TRG blog: Dynamic Pricing is NOT the Story
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Dynamic Pricing is NOT the Story

Rick Lester | June 7, 2011 10:39 AM
I have a passion for sharing stories of success. This seems especially important when so many of our ‘water cooler’ conversations are dominated by accounts of doom, gloom and bankruptcy. Success stories offer important reminders that arts and cultural organizations are not limited to merely surviving. Even during tough times – perhaps especially during tough times – we can thrive!

At the recent Canadian Professional Association of Theatres (PACT) conference, TRG had the pleasure of sharing a truly remarkable client success story, that of Vancouver’s Arts Club Theatre Company (ACTC ). About three years ago, ACTC became curious about our work in dynamic pricing, the tactic of raising prices based on customer demand after tickets go on sale. Could ACTC exceed their $4.5 million annual revenue history with this practice?

Boy, could they ever! After two years of our working together, ACTC grew its subscription and single ticket revenues by nearly $3 million, achieving a total of $7.4 million, an increase of nearly 70%.

Fact: Dynamic pricing delivered a six-figure chunk of the income contributing to this success. But, as our PACT session put it, Dynamic Pricing is NOT the Story. The real news is how in just two seasons ACTC achieved:
  • 33% increase in ACTC’s full, renewable 5- and 6-play main series,

  • $5 more revenue for every ticket sold through a theater re-scale,

  • 32% reduction in the number of comp tickets distributed,

  • Earlier, faster sales of hot shows -- even selling out a holiday production before it opened.

As Howard Jang, ACTC’s Executive Director and TRG’s Senior Consultant Laura Willumsen pointed out in our PACT session, ACTC’s success came from a focus on building loyal patrons. In the process, ACTC debunked some myths and misconceptions that – sadly – have become part of the industry’s conventional wisdom.

ACTC ‘s story tells us:

Subscriptions are alive and well. A big part of the overall growth effort at ACTC was an unrelenting focus on generating high-loyalty subscriptions –ACTC’s full, renewable main stage series. The number of full series and associated revenues grew --even with a re-scaled hall and price increases.

Flexibility is no panacea. Everyone needs flexibility or they won't buy, right? For years, ACTC followed this conventional wisdom and offered flex series from day one of their subscription selling campaign. The result? Flex series renewals were so low and resulting subscriber churn was so high that growth was stymied. ACTC’s now offers limited, more strategically placed flex offers. Flex sales represent a much smaller portion of the subscriber mix. And, that's helped increase overall renewal rates to the healthy range of about 77%.

People don’t automatically buy late. Readers of this blog have seen data debunking the myth of late buying. ACTC’s success illuminates the point. The company used early on-sale and pacing strategies for its holiday blockbuster White Christmas. In previous seasons, hot shows generated 25-40% of total revenue during the run. Last season’s White Christmas sold out before the curtain went up on the first performance.

Done right and well, dynamic pricing can generate loyalty and incremental revenue. ACTC’s smart, creative team converted patrons who bought the highest, dynamically priced single tickets into subscribers! This is an excellent example of putting the right offer in front of the right targets at the right time.

Ultimately, dynamic pricing became one tactic that made subscribing more valuable. ACTC stopped believing and acting on negative assumptions that had become self-fulfilling prophecies. When they started acting differently, so did their patrons.

ACTC grew because everyone was willing to change. Leadership ensured that everyone was on board --from programmers to box office staff. Everyone at ACTC had a relentless focus on creating and manipulating demand. Bravo to Howard and his entire team, especially Marketing Director Peter Cathie White, Marketing Manager Bryan Woo, and Box Office Manager Reena Taank.

ACTC has agreed to help us tell their story again via a webinar that we’ll schedule in the coming weeks. Leave a comment or if you’d like to attend.







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Related Articles
Case Study: Arts Club Theatre Company
Demand vs. Loyalty – No Contest
Dynamic Pricing AND Subscription, not Either/or


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Case Study: Lyric Theatre of Oklahoma

Annual operating budget up 32% in 5 seasons

Lyric Theatre of Oklahoma 
 Photo: Joseph Mills

After a poor year for earned revenue in 2012, Lyric Theatre of Oklahoma (LTO) had rebounded and was experiencing a growth spurt. In 2013, Director of Marketing Danyel Siler had turned her attention to single tickets.

Her hard work had paid off, but season tickets were still a challenge. “Season tickets were steadily declining,” she said. “The season ticket campaign had been done the same way for years, maybe even decades. And we blamed the fall on the trend that subs were declining everywhere. Our executive director, artistic director, and I all knew something needed to change, but we didn’t know what.”

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