As stated in our Registration Systems Market Analysis, we do a bi-annual internal meeting to discuss how we have done, and plan where we are heading. We thought we would share our current view on what is happening in the registration market in several areas:
- Needs of customers
- Types of solutions
- What is happening with the vendors
- RunSignUp Strategy
RunSignUp has always been clear that our purpose in life is – provide a set of web services for the endurance market that makes our customer’s lives better. We have also been consistent on our view of the market as a collection of tens of thousands of interrelated micro-communities made up of races, timers, event management companies, running clubs, running stores and the runners, walkers and triathletes that make up these micro-communities.
But the needs and expectations of a registration system have greatly expanded over the past few years as there are more races and new types of events and new technology flooding the market.
Registration systems are growing from just collecting money in two primary ways:
- Marketing Events
- Race Day Services
The days of printing out flyers to distribute at the running store and hang on Main Street are over. With the proliferation of races at every distance, there is increasing choice for participants and more difficulty in standing out in the crowd for races. In addition, professional web marketers have entered the market and are using the advanced advertising and marketing tools available on the web to reach their customers. It is not uncommon for first year events put on by professional marketers to be over 10,000 participants in a city where the most established races do not reach that level.
Registration systems are beginning to grow into full fledged marketing and “CRM” (Customer Relationship Management) systems. The registration system either needs to be a widget on the race website, or have a full fledged website offering as part of the system. There needs to be free integrated email marketing. It needs to include a Facebook App, have Facebook sharing, and do Facebook Advertising ROI. It needs to integrate with other advertising platforms. It needs to have a referral marketing component. It needs to support social features like Teams and Groups. And it needs to do all of this easily and quickly and in an increasingly automated fashion so a race director who does this once a year on a voluntary basis does not have to spend hours and days trying to make everything work.
And this area is expanding rapidly, with new tools for marketing and increasing automation available.
Race Day Services
Expectations are rising for race day services. People want to register on their phones 30 minutes before the race, they expect fast check-in with minimal lines, they want results seconds after they cross the finish line. And they are expecting increasingly to let their friends know how they are doing DURING the race, and friends are wanting to encourage runners from thousands of miles away.
It is increasingly important for registration systems to integrate with all the various systems available on race day. And certainly RunSignUp has done this with our OpenAPI. We have also invested in this area with our acquisitions of The Race Director, one of the two leading timer scoring platforms, and RaceJoy, the leading Race Day GPS Tracking mobile app.
Types of Solutions
There are over 100 registration offerings in the market today. They fall into these broad categories:
- Traditional registration
- Highly funded, Self-funding
- Fully Integrated Stack
- Open stack
These are the systems that have been around for a long time. They focus on getting people signed up, transferring money and providing simple export of data so it can be used with timing systems. Many timers and event management companies built these themselves years ago and are still running them today. These systems typically do not have advanced team, donation/fundraising capabilities, nor automated self-managed participant changes. They also do little related to race day such as bib or corral assignment, check-in, results, notifications, etc.
Active, Eventbrite and Events.com are all highly funded ($1 Billion, $200 Million, and $17 Million respectively). These companies must make a return for their investors, and there is simply not enough revenue and profitability in the endurance market. Therefore, they must address multiple markets. This has the strength of being able to diversify costs, but can also result in diluting focus.
Fully Integrated Stacks
Chronotrack is the most recognized of these, having expanded from the hardware timing equipment side to include registration and other race day functions. The other angle at fully integrated stacks is large race series who decide to build their own system. The most famous of those is when Competitor Group which owned RocknRoll acquired RaceIt to more tightly control the development roadmap and gain a new revenue stream. These systems will obviously be best for those customers who want to buy into the entire system offering.
This is the category RunSignup fits into, and several Traditional Registration systems are moving into. They provide higher levels of capabilities and have some capabilities in Marketing Services and Race Day Services. They are distinct from the Fully Integrated Stacks in that the core of their business is driven by registration, rather than high revenue from things like timing hardware or owning and operating races.
What is Happening for Vendors
The market has expanded in several ways. Certainly the number of races has increased – but many of those are small first and second year races. The number of finishers reported by RunningUSA has peaked. However, there has been huge growth in the “Entertainment Run” category with races like Blacklight Run, Night Nation, Bubble Run, Color Run and Terrain Racing.
We have also seen a lot of change in terms of vendors. This market used to be absolutely dominated by Active.com, however the past few years has seen their market share slip drastically due to a variety of issues such as the crash of the site for the Chicago Marathon in 2013, and the Marine Corps Marathon in 2013. The shift from the old Active Registration Center to a the Active Works platform caused customers to evaluate whether they should move to that platform or a new vendor. Active has also been under the gun for too much email to runners, as well as selling Memberships, which causes confusion and adds overhead to the process of getting someone registered for a race. There have even been suits about the practice of selling memberships: – “How Active Become the Most Hated Name in Race Registration”. They have also had some employee turnover and more employee turnover, partly caused by their difficulties and partly due to moving their office from San Diego to Dallas.
The result is that customers looked at other solutions in the market. This has created a surge in business for many registration companies as customers move from Active to alternative solutions. However, by our calculations on market share, while still #1, the number of customers is not what it used to be. In addition, we would hope that Active is addressing their issues for their remaining customers.
So the growth registration companies have seen from the number of new races and Entertainment Events, as well as the migration from Active will likely slow over the coming year or two. This will likely put pressure on companies who do not have a strong enough technology and customer service offering to differentiate themselves, or are not funded or structured properly. We have already been approached by several registration companies looking for an “exit” or a partner to replace their technology base. Registration systems under 1 Million registrations per year are likely just not viable entities from a financial perspective.
Traditional Registration Providers
There are three routes that are happening in the traditional registration market segment:
First, many of them continue to maintain the base level of registration functionality. They have a captured market of long time customers, and have not reached the size to be able to invest in newer features or address the broader needs of Marketing and Race Day. These solutions will see the most pressure as customers demand higher levels of functionality, the credit card industry puts more burden on registration services to comply with third party aggregation rules, and their gross profit from registration falls to a level that does not sustain the business.
Second, a number of the larger companies like RaceIt, SignMeUp and IMAthlete are trying to update their platforms with more modern technology and address their customer’s marketing and race day needs. Even in this segment, there is likely to be fall-out where they can not afford to become a fully integrated open stack due to lack of critical mass. Some of these may be acquired like RaceIt was by Competitor Group a few years ago as part of a desire for a Tight Vertical Integration of their business.
Third, we expect a new wave of self-created registration done with simple web builder tools combined with quick shopping carts like PayPal. These will of course not have advanced functions, but will have low cost for transactions (PayPal currently charges $0.30 per transaction plus 2.9%).
Eventbrite is certainly the company with the most momentum in this segment, and are spending considerable marketing and sales dollars to gain attention and customers. Events.com is still trying to refine the platform they acquired and make it broadly useful across multiple markets. Mike Riley has been very helpful in leading their endurance sales efforts to leverage his relationships and close new customers.
All of these companies need to earn a considerable return for their investors. They will need to balance the returns they get from the endurance market with other markets. For example if Active continues to lose market share and if their Ipico acquisition does not help stem the tide, they may focus on other markets. For example, their Hedge Fund owner, Vista, was able to do a merger with Lanyon in the Meeting market.
Fully Integrated Stacks
The move into registration has proven fairly successful so far for Chronotrack and Competitor Group. They are able to increase their revenue from a sale thru their channel of distribution. In the case of Chronotrack, they are the largest timing company in the US, and if they can get timers to sell registrations along with the chips they sell it can increase their revenue and account control.
The downside for these vendors is the focus on their own stacks can limit the viability of their solutions to other customers outside their channel. They also face the issue of resource allocation similar to the highly funded vendors.
There are smaller vendors such as RaceMine and RaceWire who are also making this model work. They have focused on the Race Day component of the market.
Open Registration Stacks
This is the space where the larger pure registration providers are trying to go. This is also the area where a variety of vendors come out with increasingly cutting edge and low cost disruptive technology. This is particularly true in the timing equipment market where companies like RFID and Agee enable timers to save considerable money on their disposable chips compared with the larger vendors.
The strength of these vendors is their focus. The main weakness they suffer from is their relatively small size and technology limitations.
Cash Flow and Financing
A very important topic for the real viability of all these businesses is the cash flow of their business. The reality is that any company must pay good employees a competitive salary, as well as pay for infrastructure costs of technology and office space, as well as marketing costs. A number of registration companies finance their growth with delayed payments to customers. There is some justification in holding race money since the registration company can be left “holding the bag” with customer chargebacks from customers complaining about races that were poorly managed or not even run. If a registration company holds onto even a week’s worth of race money, it can be 100’s of Thousands of Dollars – enough to absorb losses and paychecks, etc.
RunSignUp is no longer the little startup. We are in a very strong position having risen to be the #2 vendor in the market to Active. We are not resting on our past 5 years of success, but doubling-down to continue to invest and grow to serve the endurance market. Even against large well financed vendors, we are simply able to put better people and technology focused solely at this market. We are able to keep our focus. Here are some of the things we are doing strategically that will help customers and put pressure on the 100+ vendors – including the big guys:
- Fast Payment direct from the Credit Card Network. We are removing the cash cushion that helps fund companies even like Active. The idea of weekly, monthly or post-race payments will disappear over the coming years as our model becomes pervasive and pressures other vendors to do the same.
- No Per Registrant Pricing. We charge a low fee based on the total transaction amount – often saving races or runners a lot of money. And with fees of 6% for race registration over $50 and 4% for charitable donations, our costs are very competitive for the premium level of functionality in the industry.
- Free Websites and Widget Registration on Race Websites. The race website is the key mechanism to communicate with runners. It needs to be mobile first, it needs to be in one location, and it needs to be easy to manage. Many other registration companies provide a simple page, and often have advertising for other races – that will not be acceptable over the coming years.
- Marketing Services. Free, integrated Email, Facebook App, Ad tracking and ROI measurement, etc. will become more and more important. The next 6 months of releases we will do here will be a lot of fun. We will bring new levels of race promotion to every sized event – from the 100 person 5K to the 1 Million person entertainment run series.
- Participant Management Self Service. The best way to lower race administrative overhead is to enable simple self-serve. That is hard to do right, as witnessed by reports of 65-85% drops in customer service requests for races who have moved to RunSignUp from other platforms.
- Solid Technology, Rapidly Evolved. There is no other company keeping up with our pace of development. They simply do not have the technical expertise, nor have they made the infrastructure choices we have to allow for nearly 2,000 upgrades of our system per year or handle 50,000+ registrations in less than 7 minutes.
- Open Platform. We can easily work with the other systems in the market – particularly areas like Timing/Scoring software, mobile and marketing services. RunScore Results is a great example of our open platform at work, as is the integration we have done with The Race Director and various registration systems this year.
- Race Day Investments. Our acquisitions of The Race Director and RaceJoy give us significant race day expertise and plans for continued strong investments with development of our Check-In App and coming new versions of Results and Registration Kiosks, as well as a Cloud implementation of RD Go.
We are looking forward to the next several years as this market continues to grow and change. There are so many opportunities to have fun and help races, timers, event management companies, running stores and clubs as well as your runners that give us our Raison d’être.
As usual, we welcome feedback (if you got this far!). See also our blog on Race Registration Market Value.