Industry insider: ticket sales and the NBA lockout.

McKelvey, Steve

Two veteran ticket sales executives participated in a discussion about the challenges of ticket sales and the retention process during, and after, the NBA Lockout. The interviews were conducted by Steve McKelvey, an associate professor and graduate program director in the Mark H. McCormack Department of Sport Management at the University of Massachusetts Amherst and Vice President for Industry Relations of the Sport Marketing Association.

Whenever a professional sport league is engaged in a labor dispute, it can have profound implications and consequences for those who are responsible for selling tickets and maintaining relationships with existing customers. On July 1, 2011, the NBA locked out its players--the fourth lockout in the league history--upon expiration of the 2005 Collective Bargaining Agreement (CBA). The 161-day lockout ended on December 8, 2011, and delayed the start of the 2011-2012 regular season from November 1 to December 25, a delay that has reduced the regular season from 82 to 66 games. In the aftermath of this work stoppage, two veteran ticket sales executives, Jeff Ianello of the Phoenix Suns and Drew Cloud of the New York Knicks, offer their perspectives and insights.

Q: What system(s) or practices did your organization, and more specifically the sales department, implement over the past 3-5 years that you feel best enabled your organization to handle the challenges of the recent lockout?

Cloud: I would say the single biggest change during the last three to five years for our organization was the addition of a dedicated service/experience team to manage our season subscribers. This dedicated team enabled us to build stronger relationships, gain additional knowledge and interact with our customers on an ongoing basis, to ensure that we knew what they were feeling and maintain engagement during the lockout.

Ianello: The big things we have focused on over the past three to five years is to devote more focused resources to dedicated service (from five reps to eight reps) and to move towards a face-to-face model where the goal of each experience specialists' phone call is to invite the customer to a coffee, meal, etc., where they can meet one on one or invite them to a small event with 5-10 other accounts.

Q: What were the key components of your work stoppage ticket sales and retention plan?

Ianello: We took a few important measures. First, we established staffing levels pre work stoppage and ramped up our recruiting efforts. This allowed us to maintain a full strength staff during the work stoppage and prepare to make hires post work stoppage. Second, we implemented an aggressive event schedule. We hosted multiple sales events each month using organizational assets (dancers, mascot, coach, former players, the court, gorilla's playhouse, etc.). Third, we instituted a flexible payment plan. When we started to inch closer to missing games, we changed our payment plan to allow people to pay 5% down and have the balance due in three payments once a new CBA was reached.

Q: How did the league and your team handle refunds/credits for season and partial tix plan holders? How did your individual team policy differ, if it did? And if it did, what was the rationale for altering the policy within your market?

Ianello: The NBA league office policy was to refund money on a monthly basis based on the number of games missed, plus 1% interest. At the Suns, our policy was that the season ticket holder's money stayed on their account and would be applied to future ticket purchases, plus 10% interest. The idea was to reward those who wanted to stick with us with 10 times the normal bank rate. They would be renewing anyway, so give them a bump.

Cloud: The policy was directed by the league, which was to refund money on a monthly basis based on the number of games missed, plus 1% interest. To encourage season subscribers to keep money on the account to use toward future ticket purchases, we offered increased interest above the 1% that was provided for straight refunds.

Q: What metrics are you using to measure the success (or lack of success) of your ticket sales performance for this upcoming season?

Cloud: We try to keep a balanced ticketing mix so that our business is healthy in good or tough times. The foundation of every team is their season ticket holders, which is the majority of our ticketing mix. We also sell partial plans to continue cultivating season ticket holders but provide access to fans that have less time or have to make a smaller investment. Group ticketing will continue to be a key dynamic for us as we reach fans in youth sports, corporate groups, faith and family groups, and civic groups, among others. And finally, the traditional single game ticket. We measure all those factors consistently to make sure we are represented in each segment to allow everyone, from the tourist to the casual fan to the diehard Knicks fan, the chance to experience a game at Madison Square Garden.

Ianello: Although it will be challenging because of the work stoppage impact as well as declining team performance, we will definitely use the results from last year in a pro-rated form. We have and always will use "sourcing" as a way to identify where sales originated from. This allows us to drive behavior in that direction. Also, we typically use activity metrics such as number of calls made, conversion into warm leads, and appointments booked.

Q: What specifically did your sales staff do during the lockout? Were they actively engaged in selling, and if so, were there specific consumer targets that were better suited to calling?

Ianello: We were business as usual. We had no specific customer target that we went after versus a non lockout year. We did unveil a new lead trigger plan which we feel helped steer us towards buyers who visited our website and clicked on our emails through e-marketing, and also fit the demo of our season ticket holders.

Cloud: We were actively engaged in the sales process during the lockout, and the corporate segment was probably the most specific target. We are fortunate here at MSG that we have multiple properties to sell, so we spend time selling and servicing Knicks, Rangers, Liberty and the other sports events we host at The Garden, including college basketball, boxing, tennis, and more.

Q: What "best practices" did your organization do to keep up the motivation and enthusiasm (i.e., maintain a positive sales culture) during the lockout period, especially when it appeared at some point that there realistically may not be a season?

Ianello: We did a number of creative things that kept up motivation and enthusiasm through a difficult off-season. For instance, we instituted a fun wheel spin. Every time a sales rep sold a pair of courtside seats, he or she got to take a spin. The prizes on the fun wheel ranged from an iPod to a weekend in Vegas. Each week or so, we also did what we called our big hustle shout-outs. An email would be sent to the entire department touting a rep's great hustle and achievement from the previous two- to four-week period. That rep could win a variety of prizes ranging up to $200 per prize.

Another thing we did was that the manager for each sales unit named his own "Player of the Week." That sales rep would receive what they thought was a random card, email, or phone call from the head of HR and myself, telling them what a great job that they are doing.

Cloud: I believe, and our leadership team fully supports, the importance of the right sales culture. It is essential to accomplishing what we want to achieve and building the best work environment in the sports industry. It allows us to recruit top executives, and develop the future leaders of our business. "Root for each other, share everything, be the best at what you do" is simple but we all follow that mantra. We collaborate, we engage each other, and when one department is successful we are all successful.

Q: Did your organization conduct any consumer research during the lockout period (i.e., focus groups, email surveys, etc). If so, what was the purpose of these?

Ianello: Looking back we did use Axiom to append our customer data which allowed us to identify current demographics and psychographics of our customers and in turn helped us identify smarter new leads to call.

Cloud: We did, but it was not lockout-related. Our purpose was early feedback about our season ticket holders' experience during the relocation process. The first phase of the MSG Transformation that debuted in Fall 2011 featured new seating and structure in our lower bowl, so the purpose of the focus groups was to gain feedback to enable us to make adjustments to improve the experience for the upper bowl in Phase II that will debut in the Fall of 2012.

Q: Now that the lockout has ended, how much focus would you say is currently on "just getting ticket holders back" versus the long-term relationship building?

Ianello: For us, that strategy has been and is one in the same. We focus our service on face to face meetings, small events, and getting to know our customers through data collection. Through that relationship building we hope to grow retention and loyalty.

Cloud: Our goal is always to build a long-term relationship with our season ticket holders. However, we are spending a lot of time getting STHs acclimated to the transformed MSG, their new seats, sightlines, amenities, etc. We are blessed to have what I believe are the most passionate, loyal fans in sports in New York, so it's really about making them feel valued and appreciated.

Q: What were some of the "best practices" that your organization implemented prior and/or during the lockout that focused on customer retention initiatives?

Cloud: This was challenging because none of us knew of any progress towards a resolution even as officials of the organization. So much of what was playing out in the media was news to us, and we were really focused on the business practices and what we could communicate with our customers. We are lucky to have a very active and local alumni contingent, so we activated them as much as possible. Our fan development team is one of the best in the business, and they were active in the community, running camps, working with kids all summer. We communicated as much as we could, whenever we could, but it was a challenge.

Internally, I would say it was preparation and collaboration. We had a very integrated approach where all of our business units worked very well together to understand the impact of lockout items. We met weekly, discussed marketing limitations, engagement with our customers, community activation, digital presence, and payment processing and refunding standards, among other things. Knowing every detail required a very thorough process and understanding of all areas impacted and working together was key.

Ianello: We held a number of season ticket holder events, with 10-15 accounts per event and about 10-12 events per month. These events ranged from shoot-arounds, to lunches and family events in our Gorilla's Greenhouse. Also, we frequently sent email and letter communications to STH's when CBA related news would occur.

Q: Over the past five years or so, what have been the most important developments you have seen, from a league wide perspective, in terms of customer retention initiatives?

Ianello: I would cite two major developments. The first would be the creation of dedicated service staffs as opposed to sales reps who also service. The second would be the advancement of CRM systems used to house, to collect and aggregate vital customer data.

Cloud: I would agree with Jeff here. For us, it's been dedicated service teams, and the hiring of people who have specific service/hospitality skill sets and are not just cast offs from sales teams or other departments. The revenue associated with our season ticket bases greatly outweighs the new business we develop every year. It's a game changer if you can retain your customers close to 90%.

The second major area would be, as Jeff suggests, technology and data. Knowing your customers through sophisticated CRM practices; identifying ticket usage patterns to identify "at risk/fence sitters" to focus on them and improve their experience; loyalty programs; share partner programs; and dynamic pricing--very valuable to our customers that use our ticket exchange to resell their tickets. We realize that there are very different segments of STHs, and technology and data are allowing us to tap into these differences while also getting to know our STH's likes and dislikes.

Jeff Ianello, Phoenix Suns, Vice President, Sales, Phoenix Suns

Drew Cloud, Vice President, Sales/Service/Retention, Madison Square Garden Sport