Value Is Not Price

The Drucker Exchange recently noted that the Cincinnati Reds and Michigan Wolverines teams have started using dynamic pricing, scaling prices based on popularity.

The Reds don’t provide much information about their structure, though they promise the price will never fall below whatever the season ticket holder pays. They set their base pricing at the start of the season per anticipated demand and start implementing the dynamic pricing two weeks out so it probably pays to buy early.

The Wolverines basically set their anticipated pricing from the start ranging from $65 for the Akron game, $10 less than last year, to $195 for the Notre Dame game, $100 more than last year. (And by the way, that is the lowest price tickets. Their top tier tickets for Notre Dame are $500.)

The piece on The Drucker Exchange says the mistake companies often make is to ask what customers value. This is aptly illustrated by the secondary market for those Wolverines games. You can get those $65 Akron tickets for $35 on the secondary market, but those $195 Notre Dame tickets seem to be going for about $319 already. (Single tickets go on sale tomorrow, 8/1)

Peter Drucker lamented how few companies recognize the importance of simply asking themselves what their customers value. “It may be the most important question,” Drucker noted in Management: Tasks, Responsibilities, Practices. “Yet is the one least often asked.”

One reason for this is that companies think they already know. “Value is what they, in their business, define as quality,” Drucker wrote. “But this is almost always the wrong definition.” For example, for a teenage girl, “value in a shoe is high fashion,” while durability and price matter little.

“Another reason why the question ‘What is value to the customer?’ is rarely asked is that the economists think they know the answer: Value is price,” Drucker added. “This is misleading, if not actually the wrong answer.”

For instance, electrical contractors, while famously price-conscious, may prefer one of the most expensive fuse boxes on the market. “To the contractor this line is actually low-priced because it is engineered to be installed fast and by relatively unskilled labor,” he explained.

The ultimate lesson is simple but not easy: “The customer never buys a product,” Drucker wrote. “The customer buys value.”

(My emphasis on that last sentence on the Drucker citation)

There are many intangibles that factor into what people value. Will the Notre Dame game be three times better than Akron? Possibly. By game day in September, there is a fair chance the primary market tickets to the Notre Dame game will be four or five times more expensive than Akron, if not more.

There will be a point where the quality of the actual Notre Dame gameplay can’t be better than that of Akron in proportion to the difference in ticket price.

What people are willing to pay so much more for is the experience of tailgating and attending a potentially great game steeping in the palpable excitement surrounding the long rivalry between the two teams with thousands of others.

I have resistance to dynamic pricing for a number of reasons, many of which have to do with the relationship I feel we are trying to cultivate with our audiences.

The question is, do people really recognize and value that we are making the effort? Is it all pretty much one-sided? Many people don’t really discern between profit and non-profits organizations when making their entertainment decisions.

Are non-profits basically putting themselves at a disadvantage by not using dynamic pricing for shows that clearly will sell out months before the performance date based on a devotion to an audience that has no idea the organization has decided to suffer for their benefit?

There is a need to keep prices low to provide affordable access. If 900 people clearly value attending a performance that they will commit at $25 a ticket between one and three months before the show, do you really owe it to the last 100 people to maintain the $25 rate until they get around to buying tickets?

Or do you owe it to your long suffering staff to try to increase the revenue stream so you can pay them $12/hour instead of $8 by using dynamic pricing?

We aren’t sure about the investment of the community in your organization, but we can be more certain about the investment of your staff.

I am still a little uncertain about dynamic pricing. The issues aren’t as clear as I present them here. However, one issue I don’t generally see people mention in the dynamic pricing conversation is that by not using it you are potentially punishing your staff in the service of an ideal the community may not be aware of much less value.

If customers show they willing to place a higher value on a product, should non-profits acknowledge that by placing a commensurately higher price on it?

Serving The Community, It’s Like Dating

Continuing with my answers to questions asked by readers, last week Karen asked:

“I’m very interested in how small arts organizations effectively serve their community, particularly in long term collaborations. While I focus on the symphonic and choral space, I’m sure a lot of the wisdom on the topic can be applied broadly.”

Short answer- If I knew that, I would force Drew McManus to make me a partner in his consultancy and we be raking in the money.

The truth is, no one knows because there is no one right answer. Every arts organization is different and the dynamics of each one’s relationship with the community is different. One of choral groups you work with Karen, is associated with a religious entity on a university campus so their goals and target community are quite different from those of symphonies’ with which you work.

Each is going to have a different definition of what effective service means. For some it may mean getting people to attend. For others it might be people paying to attend. Even if the amount of the payment is $5, that small difference will have some significant implications about how the company interacts with the community.

Your question calls attention to the fact there are a lot of arts blogs and articles out there that sing the praises of the idealism of serving the community, but no one really admits that when it comes to the practical aspects they can’t tell you how.

Because we are basically talking about relationships with other people, it is really akin to trying to get advice on how to get someone to love you. There are tons of articles written on the subject every year, but no one has the answer.

The best anyone can ever come up with is “be yourself” and “don’t be a jerk.” The rest is all generalities: be funny, but not overbearing with jokes; get the other person to talk about themselves, but don’t be distant; find common ground, but have different interests that the other person will find intriguing, etc.

In many respects much depends on chemistry, in this case the one you have with your community, not the person you really like.

Everyone knows you don’t want to have your concerts in the slums because the impoverished don’t get invested in classical music— except there is El Sistema.

Why did it work in Venezuela? Can it work here?

Who knows, but there is an example of a long term collaboration. Somehow it endured nearly 40 years with the backing of the Venezuelan government. I suspect it was a few years before it reached the point where the national government became interested in becoming involved.

My advice is to think about who you really want to serve, regardless of whether there is any money in it or grant funding to support it. If you can make it work under those conditions, great. Otherwise, you probably need to compromise and shift your focus a little to those things there is money in.

Don’t fall into the trap of thinking, well if we spend resources on this thing that makes money, we will have the ability to help the people we really want to help. Then you are in a situation where you are cultivating relationships trying to serve community B so that you can serve community A which requires cultivating a different set of relationships.

If you have the time and resources to do that, you can probably swing working to serve community A for no money.

I am not saying that you can’t have varied programming and a wide appeal or that your other activities can’t generate revenue to support your long term collaboration. It is just that a small organization really needs to have a singular focus, otherwise they end up unable to achieve any of their goals effectively. (And I would hazard to guess this might be generally true for many organizations of larger size.)

If you are ready to be in it for the long term, then your collaboration with the community starts with developing relationships. If you decide that you want to really focus on bringing music to kids in a specific school district, you want to have relationships with the teachers, principal, superintendent that you are constantly reinforcing and renewing.

Most importantly, if at all possible, find a way to connect with the families in the district. Not only those with kids in the schools, but those with kids who have graduated and who will potentially be giving birth to those enrolling.

Show up at PTA meetings, participate in conversations on the Common Core standards for arts. Be in a position to be a partner and advocate for the community you have chosen to serve.

Go to Chamber of Commerce and Rotary meetings, talk about the group with which you are partnering, but also just meet people and talk about the weather. Get to know people and get known so that when you are in the paper for something your group has done, people already have a relationship with you from the time you brought that great pie to the potluck last New Year’s Eve.

Not only do you make a great pie, but you are doing good things for the school too. That’s great because I (as the person in your community) have to pay property taxes to support the school even though I don’t have kids. I am still resentful about the taxes, but also a little proud that my community has good schools so at least my taxes aren’t being wasted.

That is sort of my ideal vision of what a long term community partnership might look like. It is easier to do in a small city versus a large one because those relationships and connections with people not directly involved with your organization and the community are easier to create and maintain.

Having a relationship that provides a connection to people not directly involved with your organization or the community you serve is an important element in my mind. The goodwill you generate reinforces the sense of identity and worth for your organization and the community you serve.

Think about communities with strong athletic teams, whether it is college or professional. Whether you go to games or not, you walk into stores, you see branded merchandise for sale, bars have the games on television. If you are a student at the college, you get the sense that the whole community supports you even though you aren’t on a team, just by the benefit of your membership in the group.

Even if you don’t go to the games or have ever set foot on the campus, if you go visiting elsewhere and the people there are cheering for the grudge rivals of your hometown’s school, there is a good chance you will feel a tinge of responsibility to be loyal to your hometown team even if you don’t openly say anything.

I think that is the sign of an organization that has made a connection with the community when a person who has made no conscious effort at investment feels a sense of loyalty and duty to the organization.

Of course, unconscious investment ain’t paying the bills so you are always in the process of trying to convert people to being actively involved. You just don’t know if it will be a concert or a really good pie that tips the balance.

What To Expect In Arts Administration Class

Last week in response to my call for suggestions of topics to discuss, commenter Samara asked,

“I am attending Bellarmine University this fall as a freshman and am the only student as an Arts Administration Undergrad with music being my emphasis. What should I expect in my Arts Admin classes? Besides the fact that I’ll be alone and don’t get a studio until spring semester haha!”

I took a look at the Bellarmine Arts Admin program and the course requirements for the music focus and generated the following response for Samara.

[hr]

Samara-

In terms of exactly what sort of experience to expect, I obviously can’t tell you because every arts administration program is different, even from year to year.

What I can tell you is what to expect from yourself and what expect from your instructors, internship supervisors and other colleagues.

I apologize right from the start there is probably going to be a tinge of condescension in some of what I have to say. It can’t be helped when you are trying to offer general advice to someone you don’t really know.

The first thing to be aware of that you are being taught the skills you will need to be a successful arts administrator, but you are not being taught how to be a successful arts administrator.

Ken Robinson said it best a few years ago when he talked about how schools creativity.  He notes that we never know now what students will need to know decades down the road so the best thing we can do for students today is teach them to be creative, think critically and teach themselves new skills.

Twenty some odd years ago when you were born the world was just being introduced to dial up internet, and 14.4k at that. I remember a guy in 1994 telling me I should use the Macs in a different computer lab because they had this new thing called a web browser which let you see the internet with colors.

No one really had cellphones, cable or wireless modems. We could imagine a time when we would have cellphones, faster internet connections and maybe something like iPods, but social media, texting, Kickstarter campaigns, global warming, American Idol and so many other things that are common today weren’t really on anyone’s radar.

But in the three-four years between 1994 and 1997/1998 we went from web browsers just beginning to appear to everyone expecting that any worthwhile business would have a website and I was learning HTML.

No one really knows what the future will demand of arts administrators even four years down the road so they can’t give you the secret formula for success upon graduation. What they can do is equip you with the skills to discover that formula for whatever company/organization you work for or establish. Every company is different in terms of the goals they have and the customers/constituencies they seek to serve.

What you should expect from your degree program is a lot of opportunities to discuss problems facing the arts and possible solutions. By the time you are ready to graduate, I guarantee there will be entirely new problems to discuss.

You will need to read and talk a lot about challenges, trends and techniques outside of the arts which may be applicable to the arts.  You will have to discern which are likely flash in the pan trends that just have good PR behind them but won’t amount to much and which trends have staying power.

You will be a good arts administrator when you graduate if you are practiced at looking at new situations, generating and evaluating possible solutions and then implementing them.

Note that you may not be a successful arts administrator by many measures because you can certainly still make mistakes, especially when trying something new. But if you have the capacity to evolve ideas rather than fall back on old practices, you will be in good shape.

Given that times are changing quickly,  I won’t assume you will end up working for an arts organization. You could easily be a manager at an online gaming company.

One of the things I am really pleased to see about your degree program is that there are a lot of interdisciplinary seminars. (Though not surprising since Roberto Bellarmino was a Jesuit and the school had a close association with Thomas Merton.)

My hope is that you will be in those seminars with business, science and liberal arts students so that there are opportunities to exchange multiple views. There can be a lot of dangerous insularity in the fine arts.

I see from the degree requirements you will be participating in classes that engage in discussions and field visits to local arts organizations. You will also have a couple semesters of internships.

Take the opportunity to ask questions and make suggestions realizing, that you are going to make some really dumb suggestions. That is just part of the process of learning. It can be painful, but can’t be avoided.

I only stopped saying dumb things six months ago…..

Some of your suggestions will actually be good but the people in charge are afraid of implementing them. You have to be humble enough to accept being told no because you won’t be experienced enough to really discern what really isn’t viable and what people are afraid to consider.

Always assuming that people are too timid to take chances will just make you miserable. Make a list of your ideas and come back to them later. Throw away the ones that were bad and propose or keep the good ones. Repeat.

Or try implementing your ideas yourself on a smaller scale.  The times increasingly offer greater resources that allow people to accomplish thing on their own.

In terms of your internships. Everyone has to make copies and coffee when they are interns. That shouldn’t be the whole of your job though. Talk to people who have interned before to make sure the internship coordinator is ensuring the internships are valuable experiences.

The easiest way to make sure you will have a good internship experience is to know before you go that your internship coordinator actively monitors the environment and is on the look out for your best interests.

Even if you are asked to do a lot of menial work, you can turn it into a learning experience. Interning in the days before email attachments were so easy was both a blessing and a curse. I may have had to run a lot of errands, but many times it was to the lawyers’ office. I knew enough not to talk about it with others, but no one said I shouldn’t read the documents I was couriering while waiting at the red lights…

In terms of useful skills, I would encourage you to pay very close attention in the accounting, finance and law classes. A person who can understand contracts as well as maintain and properly interpret balance sheets and cash flow statements will be valued pretty much anywhere.

The same with the writing classes and communication classes. There are so many channels of communication from email to 140 character texts to image sharing and probably more still on the way. The more that emerge, the more valuable a person who is able to quickly and clearly engage the viewer/reader.

Finally, I would stress the leadership/management and philosophy classes. Effective leadership has more to do with a good understanding of philosophy than with the analytics found in other business courses in my mind.

Ultimately, it is up to you decide what you want to invest and reap from each of your classes.  Worry more about what you are getting out of the class than obsessing about your grades. When I was an undergrad, I was content to get a B or C in a class I enjoyed because I felt like I gained something valuable. The grade was only a measure of my progress at the moment, but the interest the class engendered in the subject matter inspired me to continue to learn more about it.

Good luck.

What Should I Talk About?

Now that I am back living in the lower 48, I have begun thinking a little more seriously about possibly presenting at some of the national or regional conferences. I had actually thought about it a bit when I was in Hawaii, but distance limited my opportunity to attend many conferences and hampered collaboration opportunities.

That gave me the idea to ask my readers–what do you think I should do a session on? This is actually a double duty question because I am also essentially asking what topic would you want me to write blog entries on to.

I understand that many people can’t attend conferences so I would ultimately be planning on posting whatever I talked about on the blog. And readers might see bits and pieces of what I was working on emerge on the blog as my research brought me in contact with new information.

Rather than to ask what topics I should blog about, I wanted to frame in the context of what do you want to know about so badly that you would seriously consider undertaking the expense of travel, hotel, food, etc to attend a conference where someone was talking about it?

I also suspect I take for granted people’s familiarity with many topics I come across in my daily reading. The reality might be that people are desperate for information. So even if I didn’t do a conference session on it, your feedback will help determine topics I blog about in the future.

Just as examples of conferences sessions to get you started, Arts Presenters is looking for session proposals on Catalyzing Communities around the arts, Making the Case for the Arts and The Art of Transition. That last one seems like it could encompass everything from leadership transition to changing your organizational approach to programming and marketing.

I just found out that I probably will be attending APAP conference this year. Though I am not sure I would get a proposal together by the deadline next Thursday so I am not necessarily looking for a topic that would fit that conference.

I figure I can either lead or contribute to a conversation about:

-contract negotiations, submitting offers, reading contract riders
-closely partnering with multiple arts presenters to organize a tour as a consortium
-partnering with artists to create performance works reflecting stories/values of indigenous cultures

Of course, I can talk about many other topics like marketing, social media, presenting in higher education environments (and bureaucracies) but I feel like a lot of other conference presenters can and have done so before. Though I am certainly happy to produce blog posts on these topics

I feel what I have listed are areas in which I have more specialized knowledge than many others. It is also likely that I am forgetting some too. If there is a subject area which you have come to value my expertise, let me know.

Thanks.