The Added Value Playbook

Tao of Sports, LLC

  Copyright ©2014 by Troy Kirby

  www.sportstao.com

  All rights reserved, which includes the right to reproduce this book or portions thereof in any form (electronic, paper, audio, video, cloud, etc) whatsoever except as provided by the U.S. Copyright Law.

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  1 – Stop Giving Away The Store

  In the past, readers have either welcomed or ridiculed my opinion on sales. I consider that involvement to be a good thing. My opinions on sports business have the same effect on readers as movie goers who watch the late filmmaker Stanley Kubrick’s works. They like them or hate them; no one is on the fence about how they feel about them. A thinking man’s problem, I suppose.

  I do have a tendency to harp a lot on today’s sports marketers. My criticism focuses on whether they consider themselves truly invested in “marketing” or have resigned themselves to the idea that they are merely the component of a bloated budget concept. Too harsh a question to ask? Probably. Which is why there are always those who think I’ve lost my marbles when I give my opinion.

  Heresy is often the accusation of the establishment to those presenting new ideas. It’s that first man through the wall syndrome. Those who built the wall don’t bloody well enjoy seeing it knocked down. That’s the way it's always been done in the past, even if that system was wrong to begin with. Joan of Arc was able to lead the French Army in the Hundred Years War, but that didn’t save her from being burned at the stake for her ideas afterward. Being different means hitting hard with an idea, but in some ways, being punished by the establishment brought down in the process.

  I consider myself to be part of the heresy of sales. It’s the component of the business revenue arm, that department smaller than the marketing wing. The sales component is often viewed as a stepping stone toward a greater path, such as communications or marketing, instead of the end result in itself. Yet, without sales, none of the other departments would exist, as revenue would not exist either. It is true heresy to suggest that in today’s marketing world.

  The sales department and those that understand it are part of a sect upholding the belief that while the customer experience is important, it is not performed until after the sale is done, instead of before. What do I mean by that? Too many sports operations, whether college or professional teams, center their marketing methodology around the idea of giving something away in order to entice customers to attend sports functions.

  Sales is a tough business, especially if you aren’t any good at it. I firmly believe that while some people can improve their sales skills, it realistically takes more than mere talent to succeed. You have to want it more. It’s like being a good writer allows you to put cobble together a story and perhaps pass muster, but you’ll never be a great writer unless you’ve worked at it enough to dance in between the words, so to speak. That means really focusing in on improving the shortcomings in your skills. Most don’t focus that far into it, so they tend to broadstroke into the arena of marketing, or promotions, or communications, rather than naked, unadulterated sales. Sales is something tough, mysterious, and impactful.

  The issue with marketing and promotions is that, left to the devices of the talented but never-focused person, it becomes a crutch. It’s a hand-off of materials from the team to the attendee, a bribe. That’s what I consider most premium giveaway promotions: a bribe to have a fan enter the building. To me, this shows a complete lack of faith in the product. It shows that inside the building is an after-thought, that most of what happens there isn’t as important as getting the fans to see it.

  By giving something away to entice someone to enter the arena, you’ve made the premium item the real reason that they are showing up. The premium item becomes the draw. This is the same as price point. Simply lowering the price to entice discount hunters says nothing about your product inside the building, except that you don’t believe it is worth its 100 percent of the pricing. Too often we focus on the wrong issues with drawing people, and believe they if just experienced it, the game in the pure form, then they would come back as a full price paying member without a premium item enticement. This, to be blunt, is very wrong.

  This “let’s give away the store” ethos has been around since the 1980s. It has been a destructive industry principle that has showed what little administrators think of their product. In a multi-messaged marketplace that is only growing with competitors, it's still practiced the same way as it has for the last 150 years. As these new competitors emerge, the only solution as a franchise’s revenue shares diminish is to reduce price, give away premium items, and flood the market with free tickets, as if the entertainment inside the building has always been enough, since it attracted those administrators to work for the sports franchise in the first place.

  Let’s take another industry which acts in the same way that the sports industry does: farming. It is without a doubt a self-defeating business model. Three years of being in debt, simply to generate two years of meager profit. This is not unlike the professional team model, which matches the farming scenario on how they will sell their product to their customers. They simply pump up the bad days with enticements such as pricing and/or premium items, and float on the good days of weekend gate receipts. But messaging sent out to the customers matters, and this may not be a viable way to operate as a business model long-term.

  To me, this comes down to the differences between the religion of marketing and the heresy of sales. It is something which ends up, in many cases, dividing the line between what a marketing thinks they’re doing in terms of sales, compared to the reality of the situation. Marketing folks are a different breed, as they have no need to show an ROI for anything that they do. In fact, if you bring up ROI to a sports marketing person, they will likely shy away from the conversation. Because ROI means real numbers, and it means that you have to actually prove a theory, rather than simply abide by one.

  Marketing proponents hide behind the guise of how they have helped a team “brand” their product to local customers. I find this to be an interesting word, “brand,” because it is abused often by those attempting to justify their existence. Spending large amounts of a set budget on advertising buys that have no ability to translate toward a firm customer ROI is not good branding. If there is no way to present hard data that ancillaries were purchased (tickets, merchandise, parking, concessions, etc) based on the advertising buy, then the entire argument for “branding” should be considered moot.

  Yet, in this warped world of an industry, the mentality of giving away 10,000 Bobbleheads in order to generate 3,500 single game buying attendees doesn’t become an issue. It is propagated along with the added silly notion that producing several free ticket packages as a “promotion” will supplement the already heavily discounted ticket strategy, along with reducing all of the team’s ancillary per cap items to create the ultimate draw for a would-be fan. Somehow, all of these lower prices are supposed to foster more revenue for the team in general.

  Instead, it becomes a giant sucking hole for the team’s bottom line. Sure, the marketing department has “branded” the team, but in the wrong way. Now, instead of paying full price, every would-be customer expects a discounted or free ticket, a premium item, and to be constantly catered to despite paying less than everyone else. Of course, those season ticket holders who have fully invested in the team will also be sitting next to those discount folks, who will gladly marginalize the product, the experience, and make sure to tell each season ticket holder what a sucker they are for paying full price. So, yes, indeed, the marketing department has branded the team for you. But the question is, does the team want that brand?

  Sales proponents understand that they are in the
ROI and results business. That’s why the “per cap” is valuable. While the marketing department drains the team of funds, throwing out premium item gifts, etc., the sales department actually contacts 20,000 prospects to sell around 5,000 long-term ticket packages, and generates more “per cap” long-term than any Bobblehead Night can. Even if the stands are completely full, the results differ depending on whether the majority paid full price to enter the building. With the sales department, there are no discounts.

  And that’s where the heresy comes in.

  Marketing proponents aren’t comfortable