Chad Bauman

Customer, Know Thyself

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I will admit that one problem of which I have often been aware is that it is difficult to make everyone at my theatre aware of the myriad forms of relationships different people have with us. Since there are some people who have been working for the theatre for 35 years, I am actually often less aware of a person’s history with the organization than some of the employees.

Chad Bauman tackles this very situation in an entry on his Arts Marketing blog. He relates a situation we have all probably been in: A person approaches our organization with a transaction they want to make. However, because their relationship with the organization doesn’t fit into the straightforward rules we have set down, they are not extended the courtesy accorded those less closely involved with the organization. Fortunately, someone who knows the value of the customer’s relationship with the organization is on hand and provides direction.

Bauman goes on to talk about the improvements they have made with their practices so that the communications and development departments are contributing to maintaining long term relationships with their constituency and community.

But in the course of his entry, I think he also ends up answering the question posed by the title of his entry – “Who are your best customers (and why many don’t know)?” He talks about how they replaced their old ticketing software for something with more integration and then hired someone else to write an algorithm that would alert their staff when they were speaking to someone with a high value relationship with the organization.

The best software certainly doesn’t mean anything if the practices of the organization don’t support the goal of cultivating and maintaining relationships with customers. However, I think the impediment to most organizations will be the need to pay to have someone write a custom program for them.

On the scale at which the Arena Stage operates, it makes good financial sense to have this done. The return on investment they have seen already with an increase in subscriptions and a decrease in churn probably justifies it. But will that be the case with most organizations?

That being said, I feel like I am woefully behind the curve trying to employ the customer relationship management (CRM) features with the ticketing and donor software we do use. In the sense that arts organizations aren’t using whatever resources are available, including integrating their daily practices toward a common goal, I would say Bauman is correct.

The thing is…it may be too late to pursue CRM. The trend is apparently heading in the opposite direction.

According to a articles Thomas Cott distributed the link to this past week, the government of the United Kingdom is strongly encouraging businesses to give control of customer data back to customers moving from customer relationship management to customer managed relationships.

Writes Tim Roberts:

In April this year, the UK Government launched a new consumer empowerment strategy “designed to encourage businesses to release their customer data back to them so that consumers can use this data for their own purposes.”

The Government has boasted that the ‘midata’ project will “turn the existing approach towards consumers on its head (with) a shift away from a world in which certain businesses tightly control the information they hold about consumers, towards one in which individuals along or in groups, can use their data or feedback for their own or mutual benefit“.

In the context of everyone’s worries about what Google will do with all the information it is collecting on you, this opens the possibility that we may actually find out what it is they know about us.

But it also occurred to me that while it may initially be frightening for people to learn what sort of profile has been synthesized about them, it may also prove illuminating if people came to realize their actual practices differed from their assumptions about themselves. For instance, they may attend shows every so many months not really considering themselves a fan of music as much as live theatre only to see that over the course of 5 years there is a record of them attending 12 concerts vs 5 plays. It might encourage people to be a little more open minded and adventuresome with their entertainment choices when they realize their tastes are more diverse than they realized.

In the other article quoting Alan Mitchell whose company has been advising the UK government says:

“And the second thing is that it is not only about a message going through to the customer, it is also that the organisation needs to be creating some sort of value in the information sharing – why should I share information with you? It is not just about receiving messages, it is about getting some sort of value from the process.”

When I shared my thoughts about the data contradicting people’s image of themselves with Drew McManus, he commented

“…think about all the box office and CRM solutions that require patrons to create accounts but provide next to zero outlet for patrons to do much with their user account besides update info. What sort of message does that send?”

Sharing that information would actually keep people more engaged and interested in your organization. It would probably also solve the problem of people creating multiple ticket accounts I groused about a couple months ago if they had a reason to use the same account for every interaction with your organization. Which means the organization has a much better sense of their relationship with the person since the history isn’t dispersed across multiple accounts.

CRM has been invaluable to companies because customers have had an expectation for decades now that if they patronize a place regularly, it will be acknowledged in some way whether it is the amount of starch in their shirts or the way they take their coffee. Even though CRM may be on its way out, many of the customer service practices it allowed companies to extend aren’t going away. Even if you have been behind the curve on using CRM software effectively (or at all) you still have an opportunity to participate in the next phase of relationship building.

Info You Can Use: Age Related Discounts May Be Illegal

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Hat tip to Thomas Cott at You’ve Cott Mail for making us aware that attempts to attract younger audiences through special pricing may be a form of age discrimination. The D.C. Office of Human Rights has determined the special pricing offered to young people at 30-35 years old are a form of age discrimination.

What this specifically applies to are practices by theatres like Arena Stage and Kennedy Center. I wrote about the Arena Stage’s plan (toward bottom) back in May and felt Chad Bauman’s blog post on how he was implementing it gave theatre people a lot to think about.

Now there is some cause for rethinking.

The D.C. Office of Human Rights asked for a justification for the pricing and determined it was not sufficient to warrant the exemption senior citizens enjoy.

“The report says that the theaters had not demonstrated that the discounts are justified by business necessity, because patrons older than 35 do not have the same opportunity to buy tickets at a reduced rate.

It does offer the thought, though, that there may be an emerging need for discounts to young professionals, particularly given many young adults do not begin their careers until they are at least 25 to 30 years old, and face other financial challenges.

The report recommends that pricing be broadened so that the same type of discounts are available for those 30-64. It does not appear that the office plans to enforce the recommendations by following up further with theaters to see if changes are made.”

While the article says the D.C. office may not monitor compliance, this is a practice that may come under scrutiny elsewhere. Like Ladies’ Nights discounts at bars, there is theoretically the potential that all age based discounts in every situation including restaurants and retail sales might come under review. (Finally, I can order off the kids’ menu!) The article doesn’t say what the basis for senior citizen exemption is. An earlier article quotes the head of the D.C. Office of Human Right as saying:

“Students and seniors may not have the means for a full ticket, so it is reasonable you offer discounts to those segments,” Velasquez said. “With this situation, if you’re a professional who is 34 years old? I am not sure. That’s the reason behind the inquiry.”

I can’t believe that is the entirety of the rationale for allowing it especially since they apparently rejected the idea early careerists would need it based on income or the lack of arts education schools. If income is a prime factor in exempting senior citizens, there is a chance that someone could use the median wealth of retiring baby boomers compared to that of their parents as the basis of arguing that it is as erroneous to assume they need a discount as it is a 34 year old professional.

Pricing isn’t and shouldn’t be the only method by which to attract younger audiences, but it is a pretty powerful motivator. There may be other ways to structure attractive pricing to the same segment of the population based on or complemented by some other criteria. The Office of Human Rights only rejected the reasoning the theatres submitted. That doesn’t mean a compelling line of reasoning doesn’t exist.

Info You Can Use: Tix, Pix, Kits and Internships

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I am a busy, busy boy this week which is why I ended up not posting yesterday. Hopefully things will calm down a little by next week. So by way of recompense for not posting yesterday, I offer you four links to practical information for use in your arts organization. I am sure at least one of these links will prove useful to you.

First up, Richard Kessler recently posted a toolkit for getting parents involved in arts education, Involving Parents and Schools in Arts Education: Are We There Yet? What is special about this guide is that it is written by parents for parents. Presumably, parents will know what best motivates them to get involved. As Kessler says, “You have to admit, there’s something to be said about a guide that emerges directly from the work of parents, educators, and partners, rather than from staff.”

I haven’t gotten a chance to look at the whole thing, but I am encouraged that the second chapter is “Understanding Parents” and the fifth chapter is “Motivating Parents” with the “Educating Parents” in between. In the arts I think we often want to skip past the understanding and educating parts and move straight to motivating audiences into the action of attendance. The handbook reminds us of the proper order of things. The guide is 45 pages long. Fifteen pages are devoted to interacting with parents, the other 30 odd are sample forms, checklists and templates to use in organizing parents toward a school arts event.

Next, a link from our friends at the Non-Profit Law blog to the Department of Labor’s fact sheet about what is allowed during an internship under the Fair Labor Standards Act. It should be noted that these rules only apply to for-profit businesses at the moment, but a footnote they state (my emphasis) “Unpaid internships in the public sector and for non-profit charitable organizations, where the intern volunteers without expectation of compensation, are generally permissible. WHD is reviewing the need for additional guidance on internships in the public and non-profit sectors.” So it might be prudent to design your current internship program with the for-profit guidelines in mind.

Chad Bauman talks about a plan that the Arena Stage formulated to wean people off student discounts. They used to offer $15 tickets to people under 30 during the week prior to the performance. The problem was, once they turned 31, their ticket price went up to $60. It appeared this steep price jump was discouraging people from continuing to attend.

Now their plan is to offer a “pay your age” pricing for 3% of the seats starting two months before the first performance. The hope is to not only create the idea of paying an increasing amount as you age, but also emphasize the importance of buying tickets early rather than the week of the performance.

This program is still only available to people under 30. You don’t pay $85 if you are long lived. In the comment section of the entry, Bauman addresses the potential sticker shock a person might get upon turning 31 and finding they now have to pay $60 instead of $30. I really appreciate his view of cultivating a person over 10-15 years.

“Once a patron turns 31, and we have already gotten them into a pattern of buying early for a discount, we would then offer them a 3-play preview subscription acquisition promo probably in the range of $99 for three plays (or $33 per ticket). After they “age-out,” my next major priority is getting them to subscribe. Then once they subsribe, I will work to get them to upgrade their subscription packages. This is a long term strategy that really looks at the customer over a span of 10-15 years. From first time PYA buyer to full season subscriber and donor will probably take 15 years.”

Finally, if you use images from the internet and are confused about the difference between royalty free and copyright free images or aren’t really even sure about acquiring images to use, Tentblogger has a good comprehensive guide (with supporting images, of course) dealing with all these questions and more.

Prices So Low, It Might Be Insane!

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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.