The concept is simple: You dump people in the funnel, and each step of it represents a drag. For a restaurant having a big promotion this might be people who saw your ad; they represent the leads. When they get to your eatery, they look in the window at your menu, see that they don't like anything, and leak out of the funnel - etc, based on whatever business it is.
From the Churchill Downs press release of Derby Week:
- Attendance for those five days [Derby Week card's] was up 5 percent to 348,530 from 331,922 in 2013.
- All-sources handle for Opening Night, Saturday, April 26, through Derby Day, Saturday, May 3, 2014, was $253.8 million, down 2 percent from 2013's $258.5 million
How does such a big increase in bodies of late result in less overall betting handle? That's a massive funnel leak.
Racing has seen this for awhile. Attendance has been up for big events, as has TV viewership for really big events like the Derby. It's been going on for two years. That's great, and I think America's Best Racing's initiatives have helped.
But not only are those people not becoming return betting customers (the lifeblood of the sport), they are barely even becoming one time customers.
Big screens, ABR Live buses, Tony Danza and TV coverage can only take you so far. This sport needs betting customers, and right now customer service, price and distribution issues are its downfall.
Racing is spending money to get people to the restaurant, people are coming to the restaurant, but they aren't opening their wallet to buy a meal. No eatery can grow, or even survive long-term like that, and neither will horse racing.
How do you plug the holes in the funnel? Make the customer experience better: Better pricing, better data, better distribution, ease of use and general ease of usability. That's where racing needs to improve.
Hiking the price by reducing churn, and in micro-economic terms reducing customer utility by making it more difficult to enjoy the sport - as seems to be happening as we speak - doesn't plug a funnel leak, it makes it bigger.