September 25, 2016

Customer Spend

Let's take some time this week to compare and contrast how the sports industry monetizes their audience, and how we in e-commerce / retail monetize our audience.

If you purchase season tickets to see the Seattle Mariners, you may well earn a discount ... but you are also encouraged via the discount to purchase more expensive seats, which really isn't a discount because you're watching the same game everybody else is watching.

Sports teams get your money in advance. You may or may not (look behind home plate at a Yankees game sometime) attend the game, but you paid for your ticket ... usually an above-average cost ticket.

In e-commerce and retail, we tend to do the opposite, don't we? It's late September and we throw a discount/promotion at our best customers (#crm), hoping the customer will spend more. In fact, most of the best practices in the industry involve getting a best customer to purchase again via discount/promotion. Then we throw a loyalty program on top of the existing incentive structure, paying the customer points that are used to cause the customer to spend even less in the future.

Amazon, of course, acts more like a sports team. They get you to pre-pay for shipping on an annual basis.

If we want to win in the future, we're going to have to treat our businesses more like a sports franchise. There will have to be events that the customer has to participate in, events that cause the customer to spend more. We currently do the opposite - we practically beg the customer to spend less, and we dilute events by running promotions nearly every week.