SBJ/Jan. 20-26, 2014/Opinion

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  • Stern’s vision, passion propelled NBA forward

    There are a number of ways I’ll miss David Stern being a constant voice within the world of sports business.

    I’ll miss his big thinking. No one can ever accuse Stern of lacking “the vision thing” or not thinking of ways the world would change.

    I’ll miss his skill in crafting arguments, rebuttals and spin.

    I’ll miss the rare humbled Stern, when he was unvarnished and honest, admitting mistakes or failure.

    I’ll even miss the way he would manipulate the press and play the bully.

    As we prepared for his retirement from the NBA on Feb. 1, I went through quotes of his that have appeared in our publications over the last 20 years. Reviewing them, they offer a reflection of the man’s tenure: aggressive, innovative, forward-thinking, reflective at times, and rooted in reality and society. In addition, they show a leader so passionate that at times he was dismissive, flippant and even boorish.

    Stern was named the first Sports Industrialist of the Year by SportsBusiness Daily when we developed the honor in 1995. I remember five of us circled around our editorial pit debating who would be our inaugural choice. Some of the staff pushed for Cowboys owner Jerry Jones for his assault on the traditional league/team dynamic and aggressive marketing. But Stern won out, and we wrote he saw sports as “a dynamic, global entertainment business.”

    What I learned early in my career from listening to Stern’s messaging was that sports “content” serves as the foundation of a vibrant, deep and wide-ranging business. He told CNN in 1995, “If you have a professional sports league, then you have a trading card business, you have a publishing business, you have a home video business, you have a video disc business, you have an apparel and sporting goods business.” Stern constantly leveraged this “pipe” of content and data to grow the league and its reach.

    I can’t tell you how many times over the years I was told by sources that the NBA was in trouble. A meeting, drink or group dinner would start with the comment, “The NBA is in for a BIG fall.” Most of it was based on the league’s image issues, but one of the things I admired about Stern was his ability to remind the public that the league, any sports league, is merely a reflection of society. In 1998, after a number of player-behavior issues, he told CNN, “You’re not going to be immune from the issues of the world in a sports league.” And I admired the way he’d go to great lengths to defend his players, telling Jim Rome in 2002, “If there’s one [arrest], there’s an image problem. That said, the other 400 [players] are doing great. … I don’t think you [Rome] ever ran a bit of footage focusing on David Robinson’s school or Dikembe Mutombo’s hospital. So be fair.”

    I still remember that Friday night in November 2004, when the ugly brawl broke out in Auburn Hills, Mich., an event that significantly hurt the league, from which it took years to recover. Stern said after, “Sports reflect on society in that we’re a very good place to get a take on society, and society has become less civil.” But he looked ahead a few days later when he said, “This, too, will pass.”

    Two years later, in 2006, Stern honestly acknowledged the toll of that night at The Palace. “What the brawl did was give our reputation a big hit. It became very, very convenient to refer post-brawl — if you were a talk-show host — to the ‘thugs’ and ‘punks’ of the NBA,” he said.
     
    The league suffered from that perception for years and I believe the issue was the impetus behind the launch of NBA Cares in 2005. As Stern said that year, “The players’ efforts, in my view, haven’t been fully appreciated. … We sometimes get defined by a weak moment or a bad day, rather than everything we do for those less fortunate.” Stern consistently and fully believed in the power of sports to heal, to do good, to inspire and to provide. And he said of NBA Cares, specifically, “This is not about public relations. This is not about business. This is about need, and the specific opportunity that the world of sports has to respond to that need.”

    To his great credit, Stern has positioned the NBA and its teams to be there at all times — not just when there’s a need.

    On the league’s media front, many questioned the NBA’s move to cable, shifting from its salad days on NBC to ABC/ESPN, which put the majority of its games on cable. I believe that move hurt the league’s viewership and momentum in the early-to-mid 2000s, but I look back at a quote from 2002 and see Stern’s thinking on how it would play out. He told Fox Sports Net that cable and satellite “is increasingly available to everybody who wants it.” He envisioned fewer “triple-headers and double-headers” because “it’s too hard to get people to sit through” up to eight hours of games. Finally, he said, “It’s good to be on cable during the week because that’s where our fans are looking for our games.” He is now seen as being ahead of his time in knowing how the media landscape would change and recognizing the growth of cable TV.

    At times, Stern’s deep passion for the league resulted in him biting back at the media, and a snarky boorishness emerged. I recall a combative interview with ESPN’s Bob Ley around the 2001 All-Star Weekend. Not liking the tone of the ESPN coverage, a clearly exasperated Stern said, “I tell you what, Bob: If I don’t interrupt you, how about you not interrupting me, OK?” Stern then questioned a quote attributed to Utah star Karl Malone: “The notion — not said by him directly, but said by your reporter — that he doesn’t go out of his house wearing NBA paraphernalia because he doesn’t want to be associated with that, I don’t believe it.” Ley countered, “He did say it. We just did not include that particular sound bite in the report.” Stern responded, “After I get off the air, you can bring that one up and show it to your audience if you have it.” (ESPN never played it.) Later, Ley questioned whether the league’s next TV deal would be robust considering a perceived decline in popularity, to which Stern shot back, “Despite this piece, we’d even consider talking to your parent company.” Which of course, they did, and signed a six-year deal with ABC/ESPN.
     
    He’s gone after USA Today, as well. Responding in an interview about declining playoff ratings in 2003, Stern said, “You shouldn’t believe what you read in USA Today, particularly if it’s in Rudy Martzke’s column.” And his testy relationship with The New York Times resulted in him criticizing the paper in 2007 after it ran a study that said racial bias had influenced the league’s officiating. “We’re not buying it, OK? This is the newspaper of the Duke lacrosse players and Judith Miller,” Stern said, “and so they’re impeached now with sports as far as I’m concerned.”

    You could argue with Stern’s approach and tact, but not with his passion for defending the product.

    I also have admired Stern’s willingness for risk. More than one source over the years has called the WNBA one of “David’s follies.” But an executive I have long admired told me last week that it is one of Stern’s greatest achievements. “Because of what David did,” this person said, “young girls go to bed at night knowing they can dream of playing professional basketball. What’s so folly about that?”

    For me, Stern’s lasting legacy will be his tireless ambition and firmly believing in and advocating the positive role the NBA could have on the global stage. I admire how Stern pushed boundaries: global boundaries, societal boundaries, even personal boundaries. His relentless drive to think differently always made me stop and read his quotes two or three times to make sure I wasn’t missing anything. Like all great leaders, he was constantly looking far, far ahead about the mission of the NBA. Take this quote after his first 11 years leading the league, telling Ad Age in 1995, “We’re determined to make the NBA a global marketing vehicle for global marketers.” We’d all agree he’s accomplished that.

    Nine years later, in 2004, understanding the limited runway of growth facing sports, he stuck to his script in pushing boundaries and being clairvoyant when he told Newsweek, “There’s not a lot of room for growth. Women will grow our audience, technology will be receptive to our content, but you are talking single digits, and you can pretty much chart it out. On the other hand, we’re a nation of 300 million people, and there are several billion people out there who are quite receptive to what we have to offer. You have to have a global strategy in the era of globalization.”

    David Stern may be leaving the commissioner’s office. But his vision and mindset will be felt for years. Adam Silver will be his own man and lead differently. But he, the league and its partners will continue to benefit from the care that Stern has taken in building the power of the office and laying the foundation for global growth.
    So, too, will the entire sports industry.

    Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.

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  • Decisions to make before launching loyalty/rewards programs

    New Year’s Resolution, 2014: Add value to season-ticket packages, encourage repeat attendance among single-game ticket buyers, and drive increased spending among customers across merchandise, concessions and experiences.

    If your resolution looks anything like this, chances are you might look to a loyalty or rewards program.
    Following the trend set by retailers, travel companies, restaurants and other consumer service providers, sports properties are now offering loyalty programs and rewards programs to various customer groups. Organizations may wish to think carefully about what they offer within these programs, both for maximum impact and so not to unnecessarily give away the farm.

    Before looking specifically at what can and should be a part of loyalty and rewards programs, realize that they are not the same thing. Rewards programs encourage behaviors, while loyalty programs encourage loyalty. Loyalty by definition is not a behavior, but a “feeling of strong support for someone or something.” Organizations need to decide if they are cultivating feelings or compensating behavior.

    Loyalty programs

    Loyalty is the most vague word in marketing. What makes someone loyal? Can someone be loyal to a brand but shop competitors? No brand truly can or should expect any one consumer to consistently devote 100 percent of his or her investment, nor can a brand expect 100 percent of its consumers to maintain a high level of spending and engagement. Even if brand affinity remains high, life changes can render a brand obsolete. (I can’t go to my local dry cleaner if I move from New Jersey to Texas.)

    Loyalty in sports is even trickier. I’ve suggested that season-ticket holders represent the pinnacle of loyalty across the business world, paying up front for product before they know what the quality of the product will be. Research conducted through the department of recreation, sport and tourism at the University of Illinois at Urbana-Champaign and published in Science Quarterly details how transplanted sports fans tend to remain loyal to their hometown teams in an effort to protect their identity and reminisce. Feelings of loyalty run deep and provide much more to us than just someone to root for.

    Photo by: GETTY IMAGES
    So why do teams need loyalty programs when, in many cases, customers already act super-devoted? Think of the programs as high-revenue insurance. It’s become Business 101 that proactively retaining current customers, especially higher-spending ones, offers better ROI than chasing new customers. Loyalty programs are generally designed such that loyal customers remain loyal, i.e., fans continue having positive feelings for the team. Loyalty programs in sports typically focus on season-ticket holders, since they account for so much revenue.
    Fans of the Capitals, as well as the Wizards and Mystics, can score points with the Monumental Rewards loyalty program, but only through consistent support.

    Monumental Rewards, established in 2013, is an example of a well-crafted loyalty program. Washington Wizards, Capitals and Mystics season-ticket holders can become members and accrue points through typical ticket-holder activity such as ticket renewal, attending games and reaching tenure milestones. Points can be redeemed for VIP-like experiences, memorabilia and offers. The key here is that while the rewards are somewhat transactional, gaining them comes only through consistent support of the Monumental teams. Since loyalty is a feeling, Monumental Rewards helps season-ticket members feel like a more important customer.

    Rewards programs

    The plethora of rewards programs available to consumers clearly supports any argument for their effectiveness. Subtle details can make rewards programs even more successful.

     
    PensPoints allows Penguins fans of all types to get rewards.
    I found the Pittsburgh Penguins’ reward program, PensPoints, to be a unique and entertaining system in this space. PensPoints provides Penguins fans and attendees of all types the opportunity to amass points that can be redeemed for rewards. A participant does not need to be a season-ticket holder, or a ticket holder of any kind, though attending Penguins games does account for substantially more reward points than watching a game on TV or listening on the radio.

    A unique and well-designed feature of PensPoints, the program is self-administered by the participant through a smartphone app, scanning bar and QR codes or entering keywords into a phone, so that accounts update automatically. The result is an easy, interactive rewards platform that offers no pressure to participate but all the incentives to do so.

    Multiple colleges have begun offering rewards for students who attend on-campus sporting events. Ole Miss in particular grants points to students who scan their IDs at varsity athletic events. Participants sign up at RebelRewards.com.

    An idea that can make a rewards program more effective is the “endowed progress effect.” From the Journal of Consumer Research (Nunes & Dreze, 2006), the endowed progress effect suggests that a process deemed started but incomplete is more likely to be completed than one not yet started. Why does this matter? Think about your local sandwich shop, where after seven subs the eighth is free. Someone is more likely to buy those seven subs by using a card with 10 stamp areas, having the first two areas pre-stamped. The process is already “started,” leaving the customer compelled to finish it. The Sports Authority, when it launched its customer rewards program, The League, included a bonus $5 welcome reward for signing up, the type of kick-start Nunes & Dreze would advocate.

    Keeping them all happy

    As I’ve told many clients, students, and anyone else who will listen — let your objectives drive your methodology, and never vice versa. If a team or brand is saying “we need a loyalty or reward program,” its leaders should ask why. Any business could benefit from a well-executed loyalty program. Well-executed does not have to include compensating members for their loyalty, but should instead offer them the opportunity to feel good about being there.
    Reward programs have a place too, but before rushing into one, a team should consider whether it has exhausted other methods of increasing traffic, attendance, sales, or whatever key indicator is of concern. Since reward programs often include giving up profit margin, it’s best to explore all ideas that keep margin in the team’s pocket before needlessly handing out cash.

    Steve Seiferheld (steveseiferheld@turnkeyse.com) heads the custom research division of Turnkey Intelligence. Follow him on Twitter @SteveSeiferheld.

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