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WINNING THE CUSTOMER
TURN CONSUMERS INTO FANS AND GET THEM TO SPEND MORE
By LOU IMBRIANO, ELIZABETH KING
The McGraw-Hill Companies, Inc.Copyright © 2012Lou Imbriano
All rights reserved.
TRANSACTIONAL VERSUS RELATIONSHIP MARKETING MODEL
For most of the team's early existence, the New England Patriots brand was widely considered all-around flimsy: a marginal team on the playing field and a mediocre, middle-of-the-pack business organization. Everything about the organization reeked of poor business planning and knee-jerk decision making. Games were rarely sold out, and I remember as a kid following the news to see if the coming Sunday's home game was going to be blacked out on TV because of the lack of interest in attending games at Foxboro Stadium. The stadium was built on the cheap and was outdated as soon as it opened. When it rained, the concourses flooded. I'm not exaggerating when I tell you there was not one true fan amenity in that building; its most egregious flaw was posing as an NFL stadium while offering only cold aluminum benches instead of seats. Those metal benches epitomized price-driven decision making and made it blatantly clear that no thought had been given to the fans.
Today, just about anyone who is familiar with the team, fan or not, views the organization as a model franchise—both on the field and in its business structure and execution—and it has the Forbes magazine cover story to prove it. As with the vast majority of successful businesses, transforming it from so-so to a powerhouse did not occur overnight; it took years of careful reorganization from the ground up (and the top down) to reinvent both the brand and the business model to the level of excellence it now enjoys.
When I joined the New England Patriots back in 1997, the transformation had already been set in motion. The rebuilding of the organization had begun, initiated shortly after the Kraft family purchased the team and grounded in the family's clear vision of the team's future. Because the Krafts had owned Foxboro Stadium prior to buying the team, they enjoyed an inside position; they were primed to apply their business success in other industries to the team, and they had a real understanding of how to turn the franchise around. When the Kraft family bought the team, it focused on cleaning up the image and experience of going to games at Foxboro Stadium. That transition was going to require migrating the team's business practices from a transactional to a relationship-oriented model.
Whether you realize it or not, you're already deeply familiar with transactional business models. Those folks selling bouquets of flowers on the street at stoplights are the simplest example. As you slow down to stop at the red light, they come to your window, hoping you will buy a bunch for $10. If you do, they grab the ten-spot, hand you your flowers, and you're off. They are, too—in hopes of landing their next sucker. This is a purely transactional sale. It's not quite so cut-and-dried in the context of an enormous organization like the Patriots, but the model is transactional just the same. Let's look at one specific area of the organization so you can get a better idea of what I mean: sponsorship.
The reason companies sponsor the team is to use the Patriots' identity and assets for their own branding and marketing initiatives. Before the rebuilding of the organization, selling a sponsorship package would go something like this: the sponsorship sales reps would get a meeting with a company they felt would buy in, show up at the meeting, and plunk down a package of team and stadium assets like signs, media, and logo rights. The sales team's approach was to always focus on selling the inventory that it had in stock, so if it hadn't sold enough, say, signs for the year, that would be the first thing on the table for sale to a potential sponsor—whether or not it was relevant to that company. The ways in which the company could use the inventory were not an important part of the equation. The team just wanted to sell its inventory and was focused on getting the sale.
Once the transaction was complete, the sales reps were off to the next sale. It was almost like, "Thanks for signing the contract. See you in three years!" (at the deal's expiration date). The process was all about closing business and not about producing results for the customers, which, at the time, was a typical way of doing business in the NFL and other leagues. Unfortunately, some teams still operate this way, not recognizing that transactional business is built around short-term gain and sacrifices long-term vision and sustainability.
The biggest issue with this approach was that when the contract expired, evaluating whether the inventory had helped the sponsor see a return on its investment was about as reliable as flipping a coin. Let's face it: it is pretty difficult to determine whether a sign in a stadium actually drove business to your company. Come budget evaluation time, things that aren't easily quantified are easier to do without. If the added value couldn't be proven, sponsors might not renew, which further forced the staff to operate in a reactionary, year-to-year selling method. They continuously worked to replace lost sponsors, each rep a hamster running on its wheel—there was plenty of motion, but no progress.
A cycle like this obviously hampers revenue growth; it's a struggle just to keep up with the status quo. At a football team, revenue-generation plans like this are disastrous for the team because the marketing group ends up being dependent on wins to fuel the team's financial advances—when the team wins, it makes money selling more merchandise, tickets, and sponsorship. The problem is that a sports team's winning is unpredictable, and the folks in marketing have zero control over the performance of the team. Having a marketing plan based on wins and losses will cause you to lose revenue. It's a stupid plan.
Dependence on the team's win record is not a great strategy for generating recurring revenue, and the same is true for any other business. You sell a product or service, but no organization should rely purely on the validity of the product to generate revenue. No matter how significant the brand, it's the relationship that the organization forms with its consumers to cause continued revenue growth that drives revenue. We're going to get into how to generate revenue beyond your product in great detail in this book, but implementing a business structure that supports relational business is the first step in getting there.
DESIGNING A BUSINESS OPERATIONS MODEL BUILT FOR REVENUE
A product alone does not create fans of a brand; it's the harmonious dance between the product and its positioning that does so. The teamwork between product design and marketing is crucial to ensure maximum growth. While the owners of the Patriots were working to rebuild the product, the team, and the stadium, our group was charged with developing a marketing structure that would win customers, regardless of the team's wins and losses.
I want to pause here because I realize that it's easy to believe that winning on the field solves everything. Yes, winning on the field is awesome, but without the right structure and plan in place, it's impossible to capitalize on those wins. Similarly, you may have the best product for sale, a product that's far better than your closest competitor's, but if your business structure isn't built to support it efficiently, you are not marketing it properly, and you're neglecting to create relationships with your consumer, you will never maximize your revenue opportunity. Always remember, revenue begins with the product; it doesn't end there.
It was clear from the outset at the Patriots that we had to build a different model to secure financial sustainability—we had to become relationship-orien
Excerpted from WINNING THE CUSTOMER by LOU IMBRIANO. Copyright © 2012 by Lou Imbriano. Excerpted by permission of The McGraw-Hill Companies, Inc..
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