Cost-effective Loyalty

Panelists at ProVenue Exchange Discuss the Benefits of Loyalty Programs

  • by Jessica Boudevin
  • Published: March 18, 2012

Chris Gargani from Washington Nationals, Paul Flood from Storm Consulting, John Abbamondi from San Diego Padres and Bart Wiley from Seattle Sounders speak on the “What’s in it for me, the fan?” panel at ProVenue Exchange.

REPORTING FROM NEWPORT BEACH, CALIF. — With loyalty programs, the financial return comes in the form of information, if not always direct sales. Panelists at this year’s ProVenue Exchange March 13-15 at Balboa Bay Club in Newport Beach, Calif., have found different ways to reward fans for their loyalty.

“We allow people who pay money to come and be entertained to have an active voice in what happens with the club,” said Bart Wiley, director of Business Development for Major League Soccer's Seattle Sounders. “[Loyalty club members] came to us and told us they don’t want music or sound during run of play. We thought about it and, this year, there will be no sound.” The ‘Alliance’ also voted on their name and the design of the scarf sold to season ticket holders. There are limits to fan control though. “Within reason, we allow them to shape and move the team, but they don’t have any say in decisions involving money.”

It's normal to pay to be part of a loyalty program in the U.K., said Paul Flood of Storm Consulting. “It’s about the right of obtaining an option to go to a match.” Some of the larger clubs in the U.K. have more than 100,000 members, so getting tickets to a game is difficult. “It’s about the availability of tickets.”

Chris Gargani, VP and managing director of Sales & Client Services for Major League Baseball's Washington Nationals, said loyalty program benefits center around giving away tickets and parking. “Hopefully it won't always be points, tickets and parking because, hopefully, we’ll have less tickets to give away,” Gargani said. “We can dial rewards back when the team gets really good because the season ticket holders will be getting value just by having their ticket.”

Many clubs use a points system to rack up rewards. There’s a move toward trying to give members experiential rewards as opposed to discounts.

“We’re able to expose our members to a premium experience, and that has led to sales,” said Gargani.

But there are limitations and, Wiley admitted, “we’re nervous about how the points will work because we want to make rewards experiential, but how do you get 35,000 people on the field to meet a player after the game?”

After obtaining loyalty club members or season ticket holders, companies have to come up with a cost-effective way to identify them. Most groups are switching to a card system where members will swipe or tap the cards upon entry or when purchasing concessions and merchandise at the stadium.

“We offered season ticket holders a choice this year whether to get a card or paper tickets,” said Wiley, who added that around 15,000 chose to put their membership on the cards.

The Sounders tried to influence ‘the Alliance’ that cards were preferable because they are efficient and environmentally friendly.

“I was in Manchester (England) and asked them what incentives they gave to switch their members to a card system and they said, ‘well, we just sent them a card.’”

Gargani said the Nationals want to switch their ‘Red Carpet Rewards’ members to loyalty cards. “The voucher books and the mailing in and out really took a lot of man power, so putting it on a card really helps us,” Gargani added. “It also helps the consumer because of the ease of transaction.”

This year, 57 percent of the season ticket holders have adopted using the cards for entry instead of paper tickets.

Loyalty programs pay dividends by gathering information on the consumer, not necessarily by drawing in a larger audience.

John Abbamondi, vice president, strategy and business analysis at MLB San Diego Padres, said, “I’m skeptical if they help you reach more fans, but I’m not sure that’s what they’re designed for.”

Panel moderator and Senior VP, Client Services at John Rizzi said loyalty programs “let you know who is buying those tickets and then be able to market to other people with the same characteristics who aren’t yet buying tickets.”

“CRM is important,” said Wiley, who said the Sounders have already saved money using the information by asking their season ticket holders if they want the new scarf the team sends each year. “A lot of these people have been season ticket holders for multiple years and might have enough scarfs, but we didn’t know that until we had their information to ask.”

“Data, for us, is crucial because we just implemented a CRM solution in our building,” continued Wiley. After this season, the Sounders will have 18 home games worth of data to examine. “We want to know so much about our fans that we can go to them with tactful offers that reflect our brand and our franchise.”

At the Nationals, the team gave tickets and better seats to its members. “There’s definitely a cost in having a loyalty program,” said Gargani, who added that the value of tickets given away free last year equaled almost $5 million.

Abbamondi said “the question is not whether loyalty programs work, but whether they work proportionate to the cost. Generally, the rewards offered are three-to-five percent of revenue.” Teams want to get that back in increased spending and attendance. “What we’re really talking about is how you drive repeat fans and repeat purchases.”

ProVenue Exchange drew about 150 attendees this year, just over half of whom were panelists, presenters or staff.

Interviewed for this story: John Abbamondi, (619) 795-5000; Paul Flood, +44 (0)845 2232 666; Chris Gargani, (202) 675-6287; John Rizzi, (714) 327-5400; Bart Wiley, (877) 657-4625

  • by Jessica Boudevin
  • Published: March 18, 2012