Experience Valuation: Showing How Fan Enjoyment Drives Revenue

GREAT EXPERIENCES DRIVE SPEND

The emphasis on experience is at an all-time high, with millennials and now older generations putting their dollars and time into what they see as valuable experience investments rather than product purchases. As such, the sports industry can no longer be viewed as merely a sports product. The traditional mindset of sports teams just selling a ticket or sponsor package in a marketing campaign is a thing of the past, and teams who fail to invest in the entertainment and overall experience will find themselves struggling post-pandemic. Sports teams are entertainment brands, and entertainment brands sell by creating lasting, enjoyable memories for their guests. With sports, teams can’t control the outcome of the game, but they can, and must, cultivate an unforgettable event experience to keep fans coming back.

The areas of guest services, event presentation, hospitality and fan experience have long been categorized as cost centers for teams. They are seen as departments that spend, not bring in, hard earned dollars.  While teams may wrestle, from the fan standpoint, they are not just buying a ticket plan, they are purchasing a seat to an unforgettable experience and service, entertainment and enjoyment are critical to them having a great time. Historically there has not been a way to quantify the impact on satisfaction on spend, but in 2020, Evolved Experience Solutions, Inc.’s analysis of more than 25,000 fans across four leagues that show direct correlation between spend and satisfaction do exist and are a major revenue opportunity for teams.  When fans are exceptionally satisfied with game entertainment and customer service, they spend more at the games…a lot more, up to 20% more at retail and 10% more at concessions (7).  Over the course of a season, those incremental boosts can add up to tens of thousands of dollars, if not more, merely by providing their fans with an exceptional experience at their events.

As a team leader, being able to speak to the direct impact that the experience has on revenue is critical to justifying budget and resources for your service and entertainment teams, and also putting the guest experience at the forefront of your events.  By giving fans an incredible experience, teams see a direct lift to their brand reputation, fan loyalty and bottom line.

ACCURATELY UNDERSTAND FAN NEEDS

For an average sporting event, there are over a dozen business units that are “responsible” for some aspect that goes into execution-operations, sales, corporate partnerships, facilities, concessions, game presentation, guest services, marketing, etc.  These divisions are often located in different physical spaces (some at the venue, others in a corporate office setting) and may meet weekly, if that, to discuss upcoming events. Often sports teams operate through a series of silos, internal divisions that focus almost exclusively on their specific areas, and lack the overarching vision that prioritizes the customer experience through it all. When this happens, 68% of projects and initiatives fail due to severe disharmony in internal communication (25). Without a unified approach, the overall experience can feel disjointed to a guest and negatively impact their overall satisfaction and, ultimately, spend at your events.

When a fan arrives to the game and has to wait ten minutes to park, walk five minutes in the rain to the building, stand outside in said rain for six minutes to get through security and get their ticket scanned, wait another ten minutes in concessions lines and navigate through an unfamiliar concourse to find their seat, each person that guest interacts with along the journey reflects one brand. Though the parking attendant, concessionaire, security personnel, usher and mascot may all be employed by different companies, the fan doesn’t see that, nor do they care. Fans just want the team to give them a great experience. To create a truly great guest experience, brands must use the lens of the consumer, not the corporate divisions, to become critically accurate in understanding the guest experience and delivering an exceptional one. 

Putting the fan journey first can refocus the importance of the experience when prioritizing where to invest.  Some challenges that fans face aren’t easy for teams to solve, but are critical to resolving in order to keep fans coming back. Not knowing what the customer expects, overestimating customer satisfaction or failing to act on customer feedback are the main reasons why brands falter. Companies often overestimate their success with 80% reporting that they provide good customer service, while only 12.5% of their customers agree (22).  Without understanding what your fans are seeking, it is impossible to accurately deliver, and you not only leave money on the table with that fan, but risk losing them all together.

Customers tend to have the greatest level of satisfaction if they’ve never experienced a problem or issue with a particular brand (11, 14).  However, large-scale events inevitably encounter issues that, at times, can negatively impact their guests’ experience. The team’s ability to quickly and effectively respond to an issue directly determines a customer’s willingness to return. 95% of fans who encounter a negative issue will tell their friends or family, or exit the experience without you ever realizing the impact (4), but only 1 in 26 customers bring their issue to your attention (23). Brands that provide a quick and effective service recovery regain 95% of their clients (23), however, brands that do not see their guests’ Net Promoter Scores drop rapidly and have a much higher likelihood of speaking negatively about their experience to others (14).

But to achieve the revenue lift, your brand first must be able to accurately and effectively assess fan satisfaction and have a process to quickly pivot and adjust the experience to achieve high levels of satisfaction that consistently leave the fan delighted.

CONSISTENTLY DELIGHT THE FAN TO MINIMIZE CHURN

Guest expectations influence their level of satisfaction. The variety and quality of the experience, paired with the cost, create fans’ perception of value.  Guests are most satisfied when they feel confident that the product or experience they are investing in will consistently leave them satisfied (1). Satisfaction with customer service, amenities and content elements are a direct result of perceived value and expectation levels (20).  Satisfaction tends to be lower when financial investments are high and perceived returns are lower. This means if fans spend what they consider “a lot” to attend an event, you better deliver because if they feel the quality of their overall experience was low, they are going to be less satisfied and less likely to spend money with your brand again in the future.  

Service quality has a direct impact on guest satisfaction (13), and when it comes to sporting events, exceptional customer experiences have been shown to have a greater impact on the guests’ impression than the outcome of the competition (26).  That satisfaction has a direct impact on loyalty and the customers’ relationships with brands (14, 22), future purchases and behavioral intentions (5). 81% of satisfied customers are more likely to do business with you again (4), and teams tend to have a leg up over general consumer brands. Because fans tend to be particularly loyal to their teams, there is a halo-effect of sorts that makes them more likely to be satisfied with peripheral elements (14, 27).

That said, customers don’t mind paying for quality. Consumers in general will pay 17% more when the experience is high (28) and 66% of consumers are willing to spend more with a company that provides excellent customer service across the board (6). Millennials will spend even more, up to 21% more when the experience is excellent, and leave more positive reviews than any other generation for experiences they enjoy (28). Fans’ perceived experience quality is both directly and indirectly correlated with their satisfaction, which has a direct influence on a fan’s future behavioral intentions-i.e.-if they will return (19, 26).

As guests become used to certain levels of service, they come to expect that same level or better each time they visit (24). Consistently high quality and reliability of execution of service is the most important aspect of customer satisfaction (22). Guests need to know what they can expect each time they engage with your brand. Nailing the basics of an experience is a critical baseline all brands must achieve.  Safety, cleanliness, efficiency and friendliness are the core functions that all fans expect.  When these are not achieved, guest experience ratings and satisfaction is negatively impacted (3, 7, 17).  Brands who rest on their past successes often fail to identify consumer needs and demands over time and leave fans underwhelmed. 

While conducting fan satisfaction assessments, Hightower (12) found direct relationships between wait time and perceived service quality.  Service quality had a direct influence on perceived value, which positively influenced behavioral intention among baseball fans, meaning service quality leads to likelihood to return and future brand loyalty and spend. The ability to consistently and accurately evaluate guest preferences is the most reliable way for a brand to optimize its design, minimize wasted resources and provide guests the exact experience they are looking for every time.

ENHANCE THE EXPERIENCE TO INCREASE REVENUE

Companies that lead in customer experience outperform other brands by nearly 80% and 73% experience higher revenues-upwards of five to seven times as much. Brands who create an emotional connection between consumers and the brand outperform the sales growth of others by 85% (18) and see up to 30% increases in sales per transaction. Sports has a tremendous opportunity to build strong emotional connections unlike any other industry, so prioritizing the experience to develop and sustain these is valuable and essential to long-term brand health.

Harvard Business Review found that fans who are highly satisfied with their experience spend upwards of 140% more and retain memberships up to six years longer than unsatisfied guests (16). Evolved Experience Solutions’ results corroborates that spend is directly and positively associated with experience satisfaction, showing increases in incremental spends at events of up to 26% on merchandise and 18% on food and beverage for certain teams and demographic segments (7).

When there is high perceived value and quality over time, consumers are resistant to price change and slight dips. They will weather those situations and continue to be loyal to the brand (1). However, when they are consistently left feeling unsatisfied, they resist increases in pricing and feel they are not getting a good value for their investment, at which point, they will exit their relationship with the brand and stop spending money (1, 25).  Once a customer exits the brand, it costs companies up to ten times the cost to gain a new customer than it would to retain a customer (2, 10).

Loyal customers yield ten times more than their initial purchase over the long term (29). In sports settings, loyalty is tied to perceived quality. Perceived service quality is largely a product of the quality of the skill and ability of the staff that fans interact with (3, 15). When teams focus on providing consistently excellent customer service experiences, they are directly supporting revenue gains and minimizing friction points for their fans. In sports, teams cannot control the quality of the team performance.  Programming an exceptional game day experience that meets the baseline standards of quality and also includes enhancements to engage and elevate the guests’ entertainment can overcome the impact of team performance. 

CONCLUSION

Evolved Experience Solutions, Inc. (7) works with teams and leagues around the country and has found that teams that consistently gather real-time feedback from their guests have a system for reviewing and making quick adjustments to see immediate increases in fan enjoyment, ratings and overall satisfaction, which correlates with spend. Teams can see as much as an 8% game-over-game increase by making small, important adjustments even amidst a busy home stretch that can have a direct positive impact on revenue and strengthen their connection with the fans (7).

At the end of the day, the “Sports Industry” is really an entertainment industry built on making unforgettable memories for all guests who visit the events and each staff members plays a role in executing a consistently high-quality experience.  Teams that invest and prioritize the entertainment and service experience at their events, not only see immediate increases in revenue from satisfied fans spending at events, but they set themselves up for generations of loyal, passionate fans who make visiting their venue a part of their lives indefinitely.

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