Our future aligns with sports teams
I know, I know, you are already laughing at me. You think the future aligns with highly targeted names that you target at the right time in the right place with engaging and personalized content coupled with mouth-watering discounts and promotions.
Do you have a favorite football team? Manchester United? Queens Park Rangers? Burnley?
If you want access to their “content”, you are going to pay, aren’t you?
It’s hard to get a ticket to a match. If you are lucky enough to purchase a ticket to a match, the ticket is expensive, isn’t it? And if you cannot attend the match, well, then you might want to watch on television. You might even have to pay extra to receive the channel that televises matches.
When you attend a match, you will pay a lot for food and drink, won’t you?
In sports, everything is about revenue, about generating more revenue. Look at West Ham United, for instance. They didn’t have to build a new stadium. They moved into a stadium used for the Olympics. I live near Seattle. Local government built sports arenas for the Football/ Soccer and Baseball teams – separate stadiums, no less.
How about you, the catalog brand? Are your catalogs paid for by a third party, or do you have to foot the bill?
How about the retail brand? Does the public pay every penny for all of your stores?
In sports, the most “engaged” fans purchase season tickets, spending money before the season starts. In retail, Amazon customers pre-pay for shipping via Prime, long before needing to use the service. How much money do your customers pre-pay you?
In sports, the most important events demand the most expensive ticket prices. A Champions League final or semi-final costs a lot to attend, and tickets are in high demand. In catalog, sales frequently surge around Christmas. Do you charge the most for your merchandise at Christmas? Or do you offer discounts and promotions in an effort to “tickle the buying bone?”
In sports, the process is all about maximizing revenue from each customer. In retail or cataloging or e-commerce, the process is all about getting customers to purchase by spending less!! Does a sports team constantly lower ticket prices, year-after-year, in an effort to be “more competitive”? No? Why do we constantly find ways to lower prices to be “more competitive” with Amazon? Think about the logic for a moment. Amazon asks customers to pre-pay money each year, and we compete against this tactic by lowering prices and by increasing discounts / promotions.
In other words, we have spent the entire e-commerce era, more than twenty years, training the customer to expect to pay less and less and less. Meanwhile, in sports, teams have spent the past twenty years training the customer to expect to pay more and more and more!
My critics tell me that this comparison is unfair, simply because fans have an emotional attachment to sports, but no emotional attachment to a catalog brand or retail shop. This is a poor argument! Ask fans of Apple if they have an emotional attachment to Apple products?
If we market our brand appropriately and sell products and/or experiences that are not easily replicated, we have a leg up on the competition. This allows us to charge more for our products. Apple can charge $700 for a tablet, but Samsung sells a comparable tablet for $300. The $400 difference in price equates to the premium that a sports team is able to harvest out of a “fan”.
In the future, our businesses will operate more like the way sports teams operate.
We will have a process for new merchandise, new products, new items. The process will be fundamentally similar to the process that, say, Chelsea uses to develop players.
We will have events with a cadence similar to matches hosted by sports teams. Instead of always running 20 per cent off or 30 per cent off promotions, or free shipping promotions, we will have events surrounding merchandising releases. This is the kind of strategy that “Fast Fashion” brands use. Zara releases waves of new merchandise, twice a week. They have limited inventory, which forces customers to be in the store or the merchandise won’t be available. This strategy is no different than a football team having a home game every-other-week with a limited availability of 30,000 seats.
There are three trends that leading companies are already capitalizing on.
1. They have low-cost or no-cost customer acquisition programs.
2. They continually capitalize on new merchandise, growing the number of high-performing items every single year.
3. They create scarcity by treating their business more like a sports franchise than like a brand they compete against.
By Kevin Hillstrom, President, MineThatData