofit entities of various sizes and missions. The national success and recognition of the American Cancer Society’s Suits and Sneakers initiative is evidence of these organizations’ tremendous potential as partners. Therefore, the university developed a program around Denver basketball and built relationships with nearly 30 nonprofits, which later became participants.

    Each organization was designated a certain basketball game during the 2010-11 season for which it would promote ticket sales to its extensive contact databases. Half of all ticket revenue it generated was then given back to the organization. DU also positioned each organization to gain exposure during its game. Each nonprofit was allowed to select several outstanding supporters to receive game balls in front of the crowd. In addition, each nonprofit was given a table on the concourse to promote its cause. Finally, each organization was welcomed with a public address announcement and given the opportunity to play a video PSA on the scoreboard. The program’s foundational year was extremely encouraging, for these efforts contributed to an increase in attendance and enhanced good will throughout the Denver area.

    With designs of fostering a younger faction of fans, the university worked with a number of large school districts to implement a new initiative, Denver’s Rising Stars. Each elementary school within DU’s partner school districts was asked to select “rising stars” based on academic aptitude and character. Each child was then given a small number of tickets to bring family and friends to a game at which they would be recognized. The ensuing response was overwhelming. Over the course of the season, the Rising Stars program attracted more than 10,000 additional fans to the arena, a number of whom came from out of state to enjoy the event.

    While most tickets used in the Rising Stars program were complimentary, it provided a reason and opportunity for thousands of people to attend a Denver basketball game for the first time. The program helped cultivate thousands of new fans and has since attracted the attention of companies interested in corporate sponsorship of the initiative. Like Rising Stars, the Study for Swishes program was also designed to use Denver basketball as an incentive to achieve academic excellence. Students at four elementary schools were rewarded for academic performance with free T-shirts that admitted the wearer into DU basketball games.

    External efforts also focused on young alumni though networking receptions before basketball games. And local companies that hired DU students in the last three years were hosted at a game of their choice. Including these groups attracted a substantial number of first-time fans while also conveying the university’s appreciation for their involvement.

    With such comprehensive efforts to engage the external community, DU also believed a significant emphasis must be placed on expanding relationships within the campus community. Basketball games were used as a forum to highlight the outstanding accomplishments of university faculty, specifically through the Academic Spotlight game ball presentation. In addition, both the Daniels College of Business and Sturm College of Law enhanced their partnerships with the athletic department. The Daniels College hosted an event in conjunction with a game that was attended by more than 400 of its supporters. Similarly, the Student Bar Association and law school held networking receptions for students during four games. These receptions were well-received and will be expanded in coming years.

    Largely as a result of these initiatives, attendance at men’s basketball games surged from 1,976 fans per game in 2009-10 to 3,387 fans per game in 2010-11. This 71.4 percent increase was a natural catalyst that induced a new level of excitement in the building. Moreover, thousands of new sales leads were generated, concessions revenue increased dramatically, game atmosphere was enhanced, and the school’s brand was strengthened as good will spread throughout the community.

    Division I athletic programs are in a unique position to effect positive change in the surrounding communities. While taking measures to help others fulfills an ethical obligation, it can also precipitate noticeable changes in revenue and attendance. Developing reciprocal relationships of support can help provide additional credibility to community organizations’ endeavors as well as much-deserved recognition for academic achievements. In return, this support shown to individuals both internally and externally can be expected to augment a loyal, more stable fan base of people who have benefited from outward signs of the university’s appreciation. Thus, by embracing surrounding communities, college athletic departments can unlock the potential to reap astronomical benefits. n

    Paul Pogge (Paul.Pogge@du.edu) is assistant athletic director at the University of Denver.

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