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CHAPTER 1
Introduction
Learning Outcomes
On completion of this chapter the reader should be able to:
â understand our motivation for publishing a book on Relationship Marketing in Sports
â differentiate between the potential readers of the book
â describe the main challenges which sporting organisations have to face today
â explain why relationship marketing seems to be so important for professional sporting organisations
â identify the main contents of this book
Nowhere FC â The ârealâ Problems of a Fictional Club
Nowhere FC is a professional football club somewhere in Europe. It has a long tradition, a considerable and very loyal fan base, some longstanding sponsors and a team which regularly finishes mid-table. The club is run by a dedicated Board of Directors and the business is conducted by professional members of staff. However, the club finds it increasingly difficult to keep up with the advancing commercialisation of the game. Having been a pure football club over all these years, Nowhere FC now is a medium-sized company in terms of annual turnover and members of staff. That, in turn, brings about new tasks and challenges. Some sponsors, for example, have already claimed more value for their money, the local authorities are not willing to support the club anymore, the regional media are giving the club a hard time by being overcritical and if this wasnât enough the club has to deal with a significant number of troublemakers from their own fan base. The reputation of Nowhere FC is on the line and the Board of Directors is under enormous pressure. They decided that something has to be done and that the club needs a coherent strategy in order to deal with all these problems. Gary Smith, the newly appointed Marketing Director of Nowhere FC, is in charge of designing such a strategy. Gary soon realised that most problems are caused by the clubâs inability to establish and maintain healthy relationships with its various stakeholders. As a consequence, Gary has decided to design and implement a sophisticated relationship marketing strategy. A full week of research revealed a number of books on relationship marketing as well as some good articles in magazines and papers in academic journals. However, Gary found out that most of them relate to ordinary businesses and cover the typical supplier â customer relationship. Books on sports marketing, on the other hand, dealt occasionally with relationship marketing in single chapters thereby focusing mainly on royalty schemes rather than strategies. Gary nearly accepted that he had to do the basic thinking himself. But suddenly a door opened where there was no door, when the local bookshop announced the publication of a book called Relationship Marketing in Sports.
CONTENTS
Overview of Chapter
Introduction
Rationale for Writing this Book
The Main Focus of this Book
Potential Readers of this Book
Relationship Marketing as a New Challenge for Professional Sporting Organisations
The Content and Structure of this Book
Conclusions
Discussion Questions
Guided Reading
Websites
Overview of Chapter
In order to take the reader on the journey this first chapter kicks off with a fictional story about a professional football club and its emerging need for a coherent relationship marketing strategy. On the following pages we will explain the reasons for writing this book, using empirical data from a current study to support our point of view. We will then introduce the main focus of the book and our general attitude towards relationship marketing in sports. We will also address the problem of the different target groups this book aims at and how we tried to meet the expectations of all readers. The next section then deals with the challenges and tasks professional sporting organisations face nowadays. As to that, the Qatar Stars League serves as a real-life example by providing insights from a modern and professional sports body. In this context, we once more emphasise the importance of relationship marketing in professional sports. Before providing some conclusions on Chapter 1, we explain the content of the book on a chapter-by-chapter basis and describe the overall structure of the book.
Introduction
Relationship marketing is nothing new in the context of sports. As long as there have been professional sports, there have been deep relationships on different levels. For example, sponsorship (or patronage as it was called in the early days) was mostly based on personal relations between the local benefactors and their favourite sports club. Regarding media, clubs always maintained special relationships with selected journalists. Furthermore, the bond between fans and their clubs was always a close and mutually beneficial one. All these relationships existed from the start of the sports business. Many sporting organisations always knew the value of a deep and good relationship with their stakeholders and practised relationship marketing without being aware of it. Successful sports managers, however, take the old wisdom and turn it into a modern relationship marketing approach by structuring the different relationships in order to make them more effective and profitable for the own sporting organisation and the various stakeholders. This book shall therefore illustrate the many different facets of relationship marketing and the possibilities it offers in the context of (professional) sports.
Rationale for Writing this Book
We have written this book for many different reasons. After an extensive literature review we came to the conclusion that research on relationship marketing in sports is limited. Only few studies have examined the relational aspects within the sports business so far (e.g. Chadwick, 2002; Farrelly and Quester, 2003; BĂźhler, Heffernan and Hewson, 2007). The topic is ignored in most books on sports marketing or touched superficially by few others. It is remarkable that until 2009 no book exclusively focused on relationship marketing in sports given the status relationship marketing enjoys in marketing literature on the one hand and the ever-growing commercialisation of sports on the other hand. We believe that relationship marketing still is a widely ignored concept in the world of professional sports and that only a few clubs and associations have implemented a coherent âCustomer Relationship Managementâ (CRM) strategy so far. Our hypothesis is supported by some empirical data as the example of a study on the prevalence of customer retention instruments in German professional football shows.
EMPIRICAL DATA 1.1 An Empirical Study on the Status Quo of Relationship Marketing in Professional Sports
Alexander Berlin and Frank Daumann
In times of highly competitive markets, professional sport clubs have to put their focus on the diverse needs of their customers. Customer orientation is a key to retain sport consumers (i.e. fans/spectators) in order to prevent defection, reduce dependence of financial success on performance on the pitch, and in consequence to maintain or improve a competitive position. The implementation of customer retention instruments being just one element of strategic customer relationship management is an important requirement for successfully handling customer relationships. In many industries the most common instruments including bonus programs, newsletter, customer clubs, and complaint management are by now an inherent part of the companiesâ business. But what role do these instruments play in the business of sports?
In order to answer this question, a quantitative survey was conducted in February 2008. The German Bundesliga served as the context of research in view of the fact that Germanyâs top football clubs are considered to be effectively driven businesses. A questionnaire was developed which allowed an assessment of the status quo of Customer Relationship Management (CRM) in German professional soccer and an evaluation of the prevalence of customer retention instruments. The questionnaire was sent by e-mail to 65 marketing managers of clubs being part of one of the first three divisions of German football. The number of usable questionnaires returned was 35 â this equates to a highly satisfying response rate of 54%. The following figure shows the mostly used customer retention instruments:
Figure 1.1 Prevalence of customer retention instruments in German professional soccer business
The findings make clear that newsletters are by far the most frequently used instrument of German professional soccer clubs. This is not a big surprise because the vast majority of the clubs (75%) have already implemented customer databases which are a crucial requirement for systematic mailings. Nevertheless, it seems to be arguable if, due to the small number of clubs recognizing the heterogeneity of their customers and segmenting them into discrete groups, the use of newsletter is effective at all.
Another instrument that is widely used and highly accepted by fans is the member club â a special form of customer club in the sport sector. More than 60% of German professional soccer clubs have already installed a member club to build up customer relations. Yet, the content and the organizational implementation vary between clubs. While some clubs still use member clubs in terms of membership cooperation others have implemented some kind of membership which is similar to the way of British soccer clubs: Exclusive information, special services, and financial benefits thereby are supposed to retain not only (hardcore) fans but also ordinary spectators. In this context however, clubs have to consider the results of many empirical studies which revealed a higher adequacy of member clubs for already retained customers.
Real effects of retention could better be reached by bonus programs and complaint management. But these two are the least popular instruments in German professional soccer. In particular bonus programs, which directly influence repurchase decisions and commitment, are used by only 29% of the clubs. A reasonable argument for this constellation can be found in the evaluation of fansâ acceptance of this instrument. Some marketing managers expected the bonus program to be the worst accepted instrument in relation to others.
Complaint management is another instrument that embodies an organizationsâ degree of customer orientation. But only slightly more than half of the clubs handle customer complaints systematically. This implicates that many clubs forgo the opportunity to increase customersâ retention by increasing complaint satisfaction.
The findings point out that some instruments of customer retention do play a role in the marketing of soccer clubs, albeit not comprehensive. Nevertheless, most of the clubs are still far away from an integrated CRM approach. They rather waste potentials of CRM by not fully using the opportunities of a systematic proceeding. Only 14% have already implemented a state-of-the-art process by building a unique customer database, surveying customer and analyzing customer data regularly, defining customer segments, creating specific marketing-mix strategies, and controlling segment strategies systematically. Supplemented by structural deficiencies and a lack of CRM-competencies, the German professional soccer business lags behind other industries. However, there is no doubt about the necessity of CRM in this sector. In order to reduce the dependency of financial success from on-pitch performance professional sporting organisations should know their customers and must establish, maintain, and enhance long-term customer relationships. This enables stable income streams, contributes to business success, and helps to defend or improve the competitive position in the leisure market. The majority of marketing managers already recognize these potentials. Yet, only if they also recognize the need for an integrated CRM approach and therefore set up basic conditions they will profit from it.
Alexander Berlin is currently doing a PhD at the University of Jena. His supervisor, Dr. Frank Daumann, is Professor for sports economy at the University of Jena.
Based on the above study and our experience as sports marketing academics we feel that a new paradigm is needed in sports marketing, to take relationships within sports to a new level which, in turn, leads to a better structured and more professional marketing approach at sports organisations. This book closes the existing gap and offers a detailed view on the matter and incorporates many aspects which have not been dealt with in previous publications. Therefore, the main reason to write this book was the strong belief that there is a need for such a book both in academia and in the business of sports.
The Main Focus of this Book
Building and maintaining healthy relationships with customers and stakeholders is a crucial success factor in todayâs sports business. Relationships, however, are nothing new to us. Everyone of us has different roles and therefore different relationships. For example, we relate to each other as sons or daughters, fathers or mothers, partners, colleagues, citizens or friends. And we didnât have to read a book in order to understand that good and positive relationships are based on very few basic principles. For instance, we need to trust each other, we need to communicate with each other and we need to value the relationship itself. All these principles can be applied to commercial relationships as well because interpersonal relations are at the heart of every business-to-business relationship. It is not the companies who work with each other, it is the people in the companies. Thatâs why we argue throughout this book that trust, communication and commitment refer to relationships within the business of sports as well.
In the course of this book we will describe the basics of relationship marketing with regard to sports and we will present some relationship marketing techniques. Relationship Marketing in Sports, however, is more than just introducing general points-based loyalty programmes as considered by some marketers and sports managers. We will show that a strategic relationship marketing approach should truly focus on the relationship between sporting organisations and their various stakeholders. Our book therefore includes many different concepts and incorporates a number of different perspectives...
