The Sports Industry’s Customer Strategy Problem
The changing dynamics of fans and the fan-centric opportunity for sports franchises
By Josh Buchholtz and Luke Barbarich
It’s been good to be a sports team owner. As The Ringer and Sportico have reported, average NBA values increased 387% between 2012 and 2021. The Golden State Warriors are 61 times more valuable today than in 1996.
On the macro, lucrative TV and media contracts have helped values soar with live sports being one of the last remaining tenets of value for linear cable. On the micro, professional sports have thrived for 100+ years due to limited competition in local markets, with most franchises being the only option for a given sport. There has never been a problem with demand given its captive audience. Together, these factors have helped maintain the sports industry’s dominance.
Looking backward shows prosperity, but when we look forward, outcomes are not nearly as clear. Cracks are starting to show in this long-held dominance. Major League Baseball’s attendance has declined for the past nine seasons dating back to the 2011–2012 season with World Series viewership decreasing by 50% since 2016.
Engagement is changing with demographic audiences too. According to research from Morning Consult, 18% of Gen Z fans have attended a live sporting event in the past year, compared to 25% for millennials. One-third of Gen Z fans say they don’t watch live sports on TV compared to a little over 20% for millennials.
In its simplest form, less attention — both at the stadium and on the TV set — is a long-term problem for sports teams and league commissioners.
Sports teams share one challenge that is currently plaguing nearly every industry: shifting customer habits. Fans have new expectations and new ways they desire to engage with teams. Fans have more options than ever, both in the form of league competition taking away fan attention (e.g., Formula 1’s dramatic rise in popularity) and the deluge of non-sports content across platforms (e.g., Netflix, TikTok, Instagram), both of which cut into the typical fan’s engagement capacity. There is only so much time available per day and that available time is now divided across more mediums than ever. These are problems for future growth.
As the fan continues to radically change, leagues must confront this engagement challenge. It’s already started with games across leagues shifting from cable to streaming.
How do teams tackle this challenge? To ensure fan retention and enable new fan growth, teams must take a “fan-centric” approach: take advantage of new data, technology, and analytics capabilities to better understand fan needs, deepen fan engagement, connect fan experiences, and reach untapped markets in new ways.
Challenges of today
Sports franchises face many challenges. For most teams, the immediate challenge is putting out the highest-quality product at optimal value. Quality of product correlates to ticket sales, concession revenue, and long-term sponsorship agreements. But what about fan retention and growth? How do franchises keep the customers they have? Grow new customers? Sports is an industry that has both changed dramatically and not changed at all over the past two decades. For generations, sports franchises haven’t had to consider their future fans, given the largely analog ways fans and teams engaged in the 20th century. But similar to the evolution of every industry, sports is not immune. Customer needs and expectations have changed over the past 20 years and continue to evolve at a rapid pace. Sports team ownership and management must look to the future to solidify and grow their fan bases.
Franchises face three key questions when looking at this future growth challenge:
1. How do we address existing fans’ needs to drive long-term retention?
2. How do we build meaningful connections with out-of-market fans to maximize wallet share?
3. How do we create new fans to expand our base?
Addressing existing fans’ needs
Evolving fan expectations are forcing teams to be more dynamic in how they engage with fans. Like many businesses, different fan segments have different engagement requirements. “Traditional” media — newspapers, sports radio, local news, national networks — are still the go-to source for many fans, whereas more dynamic, personalized, and conversation-based media such as X, TikTok, Reddit, etc. appeal to others. Regardless of channel preference, media coverage is highly decentralized and rarely owned/controlled by the franchise itself (regional sports networks being an exception). There’s an opportunity for teams to be more personal in how they engage their customer base.
Beyond communication preference, franchises must also consider corporate values — their own and those of their partners. Millennials and Gen Z fans have higher expectations of the teams (brands) they support and are historically more likely to change/end their support of certain brands depending on what the brand stands for. In European soccer, shares of Juventus and Manchester United collapsed in 2021 after news of a proposed super league died amid fan outcry. Fan values represent an aspect of fandom that teams need to be aware of when trying to retain existing pools.
Building connections with out-of-market fans
Out-of-market fans are a unique subset of fans that present teams with interesting challenges in terms of connection and engagement. For local-market fans, teams generally have a better opportunity to drive meaningful connections through the games themselves, local news/reporting, in-person events, and general attention from the proximity to the team. Out-of-market fans are often left out, forced to purchase game subscriptions and left to their own to find the best ways to engage. The “customer effort” of out-of-market fans is high. High effort creates business opportunity.
A good example of teams connecting with their out-of-market fans is the Supporters Club format for many English Premier League teams. Different cities offer chapters of Supporters Clubs that organize their members to watch games, have exclusive opportunities to purchase merchandise, and get direct interaction with the teams and players. While these groups are not “official” wings of the team, they provide the teams with opportunities to drive meaningful and organic connections with their fans.
How do we grow and expand our fanbase?
Gone are the days of teams assuming generational fandom. As newer customers enter the market, there are more options to deflect their attention than at any time in history. eMarketer reports the average US consumer spends 454 minutes (over 7.5 hours) per day consuming digital media. Teams must look at new and innovative ways to cut through these distractions. In addition to offering a competitive/top-tier team (which correlates to increased engagement and viewership), teams can look at several levers to acquire new fans. First, teams may look to creating easy “entry” experiences — introducing less barriers to attending games in person, providing incentives for new fans to attend games, etc. Second, teams should invest in more meaningful, personal, and closed-loop engagement tactics — targeting new fans with relevant content that may influence their ability to see or watch a game in a format/medium that reduces effort. Third, enhancing the stadium experience is a path to attract new customers to promote product engagement. Lastly, although it’s hard to build a strategy around, “buzz” drives new customer attention, driven by both local and national coverage and typically centered around key acquisitions — just look at the impact Lionel Messi and Taylor Swift had this year on bringing new fans to MLS and NFL games.
Opportunities: A fan-centric framework
How do teams acquire new customers while strengthening the loyalty of their current base? Data is at the center of future fan-centric strategy. Teams who know the most about the existing customers and prospective customers can leverage that data in ways to drive active and impactful growth strategies. To move forward, we believe teams should look to three investment focus areas:
1. Invest in understanding the dynamic and nuanced needs of all fans to prioritize which products, services, and experiences matter and why.
2. Invest in data and analytics capabilities to drive connected, unique, and meaningful fan experiences.
3. Invest in loyalty strategies and platforms to encourage and incentivize fan support.
The underlying theme of the challenges is a simple one: Who are your fans and what do they like? Not all fans of the same team have the same beliefs, buying behaviors, or engagement preferences, or are fans for the same reasons. Understanding and prioritizing fan segments and tailoring engagement strategies aligned to such nuances are needed to drive profitable connection.
At Slalom, we’ve done this sort of work with customers including the Chicago Cubs. Customer segmentation is a process that groups people by meaningful differences depending on how they interact with a product or category. Based on data analysis, segmentation makes business decisions more objective and data-driven, and reduces reliance on assumptions and intuition, leading to more informed choices that drive growth and success. Analyzing groups of people at a large enough scale to highlight key differences reveals unique value opportunities. By engaging in attitudinal and behavioral research, teams can understand the commonalities across the various groups of fans and develop strategies that are specifically targeted to unique groups of fans and their needs.
These research exercises provide teams with vast amounts of rich data that can be leveraged across product, service, and experience strategies. A good example of a team addressing a general fan need is what the NFL’s Atlanta Falcons have done with concessions at their stadium. The team recognized a challenge where many fans were unable to bring their families to the games and afford concessions. Responding to this challenge, they introduced a price cap on concessions, making game attendance a more affordable experience for fans from all socioeconomic backgrounds.
Data is central not only to fan research and segmentation plays but to driving meaningful digital and in-stadium experiences. Leading businesses invest in scalable data architectures and systems that allow for robust (and compliant) data collection, data reporting, and data analysis to inform a variety of business decisions — everything from which calls-to-action matter to mobile app layouts that encourage fan engagement, to the most effective and easiest directions to provide fans on their way to a game. Integrating data systems with human-centered capabilities, like data literacy and data decisioning, make for effective data-driven organizations. Experienced leaders lead with data. They invest in executive teams who take a data-driven approach to understanding the fan, understanding how to drive connection across business functions, and understanding the power of data.
These tactics combined create loyal, lifelong fans. Fan experience is not a singular moment; it is a collection of all moments across the entire lifecycle of the fan. Architecting these moments together in a way that is meaningful to the individual fan creates a relationship that feels much closer to 1:1 than 1:million. When it comes to loyalty, traditional loyalty programs might be a strategy teams need to consider moving into the future. More than just collecting points, effective loyalty programs seek to both incentivize more frequent consumption and deepen connection. Traditionally, there weren’t other options for sports fans, so there wasn’t a need to incentivize loyalty. Now that might be changing.
In conclusion
Fandom is changing; teams must consider the entire fan experience as they look to shore up existing customer support and grow new bases. Rich, meaningful, and dynamic data will drive the future of fan engagement. Teams have an opportunity to take more ownership and control of their engagement, rather than outsourcing to national media outlets, as a path to create more tailored 1:1 connection and learn more about the customers in play. As businesses across industries increase investment in first-party data, sports are not immune. This is central to the future growth of franchises — by leveraging data in a way that makes digital experiences, game-day experiences, and off-season experiences more meaningful, teams may reduce their risk of falling down the competitive standings.
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