Findings coming out of loyalty analyses are beginning to expose a bias in the arts industry. Many arts managers are convinced that patrons are either:
• philanthropists seeking to sustain the arts
• or consumers seeking to experience the art form.
This “either-or” mindset is dead wrong, according to TRG Arts study.
Yet, industry leaders continually provide incentives to keep the bias alive in the structure of their organizations’ budgets—divvying up revenue expectations between major gifts, membership/individual giving, marketing/ticket sales. In the end, patrons are not appropriately valued for their support in total
. And, as we’ve recently noted
, devalued patrons don’t stick around.
It doesn’t have to be this way. At recent industry conferences, we’ve seen a small corps of patron loyalty action leaders begin to model a new way for arts organizations to treat patrons like people, instead of departmental property—and on the way, build sustaining patronage.
Loyalty is “Both-And”
Over the past decade, our firm has examined hundreds of thousands of patron behavior records looking for loyalty patterns within organizations. Study reveals distinct hierarchal groupings of patrons that we call Advocates, Buyers, and TryersTM
It’s true: Some
patrons only donate and other patrons only buy tickets. This is hardly surprising given the way we cultivate support and promote ticket sales on separate—sometimes competing— operational tracks. However, our research also shows huge transactional diversity among individual patrons.
Loyalty analysis consistently shows that the top ranks of patronage are comprised of active
individuals who are both
consumers of the art and
philanthropic supporters of it.
This is where the “either/or” bias can really hurt an organization. If an organization is looking at a patron through the philanthropy-driven lens only, how do you value the kind of “total” patronage that comprises an organization’s most loyal households—its Advocates and Buyers? Consider this actual, recently-seen patron who is typical of the Buyer behavior we see in loyalists on the rise:
The household is a single male. He spent $5,000 or more each year for five years in single tickets. He consumes a lot of this performing organization’s art. He also gave $150 or so each year for five consecutive years.
This man is not a subscriber and not a major donor. But he most certainly is not “just” a single ticket buyer.
Revenue Budgets - Bad Incentives
How do you suppose this man is regarded in a typical arts organization? In my experience, here’s how: No one is looking at his total history, except maybe casually because he’s seen often at performances.
The marketing department has a subscription revenue budget to meet. So, they are sending him brochures and calling him, trying to get him to subscribe—to no avail. The development department also has revenue goals to meet.
They look at his $150 gift and likely renewed it successfully several times.
But wait. Marketing has just been told it needs to sell more tickets because fiscal year-end giving is down. So they re-contact the model patron, asking him again, to subscribe. No thanks, he’s buying single tickets. And most likely, no one is offering to help him buy the seats to performances he DOES want to see—and apparently, there are many. The organization is giving up because he doesn’t want to subscribe.
Now, turn the tables. Ticket revenue is down and development has just been told to cover the shortfall with new gifts. Our model patron has already given $150. Is he ready to give more? Has he even been approached or cultivated in any way on the basis of his apparent love for the performances on stage? Probably not, and so the gift stays at $150.
Revenue budgets often pit marketing against development departments in this way. Each department has an incentive to approach patronage through the “either/or” lens. The goal becomes: get the revenue into my department’s column—not theirs —and not “ours”.
Would our model patron do more if he were approached differently? Our industry’s new loyalty action leaders are bound and determined to find out.
Starting Point for Change
Organizations often tell me they want to do patron-based management but they don’t know where to start. Here’s how pioneers in this paradigm have launched their efforts:
- Endorse and enforce a new way of doing things from the top. Changing the way “we’ve always done it” takes institutional fortitude and change only happens when leaders insist upon it. Growth requires institution-wide commitment. It is not a departmental initiative.
- Analyze patron data across systems to see all transactions at the household level. Information is a powerful, galvanizing force in an organization. The minute everyone in the organization sees a ranked set of individual patron histories, new possibilities are apparent. Every organization’s data set can create the rationale and story line for patron cultivation and development.
- Seize an opportunity or two to pursue. Patterns that emerge from analysis invariably show where the biggest opportunities lie. That’s where to start– by focusing first efforts on cultivating one or two manageable patron groups or patron patterns with the biggest upside.
Loyalty action leaders are taking these first steps. Then, they collaborate internally across departments to set goals, map a plan, implement, and evaluate results. They have already decided that integrated, individual patron management is an arts industry practice whose time has come. And, they are not just talking about it; they are doing it.
Attend TRG Arts’ session at the Theatre Communications Group conference at 12:15 p.m. on Friday, June 22nd or request the presentation by commenting here or contacting email@example.com