Case study - Norwich Theatre Royal: friends scheme

Author: Mark Hazell
Source location: United Kingdom
Date published: 14 August, 2003
Copyright: Norwich Theatre Royal

Key to the success of Norwich Theatre Royal's Friends scheme is a determination to place Friends at the centre of what the theatre does and ensure Friends come first every time. Learn from their experience.

Background

Norwich Theatre Royal is a 1300-seat, Art Deco theatre presenting a range of performing arts work year-round, including drama, classical and contemporary dance, musicals, opera, pantomime, stand up comedy, variety, classical and pop/rock music and family shows.

A theatre has been on the current site since 1758, serving the county of Norfolk, which has one of the lowest population densities in the UK and a total population of around 800,000. The theatre presents around 420 performances of approximately 90 separate events each year, achieving ticket sales of 350,000 and turnover of £4.4 million.

Regular visiting companies include the Royal Shakespeare Company, Northern Ballet Theatre, Glyndebourne on Tour, Rambert Dance Company, National Theatre and major commercial productions.

The re-opening of the theatre in November 1992, under a new management team and following nearly three years of closure and an extensive refurbishment, presented an opportunity to re-launch the organisation, and encourage new relationships with customers.

Introducing Friends

Our Friends scheme does not have a neat set of aims and objectives, clear preparation outlines and evaluation methodology. When we started the Friends scheme, CRM wasn’t even a gleam in a randy marketer’s eye; audience development was something that only happened in the USA; Norfolk had very few marketing managers (in any industry, never mind the arts); and computerised ticketing and marketing systems were largely new and unreliable.

One of the key decisions taken at the outset was that the Friends scheme wouldn’t become a separate organisation – there was no Friends Committee, no separate legal status or entity. It was simply a membership scheme. Subsequently, it’s become a truism in the UK arts sector that Friends schemes should not be independent of the organisations they support. In the simplest terms, we place the Friends at the centre of what we do and they come first every time. If that means we run into conflict with producers, suppliers
or, indeed, other customers, tough. They are the most important people in our business.

Benefits and Segmentation

A Friends scheme had been in operation prior to the theatre’s temporary closure, and a manually-held (written on index cards) mailing list for that scheme was inherited, numbering just under 3,000 people most of whom were over 60.

• Principal benefits of the previous scheme were:
• advance notice of most performances;
• priority booking for some performances (but not all); and
• a discount on some ticket prices (but not all).

Two categories of membership were offered: Senior (Over 60) and Regular.
In contrast, the new scheme offers six categories of membership:

• Personal (£31.00 or £29.50 direct debit price)
• Senior (£14.50 or £13.50)
• Family (£41.00 or £39.50)
• Student (£11.50)
• Gold (£135.00 or £120.00)
• Group (£180.00 or £170.00)

All categories get principally the same benefits, the main difference between each
category being the number of tickets on which Friends are able to claim
discounts. Benefits in common are:

• advance notice and one month’s priority booking for all performances;
• discounts on tickets for all performances, including half price for the first night of drama productions;
• 10% discount on food and drink bought at the theatre;
• membership card, key ring and car sticker;
• discount on the price of theatre skills training courses;
• invitations to ‘meet the stars’ events; and
• a range of discounts and special offers exclusively available from local retailers, restaurants, hotels and attractions.

This last set of benefits, discounts through partnering organisations, has been a point of much experimentation. Given the profile of the Friends, it's not surprising that paintballing and motor bike riding weren't high on their list of must-do activities.

But some offers have proved very popular, including reduced prices for: rounds of golf, cruise and lunch on the river, subscription to a series of chamber music concerts by a local amateur orchestra, photography portrait sessions, summer outdoor classical concerts, luxury Christmas hampers, and eating out at local restaurants.

We come into contact with quite a lot of other local businesses and, once we'd got past about 5,000 Friends, most of those we approached were happy to consider the idea. We take the view that any exclusive discount adds value to the scheme and helps to keep the benefits fresh – if a retailer can offer us that, we publicise it on their behalf free of charge through our regular communications with the Friends.

Initially, we instigated cultural and social trips for the Friends: to other theatres, stately homes and gardens etc. They were a nightmare: complicated to organise, very labour intensive and with almost no financial return. And, crucially, there were very few Friends actually interested.

Research confirmed our experience: those Friends who wanted some kind of social club, club room in the theatre, and social and cultural outings were a tiny fraction of the overall number. The vast majority of them were interested in coming regularly to their local theatre, and they wanted us to concentrate on programming and running that in the best way we could.

The Theatre Royal now has over 10,500 Friends, generating gross annual income of £230,000 which nets down (once the running costs of the scheme are taken into account, and they include the 10% discount on food and drink) to £180,000 in membership fees alone.

Business Model

As an organisation which earns 96% of its own income, the Theatre Royal relies heavily on membership fees to provide a financial cushion for its business activity.
The aim of the new scheme was to attract 10,000 Friends. This was a target set by the Theatre Royal’s Chief Executive, Peter Wilson, based on very little evidence but informed by a high level of ambition.

At the time, the largest such group for any UK regional theatre was around 5,000, although national organisations such as the Royal Opera House had around 25,000 Friends. We finally recruited over 10,000 Friends in 1999.

One of the main features of our business model is that we retain about £1 in every £7 taken at the Box Office, with the remainder going in VAT, credit card charges and payments to producers of the performances we present. Of the income generated in membership fees, we keep £1 in every £1.

Although the main aim of establishing the scheme was to earn income, its secondary purpose was to encourage loyalty and frequent attendance from core attenders, through incentivising their purchases by discounting, and adding value to their membership wherever possible, particularly through the ‘meet the stars’ events and the discounts negotiated with external local partners.

Operational Support

At Norwich, the processing of memberships, maintenance of records and financial reporting, is mainly carried out through DataBox, our ticketing and marketing IT system, so the Friends are integrated fully into the main customer database.

We're still building email contact lists gradually, and efforts over the next few months will enable us to start moving away from traditional hard copy communications, to electronic formats during the course of the next year, with substantial cost savings.

The administration of direct debits is now completely automated and uses BACS software (which also handles the payment of staff wages directly into their bank accounts). There still needs to be some manual checking, but the whole process is considerably smoother than it was a few years ago prior to automation, and less labour-intensive.

Direct costs budgeted for each year include: printing and mailing costs, production and printing of membership cards, production of keyrings and car stickers, 10% discount on food and drink purchased at the theatre, and a proportion of salary costs for two members of staff.

The Friends scheme is run within the Marketing Department, with one full-time staff member dealing with processing, member queries, financial reporting, reminders and renewals, working with a line manager on strategic issues regarding development and communications. Both of these staff also have other marketing responsibilities in their job descriptions. Over time, the staffing structure has changed - we began with a part-time staff member running the scheme which became a full-time post once we'd reached about 5,000 members. Prior to the automation of the Direct Debit processing, we actually needed one full-timer and one part-timer just to deal with the basic administration of the scheme.
Now, it's come down essentially to one part-time job, taking up 4/5ths of a working week, although seasonal variations (from quieter summer to much busier autumn and winter) mean that some flexibility in HR capacity is always needed.

Attracting Friends

The mechanics of recruiting and retaining members are fairly simple. Every six months, we extract a list of names and contact details from our ticketing and marketing database for customers who have attended twice or more over that period but who have never been Friends, and mail them with information about the scheme.

These mail-outs focus particularly on the money-saving element of the scheme, and priority booking (eg “you could have saved £x on your theatre-going if you’d joined the Friends”, or “you could have seen Kiri Te Kanawa/Van Morrison/David Essex/Cats etc. if you’d been able to get priority booking”).

Concurrently, we mail Friends who’ve lapsed from membership in the last six months with a reduced price special offer to try and entice them back. Over each summer, when the program isn’t as strong as the rest of the year (owing to seasonal variations in the number and range of shows produced), the rate of lapses rises, and then falls going into autumn.

Friends who pay by Direct Debit qualify for a discount (which varies slightly between the different categories but is roughly 10% across the board), on the grounds that the administration of memberships paid for in this way is simpler and more cost-effective.

We borrowed this idea from the National Trust, who have a membership base of several million in the UK, and whose target for the proportion of members to pay in this way is 80%. Currently, 76% of our Friends pay by Direct Debit, which means that payment for renewal of their membership is automatic, although as a matter of maintaining good relationships with customers we always write to them and remind them that their bank account will be debited in advance – in fact, it’s illegal not to.

Friends can join the scheme at any time and the memberships are run on a monthly basis – anyone joining at any point in August this year will be entitled to all membership benefits until the end of August next year. Anyone joining in the last week of a month would have their membership extended until the end of the following month the following year.

Memberships can be purchased by phone through the Box Office or Friends office, by post, by filling in the online form on our website, or in person at the theatre, although we can’t yet offer the facility to buy a membership by phone and pay by Direct Debit.

Absent Friends

As well as the targeted marketing activity designed to attract new Friends and retain existing ones, we also run regular mailings to remind existing Friends about renewing their membership.

This is in two stages:

1. the week before the start of the month in which their membership falls due for renewal, we send a reminder that the membership is about to expire, flagging any highlights from the program over the next two or three months; then
2. if they haven’t responded by the week after their membership has expired, we send them another reminder that they’re out of membership and therefore won’t be able to claim any of their benefits. If they still don’t respond, they fall into the category of lapsed Friends who are then targeted with a special offer.

Promoting Friends

Additional promotion of the scheme is carried out via the season brochure, the website, and via displays inside and outside the theatre. We also promote seasonally, as in “Give the gift of Friendship for Christmas” to existing Friends, which typically results in around 300 memberships being sold in the month running up to Christmas.

But the single most effective way of promoting the scheme is also the cheapest: every single person who buys a ticket from us, by whatever means, is asked at the time of booking: “Are you a Friend of the theatre?” Our estimate is that this has generated about 40% of all memberships purchased. Joining the Friends is also the only way to be sure of receiving the season brochure regularly by post. We don’t operate a mailing list, free or paid for. We mail the brochure on request free to anyone who asks for it but only once.
We also mail carefully targeted groups of customers based on the program and what’s coming up nearly every week of the year - around 380,000 items in total.

This isn’t an approach I’d recommend to anyone who’s operating in a marketplace with more direct competition than ours, or in any larger city or urban area, but it works well in a mainly rural area where accessing information has historically been difficult, where the transport infrastructure is poor, and where there’s a strong local identity and sense of cultural pride.

Pricing

That’s not to say that there hasn’t been resistance from some customers who didn’t like the idea of a privileged elite who were able to pay to have more than anyone else.

That’s one of the reasons our pricing policy differs from most other theatres of our size and type. For every performance of every event, we offer 65 seats priced at £4 or £5 (deliberately priced to compare with a packet of cigarettes, renting a video or buying a drink or two in the pub). These seats are not available to Friends of the theatre in priority booking, and are not eligible for any discount. So nearly 30,000 seats each year are offered in this lowest price band, which achieves 99% of capacity annually.

Evaluation

So, does it work? Well, yes.

Retention rates are currently running at just over 82% and the number of Friends continues to increase, although quite slowly (around 100 per year). The vast majority of Friends fall into two of the membership categories: Personal and Senior.

The Over 60s account for just over half of all Friends. Norfolk has a higher than average percentage of its population aged over 60, and this demographic segment is growing rapidly across the UK as a whole, and will continue to do so over the next twenty years as the baby boom generation matures.

Norwich Theatre Royal is well placed to continue its penetration of this market, as the Friends represent the bulk of the 14% of our customers who buy 52% of our tickets - yes, that’s right, 9,000 customers buy over 180,000 tickets from us each year, and the majority of them are paying us for the privilege of doing so. And some of them are just paying us without buying anything. 16% of the Friends don’t buy tickets at all. When we ask them why, they say they want to support the Theatre Royal in particular or the arts in general. And that’s also true of the Friends as a whole: over 65% of them say they joined the scheme to support the Theatre Royal and/or the arts, and that the other benefits: discounts,
priority booking etc. aren’t the main reason for them joining – although none of them refuse the benefits.

Foes

The biggest obstacle we had to overcome in establishing the scheme was to convince the producers and promoters from which we buy our events of the value in offering discounts to the Friends.

We lost count of the conversations which began: “Why should I give away this money to these people?” (and this was particularly true of the promoters of pop/rock music and stand up comedy). But we stuck to our guns, and it’s the fact that the priority booking and discounts are across the board that keeps the retention up.

It would take only one high-profile show to be excluded from product choices for the Friends for the credibility and stability of the scheme to be seriously threatened.

It's much easier now, partly due to the increased awareness of marketing practice in the industry as a whole, and partly due to winning over some larger and higher profile producers – which makes it easier to persuade those who are more reluctant. But there are still too many producers who think that the sale is always more important than the customer, when it should be the other way round.

Tips

If you’re establishing or re-evaluating a membership scheme, consider these issues based on our experience:

• Keep the scheme in-house.
• Tell everyone you can about it, especially all customers.
• Find out what your best customers want and concentrate on delivering it.
• Don’t try and rip them off – customers like good value.
• Don’t be bullied by anyone else into watering benefits down.
• Try and keep some benefits fresh – if they start to stagnate, then the whole scheme probably will as well.
• Use Direct Debit or any equivalent method to ensure as many members as possible renew automatically.
• Observe other successful membership organisations (eg. National Trust, AA, RAC etc.) and adopt their techniques and ideas as appropriate.

Detailed information on the scheme and benefits and prices is available from the Norwich Theatre Royal website: www.theatreroyalnorwich.co.uk.

I’d also recommend Crispin Raymond’s book Members Matter, published by Arts Council England (currently out of print, but available in some libraries); and articles published in the UK magazine Arts Professional over the last few years (www.artsprofessional.co.uk). Access to the full site is available only to subscribers, but anyone can register for a trial period for free.