The sports industry is lagging.
Sports may capture an outsized part of the zeitgeist, increasingly prominent in pop culture, but when it comes to understanding and maximizing the lifetime value of their consumers, their peers in other fields are ahead.
That’s starting to change, thanks to an infusion of new leaders, strategic capital, and a convergence of technological developments positioning sports to reach new levels of sophistication and new heights of efficiency and effectiveness.
Shripal Shah has spent years in the sports industry, including a long stint with the then-Washington Redskins, ascending to Chief Strategy Officer. He’s also spent years out of the sports industry, highlighted by his time with shopping rewards platform Shop Your Way. He’s seen the way retail and hospitality analyze and engage customers, and the how those industries govern and operationalize data in ways that the sports industry is just starting to conceive. Shah is well-positioned to understand this inflection point at which sports finds itself, and the lucrative opportunities it presents.
“I think the one area [that] I think sports could adopt towards, is retail is much further ahead in this idea of true personalized marketing, like use of personas, segments, data enrichment,” said Shah, who today is Chief Digital Officer of Next League, a software development and technology solutions company specializing in sports and media. “And in retail, there’s a concept called RFM marketing…It’s an approach and a framework to drive people, based off this idea [of] how recently have they shopped with or interacted with you, how frequently and the monetization. And it really touches on this idea not just going from awareness, consideration to purchase, but this idea of how do you really create higher lifetime value from your customers? How do you create a higher share of wallet or a higher spend?”
The sports industry is built on long-term fandom. When the operation is working as expected, generational customers are cultivated, lifelong fans who aim to pass on their favorite sports and teams to their kids. And yet, while plenty of effort is put forth around season ticket renewals (though the traditional concept of season tickets has diminished appeal for younger generations), sports organizations are more often than not in pursuit of the next fan, the marginal fan and incremental dollar. There is merit in that, no doubt. When media rights deals are dictated by one more fan watching for at least a minute, it makes sense to chase increase the overall pool.
But there’s also untold riches to surface in the deeper end of the pool. There’s more value to mine among the diehard fans and those closer to the bottom of the funnel than the top. And the methods by which organizations learn more about, and activate, those fans compound in value. Shah has seen it play out with customers in the retail space.
“Once you’re at a real scalable retail, because at that point you could have — like at Shop Your Way we had over 50 million users — you don’t actually need to go acquire more users, you already have a lot of their info,” said Shah, whose recently published book, Unlocking Fan Loyalty: From Frequent Flyers to Fanatics in the Age of AI, breaks down how sports organizations transform ordinary customers into passionate fans by harnessing the power of data, personalization, and artificial intelligence. “You could always try to get more people in the funnel, but if you can also retain those users and convert more, [get people to] spend more, that can also drive not only your top line growth, but better bottom line profits. I think that nuance is starting to show up in sports, as you’re seeing the advent of these holding companies that are now cross-team, the insertion of private equity.
“And now with AI democratizing and bringing more of these mature marketing tools to the budget levels of sports teams, I think that’s going to also lend itself to really leverage those tools and those data sets and technology. It lends itself to another marketing approach that I think ultimately could lead to a higher lifetime value for the fan base.”
AI is everyone’s opportunity. As Shah told me, artificial intelligence can have a democratizing effect for marketing teams in sports and beyond. Every conversation about marketing tech stacks and roadmaps now includes myriad mentions of AI. There’s a sense of excitement, amplified by FOMO, as the sports world grapples with understanding how to implement AI into their systems. The interest is higher than ever, but there are some prerequisites for effective implementation of AI. And that’s part of this inflection point, as Shah sees it; more excitement than ever, coupled with a forcing factor requiring organizations to upend their old systems of thinking and do a deep audit, and deep cleaning, of their data.
“I think AI just kind of came and became a thing,” said Shah, whose aforementioned book is part of a three-book series on AI in sports business. “I was talking with the major LLM providers and they said it was almost like what they called an awakening, that demand for an LLM [such as] ChatGPT and Copilot went up 1,000% this summer, which was more than the request to buy enterprise licenses the prior nine months or year combined. So that kind of came over the top.
“Before that, when I first rejoined Next League and I was talking with CMOs, this idea of creating a more mature marketing tech stack for personalization was really everyone’s number one priority…But now I think that some people are waiting to see how AI changes what their plan was for the marketing approach…it is about personalization, propensity, predictability, going from like, 40 personas to 400 to 4000 to to infinite…
“I think that’s going to ultimately lead towards more automation because what existed outside of sports was people already had marketing automation and workflow automation. That was the concept that no one ever invested in in sports, and AI is going to really force that. Because to really have good AI products and workflow, you need to have good data governance and you need to really focus on automation. And I think AI is going to sort of be the forcing mechanism that really should cause this level of maturity, because it’s going to force the data to get better.”
The move towards exponential automation is also disrupting decades-old paradigms in sports business, as org charts and team compositions evolve to make the most of new AI-infused capabilities. The days of armies of inside sales reps and smile and dial at high volumes aren’t completely gone, but they’re waning. When it comes to investing in the sales and marketing operation, the first thought goes to tech before headcount now, Shah explained, and that’s a marked change.
“Earlier on, I think there would have been a question like, ‘Well, why are we spending $400,000 on this tech stack when we could just hire 3 or 4 other ticket people? Alright, let’s go hire three, four ticket people at $35k each, fresh out of school, why are we going to spend half a million dollars [on tech]?’ Like you would run into that type of thinking as recently as a few years ago,” he said.
“I think the AI discussion is now throwing that out the window where it’s saying ‘No, what could be done with AI before you ask for headcount?’ AI is not replacing people, but it’s forcing a new conversation which is now forcing an investment into these other tool sets because the tools are going to help people do better, more impactful work, more deeper work.”
AI, and its forcing mechanisms vis-à-vis data infrastructure is just part of a greater transformation Shah sees taking place in sports business. In the same way that AI is not going to replace humans, but empower them to focus on deeper work, it’s allowing the content operations to maximize the value it gets out of each creator and manager. The future of content operations, he told me, can be likened to a ‘portfolio strategy,’ with some tasks and ‘baseline’ content work largely done by AI and the more complex work being done by humans.
But perhaps the most exciting future, and where the sports industry can most emulate the retail and hospitality industries, is in loyalty programs and more integrated and improved partnerships. As Shah described earlier, bringing in principles from the retail industry, like RFM marketing (recency, frequency, monetary value), coupled with the leap ahead in data governance ushers not just better, more nuanced understanding of fan profiles and consumption behaviors, but also allows them to tell a richer story. A well-oiled loyalty program that directly shows purchase behavior and funnel conversions to partners is among the holy grails in sports — and it’s more attainable than ever, fueled by multi-directional, open-loop loyalty programs.
“It gives the teams the ability to get real data points to then describe and demonstrate that fandom and the value of that to their brand sponsors, which then ultimately should lead to higher revenue,” said Shah. “Because by being able to have that data and the proof to be demonstrated, that’s going to ultimately lead towards more spend, because then the sponsors can look at this versus other media channels and say, ‘This is going to give me a much deeper connection that’s going to help me so that I’m not always having to reacquire my customers. I’m also building long-term customers at a much lower acquisition cost.’ It creates that flywheel effect.”
Shah lights up discussing the promise of open-loop loyalty programs making their way into the sports world. Such programs thrive in the retail and hospitality fields. Among the many examples Shah cited, the Marriott Bonvoy program is a shining beacon, where points are transferable from one partner program to another, where spending with Starbucks, Uber, and BetMGM can be redeemed for rewards with any of the aforementioned programs, and points can be transferred back and forth, including from credit card programs. The intermingling of earning and redeeming presents an incredible value proposition. The opportunity is even greater now, as sports organizations invest in multi-club ownership and retail ecosystems around their venues. Spending on sports remains a non-necessity, a luxury or entertainment expenditure, which only adds to the appeal for sports to more effectively integrate into the everyday purchases and journeys of its fans. Shah explained why open loyalty programs are such an exciting opportunity for sports and why he believes loyalty programs may become among the most valuable assets sports organizations hold, as the programs are for other businesses.
“[Open loop loyalty programs] work beyond just a single retailer or partner. They’re cross-currency,” he explained. “So what that’s done is it has driven more value to the currency because now it has value in multiple places, which then creates higher liquidity because now there are more people who are earning more. But then they’re also redeeming more, so therefore they’re spending more. Now, that drives higher potential frequency. The person who came twice a year somewhere might come three, four times a year without having to pay for acquisition costs. The person who came once a month might come one and a half times a month. And that is what everyone outside of sports is seeing.”
That’s the promise of RFM marketing in action, and why Shah is so excited about bringing those principles to sports. Shah continued, noting the significant value proposition this all represents, broadening the aperture for fan engagement and consumption capture.
“This idea of cross-industry collaboration is happening in industries and verticals that have much higher spend. People spend a lot more with their grocery stores and their gas, because they need it, than they do with their sports tickets,” he said. “People in some places could be spending more on travel, so they’re using it for personal and for work than they are for their sports tickets. So it’s just a matter of understanding market size and TAM, and I think it’s an education.
“I’ve had many conversations…That’s the premise of the book; this is a reality where, for airlines, their loyalty programs are considered more valuable assets than their entire fleet of airplanes. Full stop.”
The sports industry’s long-awaited business evolution is finally here. AI has emerged as the ‘forcing mechanism,’ compelling the data maturity and automation that organizations have long desired but deferred. This new foundation allows sports to adopt the proven playbooks of retail and hospitality, shifting focus from chasing the next marginal fan to maximizing the lifetime value of their most loyal fans through sophisticated, open-loop loyalty programs.
This transformation is more than an operational upgrade, it’s part of a grander vision. The goal is no longer simply to fill a stadium, but to build a powerful economic flywheel effect where a team is embedded in a fan’s daily life, capturing value far beyond the stadium or arena. The organizations that embrace this change are redefining their very identity, marking the final evolution from a sports team that has fans to a fan platform that has a team.
WATCH/LISTEN TO THE FULL INTERVIEW WITH SHRIPAL SHAH
CHECK OUT SHRIPAL’S BOOKS ON SPORTS IN AI AND LOYALTY PROGRAMS
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