Wednesday, April 28, 2010

My most frequent answer

I am often asked about the most frequent question I get. To me, the more relevant question is, “What’s my most frequent answer?” This one is much easier.

Much of my work as a consultant has been based upon a simple premise: help sell or raise more money while reducing risk. That was the reason for TRG’s entry into the world of database management a dozen years ago. Simply put, we grew tired of guessing. Should the client do this? Should the client do that? Who knew? If pressed personally, I would express an opinion. It would be an educated or experienced guess, but still just a guess. One of TRG’s primary goals is to eliminate such guesswork – even the type that comes from years of experience.

I often joke that many of us veteran arts marketers kept our jobs because we guessed right more often than we guessed wrong. A long time colleague recently reminded me that we kept our jobs because “no one really knew what the heck we did for a living and the survivors knew how to fix their messes before the boss noticed.” Today, everyone – boss, board, colleagues-- notices. In this information-focused era, guesswork is for suckers and perhaps the soon-to-be unemployed.

I was reminded of this just the other day when reviewing a preliminary stage of research that is winding its way through the TRG Data Lab. It is a study of half-priced ticket buyers in the San Francisco market. Where do they come? What happens to a patron once they buy that deeply discounted ticket? Are they loyal? Do they come back for a second visit? Do they ever again buy a full priced ticket?

In this case, my three decades of experience was not helpful. I was convinced that cannibalization was likely to be a serious problem among half-price ticket buyers. Once converted to a deeply discounted ticket, it was unlikely that they would ever again buy a full priced ticket. I was wrong. The cannibalization rate for the study data was less than 1%. The majority of returning ticket buyers (from the 1%) made their next purchase directly from the organization they started with. Why? Today I have no idea – but we now have a new place to focus our study. We also have a long way to go before delivering the final report.

My point is simple: guessing about patron behavior is about as accurate as guessing the next winning number at roulette.

So, going back to the original question….what is my most frequent answer? Simple. For a wide range of questions, I proudly state that while “I may have an opinion – a guess, really -- I just don’t know yet. If you are serious about finding an answer to that question, let’s go check your database and find out.”

This seems to me the best way for savvy arts marketers and fundraiser to reduce risk – for their organization and their careers.


  1. Great to hear that data, Rick. Since we probably sell a significant share of the half price tickets in the Bay Area, I'm willing to offer a theory that seems to have some basis in data that we've seen here at Goldstar.

    And it's quite simple: most venues/producers believe that they're reaching far, far more people than they're actually reaching. Goldstar's approach has always been to bring new people into the market for live entertainment. From Day 1, we focused on tapping into segments of the marketplace where we would find entertainment consumers, but not necessarily live entertainment consumers, and then just work to convince them that live entertainment should be their first choice.

    A lot of times, venues don't believe us when we say that, but all of them who've looked at the data see that we're telling the truth.

    In other words, people don't buy half-price tickets just for price. They buy because they're sampling or testing your product or because they want to go do something. The lowering of the price is just there to lower the friction to a new person.

    It's what I call the importance of growing the pie, but somehow a lot of marketers have convinced themselves it can't get any bigger. I completely and totally disagree and wish that people with any level of responsibility for marketing in our industry who do believe that would consider another profession. We need "pie growers."

    In fact, I wrote about it here:

    I'm looking forward to the rest of the data.

    Jim McCarthy
    CEO, Goldstar

  2. I agree. I think theatre (in general as a whole) needs to bring in more people, make them realize that it is still a regular viable entertainment option (now that everyone has moved onto TV, movie and video games) and that it's not just a one time special thing. The high price keeps newbies away but as you say, discounts offers a reasonable rate to sample theatre so that they may discover what they like/if they like it.

  3. Rick,

    We, at Center Theatre Group in Los Angeles, regularly survey our audiences to measure how many people are "newbies" to one or more of our three theatres. The average is generally about 21% every performance of almost 700,000 tickets sold annually.

    The newbie comes from somewhere, most often through word of mouth by someone who saw the show with a full or half-price ticket. Our surveys to these people demonstrate almost without fail that the newbie will "recommend the show" to a friend more frequently, with more enthusiasm and faster than a "subscriber" or "long time single ticket buyer."

    Goldstar is our primary outlet for half-price tickets. And because Goldstar solicits opinions of its members, we can measure results and plan for allocations.

    In this economy, we don't have problems selling top price (front orchestra) or lowest price (balcony) tickets. Our challenge is the mid-price rear orch, rear mezz sales. And this is where half-price tickets play a role in our dynamic pricing schemes.

    Again in this economy, as people give up vacations, all of us need to appeal to the customer who isn't going out of town. They are looking for interesting events to draw their attention. People in our demographic do not stay at home watching television for long. It is our job to catch them. If a half price ticket does the job now, and the customer is satisfied with the work we do, they will come half-price or full-price for a better seat.

    Jim Royce
    Center Theatre Group, Los Angeles
    Ahmanson Theatre, Mark Taper Forum, Kirk Douglas Theatre

  4. I have to disagree with your data. Your 1% is very different from what we've found.

    We stopped using Goldstar for two reasons. (1) They would not let us sell half-price off of our full General Admission price (they insisted we offer half price off of our discounted Advance price) and (2) we found that in 2007 37% of Goldstar ticket buyers were returning customers but in 2008 50% were returning customers.

    We are an outdoor theatre with no reserved seats, so different from a theatre like Center Theatre Group.

    Discounted tickets can be a useful way to get people through the door, but if you keep using the same method of distribution -- like Goldstar -- you are training some people to buy half-price tickets, rather than attracting new audience members. At least, that's what our data shows.

    Lesley Currier
    Managing Director
    Marin Shakespeare Company

  5. A friendly word to Goldstar ... The lower the actual ticket sale price, the higher a percentage is the fixed fee of the intermediary (like Goldstar.) I pay the lowest price I can for any given event. But when I see a 10, 15, or 20% premium going to some entrepreneur, I really do consider whether I might as well get a better seating location (i.e. a non-discounted ticket), and give a hard-pressed not-for-profit a break.

    We should all remember David Merrick's prescient warning that the TKTS half-price booth would result in higher established prices for those for-profit tickets. He turned out to be right. Budgeted income figures are even more important in an NFP, I think