Stressed out? You're not alone.

Photo by Eamon Curry via flickr

Lack of time, money and proper staff get in the way of arts and cultural organizations achieving their top priority goals, TRG Arts found in its recent survey of the consulting firm’s eNews recipients, Twitter followers, and blog readers. By the numbers:

•    Too many activities, too little time (53%) – Priorities conflict and as one respondent aptly put it, “I can’t do anything right when I’m doing everything at the same time.”
•    Financial constraints (44%) of insufficient funding and not enough revenue are age-old issues that recent economic factors appear to have exacerbated.  Organizations of all sizes and genres say they cannot afford what they need.
•    People problems (45%) – Not enough or not the right staff, causing these three institutional shortcomings:
     o    Poor collaboration between staff peers and partners
     o    Ineffective leadership that imposes top-down pressures, provides too little or unclear direction and sets unrealistic expectations.
     o    Lack of skills/training staff need to be successful, especially in technology, campaigns, and database activities.

2013: The Year of the Patron

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4 New Year’s Resolutions for Your Database

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This article is cross-posted on artsmarketing.org.

Declarations of 2012 as the year of Big Data bring to 2013 a renewed—and well-deserved--focus on analytics and making data-driven decisions. Your organization’s database is the key to the hearts, minds, and wallets of your most fervent supporters—your patrons.  Patrons, in other words, are your biggest asset.

Of all the numbers you can pull from your database, which matter most? Two decades of arts consumer study is clear. The metrics surrounding loyalty—keeping patrons coming back and increasing their investment—are the ones that really count when it comes to building a sustainable audience (and revenue) base.

Whether your organization is large or small, performing or visual, subscription or member-oriented, here’s four resolutions to make regarding your data in the year ahead:

Get Active
The first metric TRG looks at with new clients is the total number of active patron households in the database—audience members who have done something with you in the past year. When the total number of all kinds of patrons (ticket buyers, subscribers, members, donors, program attendees, whatever you have) increases every year, the organization’s health improves.  If active patron numbers are falling, so are the prospects for growth. 

2013 Resolution:  Count your patron households, new and returning, for this season to-date and each of the past three to five seasons.  Flat or down-trending counts are symptoms of decline. Even if your counts are up, find ways to keep them growing. 

Prediction for 2013: Big Data means Big Changes

Yesterday You’ve Cott Mail asked readers for predictions about the arts in 2013. Rick's prediction was published in today's edition.

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In 2013, Big Data will radically change the shape of arts management. The reelection of Barack Obama in November marked a tipping point for the arts, but not because of a change of public policy or a shift of power in Washington.

We reached a milestone because of HOW the President won. He won because of the power of big data to identify individual voters, understand their attitudes and then encourage their behaviors. Big Data tools got the President's supporters to the polls and assured the needed votes on a neighborhood basis in all-important swing states.

Big Data is radically changing the shape of business. The arts will be no different. After decades of a guildhall mentality, new managers' training will forego traditional wisdom. Data and facts will find their place at the conference room table. Management decisions that now rely upon the HIPPO theory (Highest Paid Person's Opinion) will begin to fade in 2013. Instead, smart (and probably younger, not-yet top earning) managers will arrive at meetings armed with facts. Who is our audience? Who is not our audience?  How do we put the needs and expectations of our patrons at the center of our organizational planning?

In 2013, data will win - just like Obama did.

Thinking Long Term About Your Next Right Offer

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At TRG we frequently talk about how an arts organization should create the Next Right Offer – that is, a promotional outreach that statistically possesses a high probability of acceptance or response by the prospective buyer.

What determines your Next Right Offer? TRG orthodoxy holds that data analysis is the only path to get it right and to evaluate the offer’s success. Specifically:

• Response rates can be predictive for any offer. History is a perfectly valid guide. For example, if a specific data segment typically produces a 2.5% response for a new subscription offer, the odds are high that the same offer made next year to the same data segment will produce about a 2.5% response.

• Purchase patterns of an organization’s most active, highest-spending patrons also can shape the best offer. Every organization offers a variety of ways to experience and support its artistic product. Oftentimes the bigger the organization is, the greater the number of ways offered.  Some ways tend to produce patrons that stick around. Others could be more accurately labeled “Exit”. Understanding the transactional footprints of your most loyal patrons – their comings, goings, and repeated activities provides tangible clues about the ideal sequence of offers over time.

Data vs. Message: Which wins arts patrons?

This article was originally posted on the Technology in the Arts blog, in conjunction with Rick's guest lecture for Carnegie Mellon University's Master of Arts Management program.

What’s more important, what you say or who you say it to?

Some might argue that a precisely defined target market can trump the creative message or offer. Proponents of the “killer offer” believe the right compelling message will overcome an imperfect effort to define the “who” in the equation.

I’m convinced that data, not guesswork or intuition, must drive sales and contributed revenues. A perfectly crafted message sent to the wrong prospect or patron is not only a waste of money, but damaging to the relationship we are trying to foster with our patrons.

So, message doesn’t matter?  Wrong. 

Data is incredibly important–and has arrived as the Secret Sauce of winning supporters. But data alone cannot drive success.

In his brilliant book, The Power of Habit, New York Times staff reporter Charles Duhigg explores how habits guide our lives as citizens and consumers – especially consumers of brand name products. Brands become habits that are very hard to break. If you live in a Tide or Crest toothpaste household, it is almost impossible to change the habit of buying those specific products.

Post-Election Lessons for the Arts

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The billion dollar campaign that won the presidency on Election Day was the ultimate direct marketing strategy.  The outcome provides part lesson, part forecast about our future in marketing and raising money for the arts.

Big Data is not the future – it is now.  
In 2004, political consultant Joe Trippi reinvented politics by applying a few crazy ideas learned from a consulting gig in Silicon Valley.  Governor Howard Dean used websites and elementary data tools to collect contact information about voters, volunteers and solicited donations on-line. These guys started a revolution.

In 2008, the Obama campaign built a massive database of some 13 million supporters and their email addresses.  When connected with new social media tools and a barrage of emails, then-Senator Obama raised a half a billion dollars from small donations and went on to win his first term in office.

For 2012, the Obama reelection campaign squeezed victory from a race that appeared to be very tight. The strategy was built on growing their sizable 2008 database into a 21st century set of database tools.

Direct mail still works (better than you think)

This week, the TRG team is contributing to the Arts Marketing Blog Salon on Americans for the Arts' ARTSblog. This article by Will was originally posted as part of the salon, which previews the National Arts Marketing Project (NAMP) Conference in November.  

Photo by Brian Mitchell via flickr

In the digital age, many marketers are fond of pronouncing the death of direct mail.  Yet the data is clear--the environment has changed, new techniques have emerged and smarter approaches to direct mail are getting superior results than in days gone by.

Why? It comes down to increased trust, better targeting, and integration with online channels.

Trust
The contents of the typical American mailbox have changed dramatically in the last few years. Online bill pay options, increased digital and social marketing and the spiraling costs of postage (6 price hikes in 6 years, but who’s counting?) are some of the reasons why overall mail volume has dropped by almost 20% since 2006. These changes correspond to exponential increase in the daily volume of our email inboxes.

Recent research shows that many consumers prefer and trust mail more.  Epsilon’s 2011 Channel Preference Study showed:

•    75% of consumers say they get more email than they can read
•    50% of consumers prefer direct mail to email
•    26% of all U.S. consumers said they found direct mail to be the most “trustworthy” medium, an increase from prior studies, which even includes the 18-34 year old demographic.

This makes sense, particularly when we stack these findings next to the consistently positive results TRG sees in direct mail response analysis. Mail is getting opened and getting results.   

What Marketing-Development Collaboration Really Needs

This week, the TRG team is contributing to the Arts Marketing Blog Salon on Americans for the Arts' ARTSblog. This article by Jill was originally posted as part of the salon, which previews the National Arts Marketing Project (NAMP) Conference in November.

If so many arts leaders believe that marketing and development departments working together will generate better patronage results, why are so few organizations actually doing it? 

To be sure, there are ample tactical examples of successful cross-departmental collaboration on campaigns. And, a few industry leaders are engaging in organization-wide patron development – Arts Club Theatre Company and 5th Avenue Theatre are two we admire. 

But integrated patron management is far from being a mainstream practice. Perhaps it’s because true marketing-development collaboration requires change and new ways of doing things that most organizations find impossibly difficult – especially on top of everything else that’s necessary to keep the art on our stages and in our exhibit halls.

Stop Enabling Scalpers and Discounters

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There’s only one way to end the current practice of resellers getting obscene prices or discounters taking all but a fraction of the income for your tickets. Stop making it so easy for them. Broadway offers a good example of what not to do.

Do only tourists and suckers pay full price? 
Every Monday afternoon, The Broadway League releases the weekly sales data for every show performing on the Great White Way. Currently, about 60% of all Broadway tickets are sold below the face value of the ticket.

When the results of “never-discounted” shows (The Book of Mormon, The Lion King and Wicked) are deducted, the proportion of discounted ticket sales jumps to nearly 70%. Last week, for instance, total Broadway sales revenues (about $33 million) were about two-thirds of their aggregate gross potential. In non-peak weeks, this ratio floats closer to 50%.

To the resellers go the best seats. 
While the market is flooded with overpriced inventory that can only be sold at deep discounts, the best seats in the house are offered at premium prices in the primary market, at theatre’s own sales outlets and prices of $200-$300.

For the most popular shows, the secondary market pushes the prices for these prime seat locations into the stratosphere. And, the revenue? It’s out of producer’s hands at that point. Resellers are filling the consumer demand void and taking the profits.

Patron Loyalty 101

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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. 

I am Patron. Hear Me Roar. (Or Watch Me Leave.)

A great dialogue on patron loyalty took place at the League of American Orchestras conference in Dallas last week. TRG’s Jill Robinson and Keri Mesropov were part of it and reported sensing a slow but encouraging shift from talking about loyalty to doing something about it

Any steps that move our industry from thought to loyalty action leadership are most welcome.  And, come not a moment too soon. The era of nurturing individual patrons is long overdue. 

For more than a decade, our firm’s study and that of other arts researchers has shown the need for integrated patron management. We know that individual patrons follow their passion for an art form to the organizations that produce the art they love. Data shows that patrons invest time and money where it matters to them – in performances and events they want to enjoy, in campaigns they want to support, and at times when they are moved (or encouraged) to act. 

When we map loyalty in TRG analyses, two findings are clear.  The first is that there are distinct behavioral patterns that groups of patrons share. These patterns describe depth of loyalty. TRG calls this Advocate, Buyer and Tryer behavior, as we’ve discussed in this space. The second finding is: no two patrons behave exactly alike, even within loyalty groupings. Our study concludes that in loyalty-building, individual patron household behavior matters most.

So, You Think You Know Your Audience…

In 2012, TRG bloggers are taking a fresh look at data and trends that inform risks worth taking, best practices worth hanging onto, and assumptions worth challenging – each in time for action to be taken.

The operative word in the title question is: think, as in assume.  The more TRG studies patron behavior, the more we realize how often and how much even the smartest managers make wrong assumptions about the patrons who are visiting their exhibits or sitting in the seats of their theatres, concert halls and arenas.

Take the question: Who in attendance at an arts event has been here before?  A 2011 TRG patron origination study told us: only about half. We say “only” because the prevailing conventional wisdom was that most patrons—75% or more—are repeat ticket buyers, subscribers, or members.   In fact there are so many new patrons in America’s audiences that the study’s author, TRG Vice President Will Lester dubbed it, Every Night is Opening Night.  See Will’s 6-minute video presentation on the study here:

View the slides on SlideShare here.

Knowing that a large population of new-to-you or new-to-the arts patrons make up your audience should challenge some other assumptions like:

No, really, my audience is old and has been coming for decades.  The only way to be sure is to look for new-to-file patrons and track them.  Once you do that, deeper analysis can tell you when new audiences tend to show up and for what, and what they are willing to pay. 

5 best practices to keep your email marketing relevant

In 2012, TRG bloggers are taking a fresh look at data and trends that inform risks worth taking, best practices worth hanging onto, and assumptions worth challenging – each in time for action to be taken. This post is cross-posted on the Technology in the Arts blog.

We’re not buying the bad rap email marketing is getting these days. You’ve heard it all before. Open rates are down. Users often filter emails by sender and ignore unwanted or low priority communications. Sophisticated spam filters are plucking out and putting in quarantine anything resembling a sales message. And sophisticated users, especially those in the Millennial generation, prefer other media.
The offsetting fact is that access to email is greater than ever. Users of all ages have smartphones and tablets that make on-to-go communication easy, convenient, and ubiquitous. And, those worrisome open rates for email? They actually reached a two-year high in the third quarter of 2011.

So, when our clients ask whether it is worth it to continue to use e-mail in marketing and fundraising campaigns, our reply is: Absolutely. 

Why?

Fear Competition? Lose Opportunity!

In 2012, TRG bloggers are taking a fresh look at data and trends that inform risks worth taking, best practices worth hanging onto, and assumptions worth challenging – each in time for action to be taken.

Competition for patron’s dollars is a subject that’s back in the industry dialog again, sometimes with negative overtones. Can we really still think that sharing a marketplace with other successful arts and entertainment organizations is a bad thing? Even with foundations willing to invest in collaborations? I find that disturbing, especially in view of the opportunities being mined daily by members of community collaborations nationwide.

A couple of weeks ago, I spoke about the power of technology and data collaboration at an INTIX conference session. You can view the presentation here:

Consortiums: the Power of Technology & Data Collaboration

View more presentations from TRG Arts.

I was reflecting in this discussion on the 18 data-sharing networks (also known as consortia, co-ops) that TRG manages. Each network brings together disparate groups of patron records from all different kinds of organizations and their different ticketing and fundraising software systems. The network allows each and every member to see their own and all patron connections across an entire community—to discover all the other ways a member’s patrons engage in the arts.

The Social Media/Database Connection

This post was originally published last week on artsmarketing.org and in the National Arts Marketing Project newsletter.

The cardinal rule of communications is “know your audience”.  But on social media, it’s sometimes easier said than done.

Last week in the Arts Marketing Blog Salon I wrote about keeping your social media activity direct, targeted, and focused on return-on-investment. In it, I briefly touched on how difficult that can be, because you often can’t track users outside of social media platforms. One of the lingering questions for arts organizations—really, for all companies which thrive on direct marketing—is how to connect interactions on Facebook and Twitter with your database.

Why connect?

The primary benefit of connecting social media interactions with your database is the capability for tracking, and ultimately re-contacting those who use social media.   Tracking your social media users pays off in a number of ways.  You can:

Learn who you‘re talking to on social media. Facebook analytics and a variety of third-party Twitter analytic tools provide some demographic data and a little behavioral information.  With a database connection to Facebook and Twitter, you can recognize subscribers, members, donors, or board members who are following you.  And, you can interact with them – specifically.   Would you communicate differently if you knew, based on the evidence in your database, that a big segment of your followers were donors, or that most had never bought a ticket?

How Big Is Your Market?

As I was reviewing data for this post, two significant contributions to the national dialogue on arts and culture sparked a lot of online discussion. The publication of the National Arts Index by Americans for the Arts and comments made by NEA chairman Rocco Landesman raised compelling questions about the nature of supply of and demand for arts organizations, arts venues, and forms of expression. The consumer trends we see in transaction data offer additional perspective to consider on the demand side of this ongoing conversation, which is provocative and timely. We hope it will continue.

When I was a new young marketing director, my boss at the Cincinnati Symphony Orchestra began my orientation with a number of helpful observations about the new job and the field I was about to enter. One key ‘fact’ really pulled me up short. The target market for a symphony orchestra, Managing Director Steve Monder stated, was very different than my prior experiences as a marketer in the theme park industry. Supporters of the typical symphony orchestra accounted for no more than 2% to 3% of the population in any community. To succeed as a new marketing director, I would have to quickly learn an entirely new skill set. I would have to efficiently find a very small target market.

To do so, best practice followed the catalogue industry for inspiration. The powerful tools of direct marketing were perfectly suited to mining our arts market. Early prospect targeting efforts typically focused on (high) income as a surrogate for high education. (Demographic profiling tools available to catalogue retailers were frequently too expensive for a nonprofit to buy.) Later, Response Rate Reports became the prevailing best practice for understanding “who” was saying yes to our offers. “Back-testing” confirmed that successful list segments might produce 1% to 3% return on each offer. Ultimately, with my colleagues at TRG, we used Patron Loyalty Index data and other lifetime value analyses to perfect understanding of our best prospects. PLIs showed that a relatively small number of patrons provided the overwhelming majority of resources needed to sustain the organization each year.

So, throughout most of my career, there was never a hard fact that contradicted my earliest education about the small size of America’s market for arts and cultural offerings. That is - until now.

A few weeks ago, I received an internal report that summarizes the status of TRG’s community data networks (co-ops). A key metric that we monitor closely is the number of patron households in each community that have transactional history. In simple terms, we are looking to quantify arts and culture consumers in a market by examining the count, location, and transaction activity of households in a database community. [See postscript below for more on co-op study methodology.]


When I examined the numbers for our three largest community co-ops (Los Angeles, Philadelphia and Houston), it hit me. Something in the numbers didn’t match my expectations. If the target market for arts and culture is just a small fraction of the population, then who are all these people in community databases? In these three markets, we’re looking at counts ranging from 1.2 to nearly 3 million arts and cultural consumer households


Key Finding: The relationship between the number of households in these community data co-ops and the population each serves is much larger than one would expect. In Houston and Los Angeles, the patron household count is equal to more than one in three (37% and 39% respectively) of the total community database service area. In Philadelphia, the ratio is a whopping 61%! And, our recent review of TRG’s newer, developing database communities indicate that they are all headed toward similar results.


Clearly, a significant percentage of the citizens in these markets are buying tickets, attending exhibits, making donations, and becoming members. And, they are doing so at rates that are at odds with the concept of a tiny, narrowly defined market.


The data provides further insight into the depth and breadth of arts and cultural consumerism.

• Arts and cultural consumers in our most mature co-ops are recently active. Most households, 78%, have transaction history in the past three years; more than half, 54%, were active consumers in the past year.
• While three out of four of the households in our most mature co-ops have transaction history with only one organization in their community, 24% – and that’s hundreds of thousands of consumers in each market – are patrons of two or more of their market’s arts and cultural organizations.
• The number of out-of-market households – cultural tourists – is significant. Popular convention holds that very few U.S. markets are magnets for those who travel to experience art and culture; New York City or Santa Fe come to mind. But our analyses showed evidence of cultural tourism in all three of our most established co-ops. In Houston, for instance, 18% of the co-op population comes from outside the greater Houston area: 10% from other parts of Texas, 2% from Louisiana, and 6% from other states.
  

So, what’s an arts and cultural manager to do with this information? Some thoughts.

1. When prospecting for new patrons, look first to active arts and cultural consumers close to home. Instead of selecting prospects using demographically defined attributes with no previous purchase history (you know, highly educated, wealthy households who read the ‘right’ magazines or newspapers) look for cross-over patterns in the local community of patrons. Which colleague organizations tend to produce patrons that migrate in my direction? These prospects should receive a special offer – an invitation to give my organization a try. Finding active arts and cultural consumers in the community data that have not yet made a visit to your organization can be gold, when approached properly.

2. Use community database resources to change the playing field that defines the relevancy of the arts and culture locally. The large number of households that are investing time and money to engage in arts and culture offerings describe a vibrant, vital part of a community’s fabric. Do the math. By our count, the arts and culture organizations are serving a very high percentage of consumer (and voter) households in American communities. When advocating elected officials, I would make the case that a high percentage of their constituents are patrons. I would also have the hard facts to back up my point.
3. Explore the potential of out-of-market buyers. Our analyses suggest that cultural tourism may be a larger potential source of patronage than conventional wisdom assumes. More study is needed on who are cultural tourists, how often they come, and what attracts them. That’s on TRG’s radar for future examination.


How have you used your data resources to mine your market? Let me know by leaving a comment.


Postscript: This kind of study requires a baseline understanding about the nature of co-op data and how it can be measured. First, the co-ops we manage bring together performing, visual, historical, and cultural arts organizations in thirteen U.S. communities for the mutual benefit of sharing data on patronage (i.e. paid admissions, event attendance, membership, donations, volunteer participation). The mix of co-op organizations is diverse; those that track paid activity, including performing institutions, dominate the mix. Newer co-ops tend to be smaller than those with a longer lifespan. Well-established co-ops generally have more member organizations and their data sets generally are much more extensive – they include more households that have patron transaction and activity history for longer periods of time.


Secondly, in studying co-ops, we use specific definitions for population and market area. Co-ops are measured by the number of participating households, not individual consumers. Therefore, to calculate the ratio of arts consumer households per market area, our studies are based on co-op household count. To determine market penetration, we use U.S. Census estimates of households within in each of the jurisdictions each co-op serves. Therefore “market area” is defined by the unique geographic footprint of each database community.

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.