This article is cross-posted on artsmarketing.org and AMTlab.
Read the second post in this two-part series here.
With the arts and cultural annual conference season in full swing, we’re thrilled to see the priority that integrated patron loyalty now has in field dialogue. Prioritizing patronage can have a real impact—on year-over-year revenues, the volume of people attending and visiting arts and cultural organizations, organizational relevance, and more.
Developing patron loyalty specifically means thinking about each patron’s right next step with an organization, getting them to increase their activity with and value to the organization over time. For example, if I attend my first concert (or play or exhibit) at your organization, my right next step is attending another event in the coming months.
Many organizations regularly have thousands of patrons come through their doors. That’s a lot of right next steps! Luckily the database, ticketing, and CRM systems on the market today can capture in-depth data on patrons like never before.
Stop studying everything.
Our field is finally beginning to embrace the importance of data, its management, and its analysis. Consequently, we now have what seems like a million ways to analyze that data. Administrators are presented with nearly everything they could possibly want to know about patrons. That’s good news and bad news.
If the objective is the next right step, everything does not matter. Yet everything is what is often presented. Having everything can obscure the metrics on which we DO need to focus. I’ve talked to more and more arts managers lately who are in a state of “analysis paralysis”. To them, I say, “Stop studying everything!” Focus on the metrics that matter—the ones that inform your loyalty strategy and can lead to sustainable revenue. Three examples are below:
What percentage of your organization’s revenue comes from patrons?
How to calculate
percentage of patron revenue:
Revenue from: tickets, subscriptions,
memberships, donations, classes, gala
From the last year or season, add up your revenue from tickets, subscriptions, memberships, donations, classes, gala, and any other revenue that comes directly from patrons. Then divide by total organizational revenue (which includes other sources, such as foundation income, corporate sponsorship, etc.).
When I ask this question, I see a range of answers—as low as 30%, but usually between 70% and 90%. Arts organizations know they are heavily reliant on patrons for revenue, but most don’t know exactly how much until they see this integrated number. It puts into clear perspective the need to cultivate patrons at every level of loyalty, from newcomer to major donor.
As you are planning for your new season, evaluate your investments by their impact on patrons. Focus your energy on campaigns that retain and upgrade them. And, work with other departments to align together with the goal of growing overall patron investment.
How many patrons are active?
For most organizations, the majority of the patrons in their database are inactive—they haven’t had a transaction this year or last year.
How to calculate the percentage of active patrons in your database:
Count of households that had
any interaction this year and last year
Total households in your database
Calculate the percentage of active patrons in your own database. Look at the numbers of active patrons for the last two years in each of the following categories:
- Single ticket buyers/admissions
- Other “patron” categories in your organization
Add those households up, and this will provide an initial idea of how many patrons that are your best and most realistic prospects for revenue today.
Then look at each category. Is each growing? Declining? These numbers can help you define where to focus your loyalty efforts this season. For example, say that your subscriber base is shrinking as your single ticket buyers remain steady. It’s time to focus more resources on converting single ticket buyers to subscribers or invest more in renewing subscribers. This type of analysis in each category may illuminate where the inactive patrons in your database are coming from.
How invested are subscribers and members?
Many arts managers see renewal rate as the most important metric for subscribers and members. Consider looking also at the percentage of subscribers who donate, also known as subscriber-donors. (Or, calculate the percentage of members who donate outside of their membership.)
Percentage of subscriber-donors:
31% or above: Great job!
24-30%: You’re doing fine.
17-23%: On the low side of normal.
16% or lower: You have opportunity here.
This might sound like a metric that only development would want to see, but it affects marketing too. After all, subscription or membership is marketing’s premium offering. It can be a purely commercial transaction; a patron might subscribe only to get the best deal on tickets. That value proposition changes once a patron makes a donation. That’s why subscriber-donors statistically have a higher lifetime value and are easier to renew. This metric tells you how loyal your most active patrons are—and how much they value their relationship with your organization.
When planning marketing campaigns, consider how you can involve development or even your box office to deepen that relationship with a donation. After subscription, donation is the right next step for many patrons. If your number was 23% or below, consider a formalized subscriber or member upgrade program. It is both departments’ job to make the transition from subscriber to donor as smooth as possible for the benefit of the entire organization.