Why Sports Organizations Need to Become CLV Businesses

Do you know a company that can realistically claim that their average customer is loyal for their entire lifetime? Most companies certainly can’t. One bad experience with a brand can have us switching teams. 

But there’s an outlier with a uniquely large brand loyalty: sports. Once a fan, often always a fan. Fan loyalty is so special that it even warrants a dedicated field of research. This positions sports as one of the leaders in customer retention. And consequently, it provides them with a giant opportunity to maximize their Customer Lifetime Value (short CLV or LTV).

CLV is a crucial metric that measures the total value a customer brings to a business throughout their entire relationship. It encompasses the total profits generated by the customer, including repeat purchases, upsells, and cross-sells times the retention horizon of that customer (for a good technical explanation look here).

Lifetime Value is a guidepost for good strategy

By understanding the total value a fan brings throughout her entire relationship with a club, teams could unlock new levels of engagement, revenue, and loyalty. Alas, however, most sports rights holders to this day are pretty clueless about their fans’ LTV. As a matter of fact, the majority of managers I spoke to haven’t even taken active measures to identify CLV yet. 

That’s bad. Because CLV – or maybe we should talk about Fan Lifetime Value in sports, more on that in a bit – is more than a KPI. It’s a philosophy that guides your entire organization’s strategy. Companies that are great at maximizing CLV tend to have one property in common: they are highly customer-centric in all areas, from product development to customer service. 

As chance has it, most successful digital businesses happen to be highly customer-centric companies obsessed with understanding their customers’ lifetime value. Given that sports organizations face the challenge of digital transformation, leveraging their inherent strength – extraordinary loyalty – and making it the foundation of their digital business model and strategy, should be an obvious choice.

Yet, it’s not. There are likely several factors for it. While many digital companies successfully employ CLV-based strategies, they haven’t yet become trendy among managers in the sports business. Moreover, measuring CLV traditionally hasn’t been easy: it requires the right tools to measure and analyze it. Plus, CLV ideally is embedded in an overarching strategy centered around customer satisfaction. The fact that many sports organizations even shy away from referring to fans as customers might not help either.

There is another aspect worth pointing out: most established CLV measurement methodologies only account for customer purchases. Sports organizations, however, have additional revenue sources that are just as, if not more, important: sponsorship revenues and revenues from broadcast deals. That’s why our team at Unyfy recently started to develop a sports-specific methodology to assess a fan’s lifetime value in sports. We are not done yet and our model will certainly be tweaked over time. But our goal is to provide sports organizations with the best possible tools to understand the value of their fan base and implement new strategies to maximize their CLV – or fan lifetime value as I think of it by now*. 

Finding a starting point is key

All those issues aside, I urge any sports club, league, or other organization with fans to start integrating CLV strategies to develop their business. After all, every company is becoming a digital business and needs to act accordingly. To give you a starting point, here’s my recommendation for kicking things off: 

1. Start measuring (approximate) CLV. Even if your methodology isn’t perfect from the get-go, begin somewhere and improve your CLV model and measurement process over time. You will most likely not have a perfect, 360-degree understanding of every fan, spanning all touchpoints, from day one. But once you start, you can work towards that goal.

2. Define a strategy to grow CLV. When developing your strategy, it’s worth noting that CLV is an organization-wide challenge. From ticketing to hospitality, from social media to fan shops, all touchpoints with your fans matter to their overall experience. Identify activities that drive the most value and those events that destroy it e.g. by inducing “churn”. 

3. Tweak variables and measure their impact on CLV: When introducing new offers, say an OTT service, or launching new measures in marketing, merchandising, ticket sales, or customer service, track the impact those activities have on CLV. Double down on what works.

4. Build better user segmentation models. A side-effect of improving your CLV model is that your understanding of your fan base will grow. As you make sure that fans are authenticated “customers” at more and more touchpoints, you grow your capabilities to learn more about them and their preferences. This, in turn, will help you to identify different segments and cater to their specific needs, increasing their lifetime value in the process. 

I admit that the devil is in the details and you could certainly write a PhD thesis about CLV and each of the steps above. But the reality is, you have to start somewhere. After all, you can only improve what you can measure. And while perfection is to be aspired, it most likely won’t be achieved from day one. That, though, certainly shouldn’t stop you from building your CLV chops over time.

Because CLV is not only a KPI. It is the basis for building successful digital businesses. And doing so is critical for the sports industry and all individual rights holders that strive for longevity and a prosperous future. Our goal at Unyfy is to make it as simple as possible to understand CLV or rather fan lifetime value so you can focus on growing it.

For more information, check out our feature update on the Commerce Dashboard which lets operators gain access to valuable advanced metrics about commercial activity. 

* In case this topic is of interest to you, don’t hesitate to get in touch with me. As we develop our model, we want to work closely with as many interested sports organizations of all kinds as possible. 

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