Analysis from TRG Arts

Warning! An Election Looms November 6th

2012-01-25T08:09:00.000-07:00

As a new year begins, TRG bloggers are taking a fresh look at data and trends that inform risks worth taking, best practices worth hanging onto, and assumptions worth challenging – each in time for action to be taken. This post is also published on the Americans for the Arts ARTSblog.

Image by the League of Women
Voters of California via Flickr

When I worked as an arts manager, the election season – particularly presidential years like 2012 – was a time of fear and loathing. Why? First and foremost, ticket sales and admissions soften or die immediately before and on Election Day. At TRG, we’ve watched this trend play out across the U.S. over the past two decades in client sales results from markets of all sizes. An inescapable consequence of major election cycles is campaign advertising – a driver of America’s economic engine that is bad for arts and entertainment.

The flood of campaign advertising every other October sucks opportunity out of our promotional campaigns. (Just ask anyone in Florida right now where the Republican primaries alone are having a major impact.) Campaign advertising drives up the price and limits -- in some markets eliminates -- the availability of advertising time on radio and TV. In-boxes, mailboxes, Facebook pages, and Twitter accounts are stuffed beyond capacity. The normal roar of media clutter hits overload. It becomes nearly impossible to create a viable marketing message capable of cutting through. No matter the quality of what goes on stage or in the gallery, patrons are less likely to hear about it.

Even if patrons do hear about attractions, are they listening? The increasing negativity of campaign ads has become a cancer. I know what I’m about to say makes me sound my age, but younger generations reading this post need to know that the state of discourse has not always been as toxic as it is now. When I interned on Capitol Hill during the Nixon years, politics were not a game for the faint of heart. But the way the game is played today makes the Nixonians look quaintly naïve. The result is that we – and most importantly, our audiences – tune out. Collectively we hunker down in the safety of our ear buds and personal devices, hoping that the plague will pass by.

Our goal in this space has consistently been to provide data-driven solutions. Here is a fact that data and decades of experience make immutable. Patrons buy fewer tickets in the fall of election year cycles compared to non-election years. Smart managers understand this fact and adjust their artistic and financial plans in anticipation that ticket sales will soften or die in the weeks immediately before and up through Election Day on November 6, 2012. During the 2008 presidential year, several TRG clients in hotly contested swing states decided to pass entirely on the opportunity to present anything in October and the first week of November. For many, this is not a practical solution. But if you cannot change programming plans, at least include these considerations in your marketing:

Make your media plans now, before the campaigns buy up all the air time in your market.
Launch marketing campaigns for fall programs VERY early so that you are not dependent on promotion that happens in October amid the maelstrom of campaign advertising.
Recalibrate telesales expectations. Telemarketers are expert at getting through but they face even more barriers during a time when candidates are clogging the phone lines with robocalls.

Also remember that once November 6th has passed, arts and entertainment consumers will be ready to party. Really savvy managers will have programming in place for that celebration.
Do you have an election year story to tell? Comment here.

Upcoming Webinar: Demand and Success Factors for Museum Pricing

2011-11-17T06:00:00.000-07:00

TRG President Jill Robinson

Admission price increases at some of America’s highest profile museums trigger major media coverage and a “fear factor” in discussions about how museums should determine pricing. However, museums aren’t getting useful direction from the dialog about the pricing, says TRG President Jill Robinson in her recent blog post.

Jill leads TRG’s counsel for museums, and in this free webinar she will explain the demand-based pricing approach that has led TRG clients to sustaining revenues and lasting patron loyalty over the last two decades. Hear how pricing fits into a smart revenue strategy as well as the key success factors for optimizing admission pricing in museums and other membership-based organizations. Jill will make a brief presentation and then take your questions.

Join us for this free hour-long webinar on November 29, 2011 at 1 Eastern/10 Pacific.

To Register:
1. Go to Webex: http://bit.ly/tLvqLi

2. Click on "register" (free).

3. Fill in the short form and SUBMIT.

You will receive log-in information for the webinar in theconfirmation email.

Note: To participate fully, you will call in for sound and log onto the online presentation and virtual dialog.

The Patron Experience and the New Customer Service

2011-11-16T09:34:00.001-07:00

By virtue of the way technology has changed our world,people have come to expect an ever more personalized customer experience. Retailerslike Amazon and Netflix use sophisticated technology to recommend moreproducts, remembering buying history and order information, and tailoring theexperience to each customer’s preferences. Customers now expect products andthe customer service surrounding those products to fulfill their specificneeds.

Whatabout the arts? In the arts, the experience is the product. The words weuse to describe our product, our art, and the action of coming to the theatreor exhibit hall often include “experience”. It’s a critical part of ourvernacular. Smart arts managers know that the arts experience starts from thetime a patron picks up the phone or goes online to order a ticket and ends whenhe/she arrives home after the event. TRG’s decades of client experience and patronbehavior research shows that patron loyalty is a process that grows withaccumulated experiences with the organization.

Customerservice supports loyalty development at every step of the way. TRG’scounsel on patron-centric management and customer service is built around theconcept of patron loyalty. Think of patron loyalty as a ladder. Patrons startat the bottom rung as a “tryer” when they have their first interaction ortransaction with the organization. Patrons who come back again as a repeat buyer, multi-buyer, subscriberor member-based frequent attendee are what we call “buyers”. With good customer care, an organization canretain buyers and cultivate them into an ongoing, engaged investor—an“advocate.”

A patron’s experience, then,is a set of related interactions that, together, determine future buying anddonating behavior. Viewing customer service the way a patron sees theexperience is the very definition of patron-centric customer service. The experience arts patrons have unfolds ina variety of ways--the marketing materials they see advertising an event, theinteractions they have with box office staff or online ticketing, the ease ordifficulty of parking, the way they pick up tickets at the venue, the manner inwhich they are seated by the ushers, and, of course, the artistic experience.

But it’s not over yet--they’ll also remember how crowded the bathrooms were atintermission, the interactions they had with staff or other patrons in thelobby, and how the traffic was on the way home, when—or whether—theorganization thanks or even acknowledges them for coming. They remember these aspects of the experiencetime after time, for every event they attend.

Customerservice is everyone’s job. Goodexperiences and connection with the organization at every stage of the game helpscultivate patron loyalty, and that loyalty sustains organizations. Eachdepartment – not just the box office or front of house staff—has a role infulfilling patrons’ needs. Departments working together provide the kind ofservice and experience that move patrons up the ladder.

Whatcustomer service means in the digital age. Since ticketingtechnology allows patrons to order online, fewer patrons are choosing aninteraction with a live person. As TRGconsultant and resident customer service expert Todd Scarce says, “Why wouldyou call the box office when you can order online at 3 a.m. in your boxershorts?” Those who call nowadays have a reason to pick up the phone—they arelooking for someone to listen and help. That’swhy arts organizations’ staff—the box office in particular needs to be morecustomer service saavy than ever before. Best practice customer service requires the ability to offer service that’stailored to the patron’s expressed needs and past experience with theorganization.

TRG research consistently corroborates one fact: It’s critical to keep arts patrons comingback for more. A big contributing factor is patron-centric service. Customerservice can no longer be about meeting expectations, but, as Todd Scarce counsels,we must exceed them.

Howare you making your organization more patron-centric? Leave a comment below or join the conversationon Twitter under the hashtag #newCS.

Pricing Dynamics for Commercial and Non-profit Entertainment

2011-11-04T05:03:00.005-06:00

A version of this post originally appeared as my guest commentary for Ticket News, an online resource for ticket industry news and information.

Photo by Bobby Bradley via Flickr

When it comes to pricing ticketed events, what works? For nearly two decades, TRG Arts has answered that question for hundreds of non-profit arts and culture organizations. About four years ago, TRG also began working with a number of commercial entertainment clients, mostly Broadway productions.

Although non-profits and commercial entertainment presenter/producers serve very different missions, both face the need to get the most from every ticket sold. Maximizing revenue is frequently a life or death issue. Everyone is familiar with the fragile business model of a nonprofit. But the tight operating margins and pressures to re-coup production costs of a commercial event are no less challenging.

The key driver for both non-profit arts and commercial entertainment is demand, a completely situational factor that varies by market, organization, time of year, time of day, and of course, programming—what’s on the stage or in the exhibit space. To maximize revenue, the pricing strategy should anticipate and manipulate demand for an event or exhibition.

Demand may be a complex cocktail of factors, but its impact can be easily measured with readily available data: unit ticket sales and their associated revenues. To get a big picture assessment on demand, we prepare an assessment of per capita revenue to determine if a client’s pricing strategy is on track, off base, or leaving money on the table. More on calculating and analyzing per capita revenue.

TRG looks for a positive correlation between per capita revenues and the total number of tickets sold. (unit sales). We hope that as unit sales grow, the demand for tickets and the scale-of-house plan combine to push patrons into increasingly expensive seats. Sadly, most typically scaled houses produce the opposite – a situation in which demand pushes patrons into cheaper seats.

This upside down business model is usually the result of a combination of factors:

Inventory management: Who really manages the inventory of tickets? In too many situations, the public determines which tickets are sold and which are not, creating house fill patterns that work against the best interests of the venue. Purposefully creating a plan for the public release of ticket inventory, combined with a skillfully crafted scale-of-house (or, in the case of an exhibit, when viewing times are set) insures that the venues drive per capita revenues up as the venue fills. The house also fills so that embarrassing gaps are avoided. While many marketers are fascinated by the magic of dynamic pricing, the real money is being made through the use of inventory management.

Discounting: A culture of discounted ticket prices has overwhelmed many communities. The art of the deal now drives many marketing and pricing strategies – frequently subsuming rational thought and strategic purpose. That said, no individual marketer or organization can single-handedly change the world. How tickets are discounted and setting a discount rate that fits within a broader inventory management structure can allow one to play the discount game and win.

Secondary Market: In the commercial world, everyone focuses on the top price for an event. Ironically, this fixation is illusionary. The typical Broadway show currently has a top price of about $135 (plus a few Premium seats at $250). The average price paid for a Broadway show? Less than $90. In fact, the majority of the tickets sold to Broadway shows in New York are now discounted! What’s clear is that the top price for the best seats is almost always too low (check out the prices for Book of Mormon or Wicked on a secondary market site like StubHub.com), while our studies indicate that the rest of the house is overpriced (as discounts on sites like BroadwayBox.com or Playbill.com illustrate).The secondary ticketing market is rightsizing the relationship between supply and demand every night – and doing so at the expense of the primary box office marketplace. The secondary market is not a bad place. Their goals are just different and their business model is based in a firmer grasp of the reality of price and value.

Whether for a nonprofit or commercial ticketed event, per capita revenue can act as a valuable diagnostic tool for pricing, because it helps map historical demand. Anticipating demand for future productions or exhibitions can lead to recognition of and removal barriers to maximizing revenue.

Pricing for Museums is a Demand Issue

2011-10-24T13:53:00.001-06:00

My partner and TRG President Jill Robinson has led the development of our firm’s counsel for the museum industry. Recent media and blogosphere buzz about museum admission pricing coincided with Jill’s preparation for upcoming counsel sessions and a webinar on the subject. In this post, Jill summarizes her insights and adds her voice to the ongoing dialog. She is currently attending the American Museum Membership Conference (AMMC) in Philadelphia and will join me later this week in San Francisco for the ArtsReach Marketing, Development and Ticketing Conference.

Photo by Glen Scott via Flickr

Museums aren’t getting useful direction from the recent public dialog about the prices they are charging or want to charge for admission.

Admission price increases at some of America’s highest profile museums have made news in major media and online, and that coverage has touched off discussion that appears more emotional than productive. It seems like the further away from free or low-cost admission a museum gets, the more the institution is vulnerable to criticism on grounds of not making their collections accessible or affordable. It’s as if admission price is the only way to express accessibility and that accessibility is the only reason for a museum’s being.

Of course, accessibility is important. But, it’s not – and should not be – the sole basis for a museum’s admission price decisions. As Clare Ruud points out, pricing is a mission-based decision.

We agree, and also acknowledge there are diverse missions upon which museums of all genres and sizes are built. Some are set on a foundation of accessibility – that is, maintaining and preserving a collection that is made available and affordable to the broadest possible segment of the market. Other museum missions are built around visions to share specific themes in education, history, science, or entertainment and include the goal of accessibility.

Then there’s funding. Some museums exist because there is significant public, private, or foundation funding to support and even require free or low-cost admission. Many others, however, need some combination of ticket revenue and contributed income to bring their collections to the public.

Mission and funding sources are primary considerations to be sure, but all museums have some need to maximize revenue on whatever they charge or earn from admissions – be it ticket price, suggested donation, or annual gift.

That’s why demand must be a baseline consideration for museum pricing strategy – not just admission price setting but also the foundation for membership levels, “always available” discounts, and loyalty programs.

Demand drives admissions.

If there is no public demand for the content, schedule, or timing of an exhibit, then not even a free or cheap ticket will get a visitor through a museum’s doors. On the other hand, when demand is high and a marketplace seizes on something they really want to see, admissions – at all price levels – increase.

The art of optimizing revenue from every admission is an integrative not intuitive process. It considers mission and revenue needs with factors that impact demand. The most critical demand factors vary by market and museum so much as to be totally situational. But, each can be measured using a museum’s admission data and can be projected for sound admission price setting.

Setting the right admission price – especially a higher price – can be complex but it is not onerous. Many museums resist raising prices because they fear or assume there will be negative public or media outcry. We know from implementing hundreds of arts and culture pricing strategies for clients over the past two decades that price increases are rarely noticed. Do complaints arise? Of course, but generally the public intuitively understands the fact that operating costs increase and price increases follow. This is particularly true for very popular exhibits; they require museums to charge more because it takes more to pay for the care and maintenance associated with large attendance.

Done right and well, demand-based pricing strategy is a value proposition built for a museum’s market from careful analysis of its audience’s behavior and careful integration of its staff work in a variety of areas, including curatorial, operations, and IT. Such a strategy suits the institution and the marketplace. Important positive outcomes are the result – maximized revenues, strengthened member loyalty, and a community well-served.

Want to learn more? Register your interest in Jill Robinson’s upcoming webinar on museum pricing. Leave a comment or contact us.

TRG at fall arts conferences

2011-10-20T05:16:00.000-06:00

Photo by Sarah Cartwright via Flickr

It’s conference season and TRG’s expert consultants are hitting the road with our firm’s latest business intelligence on arts consumer behavior and resulting client experience.

American Museum Membership Conference (October 24-27 in Philadelphia)
The American Museum Membership Conference is the annual conference for membership-based fundraising. TRG President Jill Robinson and Katie Maltais, Manager of Accounts and Services, hope to contribute to the dialog on demand management and industry best practices.

ArtsReach Conference (October 28-30 in San Francisco)
This fall’s ArtsReach conference focuses on helping marketing, development, and ticketing departments collaborate to optimize patron revenues and loyalty. Don’t miss CEO Rick Lester’s 3-hour intensive on pricing and dynamic demand principles, Pricing Arts: A Team Clinic. Jill Robinson will also lead Dynamic Development: 5 Factors That Win Members and Donors, highlighting the dynamics that together make a successful fund- and friend-raising strategy. If you plan to attend, be sure to look for Rick, Jill, and Katie Maltais or stop by the TRG Arts table for a chat, information, and a gift.

National Arts Marketing Project Conference (November 12-15 in Louisville, KY)
Vice President Will Lester and Strategic Communications Specialist Amelia Northrup will be at the NAMP conference with some of TRG’s newest research on patron origination, thoughts on the relationship between customer service and patron loyalty, and one-to-one consult sessions.

Want to meet up with the TRG team at these conferences? Please contact us.

The Social Media/Database Connection

2011-10-10T06:32:00.006-06:00

This post was originally published last week on artsmarketing.org and in the National Arts Marketing Project newsletter.

The cardinal rule of communications is “know your audience”. But on social media, it’s sometimes easier said than done.

Last week in the Arts Marketing Blog Salon I wrote about keeping your social media activity direct, targeted, and focused on return-on-investment. In it, I briefly touched on how difficult that can be, because you often can’t track users outside of social media platforms. One of the lingering questions for arts organizations—really, for all companies which thrive on direct marketing—is how to connect interactions on Facebook and Twitter with your database.

Why connect?

The primary benefit of connecting social media interactions with your database is the capability for tracking, and ultimately re-contacting those who use social media. Tracking your social media users pays off in a number of ways. You can:

Learn who you‘re talking to on social media. Facebook analytics and a variety of third-party Twitter analytic tools provide some demographic data and a little behavioral information. With a database connection to Facebook and Twitter, you can recognize subscribers, members, donors, or board members who are following you. And, you can interact with them – specifically. Would you communicate differently if you knew, based on the evidence in your database, that a big segment of your followers were donors, or that most had never bought a ticket?

Tracking followers in this way will only become more critical with the new Facebook changes. As social media becomes less passive and oriented towards “liking” a page, interaction will be more oriented toward specific social actions. The upside about the changes is that you should be able to pick up more information. For example, Ms. Eleanor Moneybags might update her status to read “Eleanor Moneybags donated to Typical Theatre Company.” The downside is, actions are self-reported and it’s still unclear whether you will be able to export action information and to connect it to your existing database. Still, you’ll get more actionable information than you get now.

Identify and reward your loyalists. There are a few ways to identify key patrons and other influencers who are loyal to your organization, described here. Of course, you still have to do this on a one-off basis—it’s not automated, and takes some effort. The pay-off is that you can tailor your communication based on what their interactions with your organization are, making your direct interactions more meaningful. My colleagues and I put a high priority on investing this time and effort in cultivating loyalty among patrons. Our ongoing analysis of patron behavior has consistently shown that the payoff is those patrons’ higher lifetime investments in your organization.

Expand effectiveness of direct marketing campaigns to include social media. The most effective marketing campaigns are direct and targeted; they put the right offer in front of the right person at the right time. Tracking ROI on direct marketing—through response reporting, for instance—is a well-established practice for traditional channels like mail, telemarketing, and even email. For most organizations, social media interactions currently exist in a silo separate from the database. Connecting the two would be potentially very powerful, especially if you have a robust social media presence with individual interactions.

Imagine if you were able to compile an “engagement index” based on ticket and donation transactions coupled with brand interaction on social media. You could use analysis of this sort to more effectively target who got what offer. You also could segment your contact list better, ranking those who are engaged on social media as better prospects. For example, say you have Ms. Patron who regularly shares your posts or tweets and engages your org’s account in conversations. By tracking Ms. Patron through her email address, you can see her recent and past ticket and other transaction history. Let’s say, she was a ticket buyer or member at one time but hasn’t made any kind of investment recently. Maybe it was long enough ago that she’s no longer on your radar to contact again. Clearly she is still interested, so you include her in your next mailing and she buys a ticket. That patron relationship has just gotten a boost from connecting social media to your business intelligence system.

So close, yet so far away

To those of us of us who have been looking into this for a while, the significance is clear: Sustaining revenues will result from connecting patron databases with social media. Yet, the technology for making the connection is just not there yet—or is too expensive for the average arts organization to afford.

To get the job done, technology must easily and cost-effectively collect patron contact information from social media. Once collected, the next steps are easy and can be managed by almost any ticketing or CRM system on the market today: social media contacts go into a database and can be matched with existing contacts, creating fields for additional interactions. From there, it’s standard database operating procedure—you can analyze who is interacting with your social media presences and how—and you have the ability to re-contact those people in a more direct, targeted way except with limitations imposed by spam regulations for email.

This is where “easier said than done” comes in. As I mentioned above, right now the collection is usually something can needs to be done on a “one-off” basis—logging interactions or followers—but it takes a lot of time and energy. Many of the tools I’ve looked at help with some of the work, but they virtually all have drawbacks. Here’s a survey of what’s currently available:

SimplyMeasured.com can help by allowing you to retrieve the names of your followers in convenient Excel format. However, the most contact info you can get is name and city—not enough to make a sure match.
Non-profit tech provider Convio collects email addresses on some of their clients’ Facebook pages. When a user first visits the page, they are asked for their email address. While this helps build a list of fans that you can analyze, it’s an opt-in system, so the list might be biased and will not be comprehensive.
After reading about Flowtown on Devon Smith’s blog last year, I was extremely hopeful that importing Facebook contacts might be possible. Flowtown helped companies discover & manage the social side of their email lists by telling them which of over 50 social networks the people on their email list use. However, earlier this year, Flowtown announced that they were changing format amidst privacy concerns.

However, the drawbacks I’ve described in each of the tools bring up an interesting point. No one seems to have found a way to satisfy the need to consider user privacy concerns and to collect patron information easily and seamlessly. With new technology solutions on the horizon, we’ll celebrate the day when it’s affordable to make this important connection between social media and data, while respecting users’ privacy.

So where does that leave us now? Tracking social media interactions in your database is a best practice in the making. It may be too elusive for many organizations now. However, the more demand we create for having social media integration, the faster it will become available.

If you have connected (or attempted to connect) social media data with your database, please leave a comment below, or plan to attend my dine-around on November 12^th at the NAMP Conference about this subject, “The Social Media—Data Connection”.

What will your audience look like in 2020?

2011-10-07T09:10:00.001-06:00

This week, TRG's own Will Lester and Amelia Northrup are contributing to the Arts Marketing Blog Salon on Americans for the Arts' ARTSblog. This article by Will was originally posted as part of the salon, which previews the National Arts Marketing Project (NAMP) Conference in November.

One of the prompt questions for this blog salon was “What research is affecting your marketing and fundraising strategies?” TRG’s research on arts patrons by generation has really given me perspective on where the arts are today and what we need to plan for long-term. Right now—even amidst the recession, organizational bankruptcies and funding pullbacks, today may be the “good old days” for arts marketing.

There are four generations of arts buyers in the market right now. Each cohort is born roughly between these dates:

Traditionalists, born before 1945
Baby Boomers, born between 1946 and 1964
Generation X, born between 1964 and 1981
Generation Y, born between 1982 and 1995

Among many arts and cultural organizations it is commonly observed that a large proportion of their audiences, patrons, and members become more loyal, active, and valuable around a certain age. Usually, this occurs when patrons’ kids leave the house. They have more free time and reach a stage in life where they have access to more disposable income. As you might imagine, today is the prime time for serving Boomers, a large pool of 60 million.

If these life stage markers and conditions really influence capacity to participate and engage at high levels, the members of Gen X will begin reaching this target life stage around 2020. Our audiences will begin to look quite different as the Baby Boomers fade from the scene. A troubling statistic is the number of Gen X-ers in our population: 20 Million—1/3 of the population of 60 million Boomers.

This research has substantially changed the way we counsel our clients to market to their audiences. As Boomers are replaced by a smaller pool of Gen X-ers, marketers will need to get smart about marketing tactics and their patron loyalty strategy. So what’s the solution?

Everything marketing does well today must be three times more efficient in 2020 in order to maintain today’s level of success into the future. Targeting and multi-channel strategies utilizing messages relevant to the patron’s level of experience will become supremely important and must replace the “spray and pray” practices of the past. Today’s smart marketers will lead the way smart use of their data, divorcing themselves from “conventional wisdom” and good guessing. Amelia wrote earlier this week about the importance of turning to direct, targeted strategies, as well as tying interactions in to your database. In the future, these techniques won’t be luxuries, but will become necessities.

When faced with this dilemma, your first instinct is probably to turn to audience development—getting new audiences in the house, and preferably younger audiences. Gen Y or the “Echo Boomers” are almost as big a group as its parent generation.

This instinct is admirable. However, there are plenty of new people to sell to, and there will be for the better part of this decade. As I wrote earlier this week, on average about half of any given audience is new each season.

Are new audiences important? Yes, but re-focus your energy from getting them to come once to getting them to come back. Nationally, TRG analysis shows that 80% of all new single ticket buyers never return for a second visit. Use the time you have now to develop disciplines and activity around retention. It will serve you well today and be vitally important in the future.

3 Ways to Put Social Media in its Place

2011-10-06T05:11:00.006-06:00

Graphic: Mike Licht via Flickr

This week, TRG's own Will Lester and Amelia Northrup are contributing to the Arts Marketing Blog Salon on Americans for the Arts' ARTSblog. This article by Amelia was originally posted as part of the salon, which previews the National Arts Marketing Project (NAMP) Conference in November.

Having written about social media and its application in arts marketing for the last few years, I’ve become aware of a disconnect. I’ve written about specific social media tools and tactics, but I realize that I haven’t addressed how it fits in with overall marketing strategy, and within the media mix.

Think about the campaigns that have delivered the most revenue. For many organizations, subscription or membership campaigns are the lifeblood of their revenue each year (a good example of this came from TRG Arts client Arena Stage recently).

Direct-response renewal campaigns usually produce the highest sales volume as well as the highest marketing return-on-investment (ROI). On the other hand, social media has eluded our efforts to assign value to it since its inception. Social media is hard to track ROI on and even harder to monetize. On top of that, it’s nearly impossible to track social media users because doing so falls outside of the proprietary systems designed to protect their privacy.

You will not, repeat, NOT hear my colleagues and me advocating for abandoning your social media efforts. However, we do ask you to consider the question: Looking at your marketing strategy holistically, how does social media complement your most effective marketing campaigns?

There is no “one-size-fits-all” prescribed answer, just as there is no magic formula for the perfect media mix and strategy. Your social media presence is part of your own unique brand, and so it will be different from anyone else’s in terms of what works. However, there are simple guidelines that you can use to direct your efforts:

To what degree can your interactions can be direct? Direct response tactics deserve most of the time and money an organization spends on its media mix. Why? Because when it comes to sales campaigns, direct marketing—usually mail, email, telemarketing—continue to deliver superior response results.
As much as you can, use social media as a direct marketing tool. Instead of “broadcasting” your message on social media, focus on social media’s real power: connecting you with people you might not otherwise have conversations with. Instead of using it as a mass communication tool, use it as an acquisition, customer service, and relationship-building tool.

To what degree can your interactions be targeted? The reason direct marketing is so effective is that it targets patrons, consistently putting the right offer in front of the right prospect at the right time. The new technology options out there add some interesting nuances to the concept of targeting, as well as directness.

For example, a tweet or status update is “targeted” to a point in that your fans and followers have opted in, but it’s easy to miss. Prior to recent changes, the average Facebook user has 130 friends, each of whom creates about three pieces of content per day. Add to that the 80 community pages, groups and events that the average user is also connected to, and the chance that users will see, let alone respond to your post shrinks. Add to that the fact that often your capability for re-contacting or capturing data on users is severely limited, if not non-existent. I addressed this in a recent article about connecting social media with your database on the National Arts Marketing Project's website.

Social media platforms have started evolving to focus more on targeting. Facebook Ads is the probably the earliest and most obvious example; ad viewers are targeted by age, geography, and a dazzling array of interests. (Note: Facebook Ads are informed by social data which is why I discuss it here; there are other types of targeted online advertising that target based on other data/tracking techniques.) The newest social media darling, Google+, builds its network around the central concept that people want to communicate different ways with different groups. Facebook has tried various ways to categorize friends as well.

To what degree does it provide ROI in revenue or patronage? The question of ROI always comes back to time and resource management. There are hundreds of ways to measure social media success. But focusing back on the idea of effective campaigns, how is your social media helping you in terms of marketing goals? In terms of customer service or brand management? In terms of actual revenue? If it’s not helping you meet those goals, it’s time to take a second look at the time you’re spending there.

Finally, don’t take attention away from strategies/tactics that you know get results to focus an inordinate amount of attention on the new shiny social media thing. Conversely, don’t be so focused on those other efforts that you ignore what’s going on in social media world. Set a strategy focused on connecting directly with patrons, building relationships, and using it as a conduit to improve loyalty rather than to sell tickets fast.

Guess who’s coming to your arts events?

2011-10-04T13:38:00.000-06:00

Photo: Fernando de Sousa via Flickr

This week, TRG's own Will Lester and Amelia Northrup are contributing to the Arts Marketing Blog Salon on Americans for the Arts' ARTSblog. This article by Will was originally posted as part of the salon, which previews the National Arts Marketing Project (NAMP) Conference in November.

How well do you know your audiences…really? Before the curtain goes up you can undoubtedly pick out that valued donor or long-time subscriber in your audience. Or, at every exhibition opening, you probably know the faces and names of the most important and dedicated members attending. But who are all the rest of the people coming through your doors? Are the majority of people who have been to your organization before, or are they new? And are they new to the arts or just new to you?

The team at TRG Arts was curious about this too. What we found is that, in a given season, about 50% of the people coming to your arts events are people you have seen before. The other 50% are new to the organization, although maybe not to the arts. Subscribers, members and other regular attendees actually only comprise about 37% of the typical database. Another 14% are “reactivated” patrons—patrons who have some sort of buying history, but haven’t bought in the last two years.

That means every night is opening night for some portion of every audience. During the course of a season, HALF of an organization’s audience members had a first-time patron experience.

Of those new patrons, half were new to the arts altogether, meaning that they had never attended an arts event anywhere in the community and were not in any other database in the community. The other half were new to that particular organization, but had purchased a ticket from one or more different organizations in the community (denoted by “known to arts community” on the chart).

So what can you do with that information? In broad strokes, there are three things to take away:

1. The first rule of arts marketing is “know your audience”. Put the knowledge you have about who is attending your performances or exhibitions to use to more effectively target and tailor your communications with them. Your message to a newcomer in your audience will be different than one to a more longstanding loyal patron, or to someone who attended a few years ago, but hasn’t been back for a while.

2. Secondly, you can make better decisions about how to allocate marketing expenses. Put money into audience segments that will yield the highest return on investment. For example, understanding the prior experiences your new audiences have with the arts can help you customize your materials. A new patron may need more support, encouragement, and stronger offers to encourage repeat attendance. On the other hand, an experienced arts patron who is trying your organization for the first time is “low-hanging fruit”. They will be more apt to return with some follow-up, but less hand-holding.

3. Finally, this research also illustrates the value of cooperative arts marketing. Cooperative list exchange programs allow colleague marketers to identify new patrons who have experienced the arts elsewhere in the community. If you’ve ever wondered why you should trade with other arts organizations in your area or if you live in a city with a list exchange/co-op, consider those patron origination statistics. They suggest could be finding a big, productive pool of new patrons who are active culturally but just haven’t tried your organization yet. Once found, these new and experience patrons are prime prospects for repeat attendance, allowing you to grow your audience and bolster patron loyalty.

Will Lester will be presenting more information on this topic at the NAMP conference during Alan Brown's Lightning Rounds of Research session on Monday, November 14 from 5:15-6:30.

Per-Capita Ticket Revenue: The Canary in the Coal Mine

2011-10-03T12:30:00.000-06:00

This week, TRG's own Will Lester and Amelia Northrup are contributing to the Arts Marketing Blog Salon on Americans for the Arts' ARTSblog. This article by Amelia was originally posted as part of the salon, which previews the National Arts Marketing Project (NAMP) Conference in November.

Usually when organizations consider their ticket sales, they look mainly at total revenue. After all, revenue is what keeps an organization running, and total revenue is the 50,000-foot view of how well an organization is doing. However, when considering how to optimize ticket sales, calculating and analyzing per-capita revenue becomes a critical measurement.

Yes, “per-capita revenue” sounds boring, complex and technical, but stick with me—the reality is that it allows you to zoom in and see how tickets are selling on a season-by-season or show-by-show basis and that’s actually pretty useful.

Let’s break it down:

What is per-capita revenue?

In laymen’s terms, per-capita revenue is the average price paid for a ticket. You can calculate per-capita revenue for an individual performance, a series of performances or an entire season. You can also break per-capita revenue out by group tickets, single tickets or subscription/membership purchases.

How is it calculated?

The formula for calculating per capita revenues follows:

Per Capita Revenues = Total Sales Revenues

Total Unit Sales

And (most importantly) why should you care?

To get the most out of your pricing strategy, you should anticipate demand for a given show or series. In other words, you want to get maximum revenue for every show, whether it’s a “hot” show that can command a premium price or a not-so-popular show that needs a little price stimulus to fill the house.

That’s all well and good, but how do you tell which shows are hot and which are not? Everything you need to know is in your sales histories—those detailed reports that track the number of tickets sold and the revenue associated with each paid admission. And how do you know if your pricing method works? Per-capita is the proverbial “canary in the coal mine” when considering whether your pricing strategy is working for you.

Consider the case of “Typical Theatre Company” below. (This could be Typical Museum or Typical Festival Attraction—the principles are the same.) Typical Theatre, a client of TRG Arts, diligently tracked the number of tickets sold and associated revenues for one full season. TRG developed this graph showing the relationship between per-capita revenues and the number of tickets sold per show.

What this chart tells us is that the more tickets were sold for a show, the lower the average price paid (or per-capita revenue) was.

But wait. Per-capita revenue should rise as demand rises, right? Reason tells us that an arts organization should be making more money per person as a performance gets closer to selling out. Here, however, per-capita revenues are decreasing as we sell more seats, which means we’re missing out on potential revenue.

So, why would this be happening? Rarely is there just one reason. Rather, per-capita revenue might drop as total sales volume rises because of some combination of factors, including:

Inventory management: Depending on where the premium-priced and cheap seats are (or, in the case of an exhibit, when viewing times are set), per capita revenue will vary based on the order and manner in which your box office sells tickets. When the theater starts to fill up, people start buying further and further back, which is usually where the cheaper seats are in the house. By making smart decisions about where to place price sections and, as importantly, controlling when seats are released to go on sale, you can curb dropping per-capita revenue and reverse it.

Discounting: How much and when an arts org discounts tickets affects per-capita revenues as well. If your org is not tailoring its discounting to how “hot” the show is, you may gain sales volume (good), but on cheap seats (not so good).

Many organizations fall prey to “week-of-show” panic, offering deep discounts as the performance draws nearer, so per-capita revenue take a nose-dive during the time when ticket sales traditionally surge. Organizations that habitually offer deep discounts near to the show’s opening train patrons to buy later and pay less.

Comping: Many organizations will “paper” their house, or offer complimentary tickets to try to make it look fuller. (This should not be necessary if proper scale and inventory management strategies are in place.) Nothing drives down per capita revenues like frequent and extensive comping.

The bottom line on per-capita revenue:

Per-capita revenue is a valuable diagnostic tool. The facts you need are readily available. It’s worth the time it takes to pull unit sales and associated revenue into a spreadsheet or chart to assess how your pricing strategy is working for you.
Use your sales histories to understand and anticipate which programs are going to be blockbusters—or not. You may hope sales will happen in a certain way but studying the data is the only way to be certain.
Start thinking about how your performance space is scaled and how you are filling seats or space in exhibits for each show date. Remember that good inventory management can improve the perception of success, as well as lead to greater revenues over time.

Have questions on how to chart your per-capita revenue or confused by what you’re seeing here or in your own per-capita chart? Leave a comment.

Webinar: Is your pricing strategy working?

2011-09-12T05:53:00.030-06:00

TRG Arts CEO Rick Lester

Get a pricing briefing from TRG Arts CEO Rick Lester Thursday, September 15th at 11 a.m. Pacific Daylight Time during a free webinar previewing the October ArtsReach conference. Rick joins ArtsReach CEO John Zorn and Patron Technology’s Michelle Paul for a free advice-packed online panel presentation. Rick’s short tutorial will use a demand diagnostic analysis to show whether admission prices are too low, too high or right on the money.

Sign up for the webinar (free) here.

Rick will present a 3-hour intensive for marketing, development and ticket colleagues on pricing and dynamic demand principles, Pricing Arts: A Team Clinic, at the ArtsReach conference in San Francisco, which runs from October 28-30. More info on the conference here.

Teaching Patrons to Buy Late

2011-09-01T10:31:00.002-06:00

Ken Davenport’s insightful August 30th post spotlights the reason why advance ticket buying seems like a thing of the past. Too many presenters, producers and arts organizations are providing incentives to buy late in the sales cycle.

As readers of this blog know, our patron behavior studies challenge the accepted conventional wisdom in the field that patrons are buying later and later. Conventional wisdom is no substitute for fact. In a study of late-buying trends of 1.5 million arts patrons in Los Angeles, we found that buying later it is not an inevitable fact of consumer behavior. We summarized these findings earlier in the year on this blog.

In our consulting practice we do see late-buying trends, but more often than not, we’ve found that late-buying is a direct result of late-selling—not making the offer to the market early enough. This is typically a strategy based on the assumption that all patrons want to buy late. An empty house a week out then spurs a slew of panicked late-minute discounting, or worse yet: comping. When this happens often enough, as Ken Davenport also pointed out, patrons are trained to wait for this “management panic” fire sale. The bottom line is that giving up on advance ticketing only perpetuates the cycle of late buying—and leads to less per-ticket revenue (as well as total revenue!) on an ongoing basis.

TRG client Arts Club Theatre Company (ACTC), like many, operated under the assumption that buyers were shifting later in the sales cycle. The staff began to feel like they were dependent on good reviews or even good weather for improved sales results. Once they began accelerating their marketing and sales activities earlier, they became less dependent upon last-minute discounting or circumstances beyond their control. Selling early worked especially well for blockbusters.

As seen in the above sales tracker chart from ACTC’s production of White Christmas, advance ticket sales and selling earlier resulted in a sell out by the first performance. The red line represents the previous pattern of selling late, where 25-40% of revenue was generated during the run. The blue line shows the pattern once ACTC started marketing early. This tactic, combined with other solutions like pricing changes, reducing comp tickets, and restructuring subscription options, led to ACTC increasing overall revenue by $3 million over two years. You can read more about their success story here or hear about it on our latest webinar here.

The data is unambiguous. If the patron wants “it” badly enough, they will always buy well in advance of the performance date. Just check out the available inventory of tickets for Wicked, The Lion King or The Book of Mormon. You’ll also find advance sales when the box office opens early for blockbuster programs staged by orchestras, opera and dance companies, and non-profit theatres, like ACTC. Given a compelling reason to buy early, patrons will respond.

Which factors do you think affect patrons buying earlier or later? Leave a comment and let us know.

It Pays to Offer Subscriber Discounts

2011-08-16T06:00:00.001-06:00

TRG Arts recently hosted a webinar detailing the $3 million success story of Vancouver’s Arts Club Theatre Company. The Q & A discussion was quite robust, and from it, I caught a glimpse of the wide range of responses and questions arts managers have on pricing and patron loyalty.

One of the most interesting questions was raised on the periphery by two different attendees: Why should subscribers get discounts and more importantly, why should we give discounts on the best seats in the house? Since we didn’t have time in the webinar to address this specific question, I sat down to get Rick’s perspective. This post features the highlights from our conversation.

Subscriptions prices should drive demand and reward loyalty.

If you already have sold-out houses night after night (more than 95% of seats sold), then you really don’t have to discount anything—subscriptions or single tickets. With that level of demand, you don’t need to. Several TRG clients sell at close to capacity. They don’t need to motivate subscribers with discounts—subscribers know they have to subscribe in order to keep their seat.

Typically, organizations cannot sell out every performance or the venue is just too big, especially for those organizations which perform in municipal halls. For these organizations, we counsel offering their most loyal patrons the best seats for the best price—usually, a discounted price that promotes frequent attendance: the more you buy, the more you save.

Subscriber discounts generate increased demand and revenue.

In most organizations, about 85% of new subscribers have a patron history as a single ticket buyer. Discounts encourage single ticket buyers to convert to a subscription package. Subscribers attend more often and spend more per season, generating annual revenue and sustaining income during their lifetime of patronage. They are also much more likely to become donors.

And as Danny Newman preached 40 years ago, more subscribers means greater sales for less popular shows, leading to more demand for performances that have difficulty finding an audience. In addition, selling the “best seats” (read: the most popular seats) to subscribers increases the perception of demand for one simple reason—those seats tend to be some of the most visible that make your house look fuller when sold.

More “fannies in seats” (Rick’s words, not mine) on a more regular basis means more per-capita revenue, or the average amount paid for every seat, whether or not it’s one of the coveted “best seats”. When you have a subscriber in a given seat, that seat gets sold more frequently and there is less of a risk that it will go empty. Every seat a subscriber fills represents a dependable source of revenue. The greater the subscriber occupancy, the greater opportunity for higher total average price paid for that seat, per capita and overall revenue.

Discounts motivate subscribers to stay and move up the loyalty ladder.

TRG client studies show that continuing to offer discounts year after year reward the past behavior of subscribing and offer a reward for continuing to subscribe. For subscribers who have been with your organization for 5 years or more, TRG observes a shift in patron behavior. Loyalty becomes more important and the discount becomes less of a motivator. Consider “early bird” renewal programs. Those most likely to say “yes” are your long-time subscribers. When organizations that TRG has worked with have dropped their early bird discounts, those faithful subscribers continued to renew at the same rates. Long-time subscribers are loyalists. TRG’s lifetime value analysis finds that multi-year subscribers are the foundation of the organization’s donors, members, supporters of special events, and corps of volunteers. They keep coming and investing.

The lesson is clear: Subscriber discounts can help acquire first-time subscribers and retain them for the first few years. After that, loyalty takes over, and the mutual rewards keep growing.

More on pricing:

If you missed the webinar, the full recording of “Dynamic Pricing is NOT the Story” is available here.

TRG will also be hosting an intensive pricing session at the ArtsReach conference in San Francisco October 28-30, 2011. More information is here.

New Voices on Analysis from TRG Arts

2011-08-01T04:11:00.001-06:00

Since my first post in April 2010, I have attempted to address many of the major issues confronting arts managers today. The goal has been to offer insight drawn from our continuing study of patron data, the stories our clients tell us, and the wisdom that comes from the varied experiences that result from working with so many client organizations across North America each year (at last count, about 725!). Ours is a singularly unique vantage point from which to observe evolving patron behaviors. Our editorial standard has been to focus on fact drawn from data – not opinion. In our fragmented world, one more opinion-based blog seemed redundant.

I must confess that the success of the blog has been a surprise. Frankly, I resisted the notion of starting it. Who, I wondered, would have an interest in the rather geeky and esoteric issues that hit TRG’s radar screen? As it turns out – quite a few of you. My travels this year have allowed me to meet many of you. I’ve been gratified by the warm reception. Moreover, the most consistent suggestion from readers has been to “post more often!” Clearly, there’s more to say than my time and the demands of regular posts permit.

So, here forward, we’re adding the perspectives of two of my TRG colleagues. I am pleased to announce that Joanne Steller and Amelia Northrup will be joining me as regular contributors to the TRG Arts blog.

Joanne, one of TRG’s veteran consultants as well as its Director of Strategic Communications, has been a collaborator and thought partner on my posts since the beginning. Truth be told, it was her idea. Now you’ll hear from her directly in posts that report on industry trends and best practices with a focus on how data informs strategies that produce results.

Amelia, TRG’s Strategic Communications Specialist, comes to us fresh from Carnegie Mellon’s Center for Arts Management and Technology, where she contributed to the Technology in the Arts blog on subjects ranging from technology to social media and streaming video. Amelia promises to push and pull our dialogue in ways that better capture the ever evolving digitalization of our methods of communicating, selling tickets and analyzing what’s happening in the marketplace.

Regardless of which of us is posting, count on TRG to provide analysis that is based on data, facts and informed observations. Be careful what you wish for. We also plan to post much more often!

We appreciate your opinions and look forward to your continued comments.

Upcoming Webinar on Dynamic Pricing and Patron Loyalty

2011-07-25T13:56:00.000-06:00

Regular readers of this blog know that we've talked about dynamic pricing quite a bit in past weeks, including the case study of Vancouver's Arts Club Theatre Company (ACTC), who found success with dynamic pricing as part of an integrated patron loyalty strategy. Our latest webinar, led by TRG consultants and ACTC staff, goes in-depth on this case study.

Title: Dynamic Pricing is NOT the Story
Date: Wednesday, August 3, 2011
Time: 11 a.m. to 12 Noon, Mountain Daylight Time
(See below for your time zone)

Dynamic pricing, the tactic of raising prices after tickets go on sale, has often been in industry headlines these days. However, when it comes to growing revenue and increasing patron loyalty, it’s not the whole story. While it’s true that Vancouver's Arts Club Theatre Company (ACTC) generated six-figure revenue from dynamic pricing, the real news is how ACTC increased the number of its most loyal subscribers. Read more about ACTC's success on TRG's blog, and register for the webinar to hear TRG consultants and ACTC staff retell ACTC’s $3 million client success story, including how:

Loyalty strategies -- not pricing tactics -- led to sustaining revenue.
Unified, company-wide change in focus brought about increased revenue and subscribers.
Dynamic pricing made subscribing more valuable.

To Register:
1. Go to Webex: http://bit.ly/nkw5r5

2. Click on register (free).

3. Fill in the short form and SUBMIT.

Mark your calendar; mind your time zone:
Wednesday, August 3, 2011
10 a.m. Pacific
11 a.m. Mountain
Noon Central
1 p.m. Eastern

Questions? Comments? Contact us, or comment below.

Dynamic Pricing AND Subscription, not Either/or

2011-07-14T11:56:00.001-06:00

I recently had the opportunity to talk with Mike Boehm of the Los Angeles Times about dynamic pricing. The resulting article highlights the success that L.A. organizations have had using the tactic to increase revenue, while maintaining the accessibility that is a part of most non-profits’ mission. You can read the article here. That post, Thomas Cott’s briefing the same day, and the subsequent flurry of online discourse tells me that we, as an industry, are looking at dynamic pricing as something greater than it is.

The tactic – repeat, tactic – of dynamic pricing is but one means to an end – greater ticket revenue. It is not an end itself – sustainable patronage and revenue. Since 2002, when my colleagues and I first worked with clients to implement the practice of raising ticket prices after sales were underway, dynamic pricing has been part of an integrated revenue management strategy. That strategy began with consideration of subscribers and the demand for seats subscribers create.

Why? Subscribers have been and – hard as it is to accept these days – still are the foundation of sustainable patronage for performing arts organizations.

Subscribing is an act of loyalty. Ask subscribers why they subscribe. They will tell you – as they have been telling researchers for decades – they love the art form and that they choose to pursue that passion by subscribing to an organization that offers what they love. It’s a renewable choice and one that sustains ongoing patronage.

Subscribers invest serious money. They value their passion and are willing to pay for the seats and series that satisfy onstage their attachment to the art form. We have looked at the data on subscription for hundreds of clients and there’s no dispute: subscription revenue is the cornerstone of earned income. Whether subscription represents 10-, 25- or 50% or more of ticket revenue, it’s a fundamental, renewable revenue source that comes in the form of series income as well as associated donations and additional purchases from those very same loyal subscribers.

Can pricing tactics replace subscription? Of course not. Dynamic pricing, for instance, can build short term incremental revenue. But that tactic on its own cannot build loyalty. It cannot feed the passion that drives patrons to invest in multiple performances each season, season after season.

Is subscription dead? No, but plenty of organizations are killing it off by removing it as an option. When organizations make the sale of full renewable subscriptions a central priority, growth occurs as we saw in the success story of Vancouver’s Arts Club Theatre Company. However, subscription is more apt to die whenever organizations promote it to the wrong prospects, too little, too late, or they stop promoting it all together. In so doing, these organizations eliminate an irreplaceable means of passion-based demand and investment by arts consumers with lifelong loyalty potential.

Not everyone is going to be a subscriber, and that’s ok. The ones who choose to subscribe will be your loyalists, your bread and butter. And, with the right retention and cultivation strategies, they also can become your advocates, your legacy investors.

Selling subscriptions has never been easy – not since the days almost 40 years ago when Danny Newman first suggested Subscribe Now as the definitive patron call to action. But, the payoffs are as robust today as ever. Just recently, we posted on this blog achievements of Vancouver’s Arts Club Theatre Company and Denver’s Colorado Symphony. Subscription campaigns were at the heart of million dollar increases for each of these organizations. And, that’s just two of many who are doing subscription right, and growing their institutions in tough times.

To hear more from Arts Club Theatre Company about how subscription AND dynamic pricing helped fuel their $3 million success story, join our free webinar on August 3rd. Request to register by leaving a comment below or emailing info@trgarts.com.

Dynamic Pricing is NOT the Story

2011-06-07T01:01:00.001-06:00

I have a passion for sharing stories of success. This seems especially important when so many of our ‘water cooler’ conversations are dominated by accounts of doom, gloom and bankruptcy. Success stories offer important reminders that arts and cultural organizations are not limited to merely surviving. Even during tough times – perhaps especially during tough times – we can thrive!

At the recent Canadian Professional Association of Theatres (PACT) conference, TRG had the pleasure of sharing a truly remarkable client success story, that of Vancouver’s Arts Club Theatre Company (ACTC ). About three years ago, ACTC became curious about our work in dynamic pricing, the tactic of raising prices based on customer demand after tickets go on sale. Could ACTC exceed their $4.5 million annual revenue history with this practice?

Boy, could they ever! After two years of our working together, ACTC grew its subscription and single ticket revenues by nearly $3 million, achieving a total of $7.4 million, an increase of nearly 70%.

Fact: Dynamic pricing delivered a six-figure chunk of the income contributing to this success. But, as our PACT session put it, Dynamic Pricing is NOT the Story. The real news is how in just two seasons ACTC achieved:

33% increase in ACTC’s full, renewable 5- and 6-play main series,

$5 more revenue for every ticket sold through a theater re-scale,

32% reduction in the number of comp tickets distributed,

Earlier, faster sales of hot shows -- even selling out a holiday production before it opened.

As Howard Jang, ACTC’s Executive Director and TRG’s Senior Consultant Laura Willumsen pointed out in our PACT session, ACTC’s success came from a focus on building loyal patrons. In the process, ACTC debunked some myths and misconceptions that – sadly – have become part of the industry’s conventional wisdom.

ACTC ‘s story tells us:

Subscriptions are alive and well. A big part of the overall growth effort at ACTC was an unrelenting focus on generating high-loyalty subscriptions –ACTC’s full, renewable main stage series. The number of full series and associated revenues grew --even with a re-scaled hall and price increases.

Flexibility is no panacea. Everyone needs flexibility or they won't buy, right? For years, ACTC followed this conventional wisdom and offered flex series from day one of their subscription selling campaign. The result? Flex series renewals were so low and resulting subscriber churn was so high that growth was stymied. ACTC’s now offers limited, more strategically placed flex offers. Flex sales represent a much smaller portion of the subscriber mix. And, that's helped increase overall renewal rates to the healthy range of about 77%.

People don’t automatically buy late. Readers of this blog have seen data debunking the myth of late buying. ACTC’s success illuminates the point. The company used early on-sale and pacing strategies for its holiday blockbuster White Christmas. In previous seasons, hot shows generated 25-40% of total revenue during the run. Last season’s White Christmas sold out before the curtain went up on the first performance.

Done right and well, dynamic pricing can generate loyalty and incremental revenue. ACTC’s smart, creative team converted patrons who bought the highest, dynamically priced single tickets into subscribers! This is an excellent example of putting the right offer in front of the right targets at the right time.

Ultimately, dynamic pricing became one tactic that made subscribing more valuable. ACTC stopped believing and acting on negative assumptions that had become self-fulfilling prophecies. When they started acting differently, so did their patrons.

ACTC grew because everyone was willing to change. Leadership ensured that everyone was on board --from programmers to box office staff. Everyone at ACTC had a relentless focus on creating and manipulating demand. Bravo to Howard and his entire team, especially Marketing Director Peter Cathie White, Marketing Manager Bryan Woo, and Box Office Manager Reena Taank.

ACTC has agreed to help us tell their story again via a webinar that we’ll schedule in the coming weeks. Leave a comment or let us know if you’d like to attend.

Young Friends, Lifelong Patrons?

2011-04-26T01:01:00.001-06:00

To hear some of my fellow Boomers talk, getting young adults engaged in arts and culture is an urgent problem that requires a big solution.

We beg to differ.

Consumer research and our own studies on generational differences in patron behavior point to huge opportunities, not problems. What we are finding are some eye-opening considerations that reiterate an age-old best practice. Assume nothing.

Without the facts about who is in your audience or among your donors, it’s easy to guess wrong – especially when it comes to developing young patrons. As an age cohort, the under-30 population we’re calling Gen Y is replacing the Boomers as the largest generation in American consumer history. The spending habits of this young adult group are causing many industries to sit up and take notice.

So, consider a key finding of our pilot generational study. We examined donor transactions of some 51,300 individual donors who gave $75.6 million to the organizations in our study group during the 2009-10 season. We reported on this study at the March Arts Reach conference and our webinar last week called Developing the Generations.

Donors under age 30, while small in number, gave more generously per household than patrons who were a generation older. Gen Y represented only 2% of donor households and 1% of contributed revenue in our pilot study group. But, the average size of their gift was almost $900. Among the next older generation of donors – Gen X patrons who are 30 to mid-forties -- the average household gift was $150 less -- $747.

Older donors are undeniably important. In our pilot study, they gave 91% of the revenue and pushed the median household gift to just above $1,200. For the next decade or so, Baby Boomers and their elders will sustain arts and culture in America. Then what? That is the question.

It is the presence now and potential lifetime value of younger donors that we see as significant and potentially transformational – IF the distinct set of generational attributes of younger patrons is recognized. Respect under-30 patrons’ huge numbers, their unsurpassed tech savvy and ability to take in vast amounts of information. Accept their expectation of telling us what they think, what they want and when, where, and how they want it!

Realize too that the other group of young patrons, Gen X, deserves attention. In the U.S. population, their numbers are smaller than Gen Y and the Boomers. In our study, Gen X represented 15% of all donors. They give, and their approach to giving is very different. Donors of Gen X are more individualistic, highly skeptical and hard-to-sell but can be deeply loyal once sold. Young Friends groups comprised of Gen Xers will require a different set of criteria than will programs for under-30 prospects.

The bottom line is this: Getting the facts and getting to know your patron population is the only way to assure the success of “Young Friends” or other programs designed to attract specific patron age groups.

Database and transactional analysis can describe the size and scope of opportunity each generation represents for your organization. Analysis also can identify Young Friends prospects. Find out who they are and how you can cultivate and maintain a relationship with them on their terms.

The upside of making investments in these programs is that today’s Young Friends have three or more decades of patronage ahead of them. That is a staggering amount of potentially sustaining loyalty, patronage, and revenue.

Want to join an upcoming webinar on this subject? Leave a comment or contact us.

Every Night is Opening Night

2011-04-12T01:01:00.001-06:00

Opening nights are fun. They also are hard work. Months of planning result in huge organizational resources being focused on the celebrations that mark the beginning of a new season or production. These are important rituals of organizational renewal.

The latest research from TRG puts a patron-oriented spin on this subject. It’s telling us that opening night is happening all year long for big numbers of patrons in the audience. How so? Our just-completed internal pilot research on patron origination found:

Half of the study group’s ticket buyers had a first-time ticket-buying experience
– their own personal opening night –
during the season.

And, half of those new ticket buyers had no previous attendance history anywhere in their arts community.

Let me elaborate with a little background.

We recently did a pilot study on patron origination to differentiate between patrons that an organization already knows through current or past transaction history from patrons that are completely new. The pilot study was a deep dive into the consumer behavior of performing arts single and subscription ticket buyers in the Houston and Seattle arts communities during the 2009-10 Season.

We found about a 50-50 split between new and “known” audiences. This ratio was remarkably consistent across all arts forms and organizational size.

The half that’s new included two distinct types of “new-to-file” patrons – meaning households that made their first single or subscription ticket purchase with one of the companies in the study group during in 2009-10. Of new patrons:
• 25% were Premiere Patrons, those new-to-file consumers with no previous attendance history in the arts community. Premiere patrons are not only making their first visit to a theatre or concert hall – but their first recorded visit to ANY arts organization!
• 24% were Shared Newbies, patron households that were new to an organization but had a prior ticket purchase history with one or more different organizations within the community.

This is a perspective that should change the priority if not the whole approach for building patron relationships. Those who have followed this space know of our work in patron attrition — business intelligence on the “here one year, gone the next” nature of new ticket buyers. We’ve long been proponents of efforts to mitigate those exits.

We know new ticket buyers require specific cultivation. Now we have more convincing evidence that cultivation efforts should be happening after every curtain call and with two very distinct types of new patrons.

The other half of the story is “known” patrons -- those that have a history of buying tickets (or making other transactions) recorded in the organization’s resident database. The study found two types of known patrons:
• 37% were Retained Patrons, single ticket buyers and subscribers that had purchase history with the company in the prior season (2008-09).
• 14% were Reactivated Patrons, households whose ticket buying with the company had lapsed for two or more years prior to 2009-10.

As usual, these first findings make us even more curious. There's much more we want to find out about the mix and dynamics of new and known patrons. For now though, there are three key takeaways:

1. Smart organizations recognize that every night is opening night..and they do something about it. Performing arts organizations are overly dependent on advertising and promotion plans to deliver new audiences for every performance. This is not likely to change soon. That’s why we’ll keep beating the drum for retention efforts. Institutional strategy must be centered on getting first time visitors to come back again. Creating more multi-buyers – retention—is absolutely critical to long term sustainable growth.

2. Reactivation of lapsed buyers always makes sense...and belongs in every organization’s campaign. Although patrons lapse for many reasons, reactivation often is a matter of simply asking for the order. How recently a lapsed patron purchased (recency) is a key variable; the more recent, the higher the likelihood of reactivation and improved patron lifetime value. Aggressively and constantly promoting reactivation is an inexpensive marketing and development strategy that offers superior returns on investment.

3. Big numbers of new buyers are already known performing arts consumers in the community...and smart managers make list trades work. Targeting current, multi-buyers within a community data resource offers a “can-grow” segment of ticket buyers. TRG’s catch-phrase, “the more they buy, the more they keep buying,” applies. Communities like Houston and Seattle, with large and active permission-based shared databases, have access to highly qualified prospects that are easy and highly cost-effective to find.

Surprised or curious about these findings? Tell us how. Leave a comment.

What It Takes to Grow: An Update

2011-03-29T01:01:00.001-06:00

Last fall, TRG began monitoring a study group of organizations to examine factors that are yielding patronage and audience growth this season in tough economic times. This is the second 2010-11 TRG report on What It Takes to Grow.

TRG data analysis continues to show ticket sales improvements through mid-term of the 2010-11 season. Through February, two-thirds of TRG’s 2010-11 study group are now experiencing increased sales compared to year-to-date results last season. This represents a small increase (from 60% to 67%) of organizations making sales gains this season. All of the organizations that reported sales gains in the fall continued to see increases at mid-season.

Remaining companies in the study group were evenly split between those with sales declines and those whose results were mixed or flat year-to-date through February.

The updated review found several success factors:

Programming mattered --This analysis period included the 2010 holiday and December attractions; these programs helped boost sales among most organizations that had sales increases. Having audience favorites onstage such as The Nutcracker, Handel’s The Messiah, A Christmas Carol, and special holiday productions were assets at this time and among this group of companies. Holiday and December ticket sales also helped reverse softer sales earlier this season for a third of the organizations that posted gains in this period.

Campaign execution was key – TRG analysts paid particular attention to each organization’s operational implementation during this period. In eight out of ten successes during this period, scrupulously implemented marketing efforts played a critical role. Increases came from focused, timely campaigns that launched sales early, strategically leveraged data resources, and kept sales momentum going with continuous multi-channel promotion. Those who skipped a step or two fared less well.

No backing down on investment – Every organization that experienced sales increases did so with marketing investments equal to or greater than last year – notwithstanding what appears to be prevailing pressures for marketers nationwide to do more with less. You cannot save your way to success!

Analysts also observed: It’s still tough out there. None of the successes reported came easily. There were no quick sell-outs or sure hits reported. Analysts did see close monitoring of sales progress and facile course correction when ticket sales did not meet campaign-to-date benchmarks.

Our next report on this topic will include a final season wrap-up once the spring sales results are in hand.

Questions? Post them in comments. We’ll answer.

Are Your Subscription Renewal Rates Too High?

2011-03-15T01:01:00.001-06:00

This is a key question that I suspect managers of performing arts organizations across North America are not asking right now as they watch the results of their subscription renewal campaigns.

They should be.

According to TRG’s analysis, the closer renewal rates get to 100%, the less healthy the organization is likely to be. We’ve seen the proof in both direct marketing and patron behavior metrics.

First, the U.S. Postal Service (USPS) estimates that changes of address occur in about 15% of households every year. TRG’s national data set suggests that arts patrons change address even more frequently – about 18% each year; or 1½% every month. Databases of arts patrons trend a bit older than the general population and carry higher levels of health-related relocation as well as mortality rates. Any organization that is renewing more than about 85% of their current subscriber base is bumping up against the theoretical maximum for an addressable pool of patrons.

The second problem with really high renewal rates stems from the differences in subscriber types. There are only two kinds that matter. The bigger pool consists of long timers, some of whom have been season ticket holders for decades. The smaller group is newbies, those who subscribed for the first time last year. From a behavioral point of view, these two groups could not be more different.

Long-time subscribers are very hard to lose. Poor pricing or artistic choices and inconsiderate communication can make them angry and vocal beyond measure. It’s unusual, however, for a disgruntled long-time subscriber to express unhappiness by failing to renew a treasured subscription series and seat location. It takes a lengthy string of consistent missteps to chase away long-time subscribers. Why do faithful subscribers disappear? They die. They move away or become chronically ill. They lose their jobs. It typically requires a significant change in life circumstance before they willingly give up their subscription seat.

What about first-year subscribers? Although relocation and life changes impact this group too, their renewal is more dependent on their first season experience. Any organization’s failure to assimilate new subscribers into the “family” results in huge attrition numbers every year - two of every three first-time subscribers.

The varying behavior and attrition dynamics of these two very different subscriber types have a big impact on traditional overall renwal rates. That's why every time I hear a manager crow about their renewal rates hitting 85%, I don’t join in their rejoicing. We’ve seen this situation consistently enough to know that any organization with renewal rates that high is failing to acquire new subscribers in substantial enough numbers to sustain audience growth.

An 85% (or higher) renewal rate often masks seriously low numbers of new subscribers. There just aren’t enough new subscribers to replace the ones lost every year through natural attrition. And, without sufficient numbers of new subscribers, loyal audiences do not grow.

The traditional renewal rate calculation is a poor yardstick for measuring organizational health. The key variable that helps diagnose institutional health and predict subscription renewal rates is the prior year success in finding new subscribers. Our diagnostics focus on each season's ratio of renewing and brand new subscribers. TRG study has shown that subscriber numbers grow year-to-year when the proportion of new subscribers in the mix is in the neighborhood of 30%. Rapidly growing organizations may see a mix of new subscribers nearer 40%.

New subscribers fuel growth, even though lower overall renewal rates result. There are situational variations, of course, but typically we observe that healthy companies have overall subscription renewal rates in the 70-75% range when they are growing their subscriber base.

Savvy managers – and board members -- focus on each season’s proportion of new and renewing subscribers. Using the right tool (and the right yardstick for measuring success) keeps everyone in the organization focused on the most important goals – growing the total subscriber base each year – year after year.

Add your comment to let us know what is your subscription renewal campaign telling you.
Thanks to those who commented already. Very helpful!

Arts Patrons are Frequent Voters!

2011-03-01T09:09:00.001-07:00

Both houses of Congress are back in session and their work on budget resolutions will determine whether and how much federal funding will go to important American arts institutions, including the National Endowment for the Arts, PBS, and National Public Radio. At the state level, arts agencies are up against a rapidly devolving scenario of proposed measures that would radically restructure or eliminate them. All of us who care deeply about sustaining arts and culture in America are looking for the best ways and means of advocating for government support. The need for ever-better practices will not end with the current threat of cuts or this round of budget debate. Making the case for public funding for the arts has become an ongoing imperative.

In late January, I attended the Biennial Conference of The Broadway League, the trade organization that represents the interests of those engaged in the business of theatre. The primary topic for this Washington, DC conference was advocacy. The immediate League goal was to meet with the very members of the United States Senate and House of Representatives who now are determining the fate of funding for America’s arts and culture.

Over the years I’ve sat in on countess national service organization meetings talking about need of improved advocacy programs. I must say that this Broadway League meeting was the best I’ve ever seen – period. The focus on specific outcomes, the member training before making the trips to Capitol Hill and the explanation of the specific issues were first rate. Perhaps our best session was a meeting with a Broadway-friendly panel of senators and U.S. representatives, who discussed with League members the finer points of successful advocacy and the practice of real politics today. Key points that hit home with me in January now feel even more urgent, given the current debate:

Power in the national legislature is incredibly diffused. Long gone are the days when a handful of elected officials could exercise influence over the legislation that makes it to the floor for consideration. Advocacy today must be broader and specific to individual lawmakers because it takes many more of them to make anything happen.

The need is critical for a clear message, delivered well, and with validation from sources outside the arts and culture industry. It was surprising what this excellent panel assumed – incorrectly – about seemingly clear facts such as the differences of mission between commercial and nonprofit arts. However, there was no mistaking that any message – particularly a politically difficult one like maintaining public funding for the arts – is best voiced by passionately interested third-parties – VOTERS, that is, who can both articulate and endorse a value message.

Elected officials don’t buy the argument that the arts are good for us. Privately, individual legislators may believe in the value of arts and culture. But, the politics of the moment make government support of the arts, as one senator unambiguously stated, “not popular.” Arts and culture organizations are critical local businesses that collectively employ and engage large numbers of VOTERS.

Against this backdrop, advocacy efforts in Pennsylvania by the Greater Philadelphia Cultural Alliance (GCPA) and its statewide colleagues are a beacon of hope.

Eighteen months ago, our firm played a small role in helping to defeat a proposed sales tax in Pennsylvania on arts tickets -- not tickets to sporting events, mind you – just arts tickets! I posted a blog on that success last May (21st Century Tools for Arts Advocacy). Having rallied to stop the tax initiative, the collective leadership of the Pennsylvania’s arts community decided that the better course going forward was to become proactive in telling their story. This plan included an effort to identify and inform arts patrons across the state. The goal: start immediately to win the next debate.

Again, our firm provided data analysis – this time gleaning information from matching voter records from primary and general, municipal, state, and Presidential elections in 2006-2008 with arts and culture patrons of member organizations in the GPCA List Co-op. Our objectives: identify the proportion of voting population that are arts buyers, and leverage that information in two ways: Educate elected officials about the proportion of their districts’ voters who are arts patrons, and notify politically active or “tuned in” arts patrons about upcoming arts policy decisions.

The Pennsylvania Secretary of State’s office was the source for voter records. GPCA’s research and advocacy team developed the criteria for measuring levels of voter activity, ranging from those who voted only in the 2008 general (Presidential) election to those who voted in every primary and general contest during the study period. The key finding?

Highly engaged arts and culture patrons also are highly engaged voters.

We found that arts and culture patrons in Greater Philadelphia:

Make up a substantial proportion of the voter base –
One Third of voters in the 2008 Presidential Election were arts patrons
One Half of voters participating in ALL elections (Municipal, Primary, and General) between 2006 and 2008 were arts patrons

Vote and patronize the arts frequently: Two-thirds of Greater Philadelphia’s Arts Patrons/Voters attend programs at more than one arts organization. In most communities only 25% or less of all arts patrons are active with multiple organizations. In Philadelphia, a huge proportion of the voters are those multi-organization supporters.

The findings in Philadelphia and the Broadway League meeting with lawmakers suggest a new playing field for advocacy. Arts and culture patrons are a formidable “third party” force to be reckoned with in the ongoing public funding debate. Patrons support our organizations, and, as voters, they can determine the future of the elected officials who now are deliberating our industry’s. Whenever we can inform patrons – directly and individually – and direct them toward specific elected decision-makers, contending for public funding of arts and culture will be a whole new ballgame.

How Big Is Your Market?

2011-02-14T22:38:00.001-07:00

As I was reviewing data for this post, two significant contributions to the national dialogue on arts and culture sparked a lot of online discussion. The publication of the National Arts Index by Americans for the Arts and comments made by NEA chairman Rocco Landesman raised compelling questions about the nature of supply of and demand for arts organizations, arts venues, and forms of expression. The consumer trends we see in transaction data offer additional perspective to consider on the demand side of this ongoing conversation, which is provocative and timely. We hope it will continue.

When I was a new young marketing director, my boss at the Cincinnati Symphony Orchestra began my orientation with a number of helpful observations about the new job and the field I was about to enter. One key ‘fact’ really pulled me up short. The target market for a symphony orchestra, Managing Director Steve Monder stated, was very different than my prior experiences as a marketer in the theme park industry. Supporters of the typical symphony orchestra accounted for no more than 2% to 3% of the population in any community. To succeed as a new marketing director, I would have to quickly learn an entirely new skill set. I would have to efficiently find a very small target market.

To do so, best practice followed the catalogue industry for inspiration. The powerful tools of direct marketing were perfectly suited to mining our arts market. Early prospect targeting efforts typically focused on (high) income as a surrogate for high education. (Demographic profiling tools available to catalogue retailers were frequently too expensive for a nonprofit to buy.) Later, Response Rate Reports became the prevailing best practice for understanding “who” was saying yes to our offers. “Back-testing” confirmed that successful list segments might produce 1% to 3% return on each offer. Ultimately, with my colleagues at TRG, we used Patron Loyalty Index data and other lifetime value analyses to perfect understanding of our best prospects. PLIs showed that a relatively small number of patrons provided the overwhelming majority of resources needed to sustain the organization each year.

So, throughout most of my career, there was never a hard fact that contradicted my earliest education about the small size of America’s market for arts and cultural offerings. That is - until now.

A few weeks ago, I received an internal report that summarizes the status of TRG’s community data networks (co-ops). A key metric that we monitor closely is the number of patron households in each community that have transactional history. In simple terms, we are looking to quantify arts and culture consumers in a market by examining the count, location, and transaction activity of households in a database community. [See postscript below for more on co-op study methodology.]

When I examined the numbers for our three largest community co-ops (Los Angeles, Philadelphia and Houston), it hit me. Something in the numbers didn’t match my expectations. If the target market for arts and culture is just a small fraction of the population, then who are all these people in community databases? In these three markets, we’re looking at counts ranging from 1.2 to nearly 3 million arts and cultural consumer households

Key Finding: The relationship between the number of households in these community data co-ops and the population each serves is much larger than one would expect. In Houston and Los Angeles, the patron household count is equal to more than one in three (37% and 39% respectively) of the total community database service area. In Philadelphia, the ratio is a whopping 61%! And, our recent review of TRG’s newer, developing database communities indicate that they are all headed toward similar results.

Clearly, a significant percentage of the citizens in these markets are buying tickets, attending exhibits, making donations, and becoming members. And, they are doing so at rates that are at odds with the concept of a tiny, narrowly defined market.

The data provides further insight into the depth and breadth of arts and cultural consumerism.

Arts and cultural consumers in our most mature co-ops are recently active. Most households, 78%, have transaction history in the past three years; more than half, 54%, were active consumers in the past year.
While three out of four of the households in our most mature co-ops have transaction history with only one organization in their community, 24% – and that’s hundreds of thousands of consumers in each market – are patrons of two or more of their market’s arts and cultural organizations.
The number of out-of-market households – cultural tourists – is significant. Popular convention holds that very few U.S. markets are magnets for those who travel to experience art and culture; New York City or Santa Fe come to mind. But our analyses showed evidence of cultural tourism in all three of our most established co-ops. In Houston, for instance, 18% of the co-op population comes from outside the greater Houston area: 10% from other parts of Texas, 2% from Louisiana, and 6% from other states.

So, what’s an arts and cultural manager to do with this information? Some thoughts.

1. When prospecting for new patrons, look first to active arts and cultural consumers close to home. Instead of selecting prospects using demographically defined attributes with no previous purchase history (you know, highly educated, wealthy households who read the ‘right’ magazines or newspapers) look for cross-over patterns in the local community of patrons. Which colleague organizations tend to produce patrons that migrate in my direction? These prospects should receive a special offer – an invitation to give my organization a try. Finding active arts and cultural consumers in the community data that have not yet made a visit to your organization can be gold, when approached properly.

2. Use community database resources to change the playing field that defines the relevancy of the arts and culture locally. The large number of households that are investing time and money to engage in arts and culture offerings describe a vibrant, vital part of a community’s fabric. Do the math. By our count, the arts and culture organizations are serving a very high percentage of consumer (and voter) households in American communities. When advocating elected officials, I would make the case that a high percentage of their constituents are patrons. I would also have the hard facts to back up my point.
3. Explore the potential of out-of-market buyers. Our analyses suggest that cultural tourism may be a larger potential source of patronage than conventional wisdom assumes. More study is needed on who are cultural tourists, how often they come, and what attracts them. That’s on TRG’s radar for future examination.

How have you used your data resources to mine your market? Let me know by leaving a comment.

Postscript: This kind of study requires a baseline understanding about the nature of co-op data and how it can be measured. First, the co-ops we manage bring together performing, visual, historical, and cultural arts organizations in thirteen U.S. communities for the mutual benefit of sharing data on patronage (i.e. paid admissions, event attendance, membership, donations, volunteer participation). The mix of co-op organizations is diverse; those that track paid activity, including performing institutions, dominate the mix. Newer co-ops tend to be smaller than those with a longer lifespan. Well-established co-ops generally have more member organizations and their data sets generally are much more extensive – they include more households that have patron transaction and activity history for longer periods of time.

Secondly, in studying co-ops, we use specific definitions for population and market area. Co-ops are measured by the number of participating households, not individual consumers. Therefore, to calculate the ratio of arts consumer households per market area, our studies are based on co-op household count. To determine market penetration, we use U.S. Census estimates of households within in each of the jurisdictions each co-op serves. Therefore “market area” is defined by the unique geographic footprint of each database community.

The Myth of Last Minute Buyers, Part I

2011-01-31T10:58:00.002-07:00

Last year I added a new quip to my repertoire of answers for use during the inevitable Q&A sessions during conference season. At virtually every gathering, someone would ask about possible solutions to the increased numbers of single ticket buyers making purchase decisions later and later in the sales cycle. America’s recent economic downturn, it seems, was making this worrisome long term trend even more problematic.

I’ve heard this complaint for more than three decades. It was never supported by data or quantified over time. So, my quip seems equally unhinged from reality: If late-buying keeps increasing then any day now we’ll have patrons buying their tickets a month after the performance takes place.

An opportunity for TRG to explore the issue of late ticket-buying presented itself recently. The source data came from Southern California’s LA STAGE Arts Census. Specifically, we examined single ticket purchase patterns for more than 1.5 million households, about half of the total LA data warehouse. We were specifically looking for changes in the time between purchase date and date of performance. Our study period was 2006 through 2010.

As background, we note that the volume of single ticket orders changes from year to year in this market, as it does in every market. A number of factors drive purchase volume: the number of total performances will vary each year. So will the demand for tickets that accompanies the popularity of the productions offered on stage. Some seasons are just “hotter” than others.

In this analysis, the 2008-09 season marked a significant downturn in total ticket orders for the organizations included in our study – a one-season drop of about 20%. The 2008-09 season coincided with the worst (fears) of the Great Recession. This one year drop in total sales, accompanied by anecdotal reports of swings in buying patterns, offered a unique opportunity to use this particular data from a very large arts market to explore and quantify significant changes in buying behaviors.

Here’s what we observed:

Overall, near-performance advance ticket order volume was relatively consistent during the multiple-year study period. About 35% of total single ticket orders occurred during the week of the performance and about half of all orders (47%) were made during the two-week period prior to the performance.

However, these ratios ceased being normative during the 2008-09 Season - the year that witnessed the large decline in total single ticket orders. Week-of-performance sales rose from 35% to 46% of total orders and the two week ratio moved from 47% to 57%! These ratios were significant to be sure, and triggered our deeper dive into the raw transactional data. When we did, we saw that the actual number of orders for single tickets during the final weeks of sale in 2008-09 was virtually identical to the number of orders in comparable periods for prior seasons. That is, the number of households making a last minute purchase was the same as it historically had been – not more in number, just a higher proportion the total.

The bigger news in this analysis is that early ticket order volume was significantly lower in 2008-09. Advance single ticket orders fell behind historic sales pacing patterns beginning with the very first weeks of sales results. Thirteen weeks out, single ticket orders were already 60% behind the historic sales pace. As each subsequent week unfolded, this gap closed slightly – until the final couple of weeks. As the performance date approached, order volume increased as prospects finally made their decision to purchase.

The real story is that at the peak of the Great Recession, advance buyers in this large market appear to have decided to stay home – or at least, to delay their purchase. Their buying pattern in 2008-09 differed sharply from recent historic advance pacing. That created the perception of increased last minute buying because such a high proportion of those who did buy made their purchase nearer the performance date. In truth, however, the walk-up line was no longer and near-curtain traffic no greater than in other seasons.

So what happened next? During the 2009-10 Season, total single ticket orders recovered, far outpacing order volume experienced in 2008-09 – exceeding even the results of the two prior years. What fueled this growth? Advance sales returned to pre-recessionary patterns. And “week-of” sales? They grew proportionally with overall ticket order growth and the ratios remained consistent with seasons prior to 2008-09.

Questions and great curiosity remain, however. When there is a decline of 20% of the total audience in a single year, one has to ponder – who bought and when? Who skipped that season? Specifically, which patrons changed their behaviors? When sales rebounded in the following year, which patron group drove that success – did early buyers “come home?” Did arts organizations do what they have always done – find lots of brand-new buyers?

One of the great things about being a part of the TRG team is that we get paid to be curious. These kinds of questions make us both a bit crazy and really eager to dig in, seeking quantifiable answers. That’s just what we’re doing next. We’ll be back to you when we have more results to share.

Do you have a myth you would like busted? Leave a comment and we’ll add it to the list.

What It Takes To Grow

2011-01-10T07:37:00.001-07:00

Blogger’s Note: It’s been a long time, several thousand travel miles, two conferences, a first draft of a new book, and two new grandchildren since my last blog entry. During that time, I’ve seen case and study results that I’ll share via this and future posts. Here’s to a happy, more prosperous, more communicative New Year.

Recently, a very smart entrepreneur in the commercial entertainment industry made a surprising observation. He admitted that he carefully follows the business and marketing practices of not-for-profit arts and culture organizations. Nonprofits, he said, tend to “work smarter -- they have to.” Strategies born of necessity frequently breed cutting-edge ideas that can be applied elsewhere.

I would agree. In these tough times, the margin for error is so small and the stakes so high that survival for many nonprofit performing arts organizations depends upon the ability to do everything exactly right.

So when client organizations began posting higher ticket sales in late 2010, we took notice. We also took a closer look to understand what was happening. What were the forces that appeared to drive sales up – or down? Were there organizational or market factors at work? If so, what lessons might we learn?

To find out, TRG fielded an internal analysis on a study group of clients representing large and small organizations across the U.S. and Canada. We chose cases for which we had a good understanding of both the operational and market situation. Each case offered clean, consistent data. Every organization had staged several performances or productions since the opening of the 2010-11 season. At the time of the study, many were in the process of opening their big holiday performances and events so this analysis did not include the yet-to-come impact of December attractions.

About three of five organizations saw improved ticket sales over last year. About one in four were experiencing sales declines, with the remaining experiencing generally mixed or flat results.

Market conditions or severe weather appeared to have negatively impacted only two organizations in our study group. Far more important – especially for those organizations whose sales fell short of prior year results - were the artistic decisions about what went on the stage. Artistically challenging choices, in terms of audience appeal, clearly had a significant negative impact.

Of the organizations with mixed results, several experienced big extremes: for one production, the organization would achieve record-breaking sales volume and revenues only to be followed by a production (the same organization, mind you) with soft sales or just plain awful results.

That a majority of the study group witnessed increased admissions and revenues thus far this season is significant in TRG’s view. It was clear that these improved fortunes were no fluke or lucky break. Foresight, coordinated planning among programmers, marketers, and leadership, and exceptional implementation worked together to make these increases happen. In short, these folks worked smarter – as teams – under the worst economic circumstances of our lifetime.

What did they do right?

They put the right assets on stage. Anyone within earshot over the past three decades has heard me hammer away at this point: programming matters, especially early in the season. The organizations whose sales increased had planned and staged at least one production that drew large audiences at or immediately after the season opening. They front-loaded their season with a hot ticket – a performance or production that lots of people want (need!) to attend. Not only did subscribers look around and feel good about investing in a winning season, but relatively large numbers of new ticket buyers joined the patron base early in the season. These smart organizations gained not only immediate revenues, but simultaneously increased their prospect pool of repeat buyers (during the same season), which will create greater numbers of future subscribers and donors.

They anticipated patron demand in advance. Without exception, these successful organizations began promoting their hot performances and managing inventory for their not-so-hot dates last spring or earlier. Each had sales pacing and pricing strategies built into their marketing scheme long before single tickets went on sale. Houses were scaled and seats held and released to sell in a particular order so that hard-to-sell nights would look well-sold. Organizations -- Seattle’s 5th Avenue Theatre to name just one – created themed “sales” six months out. “Christmas in July,” Back-to-School” and “Black Friday” promotions strategically discounted seats to stimulate demand for production dates and performances that were not expected to sell out. As a result, they sold more seats much earlier in the normal sales cycle so they could maximize incremental revenue from demand-based pricing as consumer interest peaked nearer performance dates. In short, success stories were built on long-term plans that were implemented with scrupulous attention to demand and sales pacing.

They put resources in the right places. Winning organizations fueled their top-selling programs with the highest investment in marketing and manpower resources. Some saw an increased cost-of-sale but stuck with their plans, making investments that were necessary to fuel continued sales volume. Their results show that a growth-yields-growth strategy works especially well in these difficult times.

Finally, the most successful managers recognized that flawless execution is not optional. When times are this tough, missed deadlines or skipped steps negatively impact the bottom line and guarantee disappointing results – every time.

As I post this, final results from December performances are just coming in. Like you, we’ll be eager to see what the data tells us once the full impact of holiday sales can be measured. Whether or not we are witnessing hopeful trends, one thing is clear. Growth in the season ahead must be planned for now with well-informed decisions about patron demand, programming and its placement. We know it won’t be easy. In this business, it never has been.

Demand vs. Loyalty – No Contest

2010-06-29T22:39:00.001-06:00

Based on the reports of my TRG colleagues, our recent blog posting on Demand Based Pricing prompted questions and conversations at recent national service organization meetings (Theatre Communications in Chicago, League of American Orchestras and Chorus America in Atlanta, DanceUSA in Washington, DC and Professional Association of Canadian Theatres in Cow Head, Newfoundland). Discussion revolved around how arts managers should reconcile potential revenue growth from Demand Based Pricing against long term goals of enhanced Patron Loyalty. The FAQs? Are these two concepts mutually exclusive? Do techniques designed to squeeze the maximum sales revenues for tonight’s performance come at the expense of the need to develop lasting relationships with our patrons? Do higher prices negatively impact giving levels?

My simple response is that price does impact patron loyalty. Why? Because everything impacts patron loyalty. The quality of the performance, the selection of seat location, the perception of box office success, the level of service offered by venue staff, the convenience of parking, the service and quality of the pre-curtain dinner at the restaurant across town – everything impacts the quality of the patron experience and therefore patron loyalty. Some of these issues are within our control. Others not.

Within this context of total experience, it stands to reason that patrons’ perceived level of fairness of price is an essential consideration. But, how do we measure the “fairness” of price for a ticket? Pricing textbooks aren’t much help. There we find pricing theories that argue for “odd-number pricing” or “even-number pricing.” But “just” or “fair” pricing? Conventional wisdom holds that consumers (like markets) make rational decisions. No consumer knowingly pays what they believe to be an unfair price for anything.

I can’t speak for other products. I do know that savvy marketers can promote irrational patron behavior by enticing the shrewdest of consumers to make illogical purchase decisions for tickets to highly desirable events. Witness the prices paid for tickets in the secondary ticket market to any Super Bowl, major concert artist, Final Four basketball game, selected Broadway shows or World Series. Irrational is the only word that comes to mind when trying to explain the willingness of some to pay hundreds, if not thousands, of dollars for a ticket. Does that football fan feel somehow cheated if their prized $5,000 ticket results in a losing score? Does this fan become more or less loyal over time? Sports data is remarkably consistent. Winning seasons promote sales growth (and fan loyalty) the following year – regardless of price.

The price only becomes “unfair” if the experience fails to meet expectations. That shining new car on the lot is terrific until it becomes a “lemon” that spends more time in the shop than on the road. Sports marketers confirm that a sports ticket becomes a bad deal only when the team no longer has a "realistic chance” of being competitive – a chance of winning against most any opponent. And even then, the loyalty for some teams defies all logic. How long has it been since the Chicago Cubs won a World Series? (1908!) Yet, have you seen the price for a prime seat location at a Cubs game?

Our recent blog post described how the Denver Center for the Performing Arts adopted the principles of Demand Based Pricing and generated remarkable financial success. By any measure, revenue growth of $3.2 million in a single season is amazing.

So, what is the other side of this story? Recent conference debate raises a mix of caution and doubt, suggesting that such huge growth in earned income must have negatively impacted contributed income at DCPA. There is, some would argue, only so much money in any community. Moreover, some would assume DCPA’s fans came away from the pressures of the subscription renewal or acquisition campaign feeling somehow cheated or abused by a set of strategies that unfairly exploited the popularity of the season. Or so the argument would go.

Here’s what actually happened: Using the same data-driven strategies that fueled DCPA’s subscription and single ticket campaigns, the total dollars raised for the annual fund grew by 20%. In a single season. Improving per capita revenues does not mean that patrons will become less loyal – or less likely to write that donation check to support the mission of the organization. Patrons buy more, pay more, give more because the love what is put on stage.

Demand Based Pricing is all about improving per capita revenues – the average price paid for a ticket. Typically, this involves the construction of an integrated set of scale-of-house, inventory management and pricing strategies before the season begins and deploying those relatively static strategies throughout the season. Most buyers – especially the most loyal patrons – see or feel minimal impact. The Dynamic Pricing plans that adjust prices after tickets go on sale and when demand exceeds expectations typically impact the most transitory of audiences – the last minute buyer who has no idea of or interest in the range of prices previously offered. And, TRG’s research indicates that these folks are likely to never be seen again – regardless of the price they pay. (In fact, many walk away without a trace, never having been asked for contact information, which is another issue for another day). For these buyers, the price is simply what they agreed to pay, fair – or not. And rational or irrational, they make the same judgment that all of us make every day as we move through our consumer driven society.

So – does price impact loyalty? Of course it does, although not in the simple tactical sense that some might argue it does. Smart pricing plans improve both the perception of success for the organization and generate more revenue – which creates more stable business models. I’ve raised money for financially strong and financially weak companies and my experiences have been consistent. Donors respond to the legitimate needs of successful companies with the eagerness of a fan – not dread.

And, perhaps more importantly, Patron Loyalty impacts price. Loyal audiences assist our efforts to manipulate inventory and prices to encourage the kind of behavior that benefits box office and long term financial success.

Expect more on this topic from TRG. We will continue grinding through our data to see what else the numbers tell us.

Temporary Audiences

2010-06-15T19:02:00.001-06:00

A couple of weeks ago, TRG Arts unveiled the latest addition to our Data Lab arsenal of analytics tools. Designed to be a quick aid for arts administrators (both marketers and development officers), TRG’s new “Key Metrics” report provides a powerful summary of several data points that our consultants observe are good indicators of organizational health, namely new-to-file patronage, patronage loss (attrition), and multi-buying patronage. By leveraging our national data source in an automated analytical process, Key Metrics provides individual organizations with a low-cost snapshot of their situation alongside a baseline of national data from which to compare “what is normal” among arts organizations.

To provide the industry baseline, Data Lab selected 113 clients for what we called the “analysis group”. These are organizations from each major performing arts discipline: dance, orchestra, opera and theatre. They each have patron data that is extensive, deep in history, and unusually clean. Together, 113 organizations provided 5.3 million patron households for the study’s analysis group. To execute the analysis, we compiled all household transactions into a single aggregated database that was normalized for individual organization data collection, storage and segmentation quirks. We then looked for patterns of patron behavior that can be measured by purchases or donor transactions.

As the first findings rolled out, the significance of patron loss through attrition was clear. Attrition is an issue that has consumed a great deal of TRG research time since our first study with the Dallas Symphony Orchestra nearly a decade ago. Since then, further TRG studies – and the Oliver Wyman Study commissioned by the League of American Orchestras (under the stewardship of TRG’s long time buddy, Jack McAuliffe) a couple of years ago – have, without fail, raised concerns about the high turnover rates of arts audiences.

The conclusions from our initial work with 113 TRG client organizations confirm our earlier findings. Despite the eternal instinct to lay the arts community problem on a lack of “new audiences,” this is simply not the case. The number of new people entering the arts ecosystem each year is enormous. During our five year study period, nearly two-thirds of all households in the combined database (63%, or slightly more than 3 million of the 5 million households) were first time buyers. This fact endorses TRG’s oft expressed slogan in conference speeches and presentations: arts organizations must stop over-prospecting and under-retaining patrons – especially new patrons. The resources consumed to continually recruit new people to fill our theaters and concert halls are simply unsustainable.

For some time, I have believed that the attrition number for new buyers (households) has been slightly above 80%, or four out of five. All of our early work in the orchestra field confirmed that ratio. When examining this new and larger data pool, the numbers improve a bit. Across all artistic genres, average annual attrition is only 68%. Over the five year study period, aggregate attrition is 73%; meaning that three out of every four new buyers attend once and never return for a second visit. While this is better than 80%, it seems small comfort.

A side note: As I have noted in an earlier blog, one may quibble with our specific interpretations, but the data simply is the data. We either find a data point of activity, or we don’t. Over time, the size of this analysis pool will grow and the list of issues we are reviewing will become more robust. Over the next few months, I plan to share more of our findings in this blog space.

The bottom line is this. In a data set of 5.3 million total households, 3.8 million stopped buying tickets during the five years we examined. They stopped donating. They don’t subscribe. They simply stopped. How can any industry survive when spending so much money recruiting new customers only to see them walk away in such huge number so quickly? Too many organizations are actively engaged in marketing efforts that seek temporary audiences – those that will be here tonight and then never seen again.

Is there any good news to be found in these findings? I think so. When looking at new first time buyers (and most arrive using a single ticket), the effort to quickly encourage a return visit is well worth the effort. The new buyer who is successfully persuaded to make a return visit within a year of their first visit is twice as likely to remain in the family over the long term. These are odds that any savvy administrator can make money on – now and into the future.

So – is your organization obsessed with finding a new audience? You know -- that magic bullet target market segment that might offer huge response rates and recast the nature of your current audience into a younger, hipper and more diverse group of people? In other words, are you an over-prospecter?

Or, are you obsessive about encouraging a deeper relationship with every patron – regardless of their position on the loyalty continuum? Are your offers and “asks” driven by a data-driven (and provable) understanding of what that “next right offer” is likely to be for every patron? Is your prospecting campaign focused on the reengagement of lapsed buyers and donors?

If one examines the behaviors of millions of patrons of arts and culture, the answer becomes difficult to avoid. Over-prospecting for new audiences is not a game that anyone can win. As the old punch line goes, you “can’t make it up on volume.”

Want your own copy of TRG’s Key Metrics report for your organization, contact us for details.

Bending the Demand Curve

2010-06-03T14:00:00.001-06:00

The national conference season is officially in full swing. Right now, I am in Washington, DC participating in the annual meeting of the Association of Arts Administration Educators while my partner, Jill Robinson, heads to San Diego for the California Arts Presenters annual Artist Information Exchange conference. By the end of this month, my colleagues and I will have participated in ten conferences so far this year.

At almost every arts industry conference, Demand Based Pricing has been a ubiquitous topic – nearly as popular as the sessions about the importance of social media. If you know TRG well, you are aware that we’ve been preaching the message of fundament change in ticket pricing for more than a decade. It’s strange to suddenly find oneself at the center of a debate about a topic that for years was too geeky for most arts industry conversations.

There are many organizations using the techniques TRG pioneered back in the early days of the last decade. TRG’s demand-based pricing strategies date back to a project with our brave friends at Pacific Northwest Ballet, whose first effort grossed a whopping $1,500 in incremental revenues. (Subsequently, PNB has annually generated six-figure income improvements from demand pricing tools.)

Those earliest techniques have become the standard for many who wish to dynamically change prices as sales progress; that is: when seat sales hit 75%, raise prices by $5. What was true a decade ago is true today. If you dare to raise prices for hot performances, you will make more money. And, the tiniest bit of care prevents complaints from those paying the higher prices. The real change? Today, you can do dynamic pricing yourself. You don’t need complex ticketing systems or consultants to figure out how to make this method work. It really is that simple.

Simple, indeed, and there’s a big “but.” I’m observing – and commenting as frequently as possible – that dynamic pricing misses the larger point. When done well, dynamically changing prices is like the icing on your favorite cake. While great, the icing works best if it sits atop a perfectly prepared cake. The problem with dynamic pricing, as practiced by the newly converted, is that the approach is almost exclusively limited to tickets at the top of the price table and for top-selling attractions. Incremental revenue benefits are limited to a relatively few tickets and performances in the season schedule. That’s why it has always been TRG’s contention that dynamic pricing is a tactic that works best when combined with broader strategies for sustaining revenues across an entire season .

In TRG-speak, optimal pricing is all about "getting to the middle." By this, we mean the middle of your price table. It’s easy to sell through the most and least expensive seats in any house. The middle is where success or failure lives. How one manages the middle determines the outcome of per capita revenues for every performance. Managing the middle means purposely creating opportunities to “bend the demand curve,” purposefully creating increased demand and higher revenue for seats in the middle range price points.

The key metric that should drive every pricing decision is per capita revenue; or the average price per ticket paid by the patron. If faced with the choice of making an extra $5, $10 or $25 for a few top priced tickets or boosting the per capita revenues across the house by $5, I would take the latter option every time. Why? Simple arithmetic. An extra $5 for every ticket in the house is almost always more money – a lot more money.

For the Denver Center for the Performing Arts, this boost in per capita results contributed an incremental $3.2 million in revenue this year. In one year. What did DCPA do? They created a cutting edge scale and inventory management plan that correctly predicted the order of sale (by section), the velocity of inventory sell-through rates and a pricing plan that maximized per capita revenues across the entire pool of ticket inventory. This scale and inventory plan (using static, rather than dynamic pricing models) created about $2.2 million in price variance during their subscription campaign. The remaining $1 million jump came from dynamically adjusting single ticket prices, using the subscription results as a springboard. Without the subscription scale and inventory plan, the results of dynamic changes to single ticket prices would have produced much more modest success.

What does this say about the Broadway house, orchestra, opera, theatre or ballet company that focuses obsessively about their top price point? In TRG’s experience, a fixation on top prices (especially if it’s the only price offered) almost always means that little or no attention is being paid to the middle. And the middle is where winners make the big bucks.

Coming to the TCG Conference in Chicago? Learn more about bending the demand curve at the session I’m leading, The Art of Pricing, Thursday, June 17 at 12:30 p.m. Contact us about how we can connect this month at this and other national service organization conferences.

21st Century Tools for Arts Advocacy

2010-05-12T21:37:00.001-06:00

For the past decade, TRG has partnered with arts and culture communities to develop and manage shared patron data services. These community databases, often called cooperatives or coops for short, are typically built to help organizations save money through shared services. Coops also develop new patronage and revenues using smarter and more efficient communication tools. This new generation of community databases has become America’s largest single repository of information about arts and culture consumers and their behavior. Savvy arts leaders across the country are learning new ways to use coops as a resource to advance the arts agenda in their communities. Specifically, they want to match arts consumers with voter registration files. Why? Facts win cases when advocating before public officials and voters. In this post, we offer our thoughts to the current online dialog on advocacy nationwide, including on the Americans for the Arts blog and its green paper, The Future of the Public Voice in Arts Advocacy.

The mid-term elections in the U.S. are only six months away, but already forces of all sorts are lining up to make the case for the candidates they want – or, this year especially, don’t want. Points of view on must-win issues at the federal, state and local level vary wildly among Democrats, the GOP, Tea Party, incumbents and those positioning themselves as government “outsiders” Making a case that will win over politicians and voters is a lot like direct marketing success. It requires putting the right message in front of the right person at the right time.

What about the case for supporting arts and culture?

Can we find any reason to hope that a successful arts message can cut through the “clutter” of a national discourse dominated by war and peace, terrorism and financial upheaval? How can we possibly make our case amid the most toxic political environment in decades? Recently, I’ve found reason for optimism. Why? In preparation for a recent conference presentation we compiled a small list of new ways that smart community organizers are using TRG’s data coop information. The outcomes we’ve witnessed are pretty remarkable, particularly given the current national mood.

Anyone working in the arts knows that arts patrons are a very diverse group – they come in many shapes and sizes. This is always a surprise to our critics and detractors. While not as diverse as the total population of most cities, the number of organizations and their diverse target markets creates a surprisingly varied group of patrons. (I’m planning a post on this topic in the near future.). Demographic and psychographic diversity aside, there is one immediately important attribute that arts patrons have in common - arts patrons vote. They vote regularly and often. They vote in off-year elections, primaries and special elections. This common behavioral thread creates power for those who take the time to look. This fact is what is driving an entirely new use for community database resources - Advocacy.

Take, for example, the Greater Philadelphia Cultural Alliance and their colleagues’ successful (emergency) campaign to fight back a proposed new state sales tax on arts and culture tickets. Legislators assumed that the proposed tax would only impact a narrow slice of Pennsylvania’s wealthiest consumers. The facts residing in GPCA’s community database proved otherwise. Two-thirds of ticket buyers TRG studied for this case had annual household income under $70,000, and only about 8% fit the preconception lawmakers had about arts consumers. Presenting that point was helpful, but why should a state representative or senator care? Well, GPCA used their database information to show each legislator exactly where those ticket-buying arts lovers lived – on a map. There’s nothing subtle about politicians seeing “arts consumers” as registered voters living in their district. Were these district maps the case cincher in this advocacy campaign? It’s arguable, I suppose. What isn’t arguable is: there is no tax on arts and culture tickets in Pennsylvania.

[Another big Pennsylvania database, the Cultural Data Project, also weighed in on this effort. They were able to prove that the state’s estimated revenues from the new tax were wildly optimistic. Again, a fact-based argument made the art case compelling and unambiguous.]

A very large TRG arts consumer map hangs in the offices of the Cultural Affairs Division of Santa Monica, California. In this case, TRG helped the city develop the map to support their case for the location of a new art museum that Santa Monica is vying for. Using patron data from a Los Angeles market segmentation study, Santa Monica found that 67% of its residents were active attendees and donors to local arts and cultural organizations, representing the highest concentration of arts consumers of any LA County municipality. The Santa Monica patron map shows where arts and cultural patrons live in proximity to the prospective museum site and in comparison to other location’s resident pool of arts patrons. The map also shows each city council member how many of their constituents/voters are also arts patrons! The map is tangible evidence that Santa Monica is uniquely well located for the new museum, and has the additional benefit of informing other city decisions such as where its arts events should be staged.

Over the past decade, arts patron coop data has helped Denver’s Scientific and Cultural Facilities District win reauthorization of tax funding. It has helped organizations in Philadelphia convince local authorities to expand public transportation options for patrons attending post-rush hour evening events. More recently, we’ve joined an effort with several organizations in Pennsylvania to build a statewide case resource to advocate for public policy on the arts.

At TRG, we’ve begun to think about how data coops can play a greater role in influencing public policy on issues related to the arts. Increasingly, we see our data coops as providing Census-type information that can prove the case, rather than hoping that the “arts is good for us” message will ever find traction with our elected officials. As each new data coop comes online, we learn more about the power that arts and cultural patrons can have in our communities and our society. By illuminating the very presence this huge force - arts patrons who vote – we can be a positive force for influence in the political arena.

Still Guessing on Half Priced Tickets. Stay Tuned.

2010-04-30T12:00:00.001-06:00

My last blog generated several interesting responses, which I do appreciate. I looked for and found common threads in them, and prepared this follow-up blog. Special thanks to Thomas Cott and those who took the time to comment and for continuing the discussion.

The point of my original message was about the advantages of facts over opinions and the desirability of eliminating guesswork. The flashpoint , however, centered on a preliminary finding from an incomplete data project -- that only 1% of San Francisco’s half-priced ticket buyers had previous ticket buying history with their theatre of choice.

First a word about methodology. TRG’s approach to data analysis is complex in execution but pretty simple in approach. We access facts in databases-- some 20 million households of biographic tables matched with actual purchase transaction histories. Ours is longitudinal study to track and understand patron behaviors, as defined by their transactions, over time. A patron either made a purchase or gift – or they didn’t. While you may disagree with our interpretations or conclusions, the data speaks for itself. It is not a recollection, opinion or perception but a fact. It is neither right nor wrong. It simply is.

That said, it is possible to find different, individual results in your own data. For the topic of half-priced tickets, I would expect that your results might vary widely based on how your organization used the half-priced channel and, most importantly, how you followed-up with any half-priced patrons. For example, I could imagine a situation in which an organization chooses to use a half-priced channel as their primary ticketing outlet. Patrons’ experiences would be very different in this organization than in another company that infrequently uses the half-priced channel.

Second, a word about this particular study. It is still very much a work in progress. No grand conclusions about the efficacy of the half-price channel should be based on my casual comment regarding the incomplete San Francisco study. In fact, I have every expectation that more surprises are yet to be uncovered as we complete it.

Know too: TRG has “no dog in this fight.” We aren’t for or against half-price tickets or the channel. Our only goal is to understand what’s happening in the marketplace – based on empirical data and facts. One outcome of this project will be insights on best practice usage of half-price tickets and the channels that deliver them.

Those best practices can’t come too soon. The ticket channel for deeply discounted tickets has become a ubiquitous part of life for most marketers. Too often it’s emotion, fear or assumptions founded on hope that are the basis for important inventory management decisions. This applies to every ticketing channel – not just half-priced tickets. Smart managers will use the channel in ways that help build sustainable and loyal audiences – and, on that outcome it’s clear that all discount channel participants agree.

Finally, a word about new audiences. For many years I have been ranting at industry meetings about the flawed business strategy employed by most arts and culture organizations. That is, most are over-prospecting for new audiences and under-retaining those they already have. Nationally, the numbers of new audiences each year are staggering. For example, when the doors open tonight at the typical theatre in this country, the majority of the audience will be first time visitors. And, national data suggests that 80% of them will never return for a second visit – ever. My guess (see my prior blog on guesses!) is that the half-price channel can play a powerful role in building a more successful arts organization. Finding new audiences may not be the best role for this tool. TRG’s goal is to better define best practice strategies and the best role for half-price and discount channels.

But, until we examine the data and form conclusions based on facts, we are all just guessing. That makes me crazy.

My most frequent answer

2010-04-28T07:40:00.001-06:00

I am often asked about the most frequent question I get. To me, the more relevant question is, “What’s my most frequent answer?” This one is much easier.

Much of my work as a consultant has been based upon a simple premise: help sell or raise more money while reducing risk. That was the reason for TRG’s entry into the world of database management a dozen years ago. Simply put, we grew tired of guessing. Should the client do this? Should the client do that? Who knew? If pressed personally, I would express an opinion. It would be an educated or experienced guess, but still just a guess. One of TRG’s primary goals is to eliminate such guesswork – even the type that comes from years of experience.

I often joke that many of us veteran arts marketers kept our jobs because we guessed right more often than we guessed wrong. A long time colleague recently reminded me that we kept our jobs because “no one really knew what the heck we did for a living and the survivors knew how to fix their messes before the boss noticed.” Today, everyone – boss, board, colleagues-- notices. In this information-focused era, guesswork is for suckers and perhaps the soon-to-be unemployed.

I was reminded of this just the other day when reviewing a preliminary stage of research that is winding its way through the TRG Data Lab. It is a study of half-priced ticket buyers in the San Francisco market. Where do they come? What happens to a patron once they buy that deeply discounted ticket? Are they loyal? Do they come back for a second visit? Do they ever again buy a full priced ticket?

In this case, my three decades of experience was not helpful. I was convinced that cannibalization was likely to be a serious problem among half-price ticket buyers. Once converted to a deeply discounted ticket, it was unlikely that they would ever again buy a full priced ticket. I was wrong. The cannibalization rate for the study data was less than 1%. The majority of returning ticket buyers (from the 1%) made their next purchase directly from the organization they started with. Why? Today I have no idea – but we now have a new place to focus our study. We also have a long way to go before delivering the final report.

My point is simple: guessing about patron behavior is about as accurate as guessing the next winning number at roulette.

So, going back to the original question….what is my most frequent answer? Simple. For a wide range of questions, I proudly state that while “I may have an opinion – a guess, really -- I just don’t know yet. If you are serious about finding an answer to that question, let’s go check your database and find out.”

This seems to me the best way for savvy arts marketers and fundraiser to reduce risk – for their organization and their careers.

Today may be the good old days for arts marketing!

2010-04-13T15:18:00.001-06:00

I was recently asked by Chad Bauman, the bright young communications director of Arena Stage (Washington, DC), to offer my thoughts about the most significant marketing challenge facing arts organizations in the new decade. He posted a portion of my thoughts on his blog (http://arts-marketing.blogspot.com/) last month. My complete remarks are posted below.

Today may be the good old days for arts marketing.

Know that I’m not a fearful person. In fact, I’m typically quite optimistic about my future, the future of my family, my business and my country. So why do I hesitate when considering the year 2020 and the future of arts and cultural in America? My problem, I think, is found in the simple arithmetic of life. I fear that some very good organizations may be running against a tide of numbers that may ultimately prove overwhelming.

Three decades of selling tickets, raising money and balancing unbalance-able budgets frame this view. But it’s what we see in TRG’s cumulative data on arts and culture buyers that is alarming for arts managers everywhere.

As a young orchestra marketing director thirty years ago, a high proportion of my subscribers were serious avocational musicians. They studied seriously. Many performed chamber music in their homes. As this generation departed from the scene, marketers of the day successfully made a clever transition of message. The new proposition was that current study or performance of the art was no longer a prerequisite. Instead, study and performance as a child was all that was required. To “Subscribe Today,” one could find happiness as a spectator. Participation no longer mattered.

This strategy worked. Across the country we added hundreds of thousands of new subscribers and single ticket buyers. Admittedly, these new folks no longer wanted to attend 24 Saturday night performances. Simple, we said. We’ll sell you twelve performances – or nine. Or six. And it worked. Unfortunately, another force was in play. Demographics.

As theatre, opera, orchestra and ballet companies replaced one generation with another, the new target market came of age -- Baby Boomers. Today marks the best of times for serving Boomers. Right now the target pool is 60 million of us who were born between 1946 and 1964. Any current marketing or fundraising effort need not be as efficient as those programs implemented twenty years ago. There are so many people who fit the current target, one can miss the bulls eye and still be okay.

What happens in 2020? The members of Gen X finally begin reaching the target life stage. Even if we forget the cultural divide that resulted from the demise of public arts education when this group passed through our schools, the arithmetic boils down to one number: 20 Million. That’s how many Americans were born between 1964 and 1981 -- 60 million Boomers will be replaced by 20 million Gen X’ers.

The math is simple - and it doesn’t work. Everything an arts organization does well today must be three times more efficient in 2020 if they are to maintain today’s level of success.

We could, of course, wait and see what happens when Gen Y (born between 1982 and 1995) replaces Gen X. These so-called Echo Boomers are almost as big a group as its parent generation. But our data suggests waiting is a high-risk option.

Is there a solution? Yes, but it won’t be easy. The rate of audience attrition today is unacceptably high. Nationally, TRG analysis shows that 80% of all new single ticket buyers never return for a second visit. Unchecked, attrition will continue depressing audience growth and feeding decline. Smart organizations, however, won’t ignore the danger signs or wait for the generational echo. By 2020, the best among us will have long since stopped over-prospecting for new stealth patrons and will retain almost everyone they touch.

What we see is what you’ll get

2010-04-02T15:32:00.001-06:00

I have resisted the idea of creating a blog for some time. Who has the time? More importantly, would anyone want to read it? Well, I still don’t have the time – but, I am committed to making a serious effort. Will anyone care enough to read? Only time will tell. You found it. If you like it, tell your colleagues. If not – well, keep your knowledge just between us.

No. Wait. That’s wrong. That sort of attitude is much too 20th Century. If you don’t like it, respond. Write back. Tell me when, where and why I’m full of horse hockey. You’ll have at least one reader. Me. And, I promise to make the attempt to make it better next time.

What do I plan to write about? I have a few ideas. Mainly, I plan to focus on best practice marketing and fundraising in the world of arts and culture. Those of us at TRG spend our days working with some of the brightest folk on the planet. What I hope to do is provide a platform to share these great new ideas or trends.

Without question, ours is a deep reservoir of information. TRG now works with more than 600 organizations across North America. Our community data coops put us in touch with literally every kind of arts and cultural organization imaginable. In addition to ballet, opera, orchestra and theatre companies, coops frequently include museums, historical centers, public broadcasters, zoos and the occasional sports team. This means that TRG sits atop a literal mountain of data – some 20 million households of active consumers and supporters of arts and culture.

The TRG Data Lab is regularly diving into this immense data source to identify new insights into the state of the field. It was Data Lab studies that first revealed to us and the industry nearly a decade ago that patron attrition was eroding audiences nationwide, that permission-based list trades can fuel audience retention and growth, and that the best arts consumers are the most active buyers of everything from every organization in a community. One of our next projects will look at the impact of half priced tickets on patron loyalty for an entire market and the individual organizational members that make up the community. Preliminary findings from this San Francisco-based project suggest we’ll learn about emerging best practices around how ticket inventory should be managed. Stay tuned!

A perk of my job is that I get to attend a lot of amazing performances. While I have no intention of becoming a reviewer – that would be too awkward with our clients! But, as I travel the country visiting galleries and attending performances, expect to hear about what I’ve seen and liked while on the road.

Finally, know that a key part of my plan rests on a flexible publication schedule. I travel more than a human should, if health and long life were a goal. There is little that is routine or predicable about my personal or professional life. That means it will be impossible to meet a rigid posting schedule. Fortunately, a blog is built for my kind of situation. You can either check back periodically to look for new stuff, watch my tweets, visit the TRG website, or sign up below for emailed notices. Simple.

So here we go. My first real posting will follow soon and there’ll be more from me and my TRG colleagues. Let’s learn some cool stuff together, sell some tickets and raise some money.