Don’t Take Them For Granted

A lesson from the big boys in the for-profit world. My sister works in the new business department of Deutsch Inc. (as seen on The Apprentice) In the last couple months they have lost two accounts because new people took over management positions and simply decided to move their business to agencies with which they had preexisting relationships. There was no attempt to meet with the folks at Deutsch to discuss anything, just a call saying the business was being moved elsewhere.

It wasn’t a matter of poor results either. The first company, DirectTV had actually seen the largest increase in business ever since those godawful ads with celebrities reading half-literate testamonial letters began airing. Yesterday, Snapple became the second company to dump the agency and Deutsch did everything for them including designing the bottles and labels and writing those fun facts that appear under the cap. (I actually contributed a couple!) Deutsch would like to replace them with another beverage account but it is tough finding one that Pepsi or Coke doesn’t own.

A less or two here for non-profits. The first is obviously not to take your customer’s loyalty for granted. This is not to say Deutsch did. By all accounts they served their customers well. However, as you can see, some times it doesn’t matter how good a job you do and how much value you offer a customer. It just takes one opinion leader to turn a large segment of your customer base in another direction. Obviously, this can make your job easier in some respects if you can identify the opinion leader and harnass his/her influence for your own ends. But you can also encounter an easy come, easy go situation too.

Another lesson that isn’t necessarily illustrated by the Deutsch example but bears discussion is not to take your audience for granted in general. One of the things that constantly annoys me, and I am sure I am not alone, is seeing lucrative offers for subscribing to a service or magazine. Unfortunately, I can’t take advantage of these offers because I have been a loyal customer for a decade. I really resent the fact that companies will do all sorts of wonderful things to entice me to be a customer but they don’t do anything to reward my loyalty much less entice me to remain a customer. Even worse, when I originally signed up, they weren’t offering any incentives so I missed out entirely.

The only time I get offered special deals, it is to buy something I don’t need from a partner. This makes me strongly suspect they are getting a cut of whatever I buy due to their referral. Do companies really think they are rewarding me by giving me a deal on something I may or may not want when they know for certain I value what they offer?

It is so much more expensive to get new customers than it is to retain current ones, it is worth at least recognizing a person’s loyalty. Given the power and ease of use databases provide, it would be so easy for arts organizations to reward loyalty. If person buys X number of single tickets in a year, they get flagged for a free ticket or a discount. They have been buying tickets regularly for 10 years? Their tickets are mailed in a thank you card with a gift certificate for dinner.

Certainly, you may do all this work and they may still be seduced away by an impulse to do something different. An arts administrator’s job is to make it easy to at least partially ignore those seductions.

I’m A Guru!

In his entry today, Drew McManus labels me a “theatre management guru” for an entry I made last week. I tell ya, this puts a lot of pressure on me to make today’s entry (which is actually my 50th) significant.

I think I will play it safe and direct my devoted readers to I honestly don’t recall how I came across the webpage, but it has some interesting resources. The web page is a project of the New York City based Arts & Business Council, but provides valuable information for people on an international basis. (Some of the questions on their forums are posed by people from Hong Kong and Singapore.)

Some of the sections are a little outdated and the information presented is a little more general than I would have liked. If you are starting out doing arts marketing or are more experienced and seek some new ideas, it is worth a look. If nothing else, it will supplement what one already knows.

One section of the website deals entirely with creating a marketing plan from pre-planning to situational analysis to developing strategies and tactics. There is also a Hot Topics section that features articles on various aspects of marketing like audience development, communication, web marketing and research.

There is also a case study section which unfortunately only contains one study. Despite the note that you will have to pay to view it at this point, it is actually free to read. Perhaps as they build a library they will begin charging.

The portion of the website I found most interesting was their resource link page. Some of the links went to consultants, but others went to information sources of which I was not aware. Among them was BoardSource which deals with non-profit boards. (It seems like it would be a very interesting resource at first look.) Also included as a resource was a link to a Free Management Library which deals with 75 management topics in some depth. For example, it doesn’t only talk about the role of a CEO, but also talks about combating “Founder’s Syndrome” where the identity of an organization is so closely tied to the personality and energy of the founder.

It would be interesting to see if the Arts & Business Council continues to develop the arts marketing page. Since one of my goals for this blog was to eventually become a resource for non-profit organizations, I might defer to them if they do a good job. (They are underwritten by American Express and I ain’t)

Lies, Damn Lies and Statistics

I came across a couple of links about Florida via in the last week or so. In different ways they seemed to illustrate how the arts are constantly in a struggle to validate their existence by showing good numbers.

The first was talking about the Florida Arts Community rallying to get state funding restored. It was rather reminiscent of last year in NJ because the governor was the biggest impediment to arts funding in that state as well. One of the points the advocates raised of course was the economic benefit of the arts in the state.

I was somewhat impressed to see the writer explore the danger in using economic benefit as a rationalization of support by quoting a Newsweek article from a year ago by Artsjournal’s Douglas McLennan regarding the problem with employing this tactic:

“By my estimation, a pure case for public funding of art for art’s sake hasn’t been made in more than a decade,” Douglass McLennan, editor of, wrote in an essay last year for McLennan questioned “reducing arguments for arts to economic impacts,” and added, “Art may be a great economic investment, but if it’s not an investment someone chooses to make, you’re out of luck. Sorry, just business.”

In this vein, the article quotes one of the arts advocacy members as suggesting a day without art where every thing that was formed by some artistic consideration including sculpture, painting, music, film, television, architecture, to the cut of the lawmakers’ suits was covered, removed and generally forbidden them for a day to show them the value of art in their lives.

A few days after reading this, I came across an article in the New York Times owned Sarasota Herald Tribune written by the President of the Sarasota (FL) Arts Council which cited the PARC study and an Americans for the Arts study. One of the things he wrote about was how the studies illustrated the economic value of the arts. However, he also went on to state “that people of all income levels attend the arts. This dispels the popular notion that culture in Sarasota County is for the elite few.”

Since I had just read the PARC study and hadn’t come away with that impression, I was a little puzzled. I went back to the study and still felt the same as a result of the following findings:

“Enjoyment is unrelated to household income level, except in Sarasota where higher household incomes are associated with greater levels of arts enjoyment.”

“In Boston and Sarasota, attendance at performing arts events is positively associated with household income. This trend generally holds in Washington and Minneapolis-St. Paul as well, although the association is not as strong.”

“This contrasts sharply with Sarasota, for example, where respondents from the wealthiest households are over three times more likely to be frequent attenders than respondents from the lowest income households.”

“Household income, age, and presence of children at home are largely unrelated to the degree to which respondents find live performing arts to be enjoyable. Sarasota is an exception, where wealthier respondents report increasingly high levels of agreement regarding enjoyment of the
performing arts.”

“In Sarasota, more highly educated people are somewhat more likely to say that the arts are a source of pride in their community.”

“In short, households with lower levels of income are more likely to cite cost of tickets as a barrier to greater attendance. This relationship is strongest in Sarasota.”

As I had mentioned in an earlier entry, there are certainly other factors that act as barriers to attendance in all cities. However, the study singles Sarasota out a number of times as being atypical among the other cities surveyed in regard to having arts attendance and enjoyment so closely linked with education and income.

I thought that perhaps the Sarasota Arts Council came to their conclusion from the Americans for the Arts survey. However, that report was focussed only on economic impact and they only collected information from people when they were attending the event. There was no information collected from those who decided not to attend.

It was upon re-reading the Herald-Tribune article that I realized the president was actually basing his non-elitist claim on a third study that was commissioned locally. The results of that survey were not available on line that I could find. The fact that it was conducted locally makes me wonder if there was an agenda behind the data collection.

The greater tragedy though is that arts organizations seem to be focussing too great a portion of their energies these days trying to prove the worthiness of their existence. It is almost akin to Valentine’s Day in grammar school where kids are concerned about making a respectable showing when cards are distributed. Except in this case, people are massaging the results by metaphorically claiming that while they didn’t get a lot of cards, 25% of those they did get were high quality Hallmark cards rather than cheapie ones proving they are held in high esteem.

Ticket Discrimination

A short entry today because I had a job interview.

I came across an article recently about a study done on multi-tiered ticket pricing for theatres. The concept is similiar to how airlines price their tickets so that some people are paying a premium while the person next to them paid next to nothing.

A study was performed by Phillip Leslie, a professor at Standford University’s Graduate School of Business. He looked at the 1996 Broadway run of Seven Guitars to determine if the production’s 17 category pricing structure was beneficial to consumers or not. He found that it wasn’t particularly beneficial or harmful to consumers on the whole, though the producers did realize a 5% larger profit than they might have.

The article goes on to discuss the benefits of some decisions the producers made and how they could have made some more money given consumer purchasing habits. There were a couple sentences that caught my attention in the piece:

“Price discrimination is a practice used by companies that generally don’t know a lot about what consumers are willing to pay. “It’s something firms do when they lack good information about customers,” says Leslie.”

When a performing arts organization sets their prices, they are essentially setting a maximum price they feel their regular audience will be comfortable paying. They do surveying and communicate with this group directly and indirectly so they know at least a little about them. However, they don’t know much about those who don’t attend and they are the people multi-tiered pricing would be structure to.

In an entry last week I referred to the PARC survey that discovered the people who find price to be the biggest impediment are those who actually attend performances with some frequency. It might be beneficial if arts organizations could find a simple tiered pricing structure (airlines need a lot of computing power for their categories) that didn’t ultimately hurt their bottom line.

Those who are frequent attendees will be more familiar with the process of getting discounts and thus receive a “reward” for their devotion. Those who are not as familiar will end up paying a more premium price. Some people may end up paying as much as the market will bear rather than the top amount the theatre assumed the audience will pay.

This may be the structure which replaces the waning popularity of a subscription series. In order to make a tiered pricing structure work, especially one based on market demand, organizations would have to stop publicizing their prices. The only way to learn about discounts would be to be in an organization’s database to receive brochures, email, etc. where the discount prices were published. The core audience for an organization would then consist of people who are loosely interested in the production series rather than the devoted subscribers.

A multi-tiered system would put more responsibility on the shoulders of the consumers. Instead of knowing that they can always get half-price tickets the day of the show and knowing what half-price will be, the price might be half the current top price.

If tickets start out being offered at $25 and the show isn’t selling well, the theatre might email their core that tickets are now $20 two weeks out, if it still doesn’t sell well, 3 days out they might drop it to $12.50.

However, if the show start selling well, the theatre might raise the price to $35 and two weeks out email their core that discount tickets are $30, but then three days before might be selling the discount tickets at $40. Or perhaps they email their core a week out that it looks to sell out so get tickets now. (A claim they have to be very careful about making lest it appear to be hype to drive sales when the seats end up only 2/3 sold.)

Since people are making decisions about entertainment at the last moment these days, the only way it seems an organization can respond is by providing audiences with the information they need to make decisions. If the changing price structure drives people to your website so they can check which way the pricing is going, it provides the organization with an another opportunity to communicate additional information to them.

Changing pricing is a delicate matter and is as much public relations as maximizing revenues. The person who attends 2 productions out of 12 and barely gives a thought to the organization’s well being might become mightly offended that you are charging so much for a last minute ticket after the loyalty he has shown in the past.

In an early entry, I noted Ben Cameron’s observation that we may be entering a time when there is a shift in the social contract. This change in pricing structure might become a reflection of this shift.