Article 1: Scarcity (Pricing Strategy) and Maximizing the Interest Curve
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*Editors Note: this is Article of #1 of the 7 part series. To view the individual articles, click on the subject links in the first section below.
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7 Part Series: Attendance is not just an MLB Issue, but how do we Fix it?
Introduction:
There has been a lot of media focus on the declining attendance of MLB recently, some fair and some not. And while attendance is sliding it is hardly an MLB only issue other than it being the most visible due to large stadiums and the number of games. Many leagues, teams, concerts, and events are struggling to sell tickets as well.
You can look at many data points across the sports business landscape and see a myriad of varying conclusions as to why:
- Ticket price
- Ancillary costs
- A changing consumer landscape
- The ability to watch from home on a sick, affordable flat screen TV
- *gasp* Those evil millennials
However, a lot of those data sets either do not tell the entire story and point to why attendance should be increasing and not the other way around. It is possible to maximize revenue by creating scarcity with affordable tickets. You can manage brokers strategically. Millennials, ironically, covet experiences amongst many other false assumptions. TV/Content drives attendance through brand awareness. And lastly, Fantasy Sports and Gambling are driving even more marketability and awareness.
The data points to more consumer interest. So why are ticket sales failing, and how can we quickly address it? Let’s examine five reasons why and define strategies to help. Plus, two sports business relatable bonus tracks on customer LTV and innovation using real-world examples:
- Create Scarcity
- Find Solutions to Real Problems
- Embrace Modern Content
- Market Specific Resale Strategies
- Non-Revenue Shared Operating Income
Bonus Tracks:
Innovation goes Beyond Tech: What Sports Business can Learn from Sheetz
Customer LTV: What Sports Business can Learn from Buick and Toyota
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Article 1: Scarcity (Pricing Strategy) and Maximizing the Interest Curve
I wrote about this prior, but it may be the most critical aspect of the current landscape. The core issue with the existing retail pricing strategy is not taking advantage of our prime selling times as we overprice early due to revenue FOMO.
The feeling is that if we under price and sellout revenue is left on the table. We then combine this strategy with last-minute price drops, which in turn devalues our best customers. I don’t think $5, $10 or $15 flash sales are a terrible idea. To the contrary. There are just better ways to manage the effectiveness of a long-term strategy. Check out this graph below from the original article:
The higher interest times come early and pick up again late. If we overprice at on sale, there are too many tickets available leading up to the event and not enough interest to move them all.
The overpricing creates supply which has trained fans to wait out the market. The more inventory, the likelier we are to see a price drop closer to the event. While MLB has a disadvantage because of the sheer number of games and tickets to sell, other leagues and sellers can run into similar problems. Concerts, for example, have difficulties with no customer base and unique needs in each market. It is a daunting task and very difficult if you miss the on sale.
The original planning does not take into account the high costs of staffing and marketing needed to move any product over many months. By missing high-interest times, we are setting ourselves up for failure. The fix is to manage the inventory better.
We can utilize our tech infrastructure to sell earlier. Define how many seats you can sell early for the $10 to $15 range and manage the specific sections. I would recommend heavily targeting families, groups, military, and students for better targeting and quality control. You can also openly market these within the parameters without compromising your corporate or season ticket base.
You can stop the potential resale of these tickets by utilizing technology and implementing strict policies. Once you have limited supply, you can more effectively manage a sales, marketing, and broker strategy.
The revenue maximization comes in with a higher value of the remaining tickets due to lower supply (exceptionally high demand games), increased ancillary spends by the consumer, and savings from further internal efforts.
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Mike, a 20 year veteran of the ticketing industry has executive experience with primary and secondary roles. He resides in Denver with his wife Jacqui, VP/Head of Studio at UpPurpose (A United Way funded marketing consultant), and their son Grayden, a 3 year old bad ass snowboarder. See more of Mike’s media at www.michaelguiffre.com