What It Takes To Grow

Blogger’s Note: It’s been a long time, several thousand travel miles, two conferences, a first draft of a new book, and two new grandchildren since my last blog entry. During that time, I’ve seen case and study results that I’ll share via this and future posts. Here’s to a happy, more prosperous, more communicative New Year.

Recently, a very smart entrepreneur in the commercial entertainment industry made a surprising observation. He admitted that he carefully follows the business and marketing practices of not-for-profit arts and culture organizations. Nonprofits, he said, tend to “work smarter -- they have to.” Strategies born of necessity frequently breed cutting-edge ideas that can be applied elsewhere.

I would agree. In these tough times, the margin for error is so small and the stakes so high that survival for many nonprofit performing arts organizations depends upon the ability to do everything exactly right.

So when client organizations began posting higher ticket sales in late 2010, we took notice. We also took a closer look to understand what was happening. What were the forces that appeared to drive sales up – or down? Were there organizational or market factors at work? If so, what lessons might we learn?

To find out, TRG fielded an internal analysis on a study group of clients representing large and small organizations across the U.S. and Canada. We chose cases for which we had a good understanding of both the operational and market situation. Each case offered clean, consistent data. Every organization had staged several performances or productions since the opening of the 2010-11 season. At the time of the study, many were in the process of opening their big holiday performances and events so this analysis did not include the yet-to-come impact of December attractions.

About three of five organizations saw improved ticket sales over last year. About one in four were experiencing sales declines, with the remaining experiencing generally mixed or flat results.

Market conditions or severe weather appeared to have negatively impacted only two organizations in our study group. Far more important – especially for those organizations whose sales fell short of prior year results - were the artistic decisions about what went on the stage. Artistically challenging choices, in terms of audience appeal, clearly had a significant negative impact.

Of the organizations with mixed results, several experienced big extremes: for one production, the organization would achieve record-breaking sales volume and revenues only to be followed by a production (the same organization, mind you) with soft sales or just plain awful results.

That a majority of the study group witnessed increased admissions and revenues thus far this season is significant in TRG’s view. It was clear that these improved fortunes were no fluke or lucky break. Foresight, coordinated planning among programmers, marketers, and leadership, and exceptional implementation worked together to make these increases happen. In short, these folks worked smarter – as teams – under the worst economic circumstances of our lifetime.

What did they do right?

They put the right assets on stage. Anyone within earshot over the past three decades has heard me hammer away at this point: programming matters, especially early in the season. The organizations whose sales increased had planned and staged at least one production that drew large audiences at or immediately after the season opening. They front-loaded their season with a hot ticket – a performance or production that lots of people want (need!) to attend. Not only did subscribers look around and feel good about investing in a winning season, but relatively large numbers of new ticket buyers joined the patron base early in the season. These smart organizations gained not only immediate revenues, but simultaneously increased their prospect pool of repeat buyers (during the same season), which will create greater numbers of future subscribers and donors.

They anticipated patron demand in advance. Without exception, these successful organizations began promoting their hot performances and managing inventory for their not-so-hot dates last spring or earlier. Each had sales pacing and pricing strategies built into their marketing scheme long before single tickets went on sale. Houses were scaled and seats held and released to sell in a particular order so that hard-to-sell nights would look well-sold. Organizations -- Seattle’s 5th Avenue Theatre to name just one – created themed “sales” six months out. “Christmas in July,” Back-to-School” and “Black Friday” promotions strategically discounted seats to stimulate demand for production dates and performances that were not expected to sell out. As a result, they sold more seats much earlier in the normal sales cycle so they could maximize incremental revenue from demand-based pricing as consumer interest peaked nearer performance dates. In short, success stories were built on long-term plans that were implemented with scrupulous attention to demand and sales pacing.

They put resources in the right places. Winning organizations fueled their top-selling programs with the highest investment in marketing and manpower resources. Some saw an increased cost-of-sale but stuck with their plans, making investments that were necessary to fuel continued sales volume. Their results show that a growth-yields-growth strategy works especially well in these difficult times.

Finally, the most successful managers recognized that flawless execution is not optional. When times are this tough, missed deadlines or skipped steps negatively impact the bottom line and guarantee disappointing results – every time.

As I post this, final results from December performances are just coming in. Like you, we’ll be eager to see what the data tells us once the full impact of holiday sales can be measured. Whether or not we are witnessing hopeful trends, one thing is clear. Growth in the season ahead must be planned for now with well-informed decisions about patron demand, programming and its placement. We know it won’t be easy. In this business, it never has been.