Detroit PISTONS Return on Marketing Investment Katy Jackson ● Daniel Horwitz ● Naveen Das ● Kenny Fellows
Agenda • Customer lifetime value • Research • Value of Pistons fans to the organization • Season ticket holder retention • Data analysis / data conclusions • Methods to retain customers • Expansion • Research on current fan demographic • Methods for expanding target market
Customer Lifetime Value • Indicator of customer profitability • Net present value of future profits • Allocating marketing resources & increased ROI • Purpose: • Obtain a potential value of Pistons fans • Drivers: • Purchase frequency • Recency of purchase • Past purchase activity
CLV Model Development • Aspects involved in the computation of CLV • Customer characteristics • Past customer behavior • Past level of marketing resources allocated towards the customer • Models should estimate the value of a customer over the customer’s lifetime • Majority of a customer’s lifetime value captured in 36 months
Implementation of CLV General Guidelines: • Assess the distribution of customer value • Drop customers with low CLV and instead identify customers with high potential value that have been ignored in the past • Provide this customer list to salespeople • Identify products that attract new and high value customers • Contact customers with potential for higher CLV
Attendance Percentage And Playoff Purchase
Sample Single Game Purchasers • Randomly Sampled 50 Customer IDs from 2002-03 Season • 1 customer repeated • N=49 • 35% of fans purchased tickets again • 17 of 49 fans • Average Fan Purchases Ticket for 1.47 years
Valuation of Single Game Purchasers Average fan purchases ticket for 1.47 years
4-Step Framework for CRM Identify your prospects and customers Differentiate customers in terms of their need and their value to you Interact with individuals to build relationships Customize products, services, and messages to each customer
Ideas • Start a team support group • Develop rivalries • with teams rather than with Ron Artest • Reach out to those who are attending games • Individuals seek a sense of belonging and an opportunity for communication and interaction
More Ideas • Train employees to be knowledgeable and friendly • Finds ways for the customer to be involved in the decision-making process • Enhance cross-selling and up-selling • Treat valuable customers in a valuable way • Make it easy for customers to complain • And then respond quickly and constructively
Frequent Buyer Program These programs have capability of digitizing all purchases, and has potential to give near-real-time analysis of customers. Helps segment the market – can better target offers to highly specific customer segments.
Strategies Volume VI, #1, 1997, Sport Marketing Quarterlyhttp://business.nmsu.edu/~mhyman/M454_Articles/(Spectators)%20Sutton_SMQ_1997.pdf • Increase team/player accessibility to the public • Utilize reciprocity theory • Increase community involvement activities • Philanthropic/charitable efforts reflect well on team, players, and fans! • Reinforce the team’s history and tradition • Show that a fan group spans generations, not just seasons • Create opportunities for group affiliation and participation • Make it WE won and WE lost. Have fan clubs, newsletters, organized trips to road games, etc.
Large potential for Lifetime Value Many “kids” activities on website What about 18-25 Prom at the Palace Partner with local Universities to target groups Fans Ages 18-25
1 year or less 1-10 miles from Palace of Auburn Hills Pistons “Welcome to our Neighborhood” Discount Ticket Packages Photo for new house T-Shirts Length of Residence/Distance
Affordable for ALL FANS Explain Benefits of Ticket Packs/Deals Thanksgiving 4 for $44 Offer Only $11 per person Like a trip to the movies Holiday Gift Offer Ladies’/Guys’ Night Out $59 includes 2 tickets, $16 in gift cards, 2 martini glasses For $29.50 get ticket, gift card, glass $40,000 - $49,000 Income
Premiums/Giveaways Out of 20 marketing methods, promotional giveaway items were ranked 1st by spectators ROI not seen as high because of the significant cost to premium items Should secure sponsors for as many unique giveaways as possible Educate fans on a more direct level Are Fans and NBA Marketing Directors on the Same Page?
As shown, there is significant value in retaining customers beyond the five, and even ten-year periods The Pistons have many options in terms of improving customer retention as an organization As a result of retention efforts, expansion is a natural byproduct Summary