A Secret Shopper Project: Reevaluation of Relationship Marketing Efforts

Introduction

In the current sport business environment, relationship marketing tactics play a predominant role due to the increased importance of the relationship between professional sport franchises and their customers. Definitions of relationship marketing stress the creating and sustaining of a network between the individual customer and the company (Milne & McDonald, 1998; Mullin, Hardy, & Sutton, 2000; Ping, 1999; Shani & Chalasani, 1992; Wulf, Odekerken-Schroder, & Lacobucci, 2001). For many years, professional sport franchises have been interested in developing fan loyalty or psychological connections with their customers through relationship marketing.

In sport business, understanding and developing relationship marketing can increase profits. It can also be a solution for some difficulties that professional sport franchises face. Those difficulties in the four big leagues (e.g., NBA, NFL, MLB, and NHL) are as follows (Bovinet, 1999; Howard & Crompton, 2004; James, Kolbe, & Trail, 2002; Mullin et al., 2000):

  • More new franchises (e.g., 17new franchises were added to the four big leagues over the last decade).
  • Increased competition because of new types of sports and leagues (e.g., Arena Football League, Women’s National Basketball Association, Major League Soccer, Action Sports, etc.).
  • Increases in the number of sporting events on TV (e.g., with the growth of specialized sport channels as well as the major networks, sport fans could watch sport programs 24 hours a day).
  • Increases in ticket prices of the big leagues (e.g., the cost of family of four to attend a major league game: MLB-$148.61 (2002-03) which is a 92% increase compared to 1990-91; NFL-$290.41 (2002-03) which is a 90% increase compared to 1990-91; NBA-$254.88 (2002-03) which is an 84% increase compared to 1990-91; NHL-$240.43 (2002-03) which is an 81% increase compared to 1990-91).
  • More entertainment choices (e.g., computer games, DVD movies, HD TV programs, etc.).
  • Reliance on the gate receipts for revenue in some leagues (e.g., NBA and NHL have relatively smaller TV revenues compared to NFL and MLB).
  • Larger facilities and unlikelihood of getting good-view seats.
  • Negative perceptions of players’ behavior and lifestyle.
  • Increases in player salaries.

In addition to these difficulties, sport consumers are less likely to attend a live sporting event, because it is more comfortable to watch games at home without the hassle of traffic, finding parking, and getting back home late. In addition, watching at home offers the benefits of TV replay and analysis (and cleaner restrooms), without having to spend a great deal of money on games that the whole family may not be able to enjoy together (Howard & Crompton, 2004).

As Bovinet (1999) suggested, however, many of these problems could be alleviated by developing communication networks with current and potential customers. Building and maintaining a psychological connection through relationship marketing would allow franchises to increase trust and commitment among their customers. For example, the customers who have a psychological connection with a team are more likely to expect and receive special treatment, such as on-line member services, birthday and anniversary cards, and others.

Although academics have begun to recognize the importance of relationship marketing practices over the last decade (Bovinet, 1999; Bowen, 2003; McDonald &Milne, 1997; Neuborne, 2004; Reinartz & Kumar, 2000; Shani, 1997), systematic and exploratory studies on the theory of relationship marketing in sport business are still lacking.

Purpose of the Study

The purpose of this study was to reevaluate the relationship marketing efforts that the four big leagues (e.g., MLB, NFL, NHL, and NBA) use to communicate with the potential customers.

Method

Sample & Instrument: A Secret Shopper Letter

This study was modeled based on Bovinet’s exploratory study (1999), published in Sport Marketing Quarterly (v8, n3, 1999). During the fall semester, the students in an undergraduate sport marketing class were divided into two teams. Each team sent a secret shopper letter requesting season ticket information to all 122 franchises of the four big leagues (the participants). Specifically, a first group of letters (N=62) to the NFL (n=32) and the NHL (n=30) were sent on January 30, 2004. The second letters (N=60) to the NBA (n=30) and the MLB (n=30) were sent on March 5, 2004. Students obtained address and contact information for each franchise from the team’s Internet sites and through phone directories. A student’s home address, not school address, was used for responses and letters gave no indication of age or other demographic information. The NHL and the NBA were in the regular season, the NFL had just finished its season, and the MLB was due to start its season soon.


Secret Shopper Letter

March 5, 2004

TEAM NAME & ADDRESS

To whom it may concern:

I am in the process of changing job and will be moving into your area within

the coming months. I would greatly appreciate it if you can send me information

on season ticket, team schedule, parking and events that a held aside from sport

games. I am a huge fan of the (TEAM NAME), and I would like to take every

advantage of being able to regularly attend games. Any other information that

I may have excluded and you can provide would be of the utmost help as I am not

very familiar with the area.

Thank you for your consideration.

SECRET SHOPPER NAME &

ADDRESS


Results

Table 1 and 2 show the specific results of the study. “Days” indicates how many days it took to receive any type of reply. The last days of reply from the franchises were February 25, 2004 for NFL and NHL and March 28, 2004 for NBA and MLB, respectively. The total length of experiment time was 27 days and total average response time was 13.6 days. Of the four big leagues, MLB had the quickest response rate of any league (M=10.0 days), and the NHL had the tardiest response rate (M=16.6 days). Of the sent letters (N=122), only 63 franchises (52%) responded with any information. Specifically, 22 MLB teams (73%) responded, but only 9 NBA franchises (30%) sent some information.

Table 1

Result of the Response Time (Number of Days) to the Secret Shopper Letter

League/Team Days League/Team Days
NFL NHL
Atlanta Falcons 14 Anaheim Mighty Ducks 14
Baltimore Ravens 14 Boston Bruins 13
Buffalo Bills 12 Chicago Blackhawks 20
Chicago Bears 14 Columbus Blue Jackets 21
Cincinnati Bengals 13 Dallas Stars 20
Cleveland Browns 12 Detroit Red Wings 25
Green Bay Packers 20 Minnesota Wild 14
Indianapolis Colts 20 Nashville Predators 14
Jacksonville Jaguars 13 Ottawa Senators 15
Kansas City Chiefs 13 Phoenix Coyotes 13
Minnesota Vikings 14 Pittsburgh Penguins 12
New Orleans Saints 13 San Jose Sharks 14
New York Jets 14 St. Louis Blues 16
San Diego Chargers 13 Tampa Bay Lightening 16
Seattle Seahawks 14 Toronto Maple Leafs 26
Tennessee Titans 17 Washington Capital 13
Average 14.3 Days Average 16.6 Days
MLB NBA
Arizona Diamondbacks 13 Atlanta Hawks 6
Baltimore Orioles 21 Boston Celtics 5
Boston Red Sox 9 Charlotte Bobcats 8
Chicago Cubs 6 Chicago Bulls 6
Chicago White Sox 6 Dallas Mavericks 9
Cincinnati Reds 6 Houston Rockets 8
Cleveland Indians 13 Indiana Pacers 23
Colorado Rockies 5 New Jersey Nets 7
Detroit Tigers 6 Utah Jazz 20
Houston Astros 7 Average 10.2 Days
Kansas City Royals 5
Milwaukee Brewers 6
Montreal Expos 7
New York Mets 15
Oakland Athletics 5
Philadelphia Phillies 27
Pittsburgh Pirates 6
San Diego Padres 16
Seattle Mariners 16
St. Louis Cardinals 5
Tampa Bay Devil Rays 5
Toronto Blue Jays 19
Average 10.1 Days

Table 2

Summary of Each League’s Responding Rate

League Sent Responded % of Responses Average Response
NFL 32 Teams 16 Teams 50% 14.3 Days
NHL 30 Teams 16 Teams 53% 16.6 Days
MLB 30 Teams 22 Teams 73% 10.1 Days
NBA 30 Teams 9 Teams 30% 10.2 Days
Total 122 Teams 63 Teams 52% 13.6 Days

These 63 replies show a lower rate than in the previous study (65 replies out of 112 teams; 58%) (Bovinet, 1999). The responses were separated and rated as above expectations, average expectations, and below expectations based on the materials with which the teams replied (e.g., ticket plan, stadium/arena map, cover letter, waiting list application, merchandise catalog, parking information, schedule, business card to contact, and others). For example, if the teams provided more than enough and/or unexpected information such as ticket plans, merchandise catalogs, and fan guides were rated as above expectations. The other materials were considered average or below expectations. Each item of the responses was coded for convenience as follows:


Code A: Ticket plan/seating chart

Code B: Business card/person to contact

Code L: Cover Letter

Code M: Merchandise catalog/fan guide

Code P: Parking information

Code T: Team picture/individual player picture

Code W: Waiting list application

Code X: Stadium/Arena Map

Code Z: Schedule

Code AA: Other (e.g., sticker, key chain, individual phone

call/e-mail, etc.)


Only 15 teams were rated as above expectations (n=15; 12.3%), 32 teamsmet average expectations (n=32; 26.2%), and 16 teams were rated as below expectations (n=16; 13.1%).

Table 3

Category of Response Materials on Expectations

Above Expectations (n=15) Teams: Baltimore Raves (NFL)

Jacksonville Jaguars (NFL)

New York Jets (NFL)

Ottawa Senators (NHL)

St. Louis Blues (NHL)

Cincinnati Reds (MLB)

Cleveland Indians (MLB)

Kansas City Royals (MLB)

Milwaukee Brewers (MLB)

Pittsburgh Pirates (MLB)

Atlanta Hawks (NBA)

Chicago Bulls (NBA)

Dallas Mavericks (NBA)

New Jersey Nets (NBA)

Utah Jazz (NBA)

Types of Response Materials: A, B, L, M, T, X, AA

A, B, M, Interactive CD-Rom

A, M, Z, AA

A, B, L, M

A, B, M, P, AA, Trading Card

A, X, Z, AA, Player Drawing

A, B, L, AA

A, Z, AA, Promotional Flyer, Ticket Order Forms

A, L, Z, AA

A, B, L, Z, AA

A, L, Z, AA

A, L, M, AA

L, M, T, Z, AA, Folder, Pencil, Roster, Comic Book, Bookmark, Magazine, Postcard

A, B, L, Z, AA, E-mail/Phone call

A, B, L, M, Promotional Flyer, Ticket Order Form

Average Expectations (n=32) Teams: Buffalo Bills (NFL)

Chicago Bears (NFL)

Cleveland Browns (NFL)

Green Bay Packers (NFL)

Indianapolis Colts (NFL)

Kansas City Chiefs (NFL)

New Orleans Saints (NFL)

San Diego Chargers (NFL)

Seattle Seahawks (NFL)

Anaheim Mighty Ducks (NHL)

Columbus Blue Jackets (NHL)

Dallas Stars (NHL)

Detroit Red Wings (NHL)

Minnesota Wild (NHL)

Nashville Predators (NHL)

Phoenix Coyotes (NHL)

Pittsburgh Penguins (NHL)

Toronto Maple Leafs (NHL)

Washington Capitals (NHL)

Boston Red Sox (MLB)

Chicago Cubs (MLB)

Chicago White Sox (MLB)

Colorado Rockies (MLB)

Detroit Tigers (MLB)

Houston Astros (MLB)

Montreal Expos (MLB)

New York Mets (MLB)

Philadelphia Phillies (MLB)

Tampa Bay Devil Rays (MLB)

Toronto Blue Jays (MLB)

Charlotte Bobcats (NBA)

Houston Rockets (NBA)

Types of Response Materials: A, B, Z

M, W, AA

A, W, AA

L, M, AA

L, M, AA

A, M, Z

A, B, Z, AFL Schedule

T, Z, AA

A, Z, AA

A, M, Z

A, B, AA

A, M, AA

A, Z, AA

L, Z, AA

T, Z, AA

A, B, Z

L, Z, AA

L, Z, AA

A, Z, AA

A, Z, AA

L, Z, AA

A, Z, AA, Kid’s Club Information

A, Z, AA

A, B, Z

A, M, AA

A, T, AA

A, L, Z

A, Z, AA

A, Z, AA

A, B, Z, Ticket Order Form

B, M, AA

M, Z, Visitor’s Guide

Below Expectations (n=16) Teams (League): Atlanta Falcons (NFL)

Cincinnati Bengals (NFL)

Minnesota Vikings (NFL)

Tennessee Titans (NFL)

Boston Bruins (NHL)

Chicago Blackhawks (NHL)

San Jose Sharks (NHL)

Tampa Bay Lightening(NHL)

Arizona Diamondbacks (MLB)

Baltimore Orioles (MLB)

Oakland Athletics (MLB)

San Diego Padres (MLB)

Seattle Mariners (MLB)

St. Louis Cardinals (MLB)

Boston Celtics (NBA)

Indiana Pacers (NBA)

Types of Response Materials: B, W

A, L

Z (2003 Schedule)

M, Z (2003 Schedule and 2003 Fan Guide)

Z, AA

Z, AA

L, Z

T, Z

A, Z

A, Z

Z

Z

A, Z, Ticket Order Form

A, Z

L, Z

A

Discussion and Conclusion

Even though this was not a systematic and scientific statistical study, it was an exploratory team project of undergraduate sport management major students to reevaluate a useful concept of sport marketing in professional sport franchises. This study provided some evidence about how current professional franchises manage and treat potential customers. Although the original purpose of this study was simply to count the amount of time it took for the franchises to reply, the results provide some simple but significant directions to professional sport franchises including;

Develop and keep the positive relationship with your current and potential customers:

As Mullin et al. (2000) explained in the concept of the sport consumer escalator, one of the main responsibilities of sport marketers is to keep their loyal customers as heavy users and escalate lower level users into loyal customers. Contacting and relating with the customers is a first step to sell more products and services in the market.

Obey the customers:

Some franchises (e.g., New England Patriots, Los Angeles Lakers, Sacramento Kings, and New York Yankees) have sold out all tickets for this year and the following years, thus they may have felt it was not necessary to send ticket information to potential customers. However, even if some teams are sold out of their season tickets, they should send some kind of information with an apology or a letter of appreciation because the potential customer was interested in their products. This sort of communication will also buttress the positive image to potential customers who might become loyal customers in the near future because this relationship depends on unexpected situations such as relocation of a team and decreased winning rates and attendance rates. Depending on the communication style and attitude, customers may react positively or negatively.

Remember that selling tickets is not everything, but rather a cornerstone of selling the team products and services:

Although many teams find their main revenue sources in media and advertising, selling tickets is the reason behind those resources. Increasing gate receipt revenues is desirable not only for the revenues of concessions and novelties, but also for soliciting media and sponsorships.

Develop an information database of customers for a strong positive lifetime relationship:

Shani (1997) has described the differences between database marketing and relationship marketing, finding that the former has a short-term efficiency of marketing effort, while the latter retains customers who can provide the best lifetime value. Although database marketing is a necessary tool to conduct relationship marketing, it does not guarantee successful relationship marketing. Thus, building a database of customer information for relationship marketing is a first step to developing a long-term relationship with current customers. The database should include potential customers who might become heavy users of the products and services in the future. A database allows sport marketers to store information on current and potential customers and provide individualized marketing efforts (McDonald & Milne, 1997).

Realize the costs of serving long-life customers are less than other types of customers and result in willingness to pay higher prices:

Although some businesses spend more to serve long-life customers (Reinartz & Kumar, 2000), the efficiency of serving customers might increase from increasing revenues with long-term relationship customers in sport business. Cumulative revenues from the long-life customers are higher than other types of customers because of their long-term purchases.

One of the interesting results in this study was that MLB teams’ response rate (n=22; 73%) was higher than other leagues, while its response rate was the lowest in Bovinet’s study (1999). This result may be due to the different time frames within which the letters were sent and the different schedules of the leagues. Another interesting point of the study was that a team that is planning to relocate to another city showed great efforts to communicate with potential customers. For example, the New Jersey Nets sent the most information, including a cover letter, new ticket plan and game schedule, promotional event schedule, seating chart, and even made several calls and sent e-mails.

Although this student-organized team project focused on a simple facet of sport marketing, future efforts toward building and retaining customer relationships should be carefully reconsidered in the professional franchises. Keeping positive relationships with current and potential customers directly relates to the survival of any business.

In conclusion, this paper attempted to reevaluate relationship marketing efforts on the part of the major sport leagues and to consider a basic, but very important, marketing strategy in sport business. Although relationship marketing has established itself as an underlying paradigm in industrial and other service businesses, the concept and practice of relationship marketing in sport business is still in its infancy as a mainstream marketing concept. Therefore, professional sport organizations should establish not just a short-term transaction oriented objective, but also a long-term customer relationship goal.

Because of the differences between leagues, some limitations of this study and a recommendation need to be addressed. First, time selection of sending request letters for ticket information should be reconsidered because each league has a different season. For example, the NFL’s response rate (n=16; 50%) was lower than MLB’s (n=22; 73%) and the NHL’s (n=16; 53%) because some NFL franchises may have felt the season was just over and it was useless to spend time and money on mailings. Second, it is necessary to evaluate relationship marketing efforts of minor league professional sport teams because the core of their revenue rests on the gate receipts that rely directly on customer relationships.

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