TRG's Strategic Marketing Counsel for Navigating Economic Downturn
Don't panic.
Go back to basics.
Rick Lester, TRG's Chief Executive Officer, outlined details on how arts marketers can Grow Ticket Revenues in an Economic Downturn
in his presentation to the 2008 National Performing Arts Convention (NPAC) in Denver on June 12, 2008. See the full presentation.
The keys to surmounting negative economic impact on ticket sales are:
- Sound decisions on budget and programming
- Right-sizing marketing investments
- Allocating expenses to maximize revenue returns
Q: Is it worth the time to ask for ticket buyers' names? A: Absolutely.
A patron calls or comes in person at lunch time to buy tickets - as quickly as possible -- for an
upcoming performance or event. It is 15 minutes before curtain and those waiting in line to get their
tickets are hurried to their seats thanks to "quick sale" features on the ticketing system.
The very short cuts that have become standard operating procedure for servicing patrons quickly also
are costing organizations future revenue. Why? Too many organizations do not collect the patron's
name and contact information for their database.
With no means of future contact, organizations nationally lose millions of dollars in future revenue opportunity. TRG's seminal 2003 study and ongoing examination of patron behavior have shown that each single ticket buyer's name can be cultivated into $4.51 in subsequent revenue. Yet, even among America's greatest arts and cultural organizations, the rate of patron contact information collection is dismally low.
Organizations that do a good job of collecting patron contact information and developing patrons' continued attendance can earn as much as $35 per single ticket buyer in the next season. Single ticket buyers represent 78% of all subscribers and subscribe eight times more often than those with no single sale history.
TRG's conclusion: Organizations should strive to collect patron contact information with every transaction. The key success factor is: ask! Be prepared to request the patron's name, address, phone number and email address in every selling situation.
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Q: Can rented lists increase new subscribers? A: Data analysis says: no.
Many organizations still mail a season brochure to every single person on their house list plus all the traded and rental lists they can muster. That approach is a wasteful allocation of resources, TRG's ongoing examination of subscriber response has consistently found. Inevitably, too many brochures are printed and mailed to households that are highly unlikely to respond.
National-level findings are clear. Poorest response comes from rental lists which account for only four-tenths of one per cent of all new subscribers. By comparison, ticket buyers with recent purchase history account for 19% of new subscribers and traded lists, 3.5%. More compelling yet are the data on the cost of mailing subscription brochures to rental lists. TRG's 2003 groundbreaking study on national response analyzed mailing of subscription brochures to 3.6 million rental names at a cost of $1.8 million. All rental list segments yielded an overall national total of only $77,000 in subscription revenue - it cost $23.38 to generate $1 in subscription sales using rental lists.
TRG's conclusion: Increasing subscription sales at optimal cost-of-sale requires smart targeting. The most cost-effective way to find the biggest pool of likely subscriber prospects is through analysis of subscription response using conversion reporting or, better yet, predictive modeling.
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Holiday Success Stories Offer Strategic Paths to Revenue Growth
These models for good revenue results are ones arts and culture organizations can replicate, especially as the economy presents new challenges.
Big, smart investments paid off for 2007 holiday performances. Investing early, heavily, and with laser focus on smart spending for optimal return (right-sizing cost-of-sale), Pennsylvania Ballet generated record revenue for its 2007 Nutcracker - results so good that their city's leading newspaper, The Philadelphia Inquirer, ran a page one story on the Company'ssuccess. An unprecedented board-sanctioned investment in TV (airtime and an exceptional commercial) drove sales. Other well-calculated holiday investments yielded goal-busting revenue increases for: Eugene Symphony's holiday Pops concerts, all three of Tucson Symphony's December programs, Fort Wayne Philharmonic's holiday and Video Games Live concerts, and, Houston Ballet's Nutcracker, making it a second consecutive Texas-sized holiday result for HB. Your cue: Find the money in your FY09 budget -- if it's not already there - for major investments in your 2008 holiday and other performances you know will be big-sellers.
New-to-file holiday ticket buyers -- the gift that keeps on giving. Holiday performances, not surprisingly, brought many organizations new patrons in significant numbers. For example, the Pennsylvania Ballet's response analysis showed that 6,150 new-to-file ticket buyers attended their big holiday hit. That's more good news for any company that like PAB has already begun to cultivate those new patrons. Holiday ticket buyers - including first-timers - will come back if you ask them. TRG research says: your 07-08 single ticket buyers will form the most productive pool of subscriber leads for 2008-09. And, the more often they come back, the more likely they are to subscribe. It's not too late for holiday response analysis that can get your new buyers back into seats for upcoming performances.
Demand management - if you do it, you will earn. Boston Ballet pulled off one of the best-implemented demand management campaigns this holiday. The Company's Nutcracker generated $250,000 more revenue this year than last, and $160,000 of that increase came from demand-based price adjustments. Harnessing demand in New York has become a trademark of Alvin Ailey American Dance Theater, whose City Center season has exceeded previous revenue levels by $1.9 million over two years.
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