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THE GROUP SALES EQUATION
THE GROUP SALES EQUATION

By Evan Colborne | August 12, 2020

Reading Time: 6 minutes

Group Sales Quota = # of customers x (Avg. group size x Avg. Group Ticket Yield) 

Over the past few years, the importance of groups sales has increased tremendously for sports & entertainment properties. In years past, properties relied on a season ticket base as their core source of ticket revenue, with groups, mini/flex plans and single tickets making up the rest of the budget. But as consumer preferences have changed, so too has our ability to rely on a season ticket base. 

The number of shows your property has in a given season will impact the extent to which you have felt this shift. But I’d argue that all of us will feel it’s impact soon enough.

On the plus side, the benefits of group sales are plenty. 

  • They move large blocks of inventory all at once. 
  • They also introduce many new people to our product who may become fans themselves. 

However the downside is these are often high touch sales, requiring dedicated sales people to develop relationships with group leaders. For properties who haven’t had dedicated ticket sales people before, this can be a bit frightening. How much will this cost? What guarantee do I have that it will work?  

To ease some of this anxiety, we’ve put together this simple tool to help forecast how much a Group Sales rep should be able to generate for your property.

*Move the green dots to see the different totals 

# OF CUSTOMERS

Let’s start with the first variable of the equation, the number of customers. While at first it may feel like this depends on your market (and to some extent it does), for most of us there are more group prospects out there than we could possibly handle. Fair to say that there isn’t a property out there who has exhausted every group prospect in their market.

So let’s agree that the limitation is not based on your market (with some exceptions for very small markets). So then what is it based on? It’s based on the number of prospects one can reasonably juggle at one time. This is based on time, which is something that regardless of our talent or network size, we can’t change.

So if we all have the same 24 hours in a day, there is a theoretical limit on how many conversations we can have in a day, how many relationships we can manage and nurture and thus a limitation on the number of customers we can close in a particular season.

With me so far? Because here’s where things get really interesting.

As it turns out, this limitation is not only based on time, but another field of science; Anthropology.

DUNBAR'S NUMBER

Dunbar’s number is a theory that suggests there is a cognitive limit on how many relationships the human brain can manage. 

This concept was first suggested by British Anthropologist Robert Dunbar in the 1990’s. What started as an observation about the average size of primate groups led to the development of a theory that humans can comfortably manage about 150 relationships. 

Beyond the 150 – 250 mark, the relationship starts to become quite thin up to about 1500 which Dunbar suggests is the absolute limit of names and faces the human brain can keep track of.

Dunbar further explains that the 150 number is composed of smaller sub groups.

  • About 5 people who are your closest friends and family
  • About 15 who you’d consider close friends
  • About 50 who you’d consider friends
  • And about 150 who you’d consider acquaintances. 

The use of tools like a CRM (Customer Relationship Management) can certainly help manage more relationships, but still won’t help solve the time problem. Even with the help of a CRM to help remember names and conversations, you still only have so much time to go around.

So, knowing that there are two limitations at play (time & Dunbar’s Number), the number of relationships one Group sales rep can effectively manage is on a scale. The deeper those relationships are/need to be, the more time will need to be invested, and thus the less relationships one can manage. This would be the scenario for many teams where organic demand (often signaled by inbound sales) is not very high. The job of these reps is to go out, build relationships and recruit group leaders to join the movement.

On the flip side, the more organic demand there is for group tickets, the less time needs to be invested in relationships and thus the more customers a group sales rep can handle. While the rep in this scenario may be able to close more sales, they will come at the cost of relationships. These relationships will become more transactional which may be ok when times are good, but when times are tough (which will happen to just about every property at one point or another), you won’t have strong relationships to fall back on to help weather the storm.

While the limitations to the numbers of customers one group sales rep can manage are based in science, they are not a hard and fast rule. There is still some art to determining what the right number is for your team and your situation.

For the example purposes of this blog, let’s just say that the cap is 100 relationships that a group sales rep can manage while developing deep enough relationships (where both parties feel there is a relationship) and still moving enough customers through their pipeline.

AVERAGE GROUP SIZE

This variable is a little easier to explain than the previous one. Your ability to get an accurate number will depend on how long your team has been around, whether the data has been accurately kept and is accessible.

The simple answer is to compile a list of all your group sales from the past season (unique orders), that includes the number of tickets on that order and the total ticket revenue for each order. Sum the total number of tickets and divide it by the number of unique orders. This will give you the average group size.

For example purposes let’s say the average group size comes out to 80.

AVERAGE GROUP TICKET YIELD

Lastly, to find your group ticket yield, sum the total ticket revenue from group sales and divide it by the total number of tickets sold as part of groups.

For example, let’s say the average group order was $1,400. With an average of 80 people per group, the average ticket yield would be $17.50.

BRINGING IT ALL TOGETHER

To summarize:

  • # of Customers = 100
  • Average Group Size = 80
  • Average Group Ticket Yield = $17.50
  • Therefore, the Group sales Rep quota should be set at:

100 x (80 x 17.5) = $140,000

This should be used as a starting place. I’d suggest playing around with the # of customers to see how it impacts the total revenue. However, I’d caution you to not budget much more than 200 relationships per rep. After all, they aren’t machines; they still have friends and family!

Take a look at the other variables. Are there things you can do to incentivize larger group sizes? What unique benefits can you offer group leaders? What ancillary items can you add to a group package to increase the yield per customer? Could you add pre-paid concessions or merchandise items?

The Group Sales Equation is a forecasting tool and should be used as such. Use it in conjunction with your other budgeting to determine how many reps you may need to hit your target attendance and revenue. Also, keep in mind that to build 100 relationships takes time. The job of your reps is to weed through your team’s database to uncover the 100 relationships who represent your best customers. Through that process they will come across many contacts who don’t fit that bill. Your list of 100 is constantly changing, just because a group leader was on there once doesn’t mean they are on there for life.