 "Venky Mysore")
How do you grow a business, which depends on garnering revenues from a two-month cricket carnival called Indian Premier League (IPL)? That is the challenge that Venky Mysore, managing director of the Shah Rukh Khan-co-promoted Kolkata Knight Riders (KKR), and one of the IPL eight franchisees, is confronted today.
KKR, of course, has done some prudent cost-controls: It is one of the few companies which have been able to make some profit, about Rs 10.42 crore in FY-2012 for which figures are available. But that is still less than what Khan, its owner, earns from a single movie. So, Mysore is taking a leaf from Khan's business model - create a community around the brand that is steadfastly loyal, and expand the scope of the brand, so that it can be associated with other sports in other cities and even abroad, rather than just cricket in Kolkata.
Mysore says that
Manchester United, the British football club, sells over $40 million worth of merchandise because of its ever-expanding fan-following, which includes Indians. In contrast, merchandising constitutes not more than 2 per cent of KKR's revenues, and it is one of the franchisees to have done better.
"The key strategy is to create and expand the community which stands by the KKR brand. Of course, they want the team to win, but they also know that it might not be possible to do so always," says Mysore. Surely the team's performance is not in Mysore's control, even though he admits that winning is important to keep fans excited.
KKR has a vibrant social media-following of over 6 million. That might be a smart number, but the question is how active are they? The encouraging news for KKR, which has been tracking the activity level of those on its site, is that at least 75-80 per cent are "sticky" and interact regularly. Encouraged by this trend, KKR started a fans club christened "Knight Club", which has an entry fee of Rs 699, in return for which a member gets a box of merchandise and gift coupons valued more than what she has paid for.
Of course, Mysore is following the strategy that most successful franchisees of football in Europe and basketball in the US have followed for a while. "Our intention is to get more information about the die-hard fan who is ready to pay something to become a club member. This is not available on Facebook or Twitter, so we do not know clearly who is our fan. This information can be leveraged for improving the service that we offer her and also for potential sponsors" he says.
One can know details of the fan's food and beverage preferences, which can be offered to her in her seat in the stadium. Data-mining can also reveal whether she has any preferred seats. This data will also help in giving potential sponsors an understanding of the consumers who watch the match live or on TV.
Mysore is also thinking of replicating a model used by an American football franchisee in Washington where he has worked for many years and was a die-hard fan. "The franchisee had sold out all its season tickets for the next 30 years to its fans which was incredible," he says.
The KKR boss says he is assuming that at least one out of every five or 10 social media fans will convert to a member of the fan club. That means about 0.5-1 million members (currently he has roped in 10,000 members in a year). With about 50,000 tickets available in Eden Gardens with it for sale, KKR will offer season tickets to the fan base at a concessional price, and later on, extend the booking for a larger number of years. It is this membership community that will form the core who would buy merchandise.
But will KKR stick extend to other games to leverage its franchise? Mysore says that is why Kolkata Knight Riders has been rebranded as KKR. This change essentially means that it gives the company flexibility - it can use the brand for any other sport, city and country.
Mysore says that it has looked at the upcoming football, badminton and the hockey leagues but does not see them to be viable business propositions. However, he does not rule out buying into franchisees abroad and was, in fact, in discussions to participate in "Big Bash", which is the Twenty-20 cricket tournament in Australia.
Of course, building a community to grow the brand is not something which can be done overnight. Mysore says that many of the European football teams have been around for decades before they have gained the current scale of fan loyalty. Mysore says, "We are just like a start-up." The challenge is whether the take-off happens or not.
* KKR made profit of Rs 10.42 crore in FY-2012; is one of the few profitable IPL franchisees
* Merchandising makes for 2% of KKR's revenues
* Rebranding to broaden appeal beyond cricket, Kolkata and India
