Marketing/PR

Prices So Low, It Might Be Insane!

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There was a fair bit of discussion on Adaptistration two weeks ago about the Joffrey Ballet’s success in gaining over 2000 subscribers in a single day using the GroupOn discounting site. As a theatre manager, I get caught in the debate between making 25% of my ticket price vs. having an empty seat against possibly training people to wait for the deep discount in the future.

One of the best points that I think is made in the comments on the Adaptistration entry is that while you may be making 25% of the ticket revenue, you don’t have the marketing costs usually associated with promoting the show when you work with GroupOn. My assumption is that most arts organizations marketing costs aren’t 75% of the ticket price so there is still a danger of not meeting the other overhead costs you have by using GroupOn, but if the discount is structured correctly, you could end up doing marginally better than you might have and have a fuller house. Looking like you are successful is half the battle in convincing donors and granting organizations to support you.

Still, I was pleased to see Chad Bauman, the Director of Communications at Arena Stage take the subject on. In addition to suggesting that you are rewarding the wrong kind of behavior with these discounts and risk alienating the person who paid full price months ago, he notes that paying less than full price seems to translate into less than full commitment in both renewing and attendance.

“We must always remember that discount buyers behave differently and you must budget for that. Full season subscribers at most organizations renew at a rate between 85% to 90%. However, I have found that full season subscribers that purchase their subscriptions at a drastic discount renew at a much lower rate (around 60%). Additionally, because they spent significantly less amount of money per ticket, the no show rates are also substantially higher, sometimes leaving large empty holes in your house.”

As an alternative, Bauman suggests a slightly more work intensive process of acquiring mailing lists, sorting out your current subscribers and ticket buyers and-

5. Using the exact same deep discount offer you were going to give to Groupon, develop a cheap, but effective mailer and send to your list. Make sure it is an offer that is impossible to pass up, and that the offer leads in design and has a deadline. (note: if you don’t have a large box office staff, then make sure the offer is online only, or you will be swamped). The key is to keep production and mailing costs low–send using non-profit postage and use a discount printer/mail house.

By doing this, you get to keep the entire purchase price of the discounted subscription, and you minimize the possibility that your dedicated and loyal patrons will see that you are heavily discounting late into your campaign after thousands have already purchased.

Taken together, the Adaptistration entry and comments and Chad Bauman’s take, give a pretty good picture of the factors to consider and some alternative approaches to take.

I haven’t used GroupOn yet for personal consumption. In fact, it appears it might not have a lot of traction locally because there is no listing of past deals for my city. Though that could just be a technical matter. I wonder if you can effect the timing of the offer. That way, you can use it in a manner closer to that used by airlines. Not everyone in the plane is paying the same for their seats, but generally it is recognized that those who purchased earlier got a better deal. If you can arrange things so that people need to commit to the performance a couple months out, then at least you emphasize the need to plan ahead. Only problem is that if people don’t show up because their investment is as low as the price they paid for the ticket, you may judge it something of a mixed blessing.

On Refunds and Exchanges

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So I made a big mistake this week with a reception invite. There was actually a letter missing from the title of the show on the cover of the invite. Now in my defense, about five other people missed it to. I had originally assumed that I messed it up by accidentally brushing the space bar when I was reviewing the work on my computer yesterday. Then I went back and looked at the versions I emailed out to the various parties involved, including the show creator, over the course of two weeks. It was missing all that time and no one caught it. I suspect part of the reason is that the cover of the invite was inverted so that it would fold into the correct orientation on the finished product. (Also, I think the show might be cursed. The show creator made a mistake on his first run of invitations a year ago when he was inviting his donors to a preview of part of the work.)

In any case, I sent the corrected version back to the printer and told them if they were having a sense of deja vu, it was because I had made a mistake on the first run. I got a call from the print shop and they said if I brought all the flawed pieces back, they would only charge me 50% of the original cost on the reprint. This was happy news to me since I resigned myself to putting the reprint on my credit card as it was my fault. I think it is a great policy on the part of the shop because they earn good will from the customer and they can be sure the paper is recycled rather than tossed in a dumpster.

As I usually do when I encounter an example of good customer service, I wondered how this policy might be applied to the arts. My first thought was in regard to exchange fees for tickets. Many organizations either do not exchange, have a $2-$5 fee for exchanges or only allow subscribers to exchange. I don’t have any data on how well any of these policies are received by audience members who want to change the performances. I suspect it is largely a function of the communities and the dynamics of the relationship each organization has with its audience base. While I think no exchanges or a fee provides an incentive to make a firm decision, it can be difficult to discern if the ticket office made a mistake or to demand people pay it when an accident/emergency is going to prevent their attendance. Deciding to do an exchange or refund is so often a subjective judgment call that having a fee can exacerbate the frustration of those who feel they were unjustly denied.

Part of the problem is an empty seat is not a ream of paper. Yes, an empty seat is lost revenue once the show has started but that is a more abstract concept for people than the ream of paper now spoiled by a mistake the consumer has made. The whole concept of a performance as a perishable commodity which you are exchanging money for can be tough to grasp if there are many opportunities. My dentist can fine me for breaking my appointment because he knows I will have to come back sooner or later when my teeth start to hurt. (Just for the record, I am faithful to my 6 month appointments.) Occupying his chair is something I feel I need to do. Not always the case with some performances.

In these days when people are making and changing their plans at the last minute, do no refund/exchange policies or fees make sense? Do they provide a disincentive to attendance in the first place? There are a number of organizations who experiment with flex passes, some of which allow you a set number of tickets to any performance you want to see. You can come once with 6 friends, come 6 times to the same show yourself or go to 6 different shows yourself. Seattle Rep has a package like this called Player Pass. They even have a Today’s Pass where you call the day of the show to get the best seats. Of course, if the show is sold out, you can’t get in.

If you only have one night performances and many of these shows don’t have similar ticket prices, then it can be difficult to institute a program like this. What I like about these flexible programs is that it puts a little more of the responsibility back on the ticket buyer. I am good at my job because I excel at advance planning. In the face of indecision and vacillation over weekend plans, I want to grumble, “geez, make a decision already!” With these flexible passes, if a person waits too long and the show they want to see is sold out and they don’t value the remaining shows in the season as much, then their subscriptions have lost a little of that intangible value I spoke of earlier.

Of course, the annoyance factor for me would be about the same whether they were wheedling and begging to get into a sold out show or vacillating about going to a show in advance. I may feel a little smug about having a sold out show, but I always hate having to turn people away from great shows for reasons that have nothing to do with ticket revenue. Flex passes don’t alleviate your worry on Wednesday about whether people will come to see the show on Friday because few have committed to any weekend plans yet. Well sure, with the flex passes you have already collected some money, and that is comforting. But performances were meant to be seen, the more the better.

Yes, We Get Snow Here

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In about five weeks we will be producing a show about the Hawaiian snow goddess, Poli‘ahu. Yes, Hawaii has snow every winter on Haleakala and Mauna Kea. It is upon Mauna Kea that Poli‘ahu and her sisters are said to reside. There are actually a lot of very interesting tales about the goddess and her sister, including a sled race against a disguised Pele, the volcano goddess.

We are working with the same company who created a Hawaiian opera based on the myth of the Naupaka flower back in 2006. One of the things that excited me about doing the 2006 show was that the artistic director was taking an approach to storytelling that was ambitious of itself, but fairly new in relation to Hawaiian culture. I thought the show might provide a good model and inspiration for other groups since Hawaii is undergoing something of a cultural renaissance. Since then we have presented a show produced by a partner organization about Kahekili who essentially played Uther to Kamehameha’s Arthur in the unification of the islands.

I had been pleased to learn that the artistic staff creating Kahekili had looked at the Naupaka performance when they were planning to remount their work created a decade earlier. In our early discussions about the Poli‘ahu, the artistic director talked about the lessons and ideas he took from the staging of Kahekili. The idea that there was an artistic conversation of sorts driving the evolution and development of works happening before my eyes really excites me.

This may not seem like big deal in most places where everyone seems to give homage/steal the best of what they see other people doing. There are strict lines of tradition and orthodoxy in hula so even if you explicitly say you aren’t doing hula, but only hula inspired work, your product must still be respectful. Likewise, anything dealing with royalty or divine entities must exhibit suitable reverence. The production of Poli‘ahu is also integrating Siberian and Yupik Eskimo chant and dance so even more attention must be paid to avoid offending someone.

Of course, we also face the challenge of trying to convince people who are familiar with the traditional performance to take a chance on the unorthodox. We have sold out these performances before so we are leaving the door open to add additional shows. But four years ago, the people who seemed to understand what we were trying to do were those least steeped in the traditional arts. In fact, one of the arts reporters who is familiar with the company’s work asked how this production would be any different from their previous work. I almost blessed the opportunity to speak to someone who was a little jaded about it all because I didn’t have to work overcome the inertia of unfamiliarity before even explaining the concept.

I can tell by the way the ticket sales are going that this show is going to be sold by word of mouth and trusted sources rather than print and broadcast media. There are shows six months down the road that are selling about as well on the strength of the brochure alone. They will probably be 1/3 sold before I even revisit my plan to promote them.

Fortunately, we have been working together this summer to line up the interest and involvement of many of these trusted entities and that effort should bear fruit very soon. Once some of that becomes public and visible, we will start reaching out to individuals in the hopes of getting the phrases “I saw…, I heard…” entering conversations, tweets and Facebook postings.

100% Fundraising Expenses

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Some what apropos of my post on mandatory salary caps for executives of non-profits is a post by Dan Pallotta on the Harvard Business Review blog in which he makes suggestions that would likely see government entities really start screaming.

Palotta advocates for salaries of non-profit staffs on par with those of for profit businesses. But the bulk of the post is spent on the premise that low fund raising expenditures are actually inhibiting charities from doing the most good. His argument is that instead of touting 10%-15% expenditures on fund raising and remaining too small to make a big impact on a problem, charities should be spending 50%-100% on fund raising.

“The less an organization invests in fundraising the less it can grow. The less it can grow the more human suffering persists. We have institutionalized a mechanism for insuring the persistence of human suffering and called it “charity.”

[…]

“If we are serious about the value of human life, then we have to start thinking about 50 to 100% fundraising rates for the organizations chartered to save human lives. Those organizations should take no pride in telling donors or anyone else how low their fundraising costs are. Quite the opposite. I want to support the organization that’s going for scale, not the one that’s stuck where it is. Why would I support a cancer organization promoting its low fundraising investment while cancer remains uncured? We have the whole reward system backwards.

(Qualification: I’m not sanctioning inefficiency. That’s a completely different conversation. Everything I’m advocating assumes maximum efficiency.)

What we are doing is not working. A world in which 10 to 15% fundraising ratios are the norm is a world in which our charities are woefully too small to confront social problems on any meaningful scale. It’s a world where growth occurs – if it occurs at all – at the pace of molasses — the pace of death — and where human suffering continues on an unimaginable scale with no end in sight.”

If you are like me and you are thinking if an organization is spending 100% of the money it raises on raising more money then no one is getting cured, then you are absolutely correct. That is exactly what he is proposing. Presumably, you would use all that money to find a new way to convince people to donate since you wouldn’t have any examples of those whom you have helped.

If you read down into the comments section where Pallotta responds to some of the questions, you get a little more detail. Addressing the idea that the fund raiser never gets around to doing anything, Pallota says,

“Think of it this way. Humanitarian organizations regularly engage in certain activities – a direct-mail campaign – designed to acquire new donors. Sometimes those campaigns can go for several years running 100% costs. But then comes the pay-off – huge fundraising databases with no new expense associated with them You turn that engine on and then you start producing revenues for programs and for the cause at volumes many, many times larger than you could have if you never made the investment and never tolerated the 100% cost ratios for a certain period of time. Understand? “

In response to the question posed by a commenter named Shaun, who asks “who wants to be the person who gives money just to solicit more money?” Pollota answers, “Think of it this way: if I told you your dollar could go directly to the needy, or that it could go to an ad campaign that would generate ten dollars for the needy, which would you choose?” To which another commenter, RachelAC, replies, “I might prefer that my $1 go to the needy now, rather than $10 going to the needy in five years.”

I think RachelAC’s response expresses the crux of the matter for me. In an ideal situation, Pallota’s approach works. But my concern is that the fund raising entity gets so enthralled by their success in raising money, that they never stop and fund the solution. As RachelAC implies, in many situations the dollar today can make a difference where the $10 comes too late. Though granted, whenever a solution to a massive problem comes, it arrives just moments too late for some.

My even bigger concern is that the officers will embezzle the money and run off as they have with so many charities in the past. The fact they are apparently not making as much as they could be according to Pallota only means the incentive to do so increases. I would prefer to know the thieves only absconded with the little I gave rather than what they parlayed it in to.

Big problems can require audacious approaches to solve them. I can see where the piecemeal approach isn’t getting people closer to a solution any faster. But will people continue to give if a theft on the same grand scale were to occur? I think the faith you lose in a charity when it betrays your trust cuts a lot deeper than when a company or person you have invested with misappropriates your money. You enter a relationship with the latter knowing there is a chance you will lose your money. With investments, we are told to diversify. Does it make sense to do the same with our philanthropy or are we just short changing an already under capitalized effort?