Days of Thunder

What Nascar's decline can teach us about understanding customers

Yesterday

The year was 1998. Michael Jordan and the Chicago Bulls were going into game 6 of the NBA finals and everyone knew some things for certain.

A win would mean a sixth championship for Jordan (His third in a row)

Jordan was closer to the end of his career than the beginning

By this point, everyone knew Jordan was one of the best to ever play the game and a certain hall of famer

Jordan played an amazing game capping off another series MVP performance. It was a thrilling finish complete with the weight and context of everything that led up to it.

Michael Jordan led the Chicago Bulls to win Game 6 of the NBA finals. Jordan gave an amazing performance in a thrilling game to win his sixth championship. Viewers rewarded the gamw with the best ratings an NBA game has ever had. 

Today

The year was 2016. Jimmie Johnson and his raceteam were going into the final race of the NASCAR season and everyone knew some things for certain.

A win would mean a seventh championship for Johnson

Johnson was closer to the end of his career than the beginning

By this point, everyone knew Johnson was one of the best to ever race in the series and a certain hall of famer

Johnson began the race in a terrible position (40th) and charged through the field throughout the race. Johnson avoided some spectacular wrecks and went on to win the race and his seventh championship. This tied him with Dale Earnhardt Sr. and Richard Petty for most NASCAR championships. It was all the excitement one could hope for in a NASCAR championship. Despite this confluence of events, the ratings were terrible.

Why? Fast forward a year and the situation has worsened for Nascar.

I’m not going to argue that NASCAR should or will ever achieve NBA levels of mindshare and audience. I will tell you why I think NASCAR declined in a period where there’s excitement in the actual competition and what we can learn from it. Let’s talk about what changed and led to the decline in ratings. 

Background

In the heyday of NASCAR, choices for sporting competitions on television were much different. In the 1970s, ABC broadcast some of the cup races but passed on others as part of their Wide World of Sports lineup. By the 1980s, there were firm deals with several networks to broadcast all races from the season. ESPN, still in its infancy at the time, had some races but vast majority were available on the traditional networks. By the turn of the century, NASCAR was making multibillion-dollar and multi-year deals to broadcast on a combination of cable and network outlets. As NASCAR approached the current decade some things began to change. More and more races began to be broadcast on cable channels like Fox Sports One and NBC Sports. This happened at a time when NBC was reported to have bid as much as 50% more than its closest rival for the block of races they became entitled to broadcast. How could this be a bad sign?

The average income for NBA and NFL fans is $96,000 and $94,500 respectively. This in contrast to NASCAR fans. The average NASCAR fan is less than half of this. This seemingly less valuable consumer demographic has always been offset by the fierce loyalty to sponsors NASCAR fans have always shown. Why does income matter?

Accessibility

Think of televised races as fitting into 2 categories. The first is what one perceives that they don’t have to pay for. This most certainly covers traditional broadcast television (ABC, CBS, Fox, and ABC). You could also argue this would cover a race on ESPN when someone already has that as part of their cable package. There’s not an additional perceived cost to watch. The second category is what someone perceives (or what actually is) to be an additional cost. This would cover outlets like Fox Sports One and NBC Sports.

To compete with ESPN, Fox and NBC knew that securing programming would be key to draw viewers away from the established player of ESPN. This is part of why they paid such a premium for the race schedule. On the one hand, NASCAR receives a premium for race rights over their previous contract. On the other hand, the upstart cable sports channels get some exclusive programming they can use to pull in new viewers. What could go wrong?

The challenge was many long time NASCAR fans did not have these outlets and likely never will. For some, this was simply because they did not have a package with the channels. The hope of these players was rabid fans would call their cable provider and ask for the channels to be added either through a new package (the coveted up-sell) or to their existing package. Don't forget the income differential I mentioned earlier. The average NASCAR fan is in a different position from the NFL fan who gets the "Sunday Ticket" package. Remember the “I want my MTV” era? Instead of directing efforts toward the cable providers, all NASCAR got was either angry or indifferent fans.

Cordcutting

This is also in a period where consumers have been either canceling or reducing their traditional TV packages. Cordcutting has been on the rise and the “higher channels” or specialty cable channels have often been hurt the most. Other sports, like MLB in particular, have helped stem the tide by offering digital options that make their content accessible as well as provide a new revenue stream. The NFL and NBA, while not as far along, have also made investments here to capture eyeballs from fans without cable packages. NASCAR has no offer in this space.

The combination of perceived cost, resentment, and perceived inaccessibility led a notable number of fans to look elsewhere for entertainment. To be fair, even the NFL has finally seen some declines, but not to the degree and sustained decline NASCAR has seen.

The strength NASCAR has always had that other sports never had has been a tightly controlled ecosystem. The NFL is a combination of interests from different owners who make decisions by committee. This is further complicated by venues owned by various local governments along with many different stakeholders. NASCAR, the entity, is owned by a single family. To compliment this, the tracks are owned by a very small group. In theory, this should be a strength and should allow them to right the ship by being nimble. 

Ways Lessons to Remember

There’s 3 things we can take away from this decline and apply to any business.

Make it easy for me to be a fan/patronize your product

NASCAR made it more difficult to be a fan. If there is someone who sees their friend talking on Twitter about how great today’s race is, they should have a way to tune in without summoning a cable truck to their residence. As silly as it might sound to some, the inconvenience of "what channel is the race on this week" is the difference between some people watching or not. In your business, how can you make it easy for your customers?

What I want changes

NASCAR is at its best when the drama pulls in a fan and aligns them to the fate of a driver. The second screen has become a staple of live events. Viewers have become used to pairing a second screen with everything from political debates to award shows to sitcom season finales. While NASCAR has been active to promote social media leading up to a race, the experience during the event remains similar to a decade ago. This is part of the ever changing expectations of consumers. Think about restaurants and the ability to make reservations online. This used to be a differentiation, but has quickly become an expectation and table stakes (pun intended). Live TV events, like races, are expected to pull you in. Expectations of customers evolve and so must the product.

Know me as a customer

The last piece is NASCAR lost touch with who their customers are. This seems obvious, but many organizations lose sight of this. HBR wrote a good piece about the value of this from the top down.

How often do we lose sight of our customers preferences and who they are as consumers? This is work that should never be complete. First, you never know everything on this front. Second, this will inevitably change.

What other lessons can we learn from this case?