Top Secret: An Insider’s Perspective of Premium Seating Usage by Fortune 100 Companies
Many of the top U.S. companies use premium seating as a business tool, but WHY? Go inside the decision making minds of these top premium seating purchasers to better understand their wants and needs.
This article sets out to achieve three goals: 1) To learn why Fortune 100 companies purchase premium seating, 2) to gain an understanding of how Fortune 100 companies manage premium seating inventory and 3) to explore the current status of evaluation of premium seating investments by Fortune 100 companies. This research marks one of the first times businesses, leagues, teams and venues have all had access to this insider information from the Iargest U.S. corporations. By understanding how large companies leverage premium seating usage, teams and venues can adapt their strategies and techniques, ensuring they are meeting the needs of their clients and marketing partners.
This information could not have been collected without the help of 15 Fortune 100 company insiders who, in confidence, participated in phone interviews during the spring 2011. The following information contains highlights and insights gathered from the interviews.
Top Secret Question No. 1:
Why do companies invest in premium seating, i.e. what are your primary objectives?
Primary objectives include:
1. Driving business growth and adding new business
2. Retaining and providing hospitality to current clients to nurture an established relationship
3. Establishing relationships with teams and properties
4. Accessing premium space for business entertainment
5. Developing client loyalty
6. Cultivating exclusivity and the perception of what clients think of their business
7. Expanding loyalty and broadening relationships with face-to-face interaction
8. Activating sport sponsorships and brand exposure
9. Allowing customers access to better seats than they could get on their own
10. Strengthening brand awareness within the community
11. Supporting business-to-business connections
12. Doing it because competitors are
13. Including luxury seats in a deal to allow clients to utilize those tickets for their own business use
14. Recognizing employees
15. Utilizing for personal use as a tax write-off
Top Secret Question No. 2:
Do companies use premium seating inventory as an employee incentive?
For the most part, companies are discouraged and hesitant due to IRS regulations requiring reporting of gifts over $25. Several compliance departments prevent this practice, and they have policies that dictate that this resource is used for business first. Several companies offer employees tickets at the last minute, but these practices are not used as an incentive. Occasionally, after the second year of suite ownership, tickets might become available to human resource departments as incentives. In some cases, providing tickets to employees can appear as an employee incentive, when in actuality, the primary function is to aid in the sales process.
Top Secret Question No. 3:
Does your company use return on investment (ROI) when evaluating the value of your premium seating?
As one might expect, this question receives mixed reactions. The answers include a range of responses, including isolating the impact on sales, evaluating the customers that are entertained and the frequency of visits, and reviewing the income spent. In some instances, companies track data to show the impact to business, but this evaluation still only provides one data point. An area of agreement among the participants is that there is not an exact science to determine ROI on premium seating; however, each company should find what works best for their senior management.
Top Secret Question No. 4:
How important is activation (reinvestment) relative to premium seating?
Most of the insiders feel money and time are being wasted without activation. The goal is to exceed a standard experience and provide a premium experience that attendees will remember for years to come. Premium seating is an important tool to distinguish a business deal from other options a client may have, so company employees need to use premium seating as a tool to do their jobs more effectively.
Top Secret Question No. 5:
What have been the best activation examples involving premium seating within your company?
Activation can be as simple as staging events or meetings for clients and prospects because the suite environment impacts them more than being in a conference room. Further, it becomes a great touch point to use a player or coach because these appearances make those in the suite feel special. Providing key clients with tickets to entertain their own clients also goes a long way. Another form of activation is to offer prizes in the suite during the game as an added value to those in attendance.
Top Secret Question No. 6:
As a leader in luxury suite ownership in multiple facilities, what tool/method do you use to manage your ticket inventory?
The majority of insiders are using tracking software to monitor attendance, employee usage, and unused, used and charitable tickets. The most referenced software programs are Spotlight, Ovations and TicketOS. The biggest reason for using ticketing software is for ease of auditing. There are still some companies that use spreadsheets and a listing of available games to distribute on a first-come, first-served basis. Others indicate they set up a matrix and identify the tickets for each game, splitting them between divisions of the company.
Top Secret Question No. 7:
Some companies are donating tickets to charity. If your company has done this, how do you track the value of the tickets?
While this practice does happen, the tickets are commonly for less desirable games (i.e. afternoon games in the middle of the week or at the end of the season when the team is out of playoff contention). There are differing procedures amongst the participants; some track them and some do not. Some examples of responses include:
1. The tickets are not tracked unless they are going to go unused
2. The cost is tracked at either the retail price or the cost of standing room only
3. The 5031C number is entered in the database and the tickets are released to the charity
4. The value is based on the overall value of the partnership, not the individual value of a ticket
5. Goodwill cannot be measured; it is a great gesture when the tickets would otherwise go unused
Top Secret Question No. 8:
How has being linked to premium seating and corporate sponsorship in sports changed in light of today’s economic challenges?
The biggest change is being forced to be more practical and accountable. Since the senior executives are more accountable, others in the company have to show value in what they are doing. Overall, premium seating inventory has been decreased due to pressures related to spending and low usage rates. One concern from the insiders is that prices have increased. Some noted that if they buy a half-season, tickets to playoff games are not included which is what many clients prefer. Others have moved from professional sports to other environments such as college sports to achieve the same objectives.
Also reported is the greater difficulty to fill a suite than three years ago. It is more challenging to find clients willing to attend; either they are not willing, or internal rules and company policies have changed, making it difficult for them to attend. Today, more than ever before, attention is being placed on clients who have the biggest impact on the bottom line.
Top Secret Question No. 9:
What do you think the person/company with one suite can learn from Fortune 100 companies that own multiple suites?
It is critical that the person/company that has the suite establish objectives before buying and have a tracking mechanism to ensure tickets are being utilized for the intended purpose(s). Tickets should not be given to people who are not influencers in the decision-making process of buying the person’s/company’s products/services. Tickets should be annually rotated, allowing one to hit different targets. The most important thing to keep in mind is that an investment in premium seating is about creating a unique experience and not always about the game or matchup. Leveraging the connection to the team is the critical element.
The bottom line is that suite holders are going to require more unique experiences and are seeking help to better activate their inventory and support their ticket use. Additionally, Fortune 100 companies are looking for stronger partnerships between the company and the venue/team, resulting in maximization of this investment.