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Info You Can Use: Flex Subscriptions And Your Subscriber Base

August 12, 2013

by:

Joe Patti

I have been pondering whether we should start offering a “Choose Your Own” subscription series in future years. In my past jobs, we never programmed with an eye to filling slots in a series so we offered “Choose Your Own” discounts without any problem. Now I am working in a place which has historically had a number of series and I am looking to offer an additional flexible one.

Since this blog is about discussing practical aspects of arts administration, I thought I would share some of the issues I have been taking into consideration both to solicit some feedback, but also give a sense of the thought process you need to engage in when making these decisions.

The numbers I am using in my example aren’t the actual ticket amounts and they are equal for all events in a series for sake of simplicity. The discount for buying the full season relative to the sub-season pricing is the same though.

Currently we offer a full season of nine shows ($290) and three sub-seasons of three shows each: Broadway ($150); Variety ($105) and Classical ($75).

My idea for a flex subscription is to offer the sub-season pricing if to any three shows or more shows of your choice.

That might break out as follows:

Instead of buying a series, people would pick and choose from among all the series. Because they are picking and choosing willy nilly, we can’t guarantee them the same seats will be available at every performance, but they still get their seats before single tickets go on sale and at a discount.

Usually the idea behind flex subscriptions is to give people who can’t make it to all the shows in a series the ability to benefit from an advance purchase discount. It is seen as a plus if you can get someone who has historically been a single ticket buyer to commit to attending multiple shows in advance.

But the important issue is the need to factor in the likely behavior of your audience. If there are a lot of single ticket purchases for three or four shows across multiple series in the days right after single tickets go on sale for full price, you need to ask if you think more people will pick up this practice or if you will only end up giving a significant discount to the same group who typically buys tickets at full price months in advance of the show. You could end up losing money in the process.

The same for those who buy the classic series and then one or two tickets to the Broadway series at full price of $65. If there are lot of those, you may end up giving up quite a lot at a $15 difference per ticket.

In our case, our biggest series base is in Broadway with far fewer in Variety and Classic. It wouldn’t represent a significant loss if the Variety and Classic people who buy Broadway tickets at full price received a discount.

My biggest concern is that we may lose full season subscribers to a piecemeal flex series. Every year there is a Broadway show people aren’t crazy about so if Full season subscribers didn’t like one show and picked the other 8 individually, that would represent a $10 loss per subscriber. Not a big deal individually, but if many people made that choice it could be problematic.

The same with the Broadway series subscribers. If they dropped one Broadway show and picked up one Variety or Classic show as their third, that is a loss of $15-$25 per subscriber.

Now the easiest solution to keeping Full Season subscribers from becoming “slightly less than Full Season” subscribers is to place the “Choose Your Own” on the same footing as the other sub-series and limit it to any three events. That way you don’t have to worry about people defecting to a 7 or 8 event subscription.

But if you are in a situation like I was in my last job where you don’t have a large subscriber base, you can go all out and offer discounts on as many shows above the minimum as people care to buy. You have a fair chance of picking up new subscribers.

I will confess I was pretty gung ho about flex subscriptions and the philosophy of giving people the most freedom to choose in return for making that choice in advance. Organizations that kept their audiences tied into a designated series were adhering to a dated concept of audience relations! But as I say, that was when I didn’t have a fairly reliable subscriber base.

Now that I am in a situation where I am doing an analysis of the pros and cons in preparation for pitching the idea to an organization with an established subscriber base, I find myself being a little more pragmatic. (Though note I am still trying to introduce a flexible scheme.)

So what about you? Thoughts about this? Are there packages you have put together to entice people to subscribe that worked? Some that back fired on you and made you lose income or subscribers?

Audience Relations, Boards, Business Models, Info You Can Use

2 Comments

Have A Fulfilling Experience Being An Artist

August 7, 2013

by:

Joe Patti

Earlier this week, Sydney Arts Management Advisory Group listed an artist residency program that really appealed to me.

Only Australians are eligible to apply, but I just really liked the way the Asialink program at the University of Melbourne listed the expectations for their program.

You can’t use the residency for research or academic study. Instead, (my emphasis)

Each resident is offered a specific amount of funding and initial contacts in the host country. It is then up to the individual to make as much of the experience as possible and to plan and manage their own program.

Key attributes are the ability to cope with sometimes unusual or difficult situations, and to work successfully in a challenging environment while maintaining good working relationships.

That is basically it. The criteria is to have a plan, take advantage of the opportunity, be able to cope with strange situations you may encounter. You have to show that you worked on your project when you return and submit an accounting about how the money is used.

Coming from a higher education environment which emphasizes research and publishing in order to keep your job and an arts environment which has lengthy grant proposal and reporting requirements, this is refreshingly brief and liberating.

Applying will take some work and preparation, and certainly the opportunity isn’t for everyone, but the process doesn’t seem terribly onerous.

I am sure there are other grant programs like this, but I have come across few which state they expect you to have a fulfilling experience.

It makes me a little envious and wish I lived in Australia since the program includes Arts Management experiences.

I offer this in hopes it will inspire others to emulate them. And if some entity is offering something similar and Americans are eligible, I hope someone tells me about it!

Art(ist) Education, Working In The Arts

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Info You Can Use: When It Is Okay To Punish Your Customers

August 6, 2013

by:

Joe Patti

A couple weeks ago I wrote a post in which I decried the practice of many companies who offer better rates to new customers but provide no reward to long time customers.

Right on cue the next day, MIT’s Sloan Review published a piece that analyzes the transactional relationships people have with different types of business and discusses which can get away with treating long term customers poorly.

They acknowledge the fact that it can often be more costly to find new customers than to retain the ones you have, but note this is not true for all types of business. They use examples of cable and cell phone companies who provide services that are difficult to change versus a highly variable situation where someone may prefer to shop at Lowe’s, but will often purchase from Home Depot because it is move convenient to the drive home.

Lowe’s and Home Depot have to constantly work to retain customers and attract new ones while cable and cell phone companies can get away with raising rates mid-contract. The article authors say even if you are getting an offer to buy a new phone at a discount from your current service provider, it isn’t as sweet a deal as a new buyer is being offered.

Despite using the common terminology of “subscriber,” performing arts organizations don’t have the same luxury to treat current customers poorly that cable and cell phone companies do. I am sure it is no revelation that performing arts organizations operate in a far more competitive environment.

While depressing to contemplate, it was interesting to read the rationale that punishing customers makes good business sense.

Some customers are worth more than others and some customers are a greater drag on resources than others. Even if you don’t act on it, cultivating the ability to identify what policies are causing you to lose money can be valuable.

There might be some good lessons for arts organizations here. For example, some banks have started charging people to use lobby services and for receiving statements in the mail and made using ATM and receiving statements electronically less expensive because it costs more to maintain a physical presence and pay people.

Perhaps performing arts groups should make it more expensive to buy tickets in person versus online, rather than vice versa, as is the case in many places these days.

On the balance sheet, the answer is clear. However, since cultivating relationships are often viewed as the most important function arts organizations can fulfill for their community, perhaps it is better not to provide disincentives to personal contact.

But is that relationship something your customers value or is it something you have decided they value?

You should know the answer to this because if they do value good relationships and service, that is more expensive than just having someone at a desk. The training and retention of staff who provide good service and the database to support them requires a greater investment than just having someone available. If people don’t really value personal service, then maybe it is wiser to push them toward online ticketing and reduce ticket office staffing.

So here is the conclusion the authors came to:

“Specifically, we discovered that, most of the time, rewarding and acquiring new customers creates the most value. Under select circumstances, however, attention should shift to the retention of existing high-value customers….In markets that have a high degree of both flexibility and value concentration, companies should focus on rewarding their own customers — in particular, their best customers.”

The examples they use of high flexibility and value concentration is retail shopping, rental cars and airlines where people have many options to choose from and return customers will often spend greater amounts than just casual shoppers. They suggest reward programs for high frequency customers.

I translate that over to the arts as trying retain and reward subscribers and donors. The arts already acknowledge that these groups are high value individuals and need to be provided preferential treatment. So we have been doing something right all along!

Except that the authors don’t really address the question of what to do when your customer base is aging out. The article really just deals with optimizing your income from customers based on where your product/service falls on the continuum of flexibility and value.

There is an assumption that you have a product for which there is a demand. They address the question of how to treat your customers when you get them, not necessarily how to get them.

It is encouraging that the article validates the basic model many arts organizations use with their customers. The challenge that is still before us is offering a product people want and an rewards program that they value.

Audience Relations, Info You Can Use, Management Philosophy, Marketing/PR

2 Comments

What Do You Sell Online?

August 5, 2013

by:

Joe Patti

Okay, this entry is more a question for readers than any sort of discussion of issues. Basically, I would like to know how many price levels of tickets do you put on sale online?

When I was working in Hawaii, my colleagues at the other campuses and I put most of our base ticket prices for sale online- Adult, Student/Senior/Military, Under 12 and University Student.

When I arrived at my current job, I noticed only the top level ticket price for each area was listed online even though we offer just about the same discount categories as we did in Hawaii. Thinking it a mistake, I asked my box office manager why that was and she told me the software vendor suggested we only offer the highest level because people would take advantage.

[N.B. From a question I received, I wanted to clarify that this listing was on the purchase screen. When it came time to buy the ticket, they were advised to only let people buy full price tickets and not make the other price levels available. The other ticket prices were advertised both on and off line]

This was not my experience at all in Hawaii or other places I worked which also offered lower ticket prices online. Most of the time people wanted to pay the difference when someone couldn’t make it and they brought a person who didn’t qualify for discounts.

I admit I was a little riled when I heard that the ticket office was given this advice because I think that making people call or walk in to buy discounted tickets places a barrier to entry to many. I felt like this went against everything I have been working toward with my own practices and adovocating this blog.

Not to mention that someone can call and misrepresent their eligibility for discounts over the phone as easily as they can place the order online so you really aren’t preventing people who want to from taking advantage.

It’s not that my ticket office can’t ask that the internet site be set to offer more price levels, I just felt this advice reflected big corporate indifference. And that there was no effort on the company’s part to help venues facilitate the process for their customers.

But as I started to look around, I realized that many performing arts venues only seem to offer the highest level ticket online, even if they don’t use the same vendor we do.

So now my question is, what are people’s experiences and practices putting multiple levels of prices online?

Audience Relations, State of the Arts

4 Comments