Understanding Who Your Fans Are and What They Are Worth
A U.S. Navy veteran, Jacob Gallagher has spent 15 years with the NBA franchise, rising to his current role in 2019.
In his one-on-one with Jim Andrews for the All Access Interview Series, Jacob outlined the steps the Hornets have taken to understand the customer journeys and lifetime value of fans, and how those insights can be used across revenue streams from ticket and merchandise sales to corporate partnerships. Below are edited highlights of the conversation.
Jim: As a CRO, you have responsibility for multiple revenue streams that all have a common element—the fan. I know the Hornets have done a lot of work the past few years to really gain an understanding of your fans—their lifetime value, their different customer journeys, etc. Can you share some of the steps you have taken to be able to look holistically at your paying customers and potential paying customers?
Jacob: Once you understand that fans are the engine that drives the machine, it gives you great perspective on what you need to do. For us, really understanding who our fans were started out when we were looking at how we could improve our renewal numbers. We began some years ago to build out our early retention models based on specific data points such as how often they were coming to games, which games they were attending, who they were forwarding their tickets to, etc. Those data points were very useful in helping us price tickets for the following year and helped us maximize ticket revenue. But over the last few years, we have begun to look at it differently, not solely based on tickets, but on maximizing overall revenue for the organization.
We began looking at what the true value of our fans, our customers and our members is. What do they spend on concessions, or at the fan shop? What additional tickets do they buy outside of their season ticket membership? Are they buying tickets to arena shows, not just Hornets games? When you step back and see things holistically, you look at a two percent ticket price increase and realize that even if people are willing to pay the additional money there, it may have a larger negative impact on the other spending, not to mention long-term brand building and relationships with those fans.
Jim: In terms of getting that data, you mentioned to me earlier that the Hornets invested in building a CRM system almost from scratch. How important was that?
Jacob: Beyond pricing correctly and raising renewals, the data warehouse allows us to improve the fan experience. The more we understand about them, the more we can deliver on that promise. If we know what content they consume, where they consume it, who their favorite players are, where and how they buy their tickets, we can analyze all
of that information and develop very strategic and customized plans for them. That’s our ultimate goal.
Data lets us see how much we sell in the first 48 hours when tickets go on sale, and to whom. We can see peaks and valleys of the sales cycle in the times between games so we know when to step on the gas, and when to let off in terms of the cadence of marketing efforts, whether it be paid social, email marketing or digital.
Data from the CRM platform gives our reps and our leadership a tool to be successful. It’s still only one piece of the puzzle; you still need to trust your instincts, but it’s an extremely important piece.
Jim: Sports organizations also need to grow more sophisticated in their approach to corporate partnerships if they are going to meet the requirements that sponsors and partners have. What does that look like for the Hornets in terms of what you offer sponsors, how you support them, etc.?
Jacob: The brands we partner with have certainly become more sophisticated about receiving the proper value for their investments and having very targeted demographics they are trying to reach. We have to go beyond the easy stuff, such as saying to Coca-Cola, “We have X number of people in the building and they identify your brands as their favorite soft drinks.” Based on our CRM data, we can deploy the same type of customized, targeted messaging that we are producing for ourselves on behalf of our partners.
Jim: 2020 was of course especially challenging in being able to deliver value to partners once the pandemic began to shut things down. Even though the NBA had gotten through the majority of its regular season in March, you mentioned you still had many meetings with partners about ways to give them what they paid for. Can you tell us about those conversations and the outcome of those efforts?
Jacob: I’m a firm believer that to be a good partner, we have to have a solutions-based mentality. That goes beyond understanding your sponsors’ goals and objectives, and also recognizing that they are going to change over time, and not just because of a major disruption like the pandemic. That sometimes is overlooked in sports, and you see a “set it and forget it” approach rather than regularly reviewing assets and benefits and adjusting where you can to make sure you are delivering value.
When something like the pandemic happens, those with a solutions-based approach are prepared to pivot and work with their partners to figure out ways to continue to meet their goals. It’s not easy. There were a lot of meetings, a lot of back-and-forth, and our team put in countless hours to develop assets out of thin air to come prepared each time with great new ideas. In the end, we were able to find solutions with almost every partner to offset any potential lost revenue to the organization.
The spirit of those conversations was entirely about how we could help each other. And when you talk about data, as we did earlier, it’s definitely a good thing to have. But as
we saw this year, it was the relationships that drove us forward—the relationships with fans, as well as with partners.