Developing audiences through data (Desarrollar audiencias a partir de los datos)

Editor's Notes

• #2: As public subsidies for the arts change, organizations must rely on people—their audiences and patrons—to provide the revenue to sustain them long-term. How can organizations build a new business model that both serves audiences and relies on them for revenue? The first step is to see what the data says about building these patron relationships. In this keynote, Jill Robinson of the arts consulting firm TRG Arts will offer data-inspired lessons on how organizations can monetize patron relationships to drive the revenue that allows the entire organization to thrive, instead of merely surviving. Jill will also discuss data collection and privacy concerns, and how to create incentives for genuine connection between patrons and organization. You’ll learn how pricing and demand, patron loyalty, database management, and artistic programming each impact patron-generated revenue, and how they can be integrated into an organization-wide culture to drive revenue. When marketers leverage this integrated model, they can make the most of their marketing budget, and start cultivating audiences for a sustainable future. This session will discuss these specific questions: 1. Why does loyalty matter? How can higher ROI on each patron build sustainable arts organizations? 2. Not all patrons are created equal. How can we right-size our marketing investments in different groups of patrons? 3. Does the type of programming that a patron attends determine future ROI?
• #3: So: we’re hear today to talk about developing audiences. AND: I want to share with you today what we at TRG believe and know: That arts and cultural organizations serve audiences, yes. But audiences CAN and DO support arts and cultural organizations, too. It’s that relationship, driven by shared priorities and passion, and understood by you through data, that we’ll be talking about today. 
• #4: But first, allow me to introduce myself. My name is Jill Robinson, and I’m President and CEO of the US-based consulting firm TRG Arts. TRG is a data-driven consulting firm that for 20 years has been obsessed about and focused on helping our clients--non-profit arts and cultural organizations in four countries—get results that help achieve sustainable income, organizations and missions. We use strategies that we test and re-test over time until we can see that they’re proven to get results, and those strategies are focused on patrons—people—that attend and visit and support these organizations. If you’re focused on patrons and their income, we’ve found you end up spending a lot time thinking about and working in pricing and revenue management, seeking the loyalty of those patrons, and studying the data that both tells their story and shows the way to manage and measure a successful relationship with them.
• #5: But here’s possibly the most important thing you could know about TRG, and me: we are true believers. Two years ago I lost my long-time business partner and one of my best friends suddenly and unexpectedly. He passed in July of 2013 and I had to decide: is this work we’re doing worth my investing everything I have, and buying the firm, and leading this charge? My answer was “yes.” I care deeply about communities—about MY community in Colorado Springs, Colorado, where my firm is based. And every day—I kid you not, EVERY DAY—I see the impact of arts and culture. I suspect you see it, too. I think that in this room we believe that art and culture helps communities thrive. The arts strengthen communities—which are EVERYTHING, but NOTHING more than groups of individual people who agreed to share. Land, water, schools, roads…and in the communities in which we operate and live, these communities have also agreed that arts and culture plays a role in helping people: learn better (education programs) heal faster (9/11) hear each other more clearly (Tony Kushner’s Angel’s in America helped us deal with something) and, let’s not forget: simply have more fun. Who doesn’t need more fun? The arts ensure that amidst all the craziness in our lives, we still see and hear and get the “good stuff” that lightens our hearts, helps us see, and be lifted. At TRG, we really believe this—it’s WHY we do what we do. And arts and cultural organizations like the ones you staff—the larger, main-line, funded organizations—play a very important role in making all that good stuff happen.
• #6: And at TRG, we believe that the next step, then, to ensure that all of these organizations have sustainable business models—revenue streams--to ensure that this all “good stuff” happens and can take place in communities. All over the world.
• #7: It’s a rather obvious statement, but never has that last part been so important. In light of the recent funding changes all over the world, and in the EU, we would argue that your patrons matter more now than ever. The world is changing. Whether your theatre operates in the U.K., U.S., Australia, or on the moon, the last decade has demanded that we think differently, and in some cases, transform the way we do business. Public policy, economic and demographic changes are causing the entire sector to recognize the importance of our relationships with patrons and how we manage them.
• #8: Today, your patrons can be doing more. They can be cultivated to support your organization in ways that they currently aren’t. And the map to get there is in your data.
• #9: The good news? We know it can be done. In the U.S., we’ve been dealing with funding shifts/declines since 80’s. Indeed, the majority of arts orgs in the U.S. haven’t had public subsidy as a main part of their income for years. Some have never experienced it. And the Great Recession that we all experienced has put real pressure on public funding in other countries we work in, like Canada and the UK.
• #10: We operate in a different environment than you do in this county and we know that. Frankly, for true believers like us, your government’s commitment to providing arts and culture is a reality to be celebrated. But even here, in Spain, there are shifts in what’s happening in the economic environment. At TRG, we’ve increasingly been invited to consult in countries where the model is different and shifting. So, I think our question for today, is: what can we learn from each other?
• #11: Here’s the most powerful thing that we’ve learned, working across four countries now: although the tax and other incentive systems are different, all people crave connection, meaning. They want that connection with you and your arts organization. We’ve found patrons will respond to invitation and the potential of a deeper relationship.
• #12: What specifically are we talking about when we say “patron”? Let’s break it down and define it: A Patron: anyone who has a transaction with an arts organization
• #13: Now, how do patrons support us? Actually, in MANY ways: They can be ticket buyers. Donors. They can buy special event tickets or serve on boards of directors. They buy classes, maybe a membership? In the organizations that we see and often begin relationships with, each of these patron categories are managed by different people, in different departments, sometimes in different buildings. We call this the “silo” effect, where people operate and think in “silos” rather than as an integrated whole.
• #14: But let’s look an example of the revenue breakdown of a performing arts organization in one of the countries we work in today. Going clock-wise, we have revenues from single ticket buyers, subscribers, our school, individual philanthropy, our special event/gala, corporate sponsorship, and grants (public and private).
• #15: Now, let’s look at the patron-generated revenue. Which revenue streams here come directly from people—those audiences members and engaged attendees in this organization? Single tickets, yes. Subscription, yes—and classes. And…
• #16: Donations come from patrons.
• #17: And, for many organizations, much of our gala revenue comes from patrons.
• #18: If you add those revenue streams up, you see that 84% of this organization’s revenue is coming from patrons. This is a completely different orientation for an arts organization to have when it thinks and operates in departmental silos.
• #19: Here’s an example of how it looks in the EU where public funding/grants are must more dominant source of income. And yet: if you add up the patron sources of income, we’re still talking 46% of income being provided by PEOPLE.
• #20: Our experience, is that patrons are a sustainable source of income. Audiences themselves can help sustain your arts organization’s mission. Why would we call this sustainable income? It’s income that your company can earn for itself. In today’s environment, to us, that’s feels more important than ever.
• #22: Loyalty. That’s the first time I’ve said this word today. Loyalty—what does that matter?
• #23: Well, if a Patron is anyone who has a transaction with an arts organization Loyalty: developing a longer, stronger commitment with that patron to your organization Patron loyalty is the discipline of customer loyalty specific to arts organizations. The for-profit sector spends millions of dollars determining ways to make customers more loyal—and they’re not alone. Smart arts industry practitioners have also turned their focus to loyalty and retention. They measure the lifetime value of their customers. They plot out which offer to make to which customer. Why all the effort? They know how valuable loyalty can be. 
• #24: We also know that you can’t hurry love. Patrons progress in their relationship and that progression takes time. That is, in order to become a donor, patrons move through ticket buying and subscribing. Usually, in the performing arts, a patron isn’t going to donate without having seen a show, and more often, they will subscribe before they donate.
• #25: With most of our clients this is what the continuum looks like. Almost every patron in your database begins as a new ticket buyer. - If they enjoy their “first date” with you, they’ll come back - The plot thickens if and when the patron buys twice in the same season or year. We call that a “multi-buyer” - When the romance goes to the Subscriber or Membership level, this is almost akin to getting engaged. - Donation: that’s like getting married, because once you have each other, and, if the relationship is well-developed and cared for, you often have them for life. - Finally, Advocate/Investor: that’s like celebrating a golden anniversary. Not many get here, but these relationships are worth their weight in gold. This evolution of patron development is a series of largely incremental “next steps” – each involving more active, more frequent, more current transactions that – cumulatively –represent longer, greater patron investments.
• #26: In the museum sector, it looks more like this.
• #27: Some of you might recognize this formula from business school. It’s the lifetime value of a patron, taking into account revenue, costs, and retention. It’s widely disputed and within the field, there’s robust discussion on how to calculate. How much revenue can you get from a patron at what cost?
• #28: Here’s a simplified view that we use to demonstrate how loyalty is the best business model because it pushes DOWN expenses and pushes up ROI. We call it Net Revenue Analysis. This chart shows the most important metrics that measure just how much revenue, after expenses, and including retention, each buyer type was contributing to the organization’s financial health. Per patron yield—average investment made by the patron Cost of sale – ratio between revenue and expenses: it answers the question: how much did it cost to sell to that patron renewal rate – what % of patrons renew
• #29: This is an overview of our findings for a regional theatre client in the US. It has become a platform for the organization’s patron loyalty initiatives, and it’s math you can do in your organization, too.
• #30: At TRG, we sort patron development steps into three more general categories, based on how much they spend with the organization in total, how frequently and recently they’ve been active. We also measure growth in participation over time. - (Advocates, in the organization with whom we work, are Donors and consummate loyalists) Our clients almost always know the names or faces of many of the folks in the Advocates category. They’re board members, major donors, and long-time subscriber-donors. - (Buyers-the magic of “and”) Buyers contribute less on a per capita basis than Advocates, but they do multiple activities with an arts org—what we call the magic of “and”. They bought a ticket last season and this season they became a member or subscribed. Or they took a class. Or they made a small donation. - (Tryers-from 1 st time to second or next time to now.) Tryers are the least loyal—they spend the least per capita. These are our coveted new audiences, one-time ticket buyers and occasional attendees. You may be wondering about the proportions of the pyramid. (CLICK for category stats) The tryers portion is the largest because the vast majority of the people in any database we study are Tryers – lapsed and new single ticket buyers. On average, about 4 out of 5 of those tryers come once and never come back. They never become Buyers or Advocates. And that’s a shame, because Buyers and Advocates invest so much compared to their size. That base of Tryers is unstable and left untended, it’s the source of decline in so many organizations.
• #31: At TRG, we sort patron development steps into three more general categories, based on how much they spend with the organization in total, how frequently and recently they’ve been active. We also measure growth in participation over time. [Your usual ABT spiel) CLICK (Advocates, in the organization with whom we work, are Donors and consummate loyalists) Our clients almost always know the names or faces of many of the folks in the Advocates category. They’re board members, major donors, and long-time subscriber-donors. CLICK (Buyers-the magic of “and”) Buyers contribute less on a per capita basis than Advocates, but they do multiple activities with an arts org—what we call the magic of “and”. They bought a ticket last season and this season they became a member or subscribed. Or they took a class. Or they made a small donation. CLICK (Tryers-from 1 st time to second or next time to now.) Tryers are the least loyal—they spend the least per capita. These are our coveted new audiences, one-time ticket buyers and occasional attendees. You may be wondering about the proportions of the pyramid. (CLICK for category stats) The tryers portion is the largest because the vast majority of the people in any database we study are Tryers – lapsed and new single ticket buyers. On average, about 4 out of 5 of those tryers come once and never come back. They never become Buyers or Advocates. And that’s a shame, because Buyers and Advocates invest so much compared to their size. That base of Tryers is unstable and left untended, it’s the source of decline in so many organizations.
• #32: Arts and culture organizations over-prospect and under-retain. In other words, they’re often so focused on getting new audiences in that they forget that they need to keep them once they’ve got them. When you’re trying to build a sustainable organization that relies on engaged, fanatical audiences, this is really bad news. You can end up spending all kinds of time and energy filling and re-filling a leaky bucket. When you start focusing on loyalty and retention, you can begin to focus on patching up the holes instead.
• #33: In our ABT model and framework, loyalty is a triangle with three many strategic pillars. Loyalty in arts and culture is about: Deepening relationships Leveraging and managing demand And integrating programming and curatorial planning into the patron process
• #34: Now, not all patrons created equal. At a top-line, you’ve seen that Advocates are different than Buyers are different than Tryers. But there’s more:
• #35: Our studies within communities tell the story of patron difference between the museum and performing arts sectors, too. In the museum world, getting a patron to move from being a visitor or ticket buyer to becoming a member is relatively easy. The incentives are transactional. With our clients, museum admission is sometimes free, often not. Special exhibits, though, are rarely free. So, if you’re a visitor who wants to visit the museum, see a special exhibit and visit the gift shop while you’re there, the membership offers real value. A member often receives discounts on or free admission, they receive discounts on everything else in the museum, including exhibits, and so WHY NOT become a member? Often this happens right at the point of purchase, or to avoid waiting in long queues for a special exhibition. But: to move a member to becoming a donor? To investing philanthropically? That’s harder. It requires work and expense and time and enough invitations to move thinking from “transaction” to “this organization is worth my investment.” In the performing arts with subscription models, this is different. To get a single buyer ready for the marriage proposal of subscription, it requires…dates! And sometimes many of them! We use the dating analogy in our language a lot at TRG. It translates, and it helps our clients think about the steps required to move patrons from Tryer to Buyer to Advocate. So in the performing arts, it takes lots of work and expense and time and enough invitations to move a patron from single ticket buyer to subscriber. But when a patron has finally taken that step and committed to four or six or eight night a year with an organization, the conversation about philanthropy is easier. The patron has been cultivated.
• #36: In this Museum and Performing Arts example you’ve heard an operational reference point for loyalty. I talked “steps” and results. How can this apply to your organization?
• #37: Well, if we’re going to talk to about relationships with patrons. And if we use the dating analogy here, we have to start with DATA. Capturing patron data is akin to asking someone that you want to date for their phone number. We can’t develop a relationship with our patrons if we don’t ask for their contact information. Now in your country, privacy laws ensure that you’re careful about this. And there’s great news in this. If you adopt a discipline of asking patrons if they’d like to hear from you, we’re finding that VOILA! some of them say YES! And those patrons who invite you in, and say yes to your communication, respond at much higher rates. What do I mean by full contact info? The basics. Street address, telephone number, email address. You might ask, why do I need to collect ALL of that information? Isn’t it enough to get an email address? We hear this many times, and TRG has found that those organizations who run multi-channel campaigns are the ones who truly maximize revenue and fill seats and venues. In general, because the volume of direct mail has been decreasing, this means that you have less competition at the mail box than ever before. Running a multi-channel campaign that involves direct mail, email, online retargeting and telemarketing will help you succeed in getting to “yes”.
• #38: Let’s talk about the realities that we find managing the most basic types of patrons for an arts or cultural organization. We’ll start with the single ticket buyer/visitor for museum
• #42: In general we call of this that I’ve just described, “the art of the upgrade”. It could be viewed as capitalism and entrepreneurship, or straight selling. We view it as invitation, community building, and relationship building. It’s making an institution about the people who support it. These two concepts are not actually opposing forces; they’re the same thing.
• #43: Invitation plays a role in demand management too. When you talk about audience development, the conversation inevitably turns to pricing. Pricing has an effect on loyalty, in ways that might surprise you. And loyalty is stimulated, or is easier to achieve, when an organization is perceived to be in demand. Also know this: an organization that has an administrative team that knows how to revenue manage—that is, exploit demand when you have it for increased revenues—that organization is on its way to a sustainable revenue model. More on that here in minute.
• #44: Like I said, the “field” talks about pricing as a key audience development strategy or issue to be managed. We focus on demand, and its management.
• #45: Remember the Advocate-Buyer-Tryer triangle. The right-hand pillar here is the one that focuses on Leveraging the Demand we have, and creating a perception of demand if we don’t. And let’s face it: our organizations are NOT commercial entities focused only on programming that sells. Ours are mission-based, and loyalty actually requires that we have a balanced mix of programs (more on that in a minute). So not everything that we curate and present and produce will result in long lines and strong revenues.
• #46: But pricing is not the point. It’s a tactic that we must attend to, for sure. But pricing decision-making is subject to all sorts of emotional, political, and reactive forces within an organization. That can’t be what guides our loyalty strategy. What does?
• #47: But pricing is not the point. It’s a tactic that we must attend to, for sure. But pricing decision-making is subject to all sorts of emotional, political, and reactive forces within an organization. That can’t be what guides our loyalty strategy. What does?
• #48: Demand management. There are three basic tenants of this strategy: Understand the impact of demand on revenue, loyalty Build the infrastructure for success And manage it. Not in silos, but together. For increased revenue and loyalty.
• #49: So, if the first step is to understand demand in your organization, let’s look at some of the variables that affect demand. Things like: Seasonality—do you have increased demand in summer months, or at the holidays? Day of week—are Tuesday nights “hot” in your city for some reason, or are the typical Friday and Saturday nights more in demand? Time of day—do matinees sell in your organization? If you have long runs of exhibits or shows—do you notice a difference in sales at opening, or closing? Programming itself. This has an obvious and clear effect on sales. But individual seats and different access points in a museum have different levels of demand, too. So ask yourself: does your organization price any of these variables differently, or enable first access to more loyal patrons for your in-demand elements? Demand management says: manage revenue aggressively when you have demand, and also be sure that your loyalist are provided access to those in-demand events, seats, times…whatever it is.
• #50: The 2nd element of demand strategy is about building the infrastructure for success. In a performing arts model that’s about the scale-of-hall plan. This is a long subject that could be a workshop on its own, but in short, the scale plan must reward loyalty, help buttress the perception of success for all performances, and maximize revenues when demand exists. It’s a tall order for a little ole’ scale plan, but it’s possible. To illustrate how this DOESN’T happen, consider this plan, here. Price level A is this organization’s most expensive, price level E is least. The single most important section of this venue—FROM A PERCEPTION POINT OF VIEW—is the front 75% of the orchestra floor, what we call the “perception ring”. This perception ring is important, because when it’s full, the hall feels full—we’re all looking forward, at the stage. People in the balcony AND on the floor measure “full” by what’s happening in this ring. But when the perception ring is not full, or when seats are spottily sold, patrons KNOW the performance didn’t sell as well. The energy in the hall is lower. When a performance sells out, or comes close to it, this scale plan works fine. The perception wing is full, the hall looks fine, and plenty of seats are sold at Price Level B, or 2. But when the performance doesn’t sell well, this scale plan “forces” people who need or want to purchase at Price Level C, D, or E upstairs—far away from the stage, but more importantly, where their bodies don’t help the “perception wing” look full. Why does this matter? Organizations that benefit from a perception of success engender loyalty more easily. Why would I buy in advance or become a subscriber, or pay more for a ticket, if your performance venue, as often as not, looked half-empty? What’s the incentive? There is none. Demand managers manage their scale plan and pricing to provide incentives for patrons to behave in ways that benefit the organization as much as the patron.
• #51: What does this mean practically, When demand exists, we: Invest in the production or show or exhbit Carefully control the number of complimenary/free tickets and discounts And we ensure that loyalty patrons get best access When demand lower? That’s when we use seats and admissions for promotions And that’s when all customers get great access! It’s simple, and it’s not. But sewn together, these strategies build an environment that supports loyalty and revenue.
• #52: The final element in sustainable patron revenue is complex and is the foundation for everything.
• #53: It’s the base of our triangle—the foundational pillar, or element.
• #54: And in many circles, the conversation about programming, or curatorial decisions, gets simplified to this: Neither statement is true. As I hinted at earlier, the reality is, we need a mix of programming that leads and delights our communities.
• #55: At TRG, we’ve begun to study the connection between programming and patrons. And while we’re talking “correlation” not “causation” here, the data is prompting some very interesting discussion. High-demand events, like Blockbusters, big-name events…holiday events, drive volume and revenue. BUT: the patron who attend these types of events don’t come back at high volume. So, from an annual point of view, the volume and revenue make sense. Marketing directors love these programs—the “success,” so to speak, is easy! But from a loyalty point of view, these patrons are expensive and hard to retain. And these works are often not motivating for an artist team or director. Low-demand works, on the other hand, like new works, or unknown artists, or “edgy” content, attract a lower volume of patrons and usually achieve lower revenue results. We often hear artist staff complain that “marketing didn’t work hard enough to sell my beloved event!” and marketing departments say, “I wish my artistic director understood that my job is about generating INCOME. Why can’t he/she program titles that help me do that?” But the truth is: the patron that attend these kinds of events tend to be the most passionate about the art form, and are better prospects for a loyal relationship with your organizaiton.
• #56: This is a great case study, told in data, from a major regional theatre company in the US. It’s one of many that we now can tell, and their findings aren’t as important as the fact that they’re asking, and studying, and using their findings to help plan. This theatre “bucketed” their programs into these categories—comedy, drama, literary adaptation, musical, new works, and Shakespeare. They have three performance spaces in their venue, and this report is from one of them that houses 38% of their productions. Let’s look at Drama compared to New Works. Drama is 13% of income, compared to 2% of income produced by New Work. The Average price paid for a ticket (what we call per cap) is similar—although you see differences in other genres—but the cost of generating that income is VERY different. 76% for new work vs. 37% for Drama. So, it costs more to acquire a ticket buyer to new works. And we don’t get a lot of them—only 32% of the hall is full for new work, on average, compared to drama’s 57%. But look at the attrition or churn rate difference. A full 67% of drama ticket buyers don’t come back to drama. But the attrition rate for new works is much lower—46%--the lowest of all the genres that this company produces. What did this tell this theatre company? This kind of data, combined with other reports that connected programming to the purchase behavior of Advocates, Buyers and Tryers, enabled them to see the strength in programming that viewed only on an annual basis, they might have viewed as weaker in some ways. This data is enabling an institution-wide conversation about programming and the role it plays in revenues, loyalty, and more.
• #57: So now, what? What do you DO with this information in your city? In your organization? We offer that your challenge is to begin to THINK DIFFERENTLY. To turn assumptions on its head and ask: what would data about my patrons tell ME?
• #58: As you consider this, also be mindful of this reality: data doesn’t DO. People DO. The whole field, as we see it today, is enamored of data. But transformation happens in organizations when people DO things differently. At TRG we talk regularly about the dangers of too much data. And today, ticketing and other customer relationship management systems provide so much of it that we frequently see administrators suffering from “analysis paralysis.” That’s when you study for the sake of study, but can’t or won’t DO anything significant with it. Pick three things to study. Start measuring your Data Capture rate—what % of your attendees do you actually have contact information for? These are the patrons whom you can ask on a second date. Monitor your renewal rate of single ticket buyers and other types—what % of them return each season? Then, start to analyze the Net Revenue of those patron types as I described today. These three steps will change the way you think about patrons, and may even change the way you engage with them.
• #59: Measure those things, and Remember these: 1) Patrons are a sustainable source of income. And the more self-sustaining you are, the more stable and nimble you become.
• #60: 2) If you’re thinking about making a change in how you think about patrons: pursue loyalty before you pursue new audiences. It will serve you in the short- and long-term.
• #61: 3) And finally: remember “the art of the upgrade.” It’s the “how.” It could be viewed as entrepreneurialism and American capitalism. We view it as invitation, community building, and relationship building. It’s making an institution about the people who support it. They’re not opposing forces; they’re the same thing.
• #62: Want to develop audiences? People are people. Incentive systems may be different. People crave connection, meaning. They need you, arts org. They will respond to invitation and connection.
• #63: Thank you for allowing me to join you at this impressive gathering about audiences and data in arts and culture. The arts are worth all this attention and time. Keep up the good work.