Prices So Low, It Might Be Insane!

There was a fair bit of discussion on Adaptistration two weeks ago about the Joffrey Ballet’s success in gaining over 2000 subscribers in a single day using the GroupOn discounting site. As a theatre manager, I get caught in the debate between making 25% of my ticket price vs. having an empty seat against possibly training people to wait for the deep discount in the future.

One of the best points that I think is made in the comments on the Adaptistration entry is that while you may be making 25% of the ticket revenue, you don’t have the marketing costs usually associated with promoting the show when you work with GroupOn. My assumption is that most arts organizations marketing costs aren’t 75% of the ticket price so there is still a danger of not meeting the other overhead costs you have by using GroupOn, but if the discount is structured correctly, you could end up doing marginally better than you might have and have a fuller house. Looking like you are successful is half the battle in convincing donors and granting organizations to support you.

Still, I was pleased to see Chad Bauman, the Director of Communications at Arena Stage take the subject on. In addition to suggesting that you are rewarding the wrong kind of behavior with these discounts and risk alienating the person who paid full price months ago, he notes that paying less than full price seems to translate into less than full commitment in both renewing and attendance.

“We must always remember that discount buyers behave differently and you must budget for that. Full season subscribers at most organizations renew at a rate between 85% to 90%. However, I have found that full season subscribers that purchase their subscriptions at a drastic discount renew at a much lower rate (around 60%). Additionally, because they spent significantly less amount of money per ticket, the no show rates are also substantially higher, sometimes leaving large empty holes in your house.”

As an alternative, Bauman suggests a slightly more work intensive process of acquiring mailing lists, sorting out your current subscribers and ticket buyers and-

5. Using the exact same deep discount offer you were going to give to Groupon, develop a cheap, but effective mailer and send to your list. Make sure it is an offer that is impossible to pass up, and that the offer leads in design and has a deadline. (note: if you don’t have a large box office staff, then make sure the offer is online only, or you will be swamped). The key is to keep production and mailing costs low–send using non-profit postage and use a discount printer/mail house.

By doing this, you get to keep the entire purchase price of the discounted subscription, and you minimize the possibility that your dedicated and loyal patrons will see that you are heavily discounting late into your campaign after thousands have already purchased.

Taken together, the Adaptistration entry and comments and Chad Bauman’s take, give a pretty good picture of the factors to consider and some alternative approaches to take.

I haven’t used GroupOn yet for personal consumption. In fact, it appears it might not have a lot of traction locally because there is no listing of past deals for my city. Though that could just be a technical matter. I wonder if you can effect the timing of the offer. That way, you can use it in a manner closer to that used by airlines. Not everyone in the plane is paying the same for their seats, but generally it is recognized that those who purchased earlier got a better deal. If you can arrange things so that people need to commit to the performance a couple months out, then at least you emphasize the need to plan ahead. Only problem is that if people don’t show up because their investment is as low as the price they paid for the ticket, you may judge it something of a mixed blessing.