TRG blog: The subscription is evolving

The subscription is dead evolving: What Oliver Wyman’s subscription study means for the arts

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I recently sat in on a presentation at the League of American Orchestras conference entitled “The Future of the Orchestra Subscription Model.” The League is working in partnership with Oliver Wyman to study declines in subscription sales by analyzing transactional, survey, and buying simulation data.

I’m so pleased to see the attention that the topic of loyalty programs has been getting recently. Some of the best investments that arts organizations can make are in repeat attendance and cultivating patron relationships. At TRG, we’ve long been an advocate for loyalty programs, particularly subscription. It’s not just because we’re stubborn. We follow the data and we see organizations who invest in loyalty succeeding.

So, the data that Oliver Wyman collected from 45 orchestras of various sizes was of particular interest to me. Sitting in the session, I found myself nodding along. While the formal study has yet to be published, it reinforces much of what our consultants see and know. This study adds dimension and character to the trends, data, and anecdotes we’ve studied and heard.

The highlights:

No surprise: patrons want flexibility

Oliver Wyman’s data found what many in the field have observed—that consumers preferred a flexible, choose-your-own (CYO) package to fixed-seat, curated subscription packages. The study predicted that CYO packages will make up a third of all subscribers by 2017, and that the number of curated subscribers will have halved.  

Choose-your-own packages have been in orchestra field forever. They’re good options for patrons, and extremely useful in building loyalty. Long seasons and many concerts have made full-season packages a rarity for most orchestras in larger cities.

What’s wrong with traditional, fixed subscription? On its face, nothing. Both traditional and CYO packages offer value and benefits. It’s still the right subscription option for many patrons. But, recent trends in the orchestra field have to be put in the context of overall societal trends. There’s an increased expectation among consumers of flexibility and variety, and the field must answer that demand.

Note here that there’s a distinction between smaller curated packages, where the concerts are chosen for the patron, vs. CYO packages, where the patron chooses the concerts. TRG’s research has found that CYO and curated subscriptions with the same number of events will renew at similar rates. The thing that really impacts renewal is package size—the number of times we actually get patrons in a seat. In many orchestras, CYO packages are smaller, offered at the mid or end point of a subscription campaign, and have lower renewal rates. Too many orchestras don’t renew campaigns effectively for these subscriptions because they are not tied to seats. The field needs to cultivate CYO subscribers in ways that will keep them renewing and upgrading.

Relationships and experiences matter

Oliver Wyman also found that today’s patrons are interested in a more relationship-oriented engagement with arts organizations. This is especially true among Gen Y audiences, who want experience-related rewards for their loyalty.  Especially compatible with these findings are programs like our “super-subscriber” or “subscriber-plus” initiative, where patrons make a donation of $100 in exchange for extra benefits that enhance their experience, such as a backstage tour. Benefits which provide opportunities to connect with the organization act as an on-ramp to philanthropy for lower level donors. Full, fixed-seat subscription will be the final loyalty “destination” for some. For others, the loyalty sweet spot might be a CYO package with added experiences and connection opportunities.

Orchestras must continue to reward loyalty and promote the value of subscribing to their entire patron base. When it comes to value and pricing, Gen Y and Gen X are less price sensitive than previous generations. While subscribers from older generations want subscriptions to give them the best price on tickets, these generations aren’t as easily swayed by a discount.  Consumers, especially the group defined as “young urban creatives,” define themselves by their purchases and aren’t afraid to spend more on experiences. For example, 43% of every dollar that Gen Y spends on food is spent at restaurants, as compared to 37-38% for Boomers. In other words, Gen Y will spend money, but you’ve got to create a reason for them to want the product.

The context of the relationship matters. At TRG, we develop patron loyalty by finding every patron’s next step. This study affirmed that messaging which suggests next steps is effective in building loyalty.

Membership in addition to subscription

The industry has long been debating between staying with subscription or switching to membership/points-based programs. Recently field experts, notably Joanne Bernstein, have been advocating a “both/and” approach. Membership and rewards systems can be effective in building loyalty, and we agree. Organizations shouldn’t just switch to membership, but rather add it on to their larger loyalty strategy, including subscription.

Similarly, Oliver Wyman did not recommend that organizations change their subscription programs wholesale into membership programs. Membership is just one of a portfolio of program options that can be effective in building loyalty. Oliver Wyman was careful to say that membership is not a replacement for subscription, though. The study found that most people who wanted a membership wanted it to tie to ticket buying. Membership should reward buying tickets and subscriptions. It does not substitute the value of a subscription, to patrons or orchestras.

Takeaway: No magic bullet.

Oliver Wyman proposed a number of solutions to the problem of declining subscriptions, running from conservative to disruptive. The most radical and extreme solutions often get the most attention in our field. This study said that there are a variety of approaches that can improve subscription outcomes. TRG agrees. There must be a balance between curated/fixed and CYO subscription offerings. We agree that Gen Y and X require a thoughtful, data-informed approach. And, we agree that organizations should build loyalty through a number of different programs and approaches.

Our kudos to the League and to Oliver Wyman for this valuable research on developing loyalty in the orchestra field. We’re eagerly awaiting the official report, which will be released later this year.

Posted June 30, 2015

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