Active Network takes a beating from the many vocal Slowtwitch Forum readers, and it’s not just on our reader forum. It rates 2 stars out of 5 on Yelp, and the great majority of published reviews in 2013 and forward are accompanied by 1 star. The Better Business Bureau receives about 125 complaints a year against Active Network, and in 2013 Active paid $237,000 in refunds to 9,500 Iowans in a settlement with the attorney general of that state for Active Advantage membership charges many customers did not know they had signed up for while registering for an event online.
Yet, when we ask Slowtwitchers “Do you have a preferred online registration company?” 11 percent of them choose Active Network. That’s the high. BikeReg is second at 10 percent and IMAthlete sits at 7 percent. Further, 20 percent of Slowtwitchers answer, “They’re all okay,” all meaning all registration companies, and that means a minimum of a third of Slowtwitchers are at least fine if not happy with Active. Another third of you-all say you’re unsatisfied with online registration, but you don’t single out Active, rather you haven’t yet found a company that you like. Of course, with 82 online registration companies currently in business no one has had a chance to use them all or, probably, more than just a few of them.
It’s the middle third of you who specifically disfavor Active versus its competitors.
Active suffers from a blessing and a curse. A number of blessings/curses in fact. The first blessing is its massive size, which becomes a curse when Active’s detractors show up on Yelp, while it’s hard to even find a Yelp review (and therefore a detractor) for any other online registration company. Another blessing is its funding source, which is private equity. Active isn’t in danger of running out of money. But private equity also creates this irreconcilable tension: An equity’s shareholders who have no reason to care about anything but the profitability and eventual capital gain reaped from the sale of the equity. (Shareholders don’t much care, directly, about your ease of registration.)
Active has a lot of very happy customers, and they’re not only end users. Of 47 race directors recently surveyed by Slowtwitch, more use Active (12) than any other registration company. None of them are anything but happy, and half of them came back to Active after leaving for another registration vendor. They cite Active’s help in marketing their events, and in other value-adds like the provision of samples for race bag drops.
Active is, very obviously, not only used, but loved by, a lot of RDs, notwithstanding criticisms about both the unwitting email list and paid membership sign-ups as well as its high cost relative to many others in its competitive set. The cost to the consumer, which is 6.75 percent + $1.25 (it's a lower calculation for higher cost events), is a source of consternation among registrants, especially when compared with engines that charge less than half. Why would a race director voluntarily agree to foist upon his customers a charge that is higher than is required for the service to be performed?
Part of that is already answered above. From an RD’s perspective, a race that is subscribed 10 or 20 percent higher than would be the case if Active Network was not used might be the difference in that event’s continued existence. The RD might also be choosing based on his assumption of Active’s data safety. There are only so many Level 1 PCI-compliant companies out there, and I can’t ever remember in Active’s 15-year history a security breach, which is saying something for a company that seems a likely target for mischief-makers.
Why Would RDs Opt for a High Convenience Fee?
As to Active’s rate charged, there’s certainly an assumption that Active pockets that “convenience fee” or, at least, the amount between the fee charged and the credit card merchant’s charge. In the course of this reporting and, indeed, in the course of discussions held way before this series was ever contemplated, I have never found a registration company employee or principal who does not openly acknowledge or at least suspect that the gross profit from registrations is an amount in play. It’s a deal point. And why wouldn’t it be? Consider the math.
Let’s take your garden variety 20,000-person marathon, charging $200 for an entry. If the registration convenience fee is 6.75% + $1.25 that’s $14.75 per person x 20,000 = $295,000. However, that’s not all gross profit. You have to subtract what the credit card merchant fees are, which are roughly 2.75 percent x all those runners = about $110,000. That leaves $175,000 worth of discussion money.
A small race has nothing to discuss. It’s getting the benefit of Active’s formidable marketing and value-adds. But a large race, well, $175,000 is a lot of cabbage. What might the RD want? A slice of that cabbage! It might be a rebate. Okay, a kick-back. But it might be in the form of services. I spoke to one veteran of the registration wars who thinks timing is going to be a negotiating point in the future. A full service registration provider might be asked to provide, for example, the on-site timing services.
ChronoTrack is an end-to-end solution, providing online registration and timing hardware and software. Its list of contracted local timers is comprehensive and formidable. End-users love its capacity to produce results you can view immediately after you cross the finish. It’s owned by Life Time Fitness, which I find fascinating. Also among Life Time’s holdings is Athlinks, and when you ponder the fact that Life Time has, with Ironman, engaged in a ranking system for triathlon, Athlinks could become a compelling and powerful asset.
ChronoTrack can make a comprehensive sale to an RD. As long as that RD is comfortable with a local timer that uses the ChronoTrack system it’s a one-stop shop. Active Network just announced a deal that gives it that same capacity. It just bought IPICO and now it has the flexibility to provide and end-to-end solution and for the very large and successful races Active could theoretically take some of that full service margin and offer a deal on timing.
The cynic would say the margin the full service registration companies charge is just a way for large RDs to earn yet more money by earning a kick-back on registration fees. In some cases that’s probably been the case. However, it should be noted that full service registration companies are just that: full service. There are services they provide that other stripped-down companies do not. Further, the margin these companies make may flow back to the RD in, as noted above, services rather than through kick-backs. For example, if an online reg company only got the deal with a mega-race through providing some or all of the timing services, your “convenience fee” offsets the taller entry fee you’d have to pay to offset the timing cost.
Let’s take that latter example. In this case, instead of an entry fee of $125 and a convenience fee of $9.75 you might pay $130 + $4.75 with another reg company that just provided strong, safe transactions at a shorter fee. But you’d pay the same, because the entry would be higher to offset the timing company’s fee. What’s the difference? In the first scenario the full service reg company looks like the bad guy, taking some heat off the RD. This is why end users tend to think of the stripped down street rod version of the reg company as the good guy. But the good guy can’t offset any fees. He can’t offer a rebate to the RD, he can’t sponsor the race, he can’t donate some of the reg fee to charity, and, beyond all of that, he probably doesn’t operate a Tier 4 data center and he might not be level 1 PCI compliant (as Active does and is).
In short, it’s my thesis that Active Network is occasionally the bad guy for reasons it deserves, such as for opt-out email signups or stealth paid membership trials. But when it’s the bad guy for charging taller fees than many of its competitors, I offer this question: If there’s an offsetting service or cost that Active offers as part of its agreement with an RD, how can Active keep that contract if it becomes a low-cost reg provider? I’ve spoken to a lot of online reg salesmen who tell me stories of getting ground to the nub by RDs, only to still not get the deal. The sorry fact is, unless you begin the negotiation with margin to play with, you’re at a competitive loss.
So, here’s the moral of the story. If you are paying a registration fee that is 6 or 7 percent of the entry fee – and it’s not just Active but a lot of popular registration providers that charge that much – your beef is not with the registration company but with the RD. And since we’re at it, if you’re peeved at extraneous questions asked during the registration process, Active has a fairly succinct list of questions it requires you to answer. It offers the RD the ability to ask additional questions. Maybe it shouldn’t. Maybe it’s Active’s fault for allowing the RD to ask superfluous questions. But it does, and many RDs take Active up on the offer.
When I look at the landscape in this marketplace, it seems to me full service reg companies are in a bind. They have to offer more than cheap and safe registration. They can’t lower their fees and still contract with the large events. If you want an explanation as to why you’re paying a full service convenience fee don't blame the registration engine. It's the race RD's choice to use that engine and the RD's question to answer.
One of Active's prime selling features: It's the Saint Sebastian of the registration industry, the pincushion happily accepting arrows shot by end-users naive to how this industry works.
