Reading Reflection

C H A P T E R 1 5

Building Audience Frequency and Loyalty

FOR MORE THAN THREE DECADES AFTER PUBLIC RELATIONS EXPERT DANNY Newman introduced his Dynamic Subscription Promotion campaign in 1961, the widespread application of subscription drives created a substantial and loyal audience base for hundreds of performing arts organizations.

Yet, in recent years the public’s interest in full-season subscriptions has waned significantly. Not only are many arts marketers less successful at attracting new subscribers, but each year, at many performing arts organizations, fewer current subscribers renew. As a result, marketers have had to work harder and more creatively than ever before to attract sizable audiences. For the most part, arts marketers have successfully filled the seats of lapsed subscribers with single ticket buyers. However, it is far more challenging and costly to market performances one by one. Subscribers are the lifeblood of most performing arts organizations. Even though their numbers have declined, they are the most loyal attenders and most generous donors.

Subscriptions

The full-season subscriber is the ideal ticket buyer, guaranteeing an audience and an expected revenue source. Historically, claims Newman, hundreds of stage companies closed quickly because their economies were based on the hope of selling most of their capacity to the general public through single ticket sales. Consistently strong single ticket sales could happen only if all the shows pro- duced were major hits—something that is extremely unlikely for a nonprofit organization with a mission of artistic exploration. 1

History of Subscriptions

In the 1960s and 1970s, backed by the Ford Foundation and its creation, the Theatre Communications Group, Mr. Newman helped more than four hundred

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performing arts organizations thrive by rooting them in the subscription concept—selling tickets not to one show but to a full season of performances— and by teaching managers how to attract subscribers in significant numbers. The momentum gained by early successes with subscription campaigns encour- aged the inception of numerous new professional theaters, dance companies, symphonies, and opera companies, and before long, subscription drives became the backbone of most every performing arts audience development campaign. In the United States many organizations large and small rely on subscribers to guarantee an ongoing audience for their programs, and focus a great deal of their marketing efforts and resources on building and retaining subscriptions.

In the results of the John S. and James L. Knight Foundation’s Classical Music Segmentation Study in 2001, the largest discipline-specific arts consumer study ever undertaken in the United States with nearly twenty-five thousand com- pleted surveys and interviews, researchers became acutely aware of changing atti- tudes toward subscribing, especially among younger audiences. Among ticket buyers in the 18–34 age cohort, 15 percent are highly inclined to subscribe, compared to 56 percent of those aged 75 and older. About half of the subscribers are 65 or older. Among single ticket buyers, 36 percent are former subscribers who have opted out of subscription packages but who remain in the audience. In the 1980s, 80 percent of the audiences at the South Coast Repertory Theater in Costa Mesa, California, were subscribers; today 40 percent are subscribers. In response, the theater has reduced the number of performances of some of their productions and when a show is popular, sometimes the show is extended for an additional performance or two.

Furthermore, the traditionally accepted concept that people who enjoy attending an organization can gradually be encouraged to subscribe has not gen- erally held true. One orchestra found that 68 percent of its single ticket buyers have been attending for two to eight years or more and have not been responsive to subscription offers.

Clearly, says consultant Alan Brown, “subscription marketing is becoming an increasingly dysfunctional marketing paradigm.” 2

The Rationale for Subscriptions

In his book Subscribe Now! Danny Newman presented several compelling expla- nations for the value of a strong subscriber base. 3

Single Ticket Buyer Attitudes and Behavior Single ticket buyers typically attend only the biggest hits of the season. For the esoteric shows with limited appeal, for productions without big-name perform- ers, and during bad weather, reliance on single ticket buyers often means playing to halls with too many empty seats. Not only does this hurt the organization

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financially and morally, but it also deprives it of the opportunity to inspire and educate. Through repeated exposure to a variety of offerings, people develop a rising threshold of repertoire acceptance.

Artistic Benefits A strong subscriber base gives artistic directors more latitude to experiment than they have when dependent on single ticket buyers. With a subscription package, people are buying tickets for some programs they would not have attended oth- erwise, guaranteeing an audience for unfamiliar or unpopular repertoire. Even if there are one or two programs in a season that the subscriber does not like, typically he or she takes it in good spirit and renews the following season.

Influence of Critics For organizations without a strong subscriber base, especially smaller, grassroots companies without big name productions or star performers, critical acclaim can be a matter of life and death. Large subscription audiences greatly reduce the power of the critics—both professional critics and social contacts—to close a play with bad reviews. The real power belongs to the subscribers, who spread the word about the shows they like and who cast their vote at renewal time each year on the basis of their reaction to the entire season.

Economic Benefits Subscribers provide the organization with guaranteed revenue, which is often paid many months in advance of the season. This early revenue stream helps the organization maintain a cash flow for ongoing expenses, even during the off season.

Subscribers require much lower marketing expenditures than single ticket buyers do. TCG, in its annual survey of its member theaters, reported in 2012 that over the previous several years, single ticket marketing expense as a per- centage of single ticket income averaged 21 percent, whereas subscription mar- keting expense to subscription income averaged 11 percent. 4 (It is important to note that single ticket marketing expenses are much lower today than they were during Danny Newman’s era, thanks to the Internet, email, and social marketing.)

These numbers do not tell the whole story. The marketing costs for attract- ing a new subscriber may be very high—in some cases they total as much as 50–100 percent of the first year’s subscription revenue. However, one must con- sider the lifetime value of the subscriber. The cost of renewing subscribers is minimal, so over time those patrons who continue to renew provide the organi- zation with significant earned revenue garnered at relatively low cost. Also, many subscribers bring in other new subscribers and single ticket buyers from among family and friends. The 80/20 rule applies to subscribers at many organizations; 20 percent of ticket buyers purchase 80 percent of the tickets.

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Furthermore, subscribers, motivated by their sense of commitment to the organization, are prime donors to the organization. In fact, most contributions from individuals come from subscribers.

Lifetime Value of Subscribers

An analysis of the lifetime value of a subscriber clearly indicates that over time, the costs of attracting and retaining subscribers are low compared to the ben- efits. Consider the following example.

An orchestra runs a subscription campaign and generates 100 new subscrib- ers at a rate of $200 per subscriber (for five shows). In the first example (see table 15.1 ), the campaign cost is $5,000 for printing, mailing, telephoning, and advertising, or $50 per new subscriber. There is generally a large attrition rate after the first year, but attrition drops significantly in following years. Assume the orchestra follows a typical pattern of retaining 50 percent of new subscribers after the first year, 80 percent after the second year, and 90 percent each successive year. Subscribers who stay with the organization over time continue to generate revenue each year at a minimal cost to the organization. Assume that the cost of renewing subscribers averages $10 per year per patron and that the cost of a sub- scription remains at $200 for the next five years.

After five years, only 32 of the original 100 subscribers are still subscribing. But, from this one subscription campaign alone, the organization has generated revenue of $51,600 at a cost of only $8,580. The organization still comes out far ahead financially even if the campaign cost exceeds the first year’s campaign revenue .

Now imagine that the 100 subscribers and $20,000 revenue are obtained at a cost of $20,000 instead of $5,000, as in the first example. (see table 15.2 ).

Although at first the campaign costs exceed revenue earned, over time the revenue grows to exceed the costs by a continually greater amount. One must also consider that many subscribers will remain with the organization beyond five years, that many will bring in new subscribers, and that many will become

Table 15.1 Lifetime value of subscribers: Example A

Year Percent renewing No. of subscribers Revenue ($) Cost ($)

1 100 20,000 7,000 2 50 50 10,000 500 3 80 40 8,000 400 4 90 36 7,200 360 5 90 32 6,400 320

Total 51,600 8,580

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regular contributors. In other words, the lifetime value of this one subscrip- tion campaign is much higher than the chart indicates. Furthermore, in each of the five years, the organization will conduct its annual subscription campaign, bringing progressively more subscribers into the organization.

Says marketing expert Philip Kotler, “A business is worth no more than the lifetime value of its customers.” 5 And, said the character Moss in David Mamet’s play Glengarry Glen Ross, “What did I learn as a kid on Western? Don’t sell a guy one car. Sell him five cars over fifteen years.” 6

Limitations of Subscriptions from the Organization’s Perspective

Despite their many benefits to the organizations, subscriptions present some sig- nificant limitations. The thought that “I might not enjoy this” undermines the perceived value of a subscription. As a result, a subscription program tends to work best with “safe” repertoire—repertoire that is within the range of people’s expectations. Subscribers expect the works to fall within a certain stylistic range; they don’t want their avant-garde theater to perform traditional productions of the classics and vice versa.

Orchestras in particular, with their high fixed costs, are constrained by a financial model that is largely dependent on subscription sales. Therefore they have little room to experiment—they have no R&D capacity like other industries—and even less room to fail. “Until this equation fundamentally changes,” says consultant Alan Brown, “subscription marketing will continue to be the sweet honey that sustains orchestras and a slow-acting poison that impedes their long-term sustainability.” 7

In the performing arts, it is extremely helpful to be able to set different capaci- ties for different productions according to demand. It doesn’t make sense to offer the same number of performances of every concert or play when the marketing director knows that some productions will be a hard sell and others could sell out more performances. Also, both the audience and the performers have a far better experience when the hall is full than when it is half empty. The structure of a

Table 15.2 Lifetime value of subscribers: Example B

Year Percent renewing No. of subscribers Revenue ($) Cost ($)

1 100 20,000 $24,000 2 50 50 10,000 500 3 80 40 8,000 400 4 90 36 7,200 360 5 90 32 6,400 320

Total 51,600 25,580

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subscription-based season, however, makes variations in the number of perfor- mances of each production difficult to arrange. Some organizations have “dark” weeks between productions during which a show can be extended if it realizes enough single ticket demand. And occasionally, an organization—typically a theater because of its flexibility compared to symphonies, operas, and dance companies—will move the successful play to another venue, if the performers, venue, and budget allow for it. But when a show is not well received, nonprof- its will continue to offer all the scheduled performances, unlike Broadway (for profit) theaters that are fully responsive to audience demand.

At a session titled “Are Subscriptions the Past, Present or Future of Opera?” directors attending the 2004 Opera Europa conference summarized the vary- ing attitudes of European performing arts managers. Some companies still rely heavily on subscriptions; some, like Th éâ tre Royal de la Monnaie in Brussels, believe that having more than 50 percent of the house subscribed is “dangerous,” whereas others have experimented with changing or eliminating subscriptions in order to avoid bringing in the same audiences time and again.

Hanover Opera lost five thousand people—half its annual audience—when it boldly dropped subscriptions. “But,” said artistic director Oliver Kretschmer, “we continued to do work we believed in and began to make more contact with the audiences, and after two years our audiences started to change. The old types never came back but new ones started coming in.” Hanover’s dramatic policy change was driven by its managers’ opinion that, according to Kretschmer, “the subscription system is not the system of our time. We are always sold out now, but younger people do not necessarily want to subscribe.” Andreas Homoki of Berlin’s Komische Oper said that the advantage of having no subscription system is that the audiences are less conservative and dull. However, he added, the risk is that “you can have a perfectly good production that ends up with only 300 people in the audience.” Yet, some companies prioritize the high level of income they can consistently depend on from subscriptions. Says Ulrike Hessler, director of public relations and development at the Bavarian State Opera, “Subscribers are not our favorite audiences; they like ‘easy art.’ But they bring in money.” 8

Subscriber Benefits

Some people are willing to pay well in advance for an entire season of perfor- mances, to risk disappointment over some productions while committing to artistic exploration and supporting an organization they believe in, and to elimi- nate the role of the critic and other opinion leaders from their ticket purchase decision. But these factors, which constitute Newman’s rationale for subscrip- tions, are actually costs from the customer perspective—costs people are willing to pay as long as they receive benefits of value to them.

The benefits of greatest value to subscribers are seating priority, ticket exchange privileges, and sometimes, discounts. Of course, most subscribers want to be

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sure to see all the shows in the season as they have developed loyalty to the organization. Many organizations offer other subscriber benefits, but most often these are additional perks, not reasons to subscribe.

Seating Priority A popular subscriber benefit is seating priority. In heavily subscribed organiza- tions, people wait years to work their way up to preferred seats. Some subscrib- ers who consider dropping their subscriptions for a season or two do not do so because they are afraid of losing “their” seats. The best seats are still a draw for many people, and long-term subscribers and generous contributors should always be granted first seating priority.

Ticket Exchange Privileges Subscribers generally expect ticket exchange privileges as a benefit for com- mitting far in advance to attend on specific dates. Heavily subscribed theaters have typically required that tickets be exchanged for the same production only. However, performing arts organizations can best meet their subscribers’ needs and preferences by allowing them to exchange tickets for other productions as well, according to availability. If the subscribers already have tickets for the other available production, they may bring their friends to use their “extra” seats, thereby bringing new patrons into the organization. Also, people who travel frequently or spend winters away may be more likely to subscribe if they can count on such flexibility. This benefit has become so important to subscribers that many US orchestras, which have long held out against this policy, are now offering their subscribers the privilege to exchange their tick- ets for any season performance. Box office personnel complain of being bur- dened with multiple exchange requests, but they must learn to consider this a minor inconvenience compared to the great advantages of having a strong subscribership.

Many organizations charge a ticket exchange fee, but in recent years, some organizations have eliminated the fee to make ticket exchanges more palatable for their patrons. It makes the most sense to offer subscribers free (or very low cost) exchanges and charge single ticket buyers for their exchanges. Each organization must analyze its own patrons’ characteristics, expectations, and behavior to determine which policy and what exchange fee would work best for them.

Discounts The discount is one of the most common promotional instruments for selling subscriptions because so many people are drawn in by a bargain, even if they can afford a higher price. Many performing arts organizations offer subscribers five plays for the price of four, one play free, a discount off the single-ticket price that may range from 10 percent to as high as 40 percent, or some similar offer.

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In recent years, as many subscribers have been lapsing their subscriptions and it is increasingly more difficult to attract new subscribers, arts organizations are luring potential subscribers with deep discounts. This strategy may have the short-term effect of increasing the subscriber base, but unless the artistic pro- grams continue to be highly attractive, people who subscribe because prices are low are highly likely to lapse when renewal time comes around.

Frequent performing arts attenders tend to be in higher income categories than the general public, so their attendance is generally not dependent on get- ting significant discounts—except for students and other low-income groups, for whom special price offers should be made. Each organization should care- fully research what level of discount will provide the desired incentive so that it will not be overly generous. An organization can often greatly increase its ticket income by reducing the discount that it offers to subscribers.

When designing discount offers, the organization should estimate the implica- tions of each offering. For example, if an organization were to offer new subscribers a 50 percent discount for the first year, either the offer would have to be repeated year after year, at great financial cost to the organization and at great risk of annoy- ing other subscribers who were not offered the same benefit, or the organization would have to expect to lose many of these new patrons when the price goes up. On the other hand, if the organization offers all new and resubscribing subscribers a 10–20 percent discount each season, the offer may serve as a viable incentive to subscribe that helps build a loyal audience base at low cost to the organization. Some organizations are experimenting with offering a deep discount the first year and reducing the amount of the discount in subsequent years.

Guaranteed Seats Subscriptions are easiest to sell when there are many attractive shows being performed over the course of the season, or when one show is so attractive, the only way to guarantee tickets is to subscribe. At the Lyric Opera of Chicago dur- ing the 2012–2013 season, performances of A Streetcar Named Desire, starring the renowned Ren é e Fleming, were available to subscribers only. This strategy anticipated that demand would be high for tickets to the limited performances of this production and the opera wanted to accommodate its most loyal patrons. Also, since the subscriber base had been eroding over recent years, this strat- egy served to retain some subscribers who may have lapsed their subscriptions without this incentive. In organizations with a low subscribership or with an intimate hall that has uniformly good sight lines, it is harder to make a compel- ling case for a campaign that says: “Subscribe and guarantee your seats!”

Limitations of Subscriptions for Audiences

People who subscribe report that they like to plan in advance. But many people are attending less frequently and are buying smaller packages. For some, this is

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because they have become more spontaneous in their lifestyles or have difficulty scheduling in advance. Research shows that the majority of former subscribers say that their primary reason for no longer subscribing is that they prefer to select specific programs to attend.

The preference for selecting which shows to attend has come to take prece- dence over priority seating and other subscriber benefits. And as more people lapse their subscriptions and more seats become available, guaranteeing one’s seats in advance becomes less urgent. This is an advantage for ticket buyers, even though it is a worry for marketing managers. Increasingly, patrons are putting off ticket buying until the week of the performance.

The change in buying patterns is primarily a generational shift, part of a seis- mic shift in how people spend their leisure time and dollars. Many in the arts express concern that younger people are not interested in their offerings and will not attend, while in fact, the younger generation eagerly attends when marketers make offers available that match their lifestyles.

Attracting Subscribers

The marketing director must carefully consider which benefits prospective sub- scribers value and prioritize aspects of the offer around these benefits. Tactical benefits like discounts and complimentary ticket exchange privileges typically are not reasons for people to subscribe. These benefits make the offer more attractive once people have the desire to see a series of performances. As I cannot emphasize enough, a season of highly desirable plays is the most important fac- tor in attracting and retaining subscribers.

Design Your Own Series Many organizations have discovered that they achieve the greatest success in retaining and attracting subscribers by being flexible—by listening and respond- ing to their customers. According to Jim Royce, marketing director of the Center Theater Group in Los Angeles, the purpose of his Design Your Own series is to meet customers’ expectations, not the theater’s. When create-your-own sub- scriptions were first offered at the South Coast Repertory Theater in 2010, they attracted one hundred subscribers. Two years later, there were seven hundred create-your-own subscribers. 9 For many years, while subscriptions were in high demand, the Lyric Opera of Chicago had the luxury of dictating and enforcing rigid subscription plan parameters. The only flexibility allowed patrons in those days was exchanging to another performance of the same opera within the same series. During its heyday, the Lyric Opera sold more than 100 percent of capac- ity, since tickets that were turned back to the box office by subscribers who could not use them were resold to eager single ticket buyers. In more recent years, as the subscriber base had eroded and people have become increasingly selective, the Lyric has been offering a wider variety of packages with different options as

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to the number and choice of operas. The organization also added an option to switch from one opera in the package to another opera not part of that package, and the option to design your own package.

Money-Back Guarantee In response to some people’s concern about avoiding the risk of not liking the performances, the Mark Taper Forum in Los Angeles offers new subscribers a money-back guarantee. “It’s simple. Just attend your first performance. If you’re not satisfied with your subscription, we’ll refund your money for the balance of the season.” Says director of marketing and communications Jim Royce, “It makes a lot of people feel much more comfortable about buying subscriptions. And it works. We have had fewer than 500 out of 67,000 cancel.” Royce attri- butes his organization’s success in selling and retaining subscriptions to a focus on building long-term relationships with single ticket buyers, reengaging former subscribers, upgrading donors, gaining referrals from current subscribers, and providing current patrons with superior service. 10

Designing the Offer The target market for each offer should be clearly identified so that the right messages and language are used to attract the target audience. Designing a sub- scription offering is a relatively straightforward task for an organization that produces only a few productions a year. Organizations such as large orchestras, which may offer dozens of different concerts in a single season, need to divide their season into different packages of balanced offerings, creating combinations of concerts that will appeal to the various subscriber segments. This is a complex task that is best accomplished with much experience and detailed records of past sales and ticket exchanges.

Extended Payment Plans The actual cost to consumers of a subscription series is not only the price of the tickets but also the timing of payment. Traditionally, subscribers are expected to make their payment in one lump sum when they place their order, typically in the spring before the fall performance season begins. However, people prefer paying on a monthly basis for other large expenditures such as their health club membership, mortgage, and insurance payments.

In the San Francisco audience survey, we tested the premise that some single ticket buyers would purchase a subscription series if they had the option to pay for their subscription over a period of several months. The encouraging result was that 23 percent of single ticket buyers at the symphony, ballet, and theater reported that they were very or extremely likely to purchase a subscrip- tion if an extended payment plan was made available. These people represent a broad range of demographic characteristics in terms of age, income, length of attendance, and marital status. Any plan that would convert even just a small

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percentage of single ticket buyers to subscribers is definitely worth considering and implementing.

To administer this option, the organization should charge a modest service fee—$10 should be more than adequate—and a credit card number for each participant should be kept on file with the understanding that this account will be charged monthly over a period of time, which can range from three to six months or even longer, depending on how expensive the organization’s ticket prices are and when the person makes the first payment. It is best to allow the patron to decide the time frame for payments.

The arts managers I have spoken with who offer extended payment plans report they have never had anyone fail to pay, even when payments are due well after the season has begun. It is highly worthwhile to offer extended payments even if an occasional patron defaults.

The Subscription Campaign

A subscription campaign requires involvement at every level of the organization, including staff, members of the board of directors, and volunteers. The roles and responsibilities of each will vary according to the size and structure of the organization. In larger organizations, the marketing staff will do most of the work; in small organizations, board members and other volunteers may play a more central role, with one or two employees managing administrative details. Qualities to seek in persons managing the campaign are initiative, leadership, and the ability to inspire, motivate, supervise, provide incentives, and otherwise involve the staff and volunteers. The campaign leadership should have direct contact with each volunteer at regular intervals throughout the selling period. The knowledge that there is an ongoing reporting procedure will have a positive effect on sales.

Setting Goals and Structuring the Campaign For each subscription campaign, the marketing director should set specific goals for the number of new subscribers, for renewals, and for bringing back lapsed subscribers. Objectives should be set realistically so that each cam- paign’s goals are attainable. The target increase may be a small increment, or there may be a major drive to substantially increase the number of subscrib- ers, based on the appeal of an upcoming award-winning play, a new venue, a star performer, or other attractions that may serve as incentives for new sub- scribers. When an organization enjoys a large subscriber increase in one year, it rarely can sustain that level of growth in succeeding years. In this case, the organization should focus on renewing as many of the first year subscribers as possible. If the organization had lost a significant percentage of subscribers recently, it should investigate the reasons and focus on efforts to bring them back.

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The campaign should be formulated in detail, considering all opportunities for audience growth, with strategies for targeting each group, including personal selling, mass media, and social media. Marketing managers should study the effectiveness of various tactics used in the past when deciding how much effort and budget to commit to each. For example, when an arts organization trades lists with other organizations, the manager should code the mailings with the source of each contact so that the effectiveness of each source can be measured.

Timing the Campaign Renewal of past subscribers is the first step in the annual subscription campaign, but efforts to gain new subscribers must begin long before the renewal effort is over. A successful organization generally renews between 60 and 90 percent of its subscribers, meaning that it must compensate for attrition before it even begins to increase the subscriber base.

The subscription drive is usually initiated in late winter or early spring for a season that starts in the fall to allow the marketer enough time to follow up with patrons who have not responded before the season begins. The campaign runs through the season’s first production so that single ticket buyers can be encour- aged to apply the cost of their ticket to the price of the season subscription. There is evidence that starting the campaign earlier actually generates a better response rate overall. And organizations can and should extend the campaign period by offering partial subscriptions at various times as the season is running, such as during the holiday season for the winter and spring.

Renewals and Retention

Past attenders are far more likely to respond to marketing offers than people who have never attended; it is much easier to sell a fifth ticket to people who have already purchased four than to sell someone a first ticket to an organi- zation. The cost of getting a subscriber to renew is a fraction of the cost of recruiting a new one. TRG’s extensive database of ticket-buying statistics at many organizations demonstrates that the cost of sale to new subscribers is 25 percent the value of the sale, while the cost of renewing subscribers is just 3 percent. Furthermore, once people have renewed, their renewal rate over sub- sequent years is much larger, creating much higher value for the organization. Whereas 69 percent of all subscribers renew, 88 percent of subscribers who are also donors renew. In contrast, the cost of sale to single ticket buyers aver- ages 20 percent; merely 23 percent of single ticket buyers purchase tickets for another performance. 11

When people subscribe because of a star performer or other similar entice- ment, they are less likely to renew the following year if the season is less exciting. Also, the more gimmicks that are used to lure new subscribers, such as deep discounts, the less likely they will be to renew as they may have been coming

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for the “wrong” reasons. For every person who expresses annoyance at being contacted several times by mail or phone, there are likely to be many others who express appreciation for being reminded. Assume an organization begins its renewal campaign on March 1. A second notice should be mailed to those who have not responded on April 1, followed by a third on May 1. By May 15, a telephone campaign should begin to follow up with the recalcitrants.

A deadline can be set and enforced after which the subscriber’s seats cannot be guaranteed. If the “official” campaign deadline was May 31, the organiza- tion may want to extend a grace period to those who have technically allowed their subscriptions to lapse. They may be told that they are considered mem- bers of the subscriber family, that it is difficult to accept their withdrawal, and that the door is still open for them to retain (or improve) their seat location and other benefits for a certain period of time. At this point, it is appropriate to have someone special in the organization (a dancer, singer, or actor?), rather than regular telemarketing personnel, make the contact. Even when a person does not respond to such efforts, he or she should not be considered irretriev- ably lost and should be approached again in early fall amid the excitement of the new season getting under way. Of course, the person’s former seat locations will have already been given to others, but the best seats available at that late date can be offered.

The marketing director should coordinate timing with the artistic director to avoid scheduling the more “difficult” works either for the first production, when new subscribers may be getting their first impression of the organization, or during the renewal period. This will avoid giving subscribers too conve- nient an opportunity to express their dissatisfaction and abandon the orga- nization. The marketing director should also coordinate schedules with the fund-raising director so that subscribers, especially those new to the organiza- tion, have a chance to attend two or three performances before being solicited for contributions.

When a new subscriber signs up or a subscriber renews, an acknowledgment with thanks and a special welcoming letter should be sent within three to five days with notification as to when the tickets can be expected. When the tick- ets are mailed, a special “helpful hints” flyer should be inserted, highlighting important points on ticket exchange information, parking, special educational programs, dining information, and so on.

Renewing First-Year Subscribers Increasing first-year renewals by even 10 percent can amount to significant sub- scriber growth over time. From the time people first subscribe, the organization should welcome them into the subscriber “family,” provide them with in-depth information about the organization, its policies, its artists, and its programs. Newsletters and other special information should be sent on a regular basis. New subscribers should also receive at least one customer service phone call during

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the season asking them to evaluate various aspects of their experience and to express any concerns or suggestions they may have. This requires that callers are fully informed about the organization and capable of carrying on a meaningful conversation with the subscriber, and are not just reading a script. The organi- zation should follow up on all customer requests. If a patron has missed one or more productions, the organization may offer extra tickets to an upcoming production.

At renewal time, all first-year subscribers should receive a personalized let- ter inviting them to renew. Sometimes the renewal effort requires several con- tacts by mail or phone, and some people actually express appreciation for being reminded. For the others who clearly express annoyance at repeated contacts, telemarketers should ask people their reasons for lapsing, record this informa- tion for the use of the marketing department, try to find other ways to satisfy that person with alternative offers, and put that household on the “do not call for subscription” list, at least for that season.

Renewing Long-Term Subscribers If fewer than 50 or 60 percent of long-term subscribers are renewing, the orga- nization must carefully determine the reasons for customer dissatisfaction and make dramatic efforts to improve its products and/or services.

Even though most subscribers renew “automatically,” their commitment and loyalty should not be taken for granted. The organization can plan “anni- versary” events for subscribers after five years, ten years, and twenty years or more of subscribing. Once a year, subscribers can be invited to enjoy a compli- mentary dessert with the artists after a performance. On occasion, they can be invited for backstage tours and preseason previews and offered an occasional souvenir. The point is for the organization to show subscribers how special and important they are. The benefits need to be strategized so they have value for each customer.

Reaching Out to Lapsed Subscribers Some people who are unfamiliar with the organization and its offerings are willing to try it out for a season and then find it is not for them. Some people are lured by various benefits and premiums, by a special event or performer, factors that apply for one season only. These are common explanations for the high attrition rate among first-year subscribers. Among long-standing subscrib- ers who do not renew, most report their reason for lapsing is their dissatisfac- tion with the programming. Others have schedule conflicts and can no longer conveniently plan in advance, or want to select what to attend on a show- by-show basis.

Some of these factors are in the control of the arts marketer; some are not. The organization should contact all lapsed subscribers to determine the reasons

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for dropping their subscription. Some people can be encouraged to resubscribe if the organization can remedy their concerns; many others will purchase tickets on a show-by-show basis. It is important for the marketing department to treat lapsed subscribers as valued patrons, even if they purchase occasional single tick- ets, a pattern that is becoming more and more the norm.

Increasing Subscriptions at the Arena Stage

From its peak number of subscribers in 2002 until 2007, the Arena Stage in Washington, DC, lost 40 percent of its subscriber base. Chad Bauman, then director of marketing and communications at Arena Stage, made sig- nificant efforts to turn around this serious erosion. First, he conducted focus groups with specific target audiences, including current subscribers, lapsed subscribers, multishow buyers, and single ticket buyers. Using the informa- tion he gleaned from these groups, he created and implemented several strat- egies to rebuild the subscriber base. The result was that from 2008 (during the economic crisis) through 2012, subscriptions increased each year and subscription income increased 115 percent over those four years.

Bauman articulates the formula for his success as:

Great artistic product + best seats + best price + outstanding customer service = more subscribers.

Artistic product : If your customers are not satisfied with the artistic product of your organization, you will not see an increase in your subscription base. This is by far the most important aspect of the offer.

Best seats at the best price : Being able to get the best seats in the house at the best possible price is a powerful value proposition for subscribers. If you have a robust subscription base, oftentimes the only way to get the best seats in the house is by subscribing. Make sure to message that in your sales materials. Also, be very careful of undercutting your subscriber average ticket price, par- ticularly at the last minute. A substantial last-minute discount may provide a lift to an underperforming production, but the long-term side effects could be much worse.

Outstanding customer service : Customer service gives marketers the perfect opportunity to shine. Be proactive in finding ways to provide exceptional ser- vice. For example, if inclement weather is on the way, instead of waiting for subscribers to call you to exchange their tickets, why not send them an email alerting them to the approaching inclement weather and offering to make the exchanges on their behalf? And if you don’t already, find ways to thank your subscribers throughout the year. For example, there is a theater on the west coast that partners with a winery each year to give subscribers a free bottle

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of wine when they renew their subscriptions as a way of thanking them for their support.

Arena Stage made additional strategic changes that significantly added to its success in increasing subscriptions:

Lengthen the subscription campaign : Prior to 2009, Arena Stage announced its season in March and continued to sell subscriptions until October, provid- ing for an eight-month subscription campaign. Now, it begins the subscrip- tion campaigns in January and sells through March of the following year, thereby lengthening the campaigns to fifteen months. Bauman suggests that marketers avoid delaying the start of their subscription campaign at all costs. Each week is valuable and lost weeks cannot be replaced.

Don’t forget about upgrades : Our goal, says Bauman, is no longer just to renew our subscribers; we want to upgrade them as well year after year. Primarily, “we focus on getting subscribers to increase the number of plays on their subscription, but you can also have them upgrade into better seats, add parking to their orders, or increase their annual fund donation. We are even experimenting with add-ons for caf é meals to great success. In fiscal year 2013, almost ten percent of our subscription base upgraded into larger packages, amounting to nearly $175,000 in additional revenue. Furthermore, full season subscribers have a renewal rate 25 percent points higher and give donations that are four times larger than partial season subscribers.” 12

Speak to subscribers like you know who they are—because you do : Gone are the days when you can create one beautiful season brochure that speaks to all of your patrons, and then mail it over and over again until you beat people into submission. Subscription renewals and solicitations should be highly tar- geted. You know what types of productions each patron likes and on what nights they like to attend. If you sell caf é meals and parking through your box office, you even know if they park a car and what they like to eat. You know if they are a full price or discount buyer, how many shows they attend a year on average, and how many people are usually in their party. So why are we still wedded to one-size-fits-all solicitations? Our job is to get the right offer in front of the right prospect at the right time. And we have all the data we need to accomplish that.

Develop a sales pipeline : Until a few years ago, we mailed subscription solic- itations to traded lists. Then we started to look closely at our response and tracking reports and we found that list trades were not working, not even close. It would have been just as effective to drop season brochures out of a helicopter over the city. And list trading was considered a “best practice” that every major arts organization in the city bought into. However, we were not measuring efficacy. The failure of these campaigns is easy to understand. Most of these targets had never seen a show at Arena Stage. Why would they

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invest hundreds of dollars when they had never stepped through our front doors? We changed tactics and concentrated our efforts on trading lists for single tickets, primarily to our most popular productions. This in turn would create an influx of new single ticket buyers. Once they had their first experi- ence at Arena Stage, we would send them an offer to return to a second show. Once a patron had seen two or more shows, the likelihood that they would then respond to a subscription solicitation quadrupled. Don’t waste time and money mailing to poor prospects. Instead concentrate your resources on developing more multishow-buying patrons, as those will be your best leads in your next subscription campaign.

Testing and failing : The only way to succeed is to fail. The key is to succeed on a grand scale, and fail on a small one. Aggressively measure the success of every campaign, no matter how small. And test something new at least every week. Tactics will change from year to year, and you’ll need to adjust in order to maximize return on investment. As we doubled our subscription revenue over the past four years, we actually started to spend less as we grew more efficient. For example, I like to test new offers in our telesales room. Over the period of a week, we may have three or four offers in the telesales room. By the end of the week, after a thousand or so calls, we usually have a clear winner among the offers tested. That offer is then rolled out in an email solicitation, and if it responds well, then we’ll include the offer in a large direct mail campaign and then test it against the current control package to see if we achieve a better ROI (return on investment).

Concludes Bauman, “Sometimes it isn’t the [subscription] model that is dying, it is how we apply the model that is responsible for our underwhelm- ing results.” 13

Loyalty

People are as loyal as they think they are. People who have attended one perfor- mance at an organization each year for the past several years may see themselves as loyal attenders. The fact that they do not subscribe should not be seen as a failure; their annual ticket purchase should be viewed as a success. Of course, the organization rightfully values different levels of loyalty and involvement differently. But subscription is just one type of customer relationship, and it is clear that organizations need to build value around other kinds of market- ing relationships as well, particularly those that reward loyalty without a large commitment.

Also consider that loyalty is a two-way street; patrons deserve loyalty from the organization as well. A couple may be loyal subscribers for ten or fifteen years, drop their subscriptions for one or two years, then resubscribe. When

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they renew after a hiatus, sometimes the organization will treat them as first-year subscribers with the lowest subscriber seating priority. Rather, they should be welcomed back with as close to their former seat location as possible.

Some organizations believe that they win customer loyalty by offering a loy- alty award program. Says Philip Kotler, “Some programs are disloyalty programs, as when an airline says the points will be lost unless the customer flies within two months.” 14

Organizations can garner repeat business by “bribing” people with special offers. Loyalty must be earned—and retained—on a continual basis.

When creating loyalty benefits, consider how to attract those who may require several seasons to accrue the status of loyal attender, not just those who accrue the benefits in one season.

A serious concern about shrinking subscriptions is that many fewer single ticket buyers than subscribers make donations to the arts organizations they attend. As it becomes more important to garner donations from occasional ticket buyers, marketing and development must work together to develop and imple- ment strategies that will maximize both return visits and contributed income.

Building Primary and Selective Demand

In efforts to build their audiences, there are two types of demand that may be stimulated by marketers: primary and selective . When marketers stimulate primary demand, they attempt to enlarge the whole “pie” of their category’s consumer base by increasing the total number of people who attend the sym- phony, opera, dance, or theater—or, in a broader sense, all of the performing arts. When marketers stimulate selective demand, they seek a larger piece of the current “pie” for their specific organization.

Arts marketers can attempt to expand demand in several ways:

1. Current attenders can be encouraged to attend the same type of event more frequently. This strategy is the basis for subscription series and is the driving force behind “second stage” or other additional performances that current patrons are encouraged to attend.

2. Enlist current attenders to bring friends, to give gift certificates on various occasions, and to spread word of mouth about the performances in person and through social media.

3. Other events and art forms can be suggested to current attenders. This strategy aims to introduce current arts attenders to other art forms or other organizations. Thus, a patron of classical theater may be encouraged to attend a modern dance or experimental theater performance. This strat- egy can be carried out by individual organizations, collaborating organiza- tions, or umbrella organizations such as theater guilds that promote all their members’ offerings. Arts organizations are not in competition with

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each other to the same extent, for example, as Coke and Pepsi, since cul- tural attenders report the greatest satisfaction the more variety of shows they attend.

4. Nonattenders can be converted to attenders. The goal is to increase the overall number of persons who attend performing arts events. This may be accomplished, for example, by exposing new people to classical music by way of free concerts in the park, “flash mob” performances in outdoor spaces or train stations, or by providing special events for target groups.

Of these strategies, the first is the easiest to accomplish and the second is highly effective as people respond best to word of mouth from peers and aspira- tion groups. The third is more difficult and requires not only a change in con- sumer behavior but also cooperation between organizations. The fourth strategy is the most difficult, as it necessitates changing basic attitudes and influencing tastes among the nonattending public.

Primary demand stimulation is of great interest to arts marketers but is dif- ficult for organizations to undertake on their own. The most effective means for stimulating primary demand is through organizations with a broader scope such as foundations, community-wide arts associations, and schools, and through collaborative efforts between arts organizations.

Even under situations of the toughest competition, arts marketers can make worthwhile efforts. For example, during the World Cup soccer playoffs and finals, in countries where soccer is hugely popular, other forms of entertain- ment—movie houses, theaters, and restaurants—sit nearly empty. Imagine the performing arts banding together with an appeal to arts aficionados. The advertisement could show actors, dancers, and musicians kicking a soccer ball forlornly on stage and looking out at a sea of empty seats. This may serve as a humorous reminder that the rest of the entertainment world doesn’t stop when Barcelona’s famed Lionel Messi is on the field.

Alternatives to Subscriptions

A highly significant and growing portion of the arts-going public is unlikely ever to become full-season subscribers. Yet arts organizations can offer many alternatives to full-season subscriptions that build some level of frequency and commitment—offers that are effective when they are designed to meet the spe- cific needs and interests of their target markets. Organizations may choose to offer one or several of these alternatives, according to opportunities identified in the marketplace.

But arts marketers must be careful not to build a portfolio of multiple offers just to see what may be attractive to their customers. Too many offers can be confusing to people who do not take the time to understand each and compare the differences. Most importantly, marketing offers should be based in customer

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research and highly targeted to the segments for which they are intended. This means listening to customers to learn what might be appealing to them, rather than creating multiple new offers to which marketers think customers will be drawn.

Some of the options available to marketers are miniseries, flex plans, member- ships, and group sales. Although more and more organizations adopt some of these alternatives, most often they are offered—and offered for renewal—only after the full subscription campaign has run its course, to try to up-sell small package buyers to larger subscriptions, and so as not to tempt full subscribers to switch to a reduced commitment. The best way to make sure current full- season subscribers renew without being tempted by smaller packages is to send a renewal letter out well before the brochure is mailed—or even printed. Most subscribers will gladly renew based on a letter that includes information about the upcoming season. Some may require a second or third reminder by letter, email, or phone, but a great majority of subscribers can be renewed by most organizations before the season brochure goes out. It benefits both the organi- zation and the patrons to fully value the preferences of all ticket buyers and to invite smaller package buyers to renew at the same level, to not expect that they will move up to a larger package (although the opportunity and accompanying benefits should certainly be offered).

The Season Brochure

Traditionally, a brochure that offers only the opportunity to subscribe is sent to thousands of people at a high cost to the organization. Except for the aware- ness and interest these brochures build, they are wasted on the people who clearly do not wish to subscribe but want to attend certain events. So instead of a subscription brochure, the marketing manager should offer a season bro- chure, offering miniseries, flex plans, design-your-own series, single tickets, and other alternatives to subscriptions in addition to the subscription package. Of course, benefits need to be delineated so people are clear, for example, that subscribers get first seating priority. This approach is far more sensitive to the patrons than policies that say, in effect, “If you don’t subscribe, we don’t want to hear from you until we are so close to the performance dates that we do not expect to sell any more subscriptions, and then we will eagerly take your money.”

By allowing and encouraging people to purchase exactly what they want upfront, the organization is simultaneously validating their personal preferences, thereby increasing customer satisfaction and involvement, reducing costs later in the season for single ticket marketing, and most likely selling more tickets than they would have otherwise sold. The exception to this recommendation is any highly targeted offer that should not go out to a general audience.

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Miniseries

Miniseries are packages of a small number of performances—often consisting of three to five programs. At many organizations, they can be designed around spe- cific programming, such as full-length story ballets, modern repertoire, a piano series, or music of the Romantic period. This serves to attract potential patrons with specific interests and eases the decision process for people who may be attempting to select from a long list of programs. Additionally, miniseries can be packaged around the lifestyle characteristics of certain consumer segments. The Chicago Symphony’s Afterwork Masterworks series consists of one-and-a- half hour programs without intermission, which begin and end early to appeal to people coming directly from work. Some theaters in cold climates offer a “snowbird” series of fall and spring programs to accommodate people who head to warm climates for the winter, or a nonspecified “choose-your-own” series that includes the benefits offered other mini-subscribers.

Flex Plans

Flex plans are designed to appeal to people who want to select exactly which pro- grams to attend and plan their attendance at their own convenience. A patron who purchases four flex ticket vouchers may use them for four different shows or all at one performance. Flex plan buyers order their tickets whenever convenient with the understanding that they will get the best available seats at the time of their order. Some organizations allocate some seats for flex plan buyers for each performance, once all subscribers have been seated. With a flex plan, patrons retain certain subscriber benefits and the organization enjoys a far higher level of frequency and loyalty than with single ticket buyers. The organization also has a viable opportunity with this segment to sell additional tickets and gift certificates.

Some arts marketers report that a number of their flex plan buyers are unhappy with this program as they reach the end of the season with ticket vouchers remaining. The marketing manager should do everything possible to satisfy these customers. The vouchers’ expiration can be extended to the follow- ing season, patrons can be sent an email or postcard reminder notice mid-season of remaining flex tickets, and they should be offered alternatives to flex plans for the upcoming season that better meet their lifestyle.

Membership Plans

A membership plan is an even more flexible option than the flex plan. Rather than committing to a certain number of seats for the season, members pay an annual fee that makes them eligible for a meaningful discount on tickets to

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individual performances of their choice and for the opportunity to purchase tickets in advance of the general public.

The membership concept gives people a sense of belonging and provides them with a range of benefits, without requiring commitment to specific pro- gramming or frequency of attendance.

The Lincoln Center Theater (LCT) abandoned subscriptions altogether in favor of a membership program. The intent of this major change was twofold: to give managers more flexibility in scheduling plays and extending runs when there is high demand, and to attract to each play people who really want to be there, not just people who happen to have subscription tickets. Because members select which shows to see, their response at individual performances is noticeably more positive than that of many subscribers, who may not have had a particular interest in a production. LCT undertakes various strategies to attract nontraditional theatergoers to the plays, especially production-specific audience outreach through highly targeted media and in specific neighbor- hoods. There is a modest annual fee for membership; members have the right to purchase their tickets before the general public and for a much lower ticket price. Quite a few members say that the low ticket prices encourage them to take risks and to see some plays that they might not otherwise choose. Whether or not they like every play they see, the fact that it was their choice and not determined for them as part of a subscription package leaves them with a better feeling about the experience.

Some organizations offer both subscriptions and membership plans and often reach out to specific target audiences with their membership plans. The typical annual membership fee of $30–$40 is more than paid back by the time mem- bers attend their second show each season. Importantly, the membership offer does not erode the subscriber base at all. Subscribers like to plan in advance; they like to guarantee “their” seats, and do not value the lower ticket prices enough to give up their subscriber benefits.

Group Sales

Group sales provide arts organizations with the opportunity to target specific audience segments in significant numbers for individual productions. Groups may attend for social, fund-raising, or educational purposes; many organiza- tions, corporations, and schools center activities on a performing arts event. Some special interest groups have a natural affinity for the subject of a play, with a key performer, with the nationality of a composer, and so on, and are ideal target markets for group promotions. Many people who are unaccustomed to attending the performing arts find the experience comfortable and enjoyable when they are among friends. Therefore, group sales offers are a wonderful way to attract people who ordinarily would not attend on their own, while they effi- ciently sell multiple tickets at one time.

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Group sales require a great deal of advance research, planning, and fre- quent follow-up. Groups typically plan their programs many months or even a year in advance and often require several meetings to make decisions. A per- son who is knowledgeable about the organization and its offerings, is highly organized, and has good follow-through capability should be put in charge of this task.

Group Sales at Piccolo Teatro di Milano

At Piccolo Teatro di Milano, nearly half of the tickets are sold to “planned” audiences, consisting of groups of adults and students of 10–300 partici- pants each. Students include anyone from primary school to postgraduates. Adult groups receive a 35 percent discount from single ticket prices; students receive a 50 percent reduction. For all the group sales public, and in particular for students, a wide range of educational activities is arranged every season, including various training programs for students and their teachers. During the workshops, the shows being staged at Piccolo are used to illustrate the dif- ferent theater disciplines, including the text, staging, and direction, to bring the language and theater experience alive.

At Piccolo, the groups are coordinated by “animators,” volunteers who select appropriate shows for their groups and purchase tickets at reduced prices. Animators are season ticket holders or teachers who devote themselves to organizing groups of colleagues, students, or friends, for no fee. Animators are motivated by their love of the theater and by a strong sense of belonging to Piccolo Teatro. Events are organized for them every year, such as a preview of the new theater season, a Christmas-time evening, various presentations, and fun evening events. The animators and their groups are looked after by a team of six marketing staff members who take bookings and handle seat- ing arrangements; they also organize meetings, lessons, and proper training courses for the teachers, students, and adult group members.

Leveraging the Database to Increase Audience Frequency

The modern database is as powerful to the marketer as a Stradivarius is to a violinist. The database contains information of huge value to the organization, and needs to be put to full use. Through the database, organizations know what types of shows people like, where they like to sit in the venue, their preferred day of week for attendance, how often they attend, how many tickets they typi- cally buy, and much more. Marketers can and should utilize this information to reach out to their customers on a personal basis, not just promote the shows with

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mass media and semicustomized mass emails. For example, box office personnel and volunteers can be put to work telephoning and sending individual emails to patrons who are likely to be interested in an upcoming show based on their past behavior.

Recommendations based on a person’s past likes and dislikes give people the license and comfort to do something new, without it being or feeling completely new. I think of this approach as beyond the familiar. It takes people just a step beyond their comfort level, which is usually a small and doable reach. People are creatures of habit. Even though organizations often promote the arts as special (they are!), they should do their best to make arts attendance a routinized activ- ity for people, like going to the movies, attending sporting events, and going out to restaurants.

Valuing the Single Ticket Buyer

A large percentage of performing arts attenders like being single ticket buyers and their ranks are growing each season. Yet many arts marketers and managers resist focusing on this segment as a viable, rich source of income and growth.

Kim and Mauborgne, authors of Blue Ocean Strategy , say that the business universe consists of two distinct kinds of space, which they describe as red and blue oceans. Red oceans represent the known market space where boundaries are defined and accepted and the competitive rules of the game are well under- stood. As the space gets more and more crowded, increasing competition turns the water bloody. Blue oceans denote the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. In some cases, a blue ocean is created when a company gives rise to a completely new industry, as eBay did with the online auction industry. But in most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry.

The luxury brand Tiffany & Company created a blue ocean and significantly enlarged its market by shifting from demographic to behavioral targeting; repo- sitioning from “baubles for the world’s elite” to “timeless gifts for special occa- sions and special people.” By changing its marketing and branding strategies, Tiffany developed new and viable market segments for its products.

Say Kim and Mauborgne, “There is no consistently excellent company; the same company can be brilliant at one time and wrongheaded at another. Likewise, there is no perpetually excellent industry; relative attractiveness is driven largely by the creation of blue oceans from within them.” 15 The authors’ research shows that blue ocean creators offer a leap in value for both buyers and the company itself.

An obvious blue ocean opportunity for arts marketers is to focus on building audiences among single ticket buyers, a major source of audience growth in recent

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years and in the foreseeable future. TCG reports that from 2003 to 2012, sub- scriber attendance declined steadily; the number of subscribers declined 22 per- cent. But during this same period, average single ticket attendance increased 6 percent. During the five year period 2008–2012, single ticket income growth exceeded inflation by 9.2 percent. 16

It is increasingly crucial for arts marketers to develop messages and offers that meet the needs, wants, interests, and concerns of occasional ticket buyers. This means treating single ticket buyers as valued patrons and also means that marketers must redefine what they consider to be a loyal attender—even when more and more people want to select exactly which shows to attend and make their ticket purchase decisions close to the performance date.

Single ticket marketing costs

Thankfully, single ticket marketing via the Internet and email is inexpen- sive. Arts organizations have not yet realized the low cost of high-technology marketing on their bottom line, as this medium has been added to other marketing media; it has not replaced them. Before long, it is likely that the marketplace will be ready for arts marketers to reduce expensive direct mail and newspaper advertising as more customer segments adopt the Internet, email, and social media as their primary and preferred sources of information, promotions, and ticket purchase. In the meantime, frequent contacts with customers via digital media are effectively added to other ongoing communi- cations without significant additional cost, except the personnel required to manage these media.

And, if single ticket buyers have the opportunity to purchase tickets for what they want to see, when they are motivated to make the purchase—including through the season brochure—an organization’s marketing messages serve a much broader audience more efficiently.

Attracting Single Ticket Buyers

Arts organizations can employ many different strategies for attracting single ticket buyers and building their frequency of attendance. In addition to cus- tomized and personalized digital marketing methods, which were discussed at length in chapter 13 , and appealing to initiators and responders, discussed in chapter 3 , here are some options designed to meet this segment’s needs and lifestyles.

Ticket Exchange Option for Single Ticket Purchase Arts organizations have been so effective at communicating the scarcity of their tickets (even when this is not the case!) that many potential patrons do

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not even consider trying to buy tickets within a short period of time before a performance. A common marketing refrain is “Subscribe now! Guarantee your seats! Guarantee good seats!” As a result, many performing arts orga- nizations face empty seats that would have sold with a different marketing approach.

Communicating scarcity is a mixed blessing; marketers hope that this approach will create a sense of urgency for people to purchase tickets in advance, but it also deters people from even trying to see if seats are available. Sometimes people don’t buy early because they don’t know in advance what their schedule will be. Then, when it comes close to performance time, they may think they won’t be able to get tickets at all, much less good seats.

When respondents to the San Francisco study were asked their reasons for attending fewer performances than in the past, about 40 percent overall reported that they have difficulty scheduling in advance. Many people are eager to attend a performance and would like to purchase tickets early enough to get good seats, but face the risks of missing the show and of losing the monetary value of their tickets if other circumstances take priority.

The option to exchange tickets will stimulate advance ticket purchase among those who are interested in attending but uncertain as to whether they will be able to attend and do not want to risk availability at the last minute. Ticket exchange privileges mean that no sale is final and therefore no patron needs to be “stuck” with an unusable ticket.

In the San Francisco survey, we asked single ticket buyers if they would be more likely to purchase tickets if they could exchange their tickets for a different performance, for a handling fee. On average, 25 percent of respon- dents indicated that they would be very likely to take advantage of this ticket exchange option. Marketers consider any strategy that is anticipated to increase sales by 5–10 percent as highly attractive; a 25 percent response is phenom- enal. Surprisingly, we found a strong response to this offer among people with lower income levels. Obviously, the value of the ticket is worth a great deal to them.

Marketing managers have resisted offering ticket exchange privileges to single ticket buyers for two reasons: (1) ticket exchange is a subscriber benefit, and (2) it incurs box office expense in terms of personnel time. However, with a fee attached to a ticket exchange offer, there are no negative implications to the free subscriber benefit and the fee will defray any costs incurred.

The appropriate ticket exchange fee is dependent on each organization’s average ticket price and the exchange fee charged to subscribers, if any. A lower fee will be likely to attract more single ticket buyers and increase their satisfac- tion. A higher price makes the free ticket exchange privilege for subscribers seem more valuable. Organizations may offer a per-order fee rather than a per-ticket fee to minimize the cost to people who have purchased multiple tickets.

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The lead time required for the exchange can vary, but usually is in the range of 24–48 hours before the performance.

Some managers say they are willing to make a ticket exchange when a patron phones with a problem, but they are not willing to advertise the offer. Getting the word out loud and clear is key to the success of this venture, meaning that the ticket exchange offer should appear in all ads, brochures, and the website. People expect ticket sales to be final; they will not even con- sider ordering a ticket in some cases unless they know of the new policy. Typically, the last words a patron hears or reads when purchasing tickets are “All sales are final. There are no refunds or exchanges.” Imagine the customer satisfaction and potential for increased future sales if instead people hear: “No sale is final. If you are unable to attend, please phone us at least twenty- four hours before the performance and, for a small fee, we will be happy to exchange your tickets for another performance this season. We hope you enjoy the show.”

Positioning on Occasions Arts marketers traditionally capitalize on occasions that feature a composer’s birthday, a music director’s anniversary with the organization, or the opening of a new performance hall. Such events are worth noting, but they focus on occa- sions relevant to the organization, not to most ticket buyers.

Arts marketers should consider ways to attract patrons for their own special occasions. For many people, attending a performing arts event is special and infrequent. Price may be an obstacle when it comes to a usual evening out; but to celebrate certain occasions, this expenditure is not a problem.

Test Drive the Arts Test Drive, founded by Morris Hargreaves McIntyre Consulting of Great Britain, allows people to try new things for free initially and then gradually build up to paying full price. Test Drive is not really about price; it’s about breaking the inertia of the nonattendance habit. Conventional marketing communications have failed to reach, persuade, and trigger bookings from many people. Test Drive finds new ways to make a connection. Once people have experienced the art, repeat attendance becomes far more likely.

Some of the biggest Test Drive programs use indirect promotion via media channels. Organizations in Northern Ireland and Victoria, Australia, have media partners that actively promote Test Drive opportunities via the “What’s On” sections in their printed publications and websites. This ensures a steady stream of online registrations for the program. Other schemes, like at Malm ö Opera in Sweden and Circa Theatre in Wellington, New Zealand, run free prize draw competitions with local newspapers. Readers enter to win a first prize of a VIP night at a performance, including taxi, tickets, meal, and champagne for four. Runner-up prizes, a pair of tickets, are offered to every entrant, so that,

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effectively, everyone wins. The winners really value the tickets as they have been won rather than given. The newspapers and the arts organizations both benefit.

Other organizations have worked with sponsors to offer Test Drive opportu- nities for the sponsors’ staff, or have worked with a major employer, such as a hospital or local company.

Some organizations have targeted the lapsed audiences found on their own databases with Test Drive offers. Those who haven’t booked in even five years have had great response rates.

When implementing this program, marketers should choose accessible entry- level productions, even if few seats remain, and give free ticket recipients the best available seats in the house.

The key to the success of this program is in the follow-up. Follow up with a new offer—an offer that demands a commitment, such as “two shows in two months for 25 dollars.” Make a second offer to those who did not respond the first time, but then cut your losses and focus on other people with more poten- tial. Obtain and use feedback and box office data to track, measure, and evaluate the impact, then refine the program accordingly. 17

Developing a Relationship with Single Ticket Buyers

Eugene Carr, founder and president of Patron Technology, recommends ways for marketers to engage new audiences, a segment that is difficult to bring back for another performance. Says Carr,

Identify people who purchase tickets to one of your events for the first time, and send them a targeted message by e-mail or phone. Consider placing a welcome note inside their will-call envelope or attach one to their seat. I recently attended a concert where new audience members found personalized invitations taped to their assigned seat inviting them to an intermission reception. For just that small amount of effort, you can make a great first impression and begin cultivating a relationship with those new patrons. 18

Frequent Ticket Buyer Programs People who do not want to risk paying to attend something unfamiliar may be tempted with a version of the airlines’ frequent flyer program.

The policy of rewarding frequent users with free tickets has been adopted successfully by many arts organizations. This program encourages people to experiment and attend unfamiliar programs. The experienced marketing direc- tor will usually know before the season starts which programs are likely to have excess capacity and are good candidates for free ticket offers. Patrons taking

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advantage of this offer may discover that they enjoy something they have not as yet experienced, such as Handel’s operas or modern dance.

Typically, people are offered one complimentary ticket to be chosen from among a list of specific performances, after they have purchased tickets for four to eight performances, depending on the organization and its offerings. The organization should address the issue of expiration when designing the program. If single ticket buyers attend only one performance a year, it is unlikely that the frequent ticket buyer program would motivate them to go four times in one season just to get a free ticket. However, these patrons may choose to go to two performances per year for two years to take advantage of the program and should be offered extended time to earn this reward.

Gift Tickets with Subscription Orders Performing arts organizations can attract new audience members and offer a benefit to subscribers at the same time. When people subscribe to a series of four or five shows (or more, depending on the organization’s production schedule and goals), the organization can give subscribers a gift of one compli- mentary ticket to be used by a guest at a performance of their choice, accord- ing to availability. A subscribing couple will receive a pair of guest tickets. In this way, the subscribers can host friends for a performance, at no cost to them. In turn, the guests are likely to offer to host a dinner before or after the show. This becomes a wonderful, social way to thank subscribers and to bring in audience members, many of whom would not have attended without this invitation.

In order to make this program a win-win for both the subscribers and the organization, the marketing department must be sure to collect the guests’contact information before their tickets are distributed so the guests can be added to the mailing list and be followed-up with appropriately.

Activating Infrequent Attenders TelePrompt, developed by Andrew McIntyre in Great Britain, is an initiative to activate infrequent attenders. Typically, half the single ticket buyers on a data- base only attend once a year. Research shows that they generally get the brochure and mailings but tend only to purchase tickets for major shows or ones they already know they’ll like. With TelePrompt, patrons are telephoned periodically and given a menu of shows about which they can order more information— information that is more in-depth and persuasive than the general direct mail pieces. TelePrompt uses a deliberately soft-sell approach that is designed to build up a trusting relationship. Typically, 70 percent of patrons called join the plan. For every dollar invested by the organization, patrons have spent $3 at the box office. The program could be further developed to promote value-added offers

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such as backstage tours, preperformance talks, incentives for patrons to intro- duce new people, or to convert seasoned TelePrompt patrons to cost-effective email. 19

Targeting Single Ticket Buyers for Subscriptions

Jim Royce, marketing director at the Center Theater Group in Los Angeles, claims that the best subscriber prospects are recent single ticket buyers. Royce suggests phoning first-time attenders within a few days after they attend their first performance. During these calls it is important for the callers to listen to what patrons have to say, rather than just give their usual “spiel.” The patrons’ feedback should then be used to help design a customized series that meets their interests and needs. This strategy will require an advanced selection process of people to call and extra training for qualified phone personnel, but will be well worth the effort. To this purpose, some organizations enlist their own perform- ers and volunteers to contact audience members.

In most cases, says Royce, the patron will not subscribe, but that should not stop the marketer’s efforts to keep the organization top-of-mind. Marketers should send postcards, emails, and other promotions as appropriate and con- sider following up with another phone call in a few months . At the least, people are likely to purchase tickets to one or two shows.

Cultural Tourism

Whether traveling for business or for pleasure, a huge percentage of tourists attend arts and cultural events. Large institutions get the word out to travelers through the mention they receive in guidebooks, hotel room magazines, and advertisements in local papers. Of course, many travelers search the web for activities in their destination city and often order event tickets before they leave home. In this way, the web has opened up a world of possibilities for all organi- zations, no matter what their size.

A highly effective approach for exposing people to all that is available in a region is through the sites of local arts councils and tourist bureaus. The “Artsopolis” website ( www.artsopolis.com ) is a comprehensive source for all cultural events, classes, workshops, auditions, organizations, venues, and individual artists in Silicon Valley. It is a project of Arts Council Silicon Valley in partnership with the San Jose Convention and Visitors Bureau and the Norman Y. Mineta San Jos é International Airport. The site makes it easy to search the calendar or to search by type of event from 13 different categories.

Each organization should keep tourists in mind when designing its own site and anticipate the questions that newcomers to both the organization and the city may have. Arts marketers should also consider strategies for attracting

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tourists, business travelers, and conference-goers by working with local hotels, conference planners, corporate officers, and tourism agencies and implement them as part of their marketing efforts. Tourism organizations often have peri- ods of time when they need more events to encourage visitors to come. Arts marketers should reach out to them and offer to help them meet their goals.