Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice. I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/) My most recent role was as Executive Director of the Grand Opera House in Macon, GA. Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.

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They Are Just Not That Into Us

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I recently read an article that criticized the current thinking about an arts organization’s relationship with its audiences.

Except, that it wasn’t directed at arts organizations at all, but rather at general marketing concepts.

Yet it seemed to reflect upon the current conservations in the arts so closely, I was 2/3 of the way through before I realized it wasn’t really focused on arts organizations at all.

The article, 3 Ways You’re Wrong About What Your Customers Want, appeared on the website of Australian business magazine, BRW.

The first two myths they address is:

MYTH #1: MOST CONSUMERS WANT TO HAVE RELATIONSHIPS WITH YOUR BRAND.

Actually, they don’t. Only 23 per cent of the consumers in our study said they have a relationship with a brand. In the typical consumer’s view of the world, relationships are reserved for friends, family and colleagues…

How should you market differently?

First, understand which of your consumers are in the 23 per cent and which are in the 77 per cent. Who wants a relationship and who doesn’t? Then, apply different expectations to those two groups and market differently to them…

MYTH #2: INTERACTIONS BUILD RELATIONSHIPS.

No, they don’t. Shared values build relationships. A shared value is a belief that both the brand and consumer have about a brand’s higher purpose or broad philosophy…

Of the consumers in our study who said they have a brand relationship, 64 per cent cited shared values as the primary reason. That’s far and away the largest driver…

How should you market differently?

Many brands have a demonstrable higher purpose baked into their missions, whether it’s Patagonia’s commitment to the environment or Harley Davidson’s goal “to fulfill dreams through the experience of motorcycling.” These feel authentic to consumers, and so provide a credible basis for shared values and relationship-building. To build relationships, start by clearly communicating your brand’s philosophy or higher purpose.

The third myth is – THE MORE INTERACTION THE BETTER. and their suggestion is to stop bombarding your customers with emails.

Because so much of the conversation in the arts these days is oriented on engagement and relationship building, you can probably see why I initially thought it was about the arts. Actually, after reading the article and understanding its target audience, I started to wonder if maybe the ideas of engagement and relationship building might have migrated over from the for-profit business world and was embraced in an effort to “run things more like a business.”

I am not suggesting that arts organizations shouldn’t work on relationships with their community, only that in this context it might be wise to evaluate if every practice and assumption is appropriate for arts and cultural organizations.

I think most arts and cultural institutions realize not everyone is going to want to have a relationship with them. It is helpful to have an idea of what the percentages might actually be so we can better direct resources toward cultivating closer relationships with those who seek them.

One advantage arts and cultural organizations might have over businesses at large is that they are more likely to embody values with which people can identify and share. So there is a greater possibility for an arts organization to build a relationship with a customer.

The Return Of The Gentleman Caller

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A few months ago I saw an article by Peter Ling on History Today about how automobiles enabled a greater degree of sexual and social freedom in the 1920s.

I, of course, read it for the details of the social freedom cars afforded.

Ling talks about how there wasn’t really such a thing as dating before the 1900s. Arrangements would be made for a gentleman to call upon a young lady at her home where he would be entertained in the family parlor, speaking with the girl and her mother and perhaps witnessing the young lady’s skill at the piano.

With an increase in automobile ownership, the gentleman might show up to find the young lady waiting at the door, eager to go out somewhere. People were able to have new experience and interact across social classes.

“Money gave access to theatres, restaurants, galleries and clubs. By 1900, the traditional events of the season, such as the opera, began to be deemed passe by a growing number of privileged youths. These ‘bohemians’ began to perceive the possibility of a new freedom arising from the anonymity of crowded city streets…Thus, affluent youth figuratively ‘crossed the tracks’ to enjoy a surer privacy amidst working-class crowds than they experienced in their parents’ homes…

Women who regularly read the Ladies Home Journal, who could recall being warned in 1907 that it was scandalous to be seen dining alone with a man, even a relative, learnt from a debutante of 1914 that it was ‘now considered smart to go to the low order of dance halls, and not only be a looker-on, but also to dance among all sorts and conditions of men and women…’ Thus leisure-class and working-class youth began to date and sometimes to frequent the same venues

I have recently been wondering if we are seeing a reversal of this trend. With the poor economy, children are moving back in with their parents. People are staying at home to experience their entertainment from the internet and Netflix videos. And, young people today apparently aren’t interested in driving cars.

I don’t think we will see a return to courting and a rush to buy pianos for the parlor. Which is too bad because it would be nice for people to value musical skills more and most of Tennessee Williams’ plays, which often referenced courting practices, would gain renewed relevance.

If people are eschewing cars and staying closer to home, there are some possible benefits for the arts and culture. Back in June I wrote about how young people returning home from the big cities were bringing expectations and vitality back with them.

There may be a shift in importance for neighborhood arts and cultural spaces as people seek things to do closer to home. And if they don’t own cars, lack of convenient parking may vastly diminish as a consideration for attending or participating in a cultural experience which in turn provides more flexibility for establishing spaces.

These spaces may be smaller with versatile use so that they serve the varied interests of the more immediate community. Though I wouldn’t discount the possibility of larger facilities gaining renewed investment from the neighborhood and gladly renovating to accommodate more bikes and pedestrians.

Perhaps they can serve as latter day parlor for young people to call upon each other. Apparently Gen Y isn’t very good at dating and in fact can be very anxious about the whole process. There may be a very real need for a safe, chaperoned environment designed to facilitate interactions.

I make no claims at being a proficient trend spotter so who knows if any of this will really manifest. Still in some places around the country, there is probably some worth in looking around to see if former empty nesters in a short radius are seeing their chicks return and figuring out if there is something of value you can offer them.

Passion About Your Work Is Hard Work

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Apropos of my post a few weeks back about people thinking creativity as a lightning strike gift rather than a process of work over time is a piece on Harvard Business Review blog site in which the author, Cal Newport, makes a similar observation about the idea one should follow their passion when looking for a job.

Newport notes that following ones passion has become common career advice and includes a Google N-Gram charting the explosive rise of the phrase in print use during the 2000s.

“Why is this a problem? This simple phrase, “follow your passion,” turns out to be surprisingly pernicious…The verb “follow” implies that you start by identifying a passion and then match this preexisting calling to a job. Because the passion precedes the job, it stands to reason that you should love your work from the very first day.

It’s this final implication that causes damage. When I studied people who love what they do for a living, I found that in most cases their passion developed slowly, often over unexpected and complicated paths. It’s rare, for example, to find someone who loves their career before they’ve become very good at it — expertise generates many different engaging traits, such as respect, impact, autonomy — and the process of becoming good can be frustrating and take years.

The early stages of a fantastic career might not feel fantastic at all, a reality that clashes with the fantasy world implied by the advice to “follow your passion” — an alternate universe where there’s a perfect job waiting for you, one that you’ll love right away once you discover it. It shouldn’t be surprising that members of Generation Y demand a lot from their working life right away and are frequently disappointed about what they experience instead.”

The arts career path has long had a “paying your dues” period of near slavery labor for low or no pay internship followed by successfully transitioning to a near poverty level pay. I joke, but only because I don’t want to confuse the poor treatment many entry level people are subject to with the genuine need to actually go through an unsatisfying process of improving your abilities.

The dream of being discovered and making it big is what causes many to pursue a career in the arts. The fact that there are some who can make it big with no apparent effort is something of a plague on the arts industry.

Still for many people, this dues paying process gives people a realistic view of what is expected in the arts career path and they choose to leave it.

Pursuing an arts career with its abysmal pay can be something of a blessing in disguise as part of the dues paying process. The fact we have the stereotype of the actor who waits tables shows that many creative types are picking up other skills in the process of pursuing the dream.

Of course, the benefit of this all hinges on heeding the advice of our grandparents to do everything we do well. It is easy to fall into the practice of not taking a job seriously figuring your effort doesn’t matter since you will be gone soon enough. Then when you revise your career plans, you may suddenly find that as a result of your inattentiveness no one will credit you as having paid some dues.

One of my first jobs was doing yard work which involved everything from mowing and weeding to mucking out horse stalls and polishing brass and bronze pots. I don’t think it directly prepared me for a job in the arts, (though I did end up driving a farm tractor a lot the rural arts center I worked at), it probably instilled a work ethic, taught me about a lot uncommon practices like beekeeping and gave me many problem solving abilities. (Like the time I set fire to the…erm, well I have said too much already.)

Cal Newport calls for career advice to reference the inevitable sour period before you feel inspired by your work.

In some respects, I think the arts are blessed with the stereotype of the wait staff who wants to act. Even though no one believes they will ever have to work in a restaurant to support themselves, that waiter is in our collective unconscious and can’t be exorcised. Part of us always knows that possibility exists. Some may even be motivated to pursue excellence to ensure it doesn’t happen to them.

Still more discussion of that metaphorical waiter needs to happen to make people aware that the pursuit of their passion may not come easily or as directly as they imagine.

Many performing artists would acknowledge their awareness that the pursuit doesn’t come easily since many of them start working hard at eight or nine years old. The problem is that “practice hard to be a success” has been used to motivate them for all those years and it is not a foregone conclusion, especially in relation to orchestras these days.

Arts and culture industries needs to emphasize the fact that the path to success may not be as direct as it has been represented to encourage people to think about and be open to alternative routes.

What Pricing Is Right?

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Back in June the MIT Sloan Management Review had an article in pricing strategies. The bulk of the article discusses research on practices of companies that have sales forces that goes out to solicit business and has some degree of control over the pricing.

However, the research found some basic elements of price setting that are common regardless of industry and geography. (my emphasis)

1. Cost-based pricing. Here, pricing decisions are influenced primarily by accounting data, with the objective of getting a certain return on investment or a certain markup on costs. Typical examples of cost-based pricing approaches are cost-plus pricing, target return pricing, markup pricing or break-even pricing. The main weakness of cost-based pricing is that aspects related to demand (willingness to pay, price elasticity) and competition (competitive price levels) are ignored. The main advantage of this approach is that the data you need to set prices are usually easy to find.

To a certain extent, this is the pricing strategy used by many non-profit organizations–and their critics. I say it is used by critics of non-profits because one of the common refrains one hears is that if non-profits can’t make enough to support themselves, they should be left to fail rather than supported by government funding.

Non profits use this approach to determine what level of revenue they need to cover their costs in the context whatever other funding sources (donations/sponsors) exist. But as the authors say, it can ignore the level of demand that may exist potentially increasing the revenue stream if the price were set higher (or perhaps ignoring the lack of demand and setting the price too high.)

2. Competition-based pricing. This approach uses data on competitive price levels or on anticipated or observed actions of actual or potential competitors as a primary source to determine appropriate price levels. The main advantage of this approach is that the competitive situation is taken into account, and the main disadvantage is that aspects related to the demand function are again ignored. In addition, a strong competitive focus in setting prices can exacerbate the risk of a price war.

I am not aware of too many price wars among arts organizations, but it can be a mistake to taking your pricing cues from competitors. For one thing, just because you perceive your product to be of equal value to your competitor’s doesn’t mean your customers necessarily do.

3. Customer value-based pricing. This approach, which is also often called “value-based pricing,” uses data on the perceived customer value of the product as the main factor for determining the final selling price. Instead of asking, “How can we realize higher prices despite intense competition?” customer value-based pricing asks, “How can we create additional customer value and increase customer willingness to pay, despite intense competition?” The subjective and quantified value of a purchase offering to actual and potential customers is the primary driver in setting prices. Customer value-based pricing approaches are driven by a deep understanding of customer needs, of customer perceptions of value, of price elasticity and of customers’ willingness to pay.

The advantage of customer value-driven pricing approaches is their direct link to the needs of the one constituency paying for the respective goods or services: the customer. The big disadvantage of such approaches is that data on customer preferences, willingness to pay, price elasticity and size of different market segments are usually hard to find and interpret. Furthermore, customer value-based pricing approaches may lead to relatively high prices, especially for unique products. Though that may seem optimal in the short run, these pricing approaches may spur market entry by new entrants or create a risk-free zone for competitors offering comparable products at slightly lower prices. Finally, it is important to note that it is an error to assume that customers will immediately recognize and pay for a truly innovative and superior product. Marketers must educate customers and communicate superior value to customers before linking price to value. Customers must first recognize value in order to be willing to pay for value rather than base their purchase decision solely on price.

Despite these shortcomings, many pricing scholars consider customer value-based pricing to often be the most preferable way to set new product prices or to adjust prices for existing products

Now I don’t have any real evidence that non-profit arts organizations use customer values as the basis of their pricing decisions, but damned if the language the authors use doesn’t match the language being used in discussions of arts management issues: increasing value and customer willingness to pay for it; the necessity of understanding needs of customers/community; high prices for unique products (unique at least from the NP org point of view); audiences not recognizing truly innovative and superior product; need to educate customers/community about the superior value of the artistic product.

Factor in movies/internet/video games as competitors offering what is perceived to be comparable product with lower monetary/social/time, etc. costs and it sounds like they are describing a the situation facing the non-profit arts and culture industries.

Except that these factors are rarely connected with discussions of pricing for non profit arts organizations. While creating the perception of value in audiences does often enter the discussion, I don’t know that it is necessarily accompanied with a “deep understanding of the customer needs, of customer perceptions of value, of price elasticity and of customers’ willingness to pay,” but rather with hopes and assumptions. How many pricing decisions arts and cultural organizations make every year are based on this understanding?

This may be due to lack of will as much as lack of funds to conduct the research necessary to achieve the deep understanding. Since customer value-based pricing seems to be recognized as the best approach, perhaps research into the intrinsic value of the arts should include a greater focus on pricing to see how value and pricing are connected.

Though I am not sure if the knowledge will be of practical use to a significant number of organizations. The authors point out the information is difficult to gather and interpret. I imagine the results will probably be specific to an organization or geographic region.