Talking Tickets 18 December 2020: Dynamic Pricing Success! Frozen Opens In Sydney! The Global Brand of City Football Group!
Year 2 Episode 13
Hey everyone!
Happy Holidays!
We are turning the corner into the end of the year now for sure!
Next week is Christmas Day, but don’t worry…I’ll still put together a newsletter for y’all, but it may or may not be shorter. Let’s see what the week looks like.
Same for New Year’s Day.
Last week, I asked y’all to fill out a quick, 3-question survey. The secret was that I was going to test my Net Promoter Score to teach a lesson on how to use it and what you can learn now and heading out of the pandemic.
The survey is still open, so if you haven’t had a chance to drop your score of the newsletter in…go right ahead!
Forget all of that…what is my score?!
It is 60!
That’s really awesome and let me explain why. NPS ranges from -100 to 100. Anything above 50 is excellent. Two of my favorite companies, Apple and Tesla, have NPSs of 47 and 37.
The second question was about the context of the rating. I found out that the mix of stories and the focus on strategy is what folks like. The thing that I need to continue to work on is making sure the mix of American to global stories continues to favor diversity.
This is a topic I’ll continue to share more about over the next few weeks because I think it can teach you a lot about your business as we start recovering from the pandemic in 2021.
Join me, Ken Troupe, and Matt Wolff for the final #sportsbiz Happy Hour of the year! We will be counting down the Top 10 worst holiday party experiences.
If you tune out for the next week or two, I want to take a moment to thank all of you for being here each week. Keeping the newsletter running throughout this year has helped me stay focused, positive, and forward focused.
To the tickets!
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1. Sean Kelly and Vatic did a case study on pricing of streaming events during the pandemic:
Sean sent me a note a few weeks back about the results of a test he ran during the pandemic on the impact of dynamic pricing for streaming events.
He had my attention because I have been studying pricing this year and I found out how important pricing was to profit and correlation between price and profit: in general, a 1% increase in price improves your profitability by 10%+.
Sean lays out the way that he approached the project and some of the philosophical underpinnings of dynamic pricing.
The key takeaway is that you should be more aggressive in dynamically pricing your streaming events because the increase in price tickets sold at was about 4x.
As a practical manner, this put the price that the organization got for in-person events was pretty close to what they were getting for streaming events.
Why?
Customers had a different value consideration than the organization did. Customers wanted to support the arts, the organization, and they still put a high value on the production even if they weren’t there in-person.
For y’all the key ideas here are:
Focus on the value your customers receive, not the ticket or anything else, but the value. You will find that your customers likely have a different value formulation than you do.
To that point, put your assumptions aside. By being Market Oriented, you recognize that your assumptions are likely wrong and they might even be dangerous because you can slip up and assume that the customer sees the world exactly as you do…and that is never the case because as soon as you start working in an industry or in a business, you can’t see the situation like a customer ever again.
Don’t be afraid to test things. Not having the answer isn’t a negative reflection on you, it is a reflection that you are confident enough to know when you have the answer and when you don’t have the answer. More importantly, that you have a willingness to say so and go out and seek the answers.
2. Athletic Departments are working to uncover new donors:
Lately, I’ve been learning a bit more about data and using data effectively. At NSF, I shared the ideas behind STP: segmentation, targeting, and positioning.
If you have never been through a marketing program or training, STP are the core of marketing strategy.
In reading this story, I see that schools are using TicketIQ’s data platform, FanIQ, to help discover new donors as tickets can’t be sold and revenues are becoming an issue for a lot of schools.
Jesse Lawrence points out an important lesson that everyone should pay attention to about tickets being largely a local thing but the universe for donations can be a national, even global, thing.
This points to the need to focus more on marketing strategy and the idea that you put strategy before tactics.
It also opens up the door to a conversation about sales funnels because as Jesse points out, ticket sales is one funnel and donations is another. (I go into the sales funnel at the bottom in number 5.)
Back to the bigger point, the core starting point of these programs needs to be with segmenting your market effectively.
A good segmentation has a few key attributes:
It includes the entire market.
Puts customers into buckets where the people in the segment are similar and the people outside are different.
They named based on behavior.
Include segment dynamics meaning that certain segments influence other segments.
They should be sized and valued to give you an understanding of the real size and potential of the market.
And, sales should be able to tell you customers for each of the segments.
Keep in mind, segmentation is about the market and not about you.
How do you get to this segmentation?
You do some market research. Typically a little less than you think if you follow the conversation about DATA!
To use the University of Maryland as an example because they are in my neighborhood and they are one of the schools in the article, a representative sample of their alumni base is likely somewhere between 300-400 people.
In case you need context, I figured out an estimate of how large a population I would need to get a representative sample of the entire DC area and that number is 384.
Here’s a sample size calculator to play with if you are into these kinds of things.
Why do I share this with you?
Because I want you all to understand that you can do research effectively and that the data you need to make the research meaningful is much less than you might be led to believe.
As Tom Goodwin writes in Marketing Week this week, we have to be cautious of all this talk about data because it can be inefficiently managed, inaccurate, or confusing. That can lead us to make decisions that won’t help us be successful. Worse, it may stop us from making the decisions we know we need to make.
What do you need to know?
If you are looking find new opportunities or get a better overview of the market you are attempting to reach, you need to do some research and segment your market effectively.
Backwards Market Research is a concept I think I’ve talked about in the past and it involves three quick steps:
Figure out what you are attempting to answer.
Figure out how you need to show the answer meaning what graphs, charts, examples, etc.
Design your research around what you are trying to answer and how you need to see the answer so you can control for the meaningful.
From my research, this is the first big opening of a musical since the pandemic started back at the start of the year.
While we wait for the West End and Broadway to re-open, this is a good sign and something we can learn from.
Due to the pandemic, innovation has been happening in some places a lot quicker pace than ever before.
As far as positive signs go, this one is pretty great!
One thing we will want to keep an eye on as the summer in Australia progresses is what demand looks like, how the coronavirus changes impact the experience, and how quickly this allows the entire industry to start to come back online.
I’ll cover this more at the bottom, but the key idea to takeaway and use here for all of us is the idea that events are going on, musical theatre is happening, and fans are back.
So the job is to promote that and drive awareness because the success of Frozen’s opening in Sydney is a key marker in signaling to folks that we will be able to get shows and events back online soon.
In this case, promote the show, promote the safety, promote the idea that shows are going on. As you saw with the opening getting coverage in NYC, this is a moment when you can share that things do have a light at the end of the tunnel and getting the word out about positive happenings in as many places and ways as possible right now will help accelerate the recovery process because getting people back to shows is going to require a lot of top-line communication and rebuilding of the sales funnels of shows, games, and events.
4. The business model of soccer around the world has been on display the last few weeks:
The MLS Cup is typically a celebratory moment for the American soccer league, but this year Don Garber had to share that the league likely lost $1 B due to the coronavirus and that the league has no idea what the business environment will look like in 2021 either.
In France, Ligue 1 teams are struggling due to a television deal collapsing.
And, in Australia, Australian soccer clubs are working to set the sport on a new path of growth and sustainability with the City Football Group leading the way by building a new academy in Melbourne.
To me this points out two important concepts:
Brand Architecture
Streams of Revenue
Brand Architecture is part of that term “brand” that can seem fluffy and like a load of BS. But Brand Architecture is a pretty simple term that for our purposes means the structure of a group of brands under the home company.
In the case of City, their focus on growing soccer around the world while building out their global brand is classic brand architecture, done by a sophisticated group of marketers. Each team has the nod of approval of the larger City Football Group and Man City, but has its own feeling and vibe for its unique location.
This matters because it allows the entire project of rejuvenating soccer and the A-League in Australia to have a stronger feeling of likelihood because City is endorsing the move with their attention, money, and brand.
Why does brand architecture matter?
I’ll give you three things today that reflect in what is going on in soccer:
You can communicate more effectively with individual consumers and markets while growing the overall business.
Gives you a little more flexibility in how you communicate and manage each business.
It allows you to have a hallow effect at the local level of the larger or associated brands which gives the entire structure a bit more cohesion.
City is the top of the mountain at doing this, but you can look at the strength of the NFL and NBA brands as being greater than the sum of their parts as good examples as well.
Which brings me back to streams of revenue, MLS, and Ligue 1’s TV deal.
The pandemic has shown a weakness in the business models of some leagues, teams, and organizations that wasn’t apparent before the pandemic.
In looking at the situation that both leagues find themselves in right now, a look at the way they manage their brands can point to some possibilities for survival, sustainability, and growth.
First, MLS would benefit from revisiting their brand architecture. The overall brand of MLS can feel disjointed especially compared to some of the stronger brands in their portfolio like the Seattle Sounders, Portland Timbers, and Atlanta FC.
In learning branding, I learned a key rule and that was that you should have a global brand strategy, but the implementation should happen at the local level.
What does this mean?
It means that MLS needs to focus on rethinking their brand architecture and coming. up with a key brand position in the American sports market that doesn’t always come through, delivering that message through to the team level, and supporting the local efforts at building strong brands at the local level.
Think about the work that MiLB and their former Chief Revenue Officer, David Wright, did with building a global MiLB brand that opened the door to significant national partnerships while still having extremely strong local brands like the Indianapolis Indians, the Durham Bulls, and the Everett Aquasox.
Having a strong league brand doesn’t mean you don’t have strong team brands. If done well, they feed each other. Creating revenue opportunities and sustainability that doesn’t exist without the structure.
Second, Ligue 1 could benefit from some of the same market forces that are pushing La Liga into North America.
A few weeks back, La Liga announced a partnership with Stagefront Tickets to data share, on top of talking about their commitment to the American market before the World Cup in 2026.
This is one path that the league could take to stabilize its business model, grow its market share around the world, and generate more revenue period.
The reality is that Ligue 1 should have a more prominent position in the global football market because it has two top contenders to replace Messi and Ronaldo as the faces of global football in Neymar and Mbappe. On the whole, the league’s style of play tends to be more entertaining, marrying styles of play from around Europe and Africa to be free flowing and fun.
This would appeal to the American market that will know Neymar and, probably, Mbappe, but might not know much beyond that.
Using the a playbook like La Liga’s or similar to the way Bayern Munich, Man City, and other clubs have people on the ground in the States can open up a number of revenue opportunities that can bleed into every area of the Ligue 1 business portfolio.
Finally, all of the world of soccer still has some untapped revenue sources that could and should be in play now.
I’ve pointed to the One Hotspur membership program in the past as a way to monetize your global market. You can also look at Melbourne FC in the AFL to see how a membership program can incorporate into your current ticketing system.
As we head out of the pandemic, rebuilding our communities and connections to fans is likely to be important and giving folks new and exciting ways to engage and connect will create revenue streams for teams and leagues.
The best place to look for these opportunities is to look at other entertainers and how they are connecting or other brands in other industries. Go to music and check out the work of Chance the Rapper, Pearl Jam, or Travis Scott as they build communities around their music that they cultivate and monetize.
There are ideas you can steal from the flywheel companies like Amazon and Disney have created.
Or, you can also play with the some of the promotional events that have been successful over the years like the way that Yellow Tail Wines used football and tailgate parties to open up new markets, Coca-Cola used endurance events to relaunch Odwalla, and the way that James Bond is everywhere during a film cycle as ways to monetize, grow, and build out a brand or league.
5. The decline of TV ratings for sports could hold true through 2021:
This is really a story about sales funnels.
As the article states, people’s consumption and buying habits have changed due to the pandemic. In many places, the way people consumed sports and entertainment had changed before the pandemic.
A few weeks back, I linked to a story about the NFL and the data that pointed out that if you haven’t made a kid a football fan by the time they were 18, the likelihood that they would become one later in life dropped significantly.
Then, this week we see that a playoff game will be produced and shown on Nickelodeon.
What we are witnessing is a shift in the way that the NFL approaches their sales funnel for fans.
What do I mean by a sales funnel?
It is a simple concept that just really lays out the steps in the buying process that a potential customer goes through from initial awareness to long-time buyer.
For our intent, what the NFL is recognizing is that for long-term security and growth, they need to get more young fans to watch and pay attention to the NFL. This requires them to create a funnel that starts with getting kids into the game at the top, getting them to watch, and on and on.
If you are on the team side, you should have multiple funnels for the different parts of your business: ticket sales, sponsorships, ads, etc.
How does this loop into ratings?
Simple.
If we sketch out a really super basic sales funnel for getting folks to watch on TV, we have four steps:
Attention
Interest
Desire
Action
During the pandemic’s initial lockdown and the continuing phases of the pandemic, we’ve seen people’s attention drawn all over the place by the news, the elections, social justice, the economy, I can on but you get the point.
If you look at this like a funnel, you’ll see that if you stick a million people in the top, at each point in the funnel, you’ll lose folks. And, if you are managing your sales funnel well, you’ll know the steps and you’ll measure each step so you can see just how much drop off from step to step you are actually encountering.
What the declining TV ratings shows is that folks habits are different right now than they were before the pandemic. Some of this was already happening with chord-cutting, streaming, and other factors that would pull folks from watching sports or entertainment on TV.
Which takes us back to the top of the funnel: attention.
The assumption that is often made about customer preference is that it is static, meaning it stays largely unchanged.
That’s not true. There is tremendous data in the book, Soccernomics. The data shows pretty clearly that fans of a team have different phases in their fandom, ups and downs throughout the different stages of their life.
What does this mean to us?
It means a few things, go back into the podcast archives and check out my conversation with Colby Fackler. Colby shared the story of a customer of his that brought his teenage daughter to the Whitecaps’ matches and when he reached out to talk with him about how he used the tickets, he found out that this was the one time and place that he could spend uninterrupted time with his daughter.
That’s a life-stage that is meaningful, don’t you think?
This probably opens up to a further discussion of segmentation, research, and some other key tentpoles of marketing, but for today’s discussion…this points to the idea that you have to manage the sales funnel so you can recognize where folks are in their customer journey.
But the bigger thing is that if your bottom of the funnel numbers are declining or not where they need to be, you need to look at the higher stages of your sales funnel to figure out where the biggest leak is and fix that one first. Start with the point of entry and work your way to the end to fix the sales funnel and in the case of sports’ TV ratings, begin at the top with attention because folks are distracted right now and their attention may not be where it normally is.
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I’m largely going to try and rest and relax until the 1st of January. I will pop in with holiday editions of Talking Tickets, but they may be a little lighter.
But you can visit my website and catch up on podcast episodes.
Check out my friends: We Will Recover, Activity Stream, and Booking Protect.
If you haven’t had a chance to join our Slack Community yet, get over there. I’m going to focus a lot more on community building and helping folks recover next year, like I mentioned last week, but I’m going to work to create more engagement in the Slack Channel starting the 1st of January.
Check out this thread on Twitter with my Top 12 podcasts of the year including Eric Fuller interviewing me, Zoe Scaman, Colin Lewis, Aubrey Bergauer, and more!