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Info You Can Use: Dynamic Pricing That Doesn’t Alienate

September 13, 2011

by:

Joe Patti

Last week I was reading about some interesting ticketing structures being used by theatre groups in Chicago. Theatre Wit offers what is described as a Netflix subscription model where they provide unlimited admission to their shows for a monthly fee of $36. They also employ dynamic pricing with their single ticket sales and increase the cost based on demand.

What really intrigued me was the model being used by Filament Theatre Ensemble. Instead of selling tickets, they ask people to sponsor an element of the production as the price of their admission.

“In lieu of tickets, customers can sponsor costumes, props, and set pieces, finance two hours of rehearsal space, or pay for the production’s licensing fees. Big-ticket items such as the rent for the performance venue are broken into small portions and spread over the entire run of the show, so that all of items on the website are priced between 10 and 35 dollars. “

What I really loved about this system is that there is dynamic pricing by default but it is presented in a very positive and constructive way. It also provides a degree of transparency about the costs of mounting a production to audiences and gets them invested.

“Seeing as there is a limited number of items available in each pricing category, dynamic pricing is built into the system: once all of the 10–15-dollar items have been sold, patrons have to purchase something in the 15–20-dollar range if they want to see the show. However, contrary to Filament’s expectations, the lowest priced items aren’t the ones that sell first. Patrons are willing to spend a few extra dollars to sponsor something they can identify with—a cool prop, or a distinctive costume—rather than paying a smaller amount that will go towards office supplies…

However, from the company’s perspective it is more important that sponsoring a particular item, instead of purchasing a ticket, increases the audience’s emotional connection with the performance and with the company. Ritchey recounts, “A lot of times people would come up to us after the show and say I got you guys an hour of rehearsal space or I got that costume.” People get excited about what they have contributed to the evening’s performance. In addition to that, viewing all of the elements that go into a production online gives the audience a sneak preview of the show. Having seen all of the costumes and props in advance, the audience immediately feels connected to the production when they recognize those items on stage.”

According to the article, there are still a few issues to work out. Specifically, arranging for admission of people who come to the door to “purchase tickets.” I am guessing given this unorthodox approach, it may be difficult to explain the remaining sponsorship opportunities to those who show up at 5 minutes to curtain and just want to get in rather than choose between a ream of paper and audition space.

I find stories about alternative approaches like these and the one Andrew McIntyre related about Toronto’s Passe Muraille’s Buzz Festival very encouraging. Slowly arts organizations are beginning to discover valid approaches to audience engagement and keeping themselves viable through experimentation.

Business Models, Info You Can Use, State of the Arts

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Will Buffet Family Foundation Influence Other Funders?

September 12, 2011

by:

Joe Patti

Non-Profit Quarterly linked to an interview in Fast Company in which Warren Buffet’s grandson talks about his approach to philanthropy as he takes up the reins of the family foundation.

As I read the interview, I vacillated between mild dread where I hoped no one else decided to adopt the approach and feeling that his approach was sensible and might provide leadership that would strengthen the general non-profit infrastructure in the United States.

What made me most uneasy was his focus on quantity over quality.

“The first question, for instance, is “Assuming we are successful, how many people would we reach directly with the funding of this gift?” Proposals gets 3 points for affecting +1 million people, 2 for greater than 100,000, and 1 for less than 100,000. Those proposals with a less ambitious scope can secure a coveted spot on the portfolio team by being particularly unique or cost-efficient.”

While he does allow for funding of smaller efficient and effective organizations, I just wonder if that will get lost in the desire to report numbers served and therefore reinforce the idea that you have fudge numbers and always report success or lose funding.

Where this is coming from for him is wanting to get away from non-profits making emotional appeals and move toward discussing the complex factors which contribute to the problems the non-profit is trying to address.

“In the philanthropic world, the problem is the product, in the business world, the product is the solution.” says Buffett, who argues that NGOs are forced to “sell suffering.” The needless focus on sappy narratives often overlooks sophisticated solutions that can’t be easily marketed with a T-shirt-clad celebrity holding a small child.”

This is where I feel he is most sensible because he is determined to fund every step in the chain to addressing a problem, including the unsexy areas. But to do that, he wants the redundant organizations to either get out of the business, partner with other groups or refocus themselves.

“…rather than dolling out cash to independent, uncoordinated actors with the most heart-string-tugging story, they could take on an entire social problems (like food security or breast cancer) by systematically lining up nonprofits to tackle each part of the causal chain, from federal policy to victim resources.

“If you are an NGO, doing the exact same thing as another NGO, and that other NGO is doing better than you’re doing it, then you are in business for the wrong reason,” Buffett says in an exasperated rant against the individualist nature of charities. Overlapping operations, he says, not only waste money through redundant overhead, but keep brilliant minds occupied with logistical distractions that sap their potential impact.

“We will give you money to execute your mission,” Buffett says, “if you work together and identify the most cost-effective and successful ways to achieve that.”

Meanwhile, looking at the entire causal chain of a crisis is key to revealing missing links in the solution, such as political or logistical hurdles that are essential to success, but not appealing enough to raise dollars.”

Granted, the focus of the foundation he is leading is on agriculture, water and feeding school children rather than arts and culture. However, the practices of a Buffet family foundation is bound to have widespread influence with funders in other areas. It is possible that other foundations may use the same criteria.

Given that the question about whether there are too many arts organizations in existence has been a hot topic of late, it is conceivable that funders are already thinking along these lines.

So let me ask-

-how many arts organizations would seriously discuss merging or refocusing if a major funder told them they were redunant and less effective than another organization?

-how many might consider abandoning major activities that were redundant if the funder offered major support to expand in their areas of strength?

-would the arts in your community be more vibrant if there were groups that focused specifically on different niches within the chain? Such as:

-organization that handed advocacy for the arts with local government
-organization that focused on advocacy for the arts in education in conjunction with other advocacy groups
-organizations that purely perform
-organization that coordinates outreaches to schools by designing programs that emphasize the strengths of the performance and presenting groups

There are more functions that different groups might handle, of course, but this serves as a good example. You might look at this and think about how difficult it would be with all these tasks so decentralized, but think about how more schools would benefit if there was an organization that was making an effort to provide uniform coverage of your entire city/county. How much easier would it be for artists to make a living in the community if there was an organization that was hiring them to do outreaches in schools or connecting artists with students seeking instruction.

All this in an environment made conducive for these activities by groups who solely focused on influencing law and policy in government and school boards. Their advocacy is made credible by the existence of organizations who attract and employ strong performers and other organizations who develop exemplary education/outreach programs and train the artists to execute them effectively.

This approach may decentralize efforts and require a lot of cooperation between different groups, but does improve on the current situation where everyone does a little of everything with different degrees of success provided they have the funding and personnel. As Howard Buffet acknowledges, there is a lot of unsexy infrastructure that no one really wants to fund that is crucial to the success of non-profit efforts. What a boon it would be if someone would fund all those places at a level smart people would be willing to engage in the work.

Advocacy, Business Models, Fundraising, New Initiatives, State of the Arts

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Info You Can Use: Talk About Someone Else

September 7, 2011

by:

Joe Patti

One of the biggest dating no-nos is monopolizing the conversation and talking only about yourself. Most of us are probably pretty good at recognizing when we are personally committing this faux pas. How about organizationally? How about on social media?

In some respects, non-profit organizations are like awkward teenagers when it comes to social media. Lacking experience in talking to new people, they tend to stick to the topic of themselves. However, the same rules by and large apply. There ain’t nothing social about social media if you aren’t including other people in the conversation.

A tip of the hat to Technology in the Arts for calling attention to the post on Social Strand Media, 7 Things Nonprofits Can Talk About on Facebook Besides Themselves.

Author Tracy Sestili suggests the following topics that one might use (which I edited down a bit so read the original.)

1. Industry news on your topic – Don’t just regurgitate the news for them, they can set up a Google e-alert for that, but rather, aggregate the news in a way that is engaging by asking them what they think. Don’t just post a link to a news article, read it and ask a question about their opinion.

2. Newsletters – almost all e-newsletters have an option where you can view the newsletter online in a browser….

3. Share pictures – Facebook folks love pictures and it’s the perfect place to showcase the people who make the organization run or people that you impact…

4. Comment on current news – even if it’s not completely related to your organization, showing that there is a human behind the Facebook wall goes a long way with your constituents….

5. Re-purpose content (photos/videos – not text)…

6. Public opinion – ask your fans what they think about decisions you are struggling with internally…

7. Be shameless – Facebook fans of nonprofit organizations like to help out online. They like to be given calls-to-action where they can make immediate impact. So, ask them to help spread the word to 2 or 3 people in their network…

While I have been doing a number of these things for my theatre already, I don’t employ these techniques as frequently as I should. My problem is trying to decide on a voice for the organization on social media. I want to make people aware of challenges facing the arts, but not beat them over the head. Be whimsical, but not too silly. I want our audiences to become bigger consumers of arts experiences which may mean pointing them to events other people are sponsoring. Of course, in the process of becoming a credible source of this information, I don’t want my own performances to suffer.

Arts in an Age of Technology, Info You Can Use

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Brains, Rather Than Butts, In The Seats

September 6, 2011

by:

Joe Patti

Ever since it was announced back in July, I have been waiting for Arts MidWest to post their video from the talk given by Andrew McIntyre provocatively titled, Arts Marketing is Dead: Long Live The Audience. The video was posted last week (or at least they tweeted that it was posted then) so I got right to watching.

McIntyre is a founder of Morris Hargreaves McIntyre which has developed a system of audience segmentation being used in Europe and a number of the British Commonwealth nations. The talk, while an hour long, is broken up into segments itself so you can view parts of it and then easily return to it and continue if you can’t view it all in one sitting.

What McIntyre says is dead, or rather needs to be dead, is the underlying idea espoused by Danny Newman in Subscribe Now that vilified the single ticket buyer for not allowing the arts organization to illuminate their life. McIntyre says that while ticketing philosophy has changed, the underlying philosophy underpinning that idea remains. Most arts organizations view those who are not attending as having a deficiency in their cultural diet that their product can fulfill.

McIntyre says that the focus of most marketing is on people who are immediately loyal, not on those who haven’t been to a show in a number of years. The practice of cleaning a database doesn’t recognize that the cycle of attendance for most people is actually one that skips a couple years. He speaks of conducting focus groups with audience members who speak enthusiastically about the arts organization but whose previous attendance was four years prior. These people have a long history of being associated with the organization, it is just at 2-3 year intervals. According to McIntyre, these people are apparently just as likely to support an organization over the course of decades as someone who attends annually.

McIntyre doesn’t mention what an ideal period for retaining contact information with what appears to be former supporters might be. I suspect that it may be specific to each community based on various factors including the transient nature of the population. As he was talking about this, my first thought was that you should be clearing your mailing list of people who didn’t seem to want a relationship with you so you weren’t sending them unwanted mail.

That said, I basically use attendees from the previous 5 seasons as the basis of my annual mailing list. I occasionally get a call from people who are concerned that they didn’t know about a show because they know they are on our mailing list and have always gotten our brochure. But if we haven’t captured their name in the last five years either because they haven’t attended or made a purchase at the door when it wasn’t practical to collect their contact information, they eventually get excluded from our list.

McIntyre cautions against relying too much on technology noting that Facebook didn’t invent community and Twitter didn’t invent word of mouth. The arts are about connecting people with people so more direct and personal contact is needed to maintain your relationship. The typical practice has been push marketing where you push empty seats on the community rather than pull marketing where you try to engage people to become involved with you.

He makes some rather humorous observations about why audience development as a concept is on the way out. He says audience development has never been clearly defined as an organizational activity. For marketing it is a euphemism for marketing staff, for education people it is euphemism for outreach, for finance it is a euphemism for box office development and for artistic directors, it is a less objectionable term than marketing.

It has been about how many people you can get involved rather than how deeply you can get them involved. McIntyre says in the UK until recently audience development has been out going out to get people who don’t want to come. The task, however, is not to rescue stranded audiences. They are quite happy with the cultural experiences they have, thank you very much. It is the arts organizations who are stranded and so audience development is really about making the organizations relevant to audiences.

He is clear to point out that audience focus doesn’t mean audience led. Everything is still artistically lead. He gives the example of a theatre in Toronto, Pass Muraille, that has a program called the Buzz Festival where they have audiences view 10 minute segments of shows in development and then pass out surveys asking people to answer specific questions about whether the choices were working – “Did you believe the motivation/relationships of X characters in this moment?” By the time the full show reaches the stage, there is such a buzz and audiences have such an investment in the show, that they sell very well.

The playwrights and directors are still making the decisions, but they are getting the feedback they need to inform these decisions. McIntyre says that in the past this sort of engagement with the audience was viewed as dumbing down the product and so maintaining a high degree of isolation was sought. Audiences are more intelligent and creative than they are given credit for and don’t deserve this level of disdain.

McIntyre says we need to treat people as brains in seats, not butts in seats. (Erk, maybe I need to change the name of this blog. I can see how it is complicit in this mindset.)

It is a little too long to cover here, but in the 6th segment of the video, McIntyre covers the Seven Pillars of Audience Focus that they feel are embodied by those most successful at engaging with their audiences.

Among the changes McIntyre says that need to be made: An organization must be vision lead. It can’t exist only to make enough money to continue to exist. Organizations need to stop fearing audiences and feel the need for peer approval because it holds them back. Stop trying to build brand loyalty in favor of building brand equity where people feel they have a stake in the organization. Need to know more about our audiences than the average income people in their zip code. Everyone in the organization must be involved in the marketing. What each person does needs to grow the organization and its brand.

McIntyre talks about a self evaluation tool they developed so you can arrive at a score for your organization and then use it again multiple times to chart your progress. He says he is less interested in the score than in the discussion the score and test generate. I thought maybe it was online, but I couldn’t seem to find it on their website.

Arts in an Age of Technology, Audience Relations, State of the Arts

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