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Written by Sam Middlehurst, Chief Executive Officer at admiral.digital
Let’s be honest – the traditional business model of sport, which typically involves getting upfront payments for future media rights (and often commercial rights), has created a laissez faire attitude in many sports organisations.
This has resulted in many sports (not all) becoming complacent about the relationship with their most valuable asset – the consumer (AKA the fans).
Consumer behaviour is changing. Media is transforming.
Rights fees are no longer the guaranteed cash cow they once were. Charts that are “up and to the right” are not guarantees of long-term customer retention.
Sports organisations must evolve their business model and diversify revenue streams by embracing a Lifetime Value (LTV) mindset which can be achieved by applying a direct-to-consumer (D2C) toolkit.
Shifting from rights fees to a D2C model
By embracing an LTV mindset, sports organisations can begin shifting to a D2C model.
Think of e-commerce businesses (Amazon, Grab) and subscription services (Netflix, Strava). These D2C models are accelerating in growth due to the proliferation of marketing technology platforms which employ a software-as-a-service (SaaS) rental model.
Sophisticated data gathering, online payments, and subscription technologies are now affordable and accessible to all. Businesses embracing these technologies have been able to truly identify and segment customers, understand end-to-end customer journeys, and connect first point-of-brand contact through to LTV.
An integrated approach is essential
Adopting consumer-centric thinking is the aim of the game. This requires an integrated approach to connect marketing (communications), data & analytics (insights), and technology (platforms & tools).
Now part of the DNA of e-commerce businesses, this integrated approach forms the basis of the D2C toolkit.
Businesses applying this D2C toolkit have been able to build deeper relationships with their best customers, increase annual revenue per customer (ARPC), and extend the customer average lifetime (CAL). These are the key ingredients for growing LTV.
Moving to an LTV mindset
Deep, emotional, and evangelical relationships are the ultimate goal for any entity and its consumer – sports already has this in the bag. However, the current practice of outsourcing the management and monetisation of significant parts of the consumer relationship, has resulted in sport organisations leaving cash on the table.
Sports organisations need to invest more time, resources and capital to build DTC capabilities and adopt consumer-centric thinking.
With an LTV mindset in place, sports organisations will be able to capitalise on having a direct (1:1) relationship with the consumer enabling the business model to evolve and revenue streams to be diversified.
If you’re a sports organisation looking for a seamless way to implement the D2C model, we have the skills and expertise to help you realise new revenue streams while growing your customer base. Reach out to us at hello@admiral.digital to get started!
