Teams cozy up to the fans with CRM's 'personalized marketing' strategy

Imagine a software strategy that allows an organization to combine the disparate data threads it collects about customers, then, using the Web and other technologies as well as non-technical methods, put the data to work to develop closer ties with customers. This is CRM, or Customer Relationship Management. With CRM, sports teams can cater specifically and efficiently to fans' needs and whims, react to trends, reward loyalty, fix problems, and retain its current clientele and attract more. A panel of sports executives discussed the state of CRM in their industry at the annual meeting of the Sport Marketing Association recently at the W. P. Carey School of Business.

It's your birthday. Logging on to your computer, you hear a "pop!" announcing the arrival of an online coupon for use at your favorite team's merchandise store. Your phone rings. It's your team's front-office people wondering if everything's OK because you hadn't used your season tickets for a third straight game. You and your neighbors, also fans, receive a heads-up that your team's head coach will be making an appearance at a restaurant down the block.

This is the new reality for teams and fans as the sports world embraces a business staple — CRM, or Customer Relationship Management. CRM is both a technology and a marketing strategy. CRM technology tools allow an organization to combine the disparate data threads it collects about customers. Then, using the Web and other technologies as well as non-technical methods, companies put the data to work to develop closer ties with customers.

Knowing customers' needs and whims, teams can market specifically and efficiently, react to trends, reward loyalty, fix problems, retain current clientele and attract more. A panel of sports executives discussed the state of CRM in their industry at the annual meeting of the Sport Marketing Association recently at the W. P. Carey School of Business. "The days of shotgun marketing are over," says Steven Hank, assistant athletic director for revenue and marketing at Arizona State University — an innovator in the use of CRM.

"We're in the era of personalized marketing. Personalized marketing, not mass marketing."

— Steven Hank, assistant athletic director for revenue and marketing

The same is true for pro teams. "Sports over the last five years has had to do more to really touch the fan, as opposed to putting a product out and expecting them to come," says Todd Merkow, the CEO of Elevate Media, which helps companies provide engaging content for their CRM connections. "It's now giving some of the power to the fans."

It's personal now

Devil's Domain, the ASU's Web connection to Sun Devil fans, was the country's first when Hank started it four years ago; next month, the Pac-10 Conference will begin to use a similar approach.

Devil's Domain collects basic information from fans — including birthdays and preferences in sports and ticket-buying. In exchange, fans receive access to a portal, through which they get ticket discounts, early purchase opportunities, exclusive newsletters, daily headlines, video highlights from regional sports networks, and that merchandise coupon on their birthdays.

Hank says each week the team store redeems 20 to 25 of the one-item 50 per cent discount birthday coupons, and "very rarely do [users] walk out with one item." In another example, Hank showed how ASU has used its CRM capability to build a home-court atmosphere for its basketball team.

ASU's arch rival — the University of Arizona — is only 100 miles down the road from the ASU campus. Wildcat fans live in the Phoenix area as well — a fact that was painfully obvious at basketball games. On a regular basis, University of Arizona fans would buy up the majority of the lower-bowl seats when their nationally-ranked squad came to Tempe to play the Sun Devils. ASU's team found the atmosphere on its home court was more like an away game. The University of Arizona's red-and blue-filled the lower court seats.

Last season, Hank took action. Using the fan database, ASU notified Sun Devil hoops fans that they could buy lower-bowl tickets before they went on sale to the general public. The Sun Devils pounced, and the seats closest to the court are now a sea of gold. "It completely changed the environment," says Hank. "You could tell it affected the players."

How it works

Hank and his ASU staff know — and can use — a person's name, alma mater, shirt size, propensity to donate to ASU, frequency of visits to ASU's Web site, and purchase history. Promotions can be tracked for success.

The ASU program, as well as that of Vanderbilt and many other universities, is guided by software provided and maintained by Nashville firm SmartDM. The 10-year-old company has seen its sports clientele boom in the new century as teams compete with an ever-widening scope of entertainment options. SmartDM is now the leading sports-CRM specialist, boasting clients in universities all over the country and in every major sport.

Sports organizations didn't ride the initial CRM wave in the 1990s, but a marketing professor at the W. P. Carey School of Business says that's not necessarily bad. Universities missed CRM's growing pains. "In the 1990s, CRM was over-hyped," says Professor James Ward. "The software systems available at the time were often difficult to implement and expensive. The difficulty of building a database to make the software work, and the greater difficulty of changing organization cultures to focus on customer service was often underemphasized.

"Today," he adds, "CRM software systems are often easier to implement, more reliable, less expensive. There is much more expertise and experience available about what CRM can and can't do." Consider this example of a sports marketing effort, pre-CRM: one Denver major-league level team bought a list of subscribers to sports magazines, then mailed its promotions to them and crossed fingers. They discovered that hope is not efficient.

In contrast, Comcast-Spectacor, owner of the Philadelphia Flyers and Philadelphia 76ers and other sports and entertainment entities, used SmartDM to aggregate over 5,000 sources of data gleaned from its customers. That's only the first step of CRM, however; the software is nothing without the hard work of people, or as Merkow puts it, "The face-to-face: that's vital. That has to happen."

"It seems like every team we talk to says the same thing," Bobby Whitson, vice president of sales for SmartDM, told Street and Smith's Sports Business Journal in 2003. "They do a great job of aggressively collecting data. However, they also will be the first to admit that they often do a less than good job of figuring out ways to organize and use it."

Now, teams want to know all they can, then slice and dice the information in myriad ways. John Walker, the vice president of business development for the Phoenix Suns and America West Arena, gives an example: when expensive floor seats became available to Suns fans before the team developed its CRM, offers were sent to all upper-level single-game ticket buyers.

"Not everyone was interested," Walker says.

The offer was a nice gesture, but misdirected to those who had a history of buying the arena's least-expensive seats. Now, Walker's people have plans for each type of ticket buyer. And if a season-ticket holder doesn't use that ticket for a few games in a row, the Suns organization knows. Because the tickets are bar-coded, the fan will get a call from the team to assess the reason. Likewise, those with better attendance get rewards. Since the Suns know who your favorite player is, perhaps you'll get a replica of his jersey or an autographed item.

"Traditional marketing as it related to databases was a shotgun approach," says Walker. "There wasn't an ability to segment or target. Everyone got the same message." For the Suns, and the other Suns Legacy Partners entities - which include teams from the Women's National Basketball Association (WNBA), East Coast Hockey League, and Arena Football League, as well as the Dodge Theater - those messages are sent by e-mail. Walker says more than $7 million has been generated by e-mail for Suns Legacy Partners in the past two years.

In contrast, Hank's Devil's Domain does not use e-mail. Rather, all its messages are sent through the downloadable portal software. Hank says the method of delivery of CRM communication is crucial. "We live in an era of spam," he says. "Some people think 'Blast out e-mails, and you'll be successful.' That's wrong."

Hank says e-mail is fine as long as it's targeted — not one-way marketing. He cites an NBA team which lost most of its e-mail-address database because of overzealous and greedy soliciting. He says the target audience should see offers and promotions as membership benefits and not just "we want, we want, we want." Ward says discipline and finesse are parts of CRM that increase the payback on the costly software.

"The effectiveness of a CRM system depends a great deal on the size and quality of the fan database that the CRM system works from," he says. "A good database can take years to build. Once the database is built, organizations can be tempted to overuse the system for short-term sales gains by pushing too many offers and communications to fans. Most organizations should consider placing formal limits on the number of times they push offers to customers per month and per year to be sure not to wear out their welcome."

As one of the leaders in the NBA in CRM use, the Suns have hosted officials from other teams who are interested in improving or implementing their own systems. Rob Sullivan is the vice president of sales and service for Maloof Sports and Entertainment, the umbrella corporation that owns the Sacramento Kings of the NBA, as well as a WNBA franchise, and ARCO Arena. He recently visited Phoenix to brush up on CRM.

"We're looking to enhance from a tracking standpoint, as well as a new business standpoint," Sullivan said before the trip. "We want to better understand our clients. We want to get to where we sell them what they want when they want." Sullivan is looking to upgrade his current system; he's just not sure in what way. That's the most important step, says Hank.

Strategy — not just software

"Most people see CRM as software," he says. "It's not. It's a strategy. The mistake some make is that they buy the software then fit their strategy." Hank is as much a pioneer as Merkow, who as a team president used downloadable portals to communicate with and establish a fan base for a Los Angeles Arena Football League franchise that competed for dollars in a market with a dozen other sports presences.

"Trading information for software" is what he calls it. "It was an invaluable tool to us." Major teams are not the only ones that can benefit from the efficiencies of CRM. "CRM and database marketing more generally may help smaller, more niche sports and sports organizations flourish," says Ward.

"Niche sports marketing depends on identifying and uniting scattered fan bases, narrowcasting to these fans, and staying in touch efficiently. CRM won't change the world of sports marketing, but it will help teams use their marketing resources more efficiently and effectively."