Recession and post-recession Marketing

With all the talk about discounting, buying patterns, and subscriptions, I started to think about the trends we are setting (yes, I said WE are setting).

As the old saying goes, it takes two to tango and we have been a terrific dancing partner in the avalanche of discounting, last minute ticket purchasing, and the demise of the subscription model.

We didn't have much choice and hindsight is 20/20, so rather than looking at what got us to this point (there are many great posts on that on other blogs and even a few in my past posts), I am thinking about the impact we are right now during these exceedingly tough times.

The cultural shifts in ticket purchaser's patterns will likely stick after the recession. We are shaping a lot of consumer's ideas about attendance during this time, and we are actually instilling future habits.

Can the last-minute buying trend be reversed?

Why don't we reward early-adopters like say software companies products? Free betas of software are common – try it out for us and help us find the bugs and in exchange it is free. Isn't that sort of the exact same concept for previews? Lots of folks make these preview prices earlier, but what if we took it further. Web-site start-ups often let the initial "customer" have free or low cost membership forever. Why aren't we rewarding those who buy early?

Without question buying early and loyalty of repeat customers should be rewarded. However with all the last minute discounts, subscribers or members tend to pay on the higher end of the price scale. We justify this by saying to ourselves that when a show is a hit, they are guaranteed their seats or through so-called benefits (exchanges, extra events). But let's be honest, the traditional pick your seats in the advance program really only works for one thing – a subscriber who wants to sit in a specific seat, in other words, the traditional much older subscriber.

What would happen if the subscribers were guaranteed a steep discount? I think it is really important to do some number crunching and see if lowering subscription prices significantly can increase your number of subscriptions and make up for the lost income with number of butts in seats. After all it is about having the cash in the bank AND the advance ticket sale.

However this can only work if last minute buyers aren't rewarded more for their "bad" behavior than subscribers.

Frankly, we are treating theatre subscribers like the gadget industry treats its customers. To get the cool new thing (or the possible hit show) you actually have to buy in at the higher price than those who wait. Is the Kindle or Ipod model really what most theatres want to be? A few privileged few who can afford it get it first? After all two months after the first Iphone release Apple had to drop the price $100 to increase sales, isn't that the same thing we do with single ticket discounts?

Lot of folks talk about the airline model being applied to theatre – where the earliest and the last customers are rewarded with the best price, this does fill seats that would go empty. It certainly is work exploring.

Other folks are experimenting with scaling of prices based on demand. This resulted in the last minute premium ticket prices that some find insanely over done, but perhaps it teaches a bit better behavior. Perhaps scaling should be extended to daily performances. If Saturday night is the hardest ticket to get shouldn't it be the most expensive?

Let's use some simple numbers – what if ever subscriber paid $1 per show, single ticket buyers who bought during the first 10 days tickets were on sale paid $1.50 and those who bought in the few weeks prior to the show paid $2-3, and a few rush tickets were sold at $1 a show. Would the capacity shifts actually increase overall income?

Whatever route a theatre decides to take, this is the time to experiment with ticket prices and to create good habits that help theatres with advance sales.

I am including in this post excerpts from a proposal I wrote (with a great Institutional Grants Manager) for TCG's Think It! Do It! Grant. It is about deconstructing the traditional subscription model – we didn't get the funding and I am not at that particular theatre to implement it (nor are they), but I think it has some good thoughts on how seasonal planning can also play into pricing and advance tickets sales. I certainly wouldn't advise it for every theatre – but if you read this blog often you know that I don't prescribe anything for all theatres except individuality, uniqueness, and self-examination.

May 15, 2008 proposal for TCG's Think It! Do It! Program (in partnership with Met Life). This was submitted under the Do It! Guidelines.

How do we increase ticket sales, increase working capital and broaden our audience base? This is a question familiar to any performing arts organization. As reported in Theatre Facts 2006 and based on the TCG Fiscal Survey of 105 Trend Theatres between 2002 and 2006, the percentage of seats filled by subscribers is on a steady decline and there is a decrease in overall subscription packages sold.

Many theatres have struggled to maintain a subscription audience and have found that a significant amount of staff time is dedicated to the exchange of tickets and updating subscribers with changes in programming and other information. Industry-wide, the last five years have marked a steady change in buying patterns with an increase in single ticket purchases, especially for a specific date or performance in the distant future. Pricing models are in flux; theatres are trying different types of subscription packages, single ticket initiatives, flexible purchasing options, and audience initiatives focused on filling seats and reaching a varied demographic. Perhaps most pressing is the struggle to maintain working capital. Theatre Facts 2006 reported that of the 190 Profiled Theatres that participated in the survey, 64% experienced negative working capital. Theatres consistently struggle with the challenge of maintaining a steady income while producing first rate art and decreasing our dependence on a once a year season announcement, an annual gala and an annual appeal.

What if a theatre were to throw out the traditional season-based subscription model and transition to an advance, multiple ticket sales model by introducing productions on a rolling basis. Perhaps, three times a year, the theatre rolls out the next eight months of programming, offering the opportunity to purchase multiple tickets to be used in any number at any of the listed events. While the theatre may still offer the traditional keep your seat/pick your day subscription model, it will no longer be the primary sales focus. The intention is to shift the focus from seasonal programming to ongoing programming, giving the theatre multiple marketing opportunities and creating a more consistent cash flow. This model may provide audiences more choices and flexibility with how and when they choose to use their tickets. The theatre would have greater flexibility in terms of ticket pricing and artistic programming.

I was inspired by the 2007 TCG Fall Forum to think about making radical changes to our business model – which is where this grant idea was formed. At the forum, business leaders proposed that innovation and the need for major change were necessary in order for theatres to survive in a shifting consumer market. People were working on this.

Some theatres attempted to address these issues by introducing a "Flex Pass" to the subscription model, allowing patrons to choose from any number of shows in our season with a variety of pricing options. Other theatres have offered flat rate performances, student rush passes and vouchers redeemable for any production within a given season. Talk back's, pre and post show social gatherings, and other social events have been introduced to enhance programming and to draw more patrons to our nation's theatres. I believe that these tactics were acting as "band aids" to the larger problem of an antiquated system, and began to strategize a whole new way of looking at sales and programming.

This could yield an exciting opportunity for Artistic Directors by not being limited to the traditional season model. Being released from the confines of securing an entire season at one time, the artistic staff will be given more options, planning can be multi-dimensional – a programming arc of four months can than become larger affecting the next four months, and then the next, rippling out to present a more powerful and fluid vision. An Artistic Director could find freedom to focus not only on our mainstage productions, but also on our ancillary programming that enhance the themes of the theatre's productions. In addition, the artistic staff will be able to capitalize on last minute changes that occur in programmatic and talent availability, as well as having the opportunity to adjust programming to address changes in our larger social landscape; remaining current and vital.

Marketing will be key in communicating the new model to patrons. Finance will face some adjustment to our accounting practices, including changes in pricing models, marketing budget and economic projections.

The desired outcome is to increase the sale of multiple advance tickets. By being in constant dialogue with its audience, a theatre will change the audience's expectations and inspire them and give them more opportunities to purchase multiple tickets in advance. A new ticketing model could give a theatre more flexibility with pricing models, and more fluid artistic programming.