What You Need to Know about Customer Lifetime Value in Sports Sponsorships

September 30, 2024

The Customer Lifetime Value (CLV) is a fundamental pillar of marketing strategies, including sports sponsorships. 

It assesses the long-term economic impact and measures the profit generated throughout the entire business relationship.

But what is its significance in the context of sports sponsorships, and how can it be effectively applied?

What is Customer Lifetime Value?

CLV is the sum of the future profits expected from a single customer during the entirety of their relationship with a company.

In other words, it quantifies the monetary value produced by a customer over time, including recurring purchases, additional services, and potential referrals.

You can perform the calculation using various formulas, usually based on factors such as the average purchase rate and the average value of the purchases themselves.

In Sports Sponsorships

Since they reach broad and diverse audiences, sports sponsorships are an ideal field for the application of CLV.

To optimize results, it is important to focus on building lasting relationships rather than short-term transactions.

Brands use CLV to select the events or athletes to sponsor, based on the spending potential and loyalty of fans.

Additionally, CLV is not limited to direct purchases but extends to the intangible impact that sponsorship has on brand perception, customer loyalty, and the creation of a positive image.

How to Use Customer Lifetime Value in Sponsorships

Companies can adopt various strategies:

• Audience Segmentation · CLV analysis allows identifying the most profitable audience segments and focusing sponsorship activities on them.
• Develop Targeted Campaigns · Knowing the CLV enables the creation of sponsorship campaigns based on the interests of specific audience segments, maximizing impact.
• Improve Loyalty · Investing in existing customer loyalty, with membership programs or experiences linked to the sponsor, can significantly increase CLV.
• Evaluate Sponsorship Effectiveness · By comparing the CLV of sponsorship campaigns with their cost, it is possible to determine if the investment is producing a positive ROI.

Successful Examples

Nike & Michael Jordan

One of the most iconic and profitable sponsorships.

Thanks to the sale of Air Jordan products, the impact of the collaboration has been incredible, generating immense CLV and a substantial increase in brand awareness.

Emirates & Arsenal

This partnership has helped to enhance the visibility of the Emirates brand internationally, attracting new customers and retaining existing ones.

Exclusive access to matches and events for members of the Emirates Skywards program has further increased the CLV.

Visa & FIFA World Cup

Lastly, this partnership allowed Visa to consolidate its position as a global leader in digital payments.

Exclusive payment rights within the stadiums, as well as the experiences offered to fans, have contributed to raising the CLV.

Customer Lifetime Value in Sports Marketing

So, behind the success of a marketing operation, there are key metrics.

Among these, the CLV enables the establishment of long-lasting relationships, increase profitability, and hope for sustainable growth in the long term.

By applying this principle, companies can transform sponsorships into investments with significant returns, strengthening customer loyalty and their market position.

If you’d like a free consultation to discover what kind of sponsorship might suit you, contact us. We’re waiting for you!