21st Century Arts Conference - keynote presentations - summary

Author: Christine Young
Source location: New Zealand
Date published: 29 July, 2008
Copyright: Creative New Zealand

Need reminding of the key points on pricing strategies, building and finding audiences and need to know more about data collection? These three summaries from Tim Baker's, Roger Tomlinson's and Stuart Nicolle's presentations at the 21st Century Arts Conference in New Zealand are for you.

Pricing strategy, says Tim Baker (Baker Richards Consulting), can help performing arts organisations increase yield, volume of sales and accessibility. Baker, a director of Baker Richards Consulting, which specialises in pricing research, data mining and marketing to help cultural organisations maximise their earned income and admissions, offers some simple pricing maxims to help arts organisations refine their thinking about price:

• It’s not about price; it’s about value
• Perceptions of value are almost unique to each customer
• The key to unlocking value is price differentiation
• Revenue management allows you to maximise sales and yield.

Any organisation has three basic pricing strategy options:

• Skim pricing – prices above market rate for high yield but low volume sales
• Penetration pricing – prices below marketing rate to achieve sales volume. This, warns Baker, makes price your key message, “and I’m not sure that’s the right message in the cultural sector”.
• Neutral pricing – the value offered for price is equivalent to what you can get anywhere else. Price is taken out of the decision-making equation.

The best option is to base your strategies around neutral pricing, Baker advises, but skim when money is available or demand high, and use penetration pricing when you need to.
Ultimately, he says, the price someone is willing to pay is based on the value they perceive they will receive in exchange. While infrequent attenders often use price as a proxy for value, value perceptions are shaped by a range of factors. These range from what you offer (what’s on, added value, venue and amenities, artistic vision, and brand and positioning), to your customers’ characteristics (demographic and psychographic profile, plus experience, knowledge and frequency of attendance) and perceptions of you compared to competitors or other entertainment options.

If you charge only one price, your income is limited by the number of tickets you can sell at that price. Without getting too far into the niceties of price elasticity of demand, Baker demonstrates that there may have been people who would have paid more, or others who would have come if you had charged less. The challenge is to find the price points that fit differing perceptions of value.

At the heart of the price differentiation toolbox, says Baker, are price metrics including:

• price
• the number of prices
• the range of prices and the relationship between your prices and neutral price thresholds for your art form

You need to be aware, says Baker, of how many seats or items you have at each price, and how to encourage people to trade up to the next price bracket.

• the number of seats available
• transaction fees
• discounts

He relates the parable of a hunter carving off a small elk steak to stave off hungry wolves as he trudges back to camp, then two steaks as more wolves circle, and so on – arriving back at camp with an elk skeleton, and his hut surrounded by wolves.

“Customers are like wolves,” he warns. “Don’t treat discounts like elk steaks. Never give away anything unless you know what you are getting in return. Whenever you make a difference in price, you need to make a difference in value to justify the difference in price.”

Premium prices require added value (such as best seats, free programme, pre-show drink or priority bar queue); conversely, discounts should carry disadvantages that clearly signal lower value. For standby or rush tickets, for example, there should be a real risk of not getting a seat.

Remember, he adds, that discounts and concessions are quite different. The former are a promotional tool to achieve sales and audience objectives (new attendees, early booking, group booking, shifting unsold seats, frequency of attendance); the latter are to meet social objectives such as accessibility. If you are offering concessions, consider carefully who they are for and what your objectives are in offering them.

“Always use differences in price to reward the behaviours you want.”

Value, and therefore price, can be influenced by variables including:

• venue
  Effective differentiation of prices in the venue requires analysis to understand the percentage of capacity sold in each price category, the speed at which specific seats sell (quick sale indicates high demand and the potential to increase prices) and the price perceptions and behaviour of the audience. Tweak prices to maximise revenue and the number of tickets sold.
• timing
  Day or time of event or performance, or which week of an extended run. Consider varying prices to maximise revenue if there is a spike in demand at the end of a run.
• the product – up to a point
  “If people want to attend, charging more doesn’t put them off. Neither does charging less if they don’t want to attend.” But be warned – while some brave arts companies are charging different prices for different shows, prices as indicators of value can give very strong signals about events or performances you do (or don’t) value.

Baker believes that arts organisations need to not only create added value – and therefore the ability to charge higher prices – but also to maximise revenue. A powerful tool in achieving maximum revenue, given the “perishability” of arts performances, is to use yield management tools, such as those adopted by the airlines and hotel industry. Basically, this involves adjusting price differentials in response to changing customer demand in order to maximise occupancy and income. Recognising that there may be some resistance to changing advertised prices, he suggests maintaining prices and altering the zones where each price applies, according to demand. Or offering discounts such as early bird prices “subject to availability” and switching off the discount when sales reach a certain level.

“Using revenue management tools,” says Baker, can shift demand from where it is strongest and stimulate a shift in behaviour to encourage ticket purchase at times of lower demand.”

See Tim Baker’s presentation here.

About the author:

Christine Young is a marketing communications consultant, specialising in arts marketing. She works with a number of arts organisations advising on marketing, business and audience development, and was previously the marketing manager of the Auckland Philharmonia Orchestra. She was editor of NZ Marketing Magazine for several years, as well as having a reputation as an accomplished feature writer.  

‘Wanted: A Loyal Audience’

Relationship building, says Roger Tomlinson (ACT Consultant Services), is all about ensuring your audience wants to come back. Tomlinson, co-author of the Creative New Zealand publication, FULL HOUSE: Turning Data into Audiences with Tim Roberts and Vicki Allpress Hill, starts from the concept of the “Virtuous Circle” (explained in detail in FULL HOUSE) by which relationships with audiences can be developed. The real challenge for the arts, he says, is how, having converted “potentials” into first time attenders, we can get them to come back. The key to success is in how personally you do it.

Statistics in the UK show that as many as 60% of first time attenders don’t return. But simply looking at what performance they had attended and sending them a personal letter with information that acknowledged this in some way resulted in 25% returning for a second performance.

People today expect to be offered personalised communications. And they want it all NOW; this is the generation which picks up emails and messages on the move, organises its social life through mobiles and social networking sites, and attends events because others in their social group do.

Tomlinson says that welcoming first time attenders and encouraging them to make their second visit is “possibly the single most important” audience development strategy any arts organisation can adopt. He outlines some simple strategies and success stories:

• recognise the “unknowns”, the walk-ups who “just buy” tickets, and record any information gathered informally. For example, a conversation at box office might reveal someone who has just moved to the area and regularly attended your art form in their old home town
• implement a Test Drive programme, that follows up people who are offered tickets, and incorporates hospitality and add-ons
• The Barbican reduced promotional costs and increased audiences through a conscious programme of monitoring and contacting first time attenders. They found that people who were contacted became more frequent attenders more quickly.

“Tomlinson believes that it’s time for a major rethink of the traditional arts brochure. He despairs of organisations that produce just one brochure, and worse, just one for the whole year.”

Building frequency of attendance is critical, he says. Make your invitation to return relevant. Understand what they first came to and therefore what to invite them back to. Once you have enticed a first time attender back, the challenge is to engender loyalty:

• recognise group organisers – they may bring new people who you are unable to recognise as they don’t actually purchase the tickets;
• establish loyalty based on behaviours and attendances. Make friends, he says, and don’t “shout” at them. Once they’ve agreed to be friends, you can ask them to do things (e.g. invite their friends) because they are friends;
• identify potential subscribers – people who have had a great experience and want to return; many of them are not motivated by price;
• tailor communications and offer bespoke, not broadcast, messages

Segmentation is the key to personalisation. Tomlinson says there are a range of ways to do this:

• By age and cohort – year and decade of birth are key dividers. This often reflects a “digital division” according to the propensity to use or rely on digital media.
• By behaviour and attendance. Segmentation and customer analysis by recency and frequency of attendance allows you to identify who has only attended once, and what they saw; it also identifies lapsed and infrequent attenders (remembering that most people regard themselves as frequent even if they only attend once a year).
• Motivations – often revealed in the nature of the events they attend
• Lifestyle profile – often obtained from MOSAIC or other proprietary data analysis tool
• Make-up of attender groups – solos, couples, family, groups… each of which has different needs
• Type of booker – student, pensioner, unemployed, Member, Friend…

Tomlinson believes that it’s time for a major rethink of the traditional arts brochure. He despairs of organisations that produce just one brochure, and worse, just one for the whole year. How soon does that “wear out” – and how many exit points does it offer the new or infrequent attender?

“Research shows,” he says, “that people use your brochure to decide what NOT to go to. They find out what’s on and what’s relevant or not to me. Potentially any piece of communication is an exit point.

“Don’t broadcast messages. One version cannot fit all: it could deter up to 85% of attenders. Tailor your message content, ‘tone of voice’, style and images to the recipients.”

“Plan steps to build relationships …”

He suggests producing multiple versions of any communication to ensure relevance to different audience segments. Arts organisations should provide different copy and images, for at least nine (or more) groups with different profiles and information needs:

Core attenders (15%), less frequent attenders (35%) and infrequent attenders (50%) in each of at least three age cohorts – under 26; 26-50; and 50+.

Other suggestions for deepening personalisation include:

• emails, e-newsletters and micro-sites to deliver specific messages to individuals
• tailoring website content according to the customer’s profile
• seeking interaction and user-generated content: photographs, reviews and comments
• supporting social networking, forwarding recommendations and helping “initiators”
• ensuring you respond to customers, with appropriate personalised phone or email communication

And always ensure you protect data and only undertake proper permission marketing.

“The challenge in one-one marketing,” Tomlinson concludes, “is to develop your strategies to help audiences build their loyalty. Plan steps to build relationships, get permission to communicate, and then deploy membership and loyalty schemes using all possible personalised and tailored marketing and e-marketing tools.” 

About the author:

Christine Young is a marketing communications consultant, specialising in arts marketing. She works with a number of arts organisations advising on marketing, business and audience development, and was previously the marketing manager of the Auckland Philharmonia Orchestra. She was editor of NZ Marketing Magazine for several years, as well as having a reputation as an accomplished feature writer.  

Vital Statistics for the performing arts

Statistics are the lifeblood of successful arts organisations. Not only is data the foundation on which FULL HOUSE is built; it is also integral to the Seven Pillars of audience focus. Data provides a comprehensive view of purchasers and attendances; is the facilitator of effective marketing; and allows more ongoing and personalised marketing, says Tim Roberts in introducing Vital Statistics, a new concept in data analysis which is being introduced in New Zealand and Australia.

Box office data in particular provides a rich vein to mine for customer information, both at a personal and aggregated level. Stuart Nicolle, of Purple Seven, a UK-based tickets analysis software firm, says that every interaction with a customer can add to the data and therefore the understanding of a customer, from frequency of attendance, to family context, seating preference, address, ticket value, and how they pay. At every transaction, all this data can – and should – be added to their existing customer record.

Beyond that, box office data can also be configured to provided anonymous vital statistics on audiences in general. Which is exactly what Purple Seven does. It was established to collect ticketing data automatically and collate it to provide audience profiles to its clients.

Its first project, Nicolle reveals, almost cost the fledgling company its credibility: it revealed that fewer than 2% of people attend more than one venue in any given year, even when there are four venues in close proximity. The figure was so astounding as to be almost unbelievable and required a re-run of the data to validate it. Purple Seven data also shows that only 30-35% of customers attend more than one arts performance in a year, and 8% of those customers will have attended at exactly the same time as the previous year (a statistic that suggests that customers are either creatures of habit or need a specific reason for attending).

Vital Statistics, with an impressive line-up of clients in the UK, is now being introduced to Australia and New Zealand. Creative New Zealand and The Australia Council for the Arts are partnering with Purple Seven to allow participating arts companies to drill down to better understand performing arts audiences.

“The project already has several arts organisations on board in New Zealand (including the Auckland Philharmonia Orchestra, Centrepoint, the Court Theatre, Downstage, Capital E and the Fortune Theatre)”, says Creative New Zealand’s National Audience and Market Development Adviser, Helen Bartle. “All these organisations use the Patronbase ticketing system; while it may be more difficult to involve organisations who use third party ticketing agencies, Creative New Zealand aims to work with the agencies to ensure a full and comprehensive view of performing arts audiences.”

Vital Statistics will be fully developed over the next two-three years, and aims, she says, to provide participating organisations with ways of looking at patron data, and to create a profile of audiences as a benchmarking tool.

Reports, provided six-monthly to participating organisations, will offer detailed (but not personalised) analysis of, for example, MOSAIC groups, frequency of customer attendance, booking patterns, the drive time/distance people travel to events, and the nature and extent of art-form crossover attendance. Organisations involved will get aggregated data as well as comparable reporting on their database, to allow them to better understand the nature of their audience and compare it with wider arts audiences.

All of which should be useful in getting beyond what many arts organisations are great at – getting audiences through the door the first time – and improving what they are generally not so good at: getting them back for the second time.

Vital Statistics has the potential, says Nicolle, to profile differences in lifestyle between high-spend high-frequency buyers and high-spend low-frequency buyers, for example, and through that provide the arts company with a much better perspective on how to reach and communicate with people most likely to become high frequency attenders. Vital Statistics data can also be matched with MOSAIC to drill down and find lifestyle profiles for audience groups where you have very high or very low penetration.

An organisation’s own report can offer a snapshot of the audience attending a single event, or combined event. It can compare events with regard to factors such as recency and frequency of attendance, loyalty, and the top 10 previous events booked for. This is great for ”if you like this, you might like that” communications to audience members.

“We believe Vital Statistics will lead to a more informed marketing community, offering not only detailed insights to individual companies, but also an opportunity for benchmarking across organisations, and an inclusive forum to discuss trends,” says Helen Bartle. She invites arts companies interested in participating to contact her:

helen.bartle@creativenz.govt.nz.

About the author:

Christine Young is a marketing communications consultant, specialising in arts marketing. She works with a number of arts organisations advising on marketing, business and audience development, and was previously the marketing manager of the Auckland Philharmonia Orchestra. She was editor of NZ Marketing Magazine for several years, as well as having a reputation as an accomplished feature writer.