Agenda1. Customer lifetime value

• Research• Value of Pistons fans to the organization

2. Season ticket holder retention• Data analysis / data conclusions• Methods to retain customers

3. Expansion• Research on current fan demographic• Methods for expanding target market

• 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

Customer Lifetime Value

• 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

CLV Model Development

General Guidelines:1. Assess the distribution of customer value2. Drop customers with low CLV and instead

identify customers with high potential value that have been ignored in the past

3. Provide this customer list to salespeople4. Identify products that attract new and high

value customers5. Contact customers with potential for higher CLV

Implementation of CLV

Tickets, Beverage, Hot Dog, Parking, ProgramUsing 3.58% growth rate

5% discount rate 10% discount rateValue of One Year $39.32 $39.32Value of Five Years $191.35 $174.95Value of Ten Years $370.11 $304.47Value of Infinite Years $2,769.01 $612.46

Tickets ONLYUsing 3.58% growth Rate

5% discount rate 10% discount rateValue of One Year $27.07 $27.07Value of Five Years $131.74 $120.45Value of Ten Years $254.81 $209.61Value of Infinite Years $1,906.34 $421.65

Customer Value

Season Ticket Renewals

Full Season Renewal and Attendance

Half Season Renewal and Attendance

Combined Renewal vs. Non-Renewal

Attendance Percentage And Playoff Purchase

• 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

Sample Single Game Purchasers

Year 02-03 03-04 04-05 05-06 06-07 07-08

Total Tickets Purchased

412 35 42 54 24 2

Avg. Tickets Per Person

8.41 0.71 0.86 1.10 0.49 0.04

Total/Avg. Tickets Per Fan

Year 02-03 03-04 04-05 05-06 06-07 07-08

Number of Fans who Purchased

49 10 7 3 2 1

Percentage of Fans who Purchased

100% 18% 14% 6% 4% 2%

Number of Repeat Fan Purchases

Average fan purchases ticket for 1.47 years

Regular Price2002-03

5% discount rate 10% discount rate

Price including concessions, parking, etc

$47.60 $69.67 $68.67

Tickets ONLY $30.60 $44.79 $44.14

Valuation of Single Game Purchasers

• 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

4-Step Framework for CRM

• 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

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

More Ideas

• 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.

Frequent Buyer Program

Creating and Fostering Fan Identification

• 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.

Volume VI, #1, 1997, Sport Marketing Quarterlyhttp://business.nmsu.edu/~mhyman/M454_Articles/(Spectators)%20Sutton_SMQ_1997.pdf

Strategies

Fan Age

• 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

Length of Residence

Distance From the Palace

• 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

0%

5%

10%

15%

20%

25%

Under$15,000

$ 15,000 -19,999

$ 20,000 -29,999

$ 30,000 -39,999

$ 40,000 -49,999

$ 50,000 -74,999

$ 75,000 -99,999

$ 100,000 -124,999

$ 125,000or more

Total Household Income

• 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