Patron Loyalty 101

Photo: Mario via Flickr

This article is cross-posted on the #artsmgtchat blog. Strategic Communications Specialist Amelia Northrup will guest-host #artsmgtchat on Twitter on July 20 at 2-3 p.m. EDT.

Audience development. Usually when you hear this arts industry buzzword, it’s all about finding new audiences—everyone wants to develop a larger audience, right? However, audience development is not only about finding new audiences, but also retaining and deepening the commitment of the patrons you already have. Out of the two, the second will nearly always give you a larger return on your investment.

That’s the goal of patron loyalty programs—retaining and deepening the commitment of existing audience members.

Don’t get me wrong; new audiences are crucial to sustaining the arts. But when ongoing TRG research shows that anywhere from two-thirds to 80% of new audience members don’t come back, the real problem becomes clear. It’s retention. That’s what will get those larger audiences in the end. As the Girl Scout saying goes: Make new friends, but keep the old. 

What exactly is Patron Loyalty?
What specifically are we talking about when we say “patron loyalty”? Let’s break it down:

• Patron: anyone who has a transaction with an arts organization
• Loyalty: developing a longer, stronger commitment to your organization

Patron loyalty is the discipline of customer loyalty specific to arts organizations. The for-profit sector spends millions of dollars determining ways to make customers more loyal—and they’re not alone. Smart arts industry practitioners have also turned their focus to loyalty and retention. They measure the lifetime value of their customers. They plot out which offer to make to which customer. Why all the effort? They know how valuable loyalty can be.

Why is Loyalty so important?
When you look at the numbers, it’s easy to see how valuable loyal patrons are to an arts organization. TRG does just that when we analyze loyalty for an organization. Patrons naturally fall into three different categories:

• Patrons begin as a “Tryers” when they have their first interaction or transaction with the organization. About 90% of the typical arts organization’s database is made up of Tryers.
• Patrons who come back again as a repeat buyer, multi-buyer, subscriber or member-based frequent attendee are what we call “Buyers”.
• When an organization retains Buyers and cultivates them, they can become an ongoing, engaged investor—an “Advocate.”

You can then determine, on average, how much a patron in each category is worth over a set period of time. Below is an analysis that TRG spotlighted during a webinar with 5th Avenue Theatre.

 

The numbers in the pyramid are the numbers of patrons in each category. The dollar amount next to the category name is the average amount that a patron in that category was worth to the organization over 2 years. The percent is the total proportion of revenue each category represents. What you see in the pyramid is typical—the value of a patron increases 10-fold at each level.

What does this mean to you?
How can arts managers orient their work to promote loyalty? When you examine all the tools in your arts marketing toolbox, some are better than others at promoting loyalty—and some can be tailored to do so.

Data should be your #1 priority. Clean, accurate data can tell you who your most valuable patrons are and illuminate how to deepen their loyalty. Systems that capture every interaction—ticketing, donations, educational programs, etc.—are best. Patrons can interact with an organization in many different ways and you want to know their total investment across all categories. Their total value can add up in ways that may surprise you—outside of the traditional single ticket buyer, subscriber/member, or donor categories.

More communication, more directly. In your budget and timetables prioritize targeted, direct communications to your existing patrons over mass media advertising campaigns. That means postal mail, e-mail, telemarketing, and targeted online ads. If your data is clean, you’ll be able to target those most likely to respond. Dumping some of the mass media and reallocating the money to communications with existing patrons will result in stronger relationships with your most value patrons and in turn, more revenue.

What about social media? By all means, use social media. People now expect your organization to be there. But see it as a medium for customer service and patron interaction. Post messages that people will respond to, share, or click through, more than simply broadcasting ads. Strive to make it personal. And, if possible, try to log important interactions in your database.

Box office=big opportunity. Every time someone calls the box office, there’s opportunity to deepen loyalty. The database can be a big part of this. Knowing all of a patron’s interactions can point box office staff to the right next step for the patron—whether it’s buying more single tickets, upgrading their subscription or membership, or making a donation.

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#artsmgtchat on July 20

Chat about loyalty with arts managers from around the country during the July 20 Arts Management Chat (#artsmgtchat) on Twitter. If you’ve never participated in a Twitter chat before, it’s simple. Under the hashtag #artsmgtchat, I will ask a series of discussion questions during the hour. (The chat begins at 2 p.m. EDT/11a.m. PDT.) People who are following the hashtag respond and chat with one another, putting “#artsmgtchat” in their response. More on using Twitter hashtags.

The goal of this discussion is to have an open dialogue about how practitioners are approaching loyalty. I've structured the questions (below) to facilitate the sharing of your ideas—what’s working (and what’s not), how your organization strategizes around loyalty, and the trends you’re seeing in the field.

1.    Does your organization focus more on new patrons or patrons you already have and why?
2.    What outcomes do you look at for measuring loyalty? (renewal rate, new donors, number of upgrades, etc)
3.    How do you motivate first-timers to come to your organization again?
4.    What loyalty programs have you developed to retain or upgrade subscribers, members and/or donors?
5.    How do you feel about loyalty programs like the subscription and membership model?
6.    How do you motivate subscribers/members to become donors?
7.    Which arts organization has a loyalty program you admire and why?
8.    What’s the best idea for promoting loyalty that you’ve used or heard about recently?