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When Numbers Lie
Arts marketing professionals across the country scramble daily to build audiences for the artists and companies they serve. At the end of most days, when results are tallied and numbers are reviewed, people laboring in arts marketing departments experience disappointment, frustration, and, often, alarm.
What story do the numbers tell?
Arts organizations are not attracting new audiences. They’re not meeting sales and attendance goals. Traditional fine arts offerings aren’t the only ones suffering, either. Many historically “sure things� like Christmas Carol or Nutrcraker aren’t so sure anymore. Seemingly, consumers are making other leisure and entertainment choices.
The numbers lie.
Over the last year, as we’ve closely examined audience behavior across a range of organizations, disciplines, and North American regions, we’ve discovered a deeper reality – one containing both good news and bad news. Our findings are supported by hard, unimpeachable evidence that is disturbing in its implications, but promising, if addressed.
WHY ALL THESE FAULTY ASSUMPTIONS?
The top-line ticketing-system reports that most organizations review on a daily or weekly basis summarize gross sales and attendance numbers. Those numbers are compared against goals on a show-by-show basis and sometimes on a year-to-date basis, as well. The organization’s attention is riveted on answering the question: “Did we meet goal?�
As the answer has increasingly become “No,� and as budget-balancing anxiety has deepened, efforts to meet revenue goals have understandably spawned a plethora of related questions that, among others, include:
• Is our goal-setting process flawed?
• Are our prices too high or too low?
• Are we targeting the right prospective audiences?
• Is our advertising placement strategy wrong?
Without a doubt, these are worthy questions that deserve examination. On their face, they are logical and practical. They emerge directly from what’s happening in the current life of the organization. It would follow that “right answers� to these questions might yield productive course corrections that would put an organization back on track.
What if that’s not true? What if these questions are actually stealing focus from a much more important set of questions and findings that more accurately depict what’s going on?
What if there is another story? One that is compelling because it gets at a more robust truth.
What if the strategic premise underlying the arts sector’s response to its consumer environment is faulty? There is an old maxim in management: You’ll only get the answer to the question you ask, so be careful in choosing your questions.
A DEEPER REALITY
First, the good news. Arts marketers are successfully acquiring new audiences, and not just new single-ticket buyers, but also new subscribers, despite assumptions derived from conventional wisdom about subscription being dead. According to the evidence we’ve compiled, new audiences are being acquired at an impressive rate.
If this is true, then how could so many organizations be experiencing such alarming revenue shortfalls? Now the bad news:
An alarming number of audience members, whose attendance history would demonstrate that they are arts-inclined are no longer attending performances presented or produced by those organizations that they have previously patronized. Many of these are high-value audiences for which organizations have invested substantially to develop.
When we do a churn analysis1, we stratify and segment audiences a number of ways, including frequency of attendance, selling method, longevity of activity, and donor status. This segmentation strategy enables us to create models that distinguish high-value audience members (e.g., those who attend at a frequency greater than a give number, for example 4 or more events per year) from infrequent attenders (those who attend once every year or two.) We have repeatedly found that high-frequency attenders churn out more often than do low-frequency attenders. They also churn back in less frequently.
This behavior, seemingly counter-intuitive, is consistent with findings generated some 15 years ago in studies focused on entrenched consumers in so-called “inert� categories such as finance, religion, insurance, banking, health care, and - yes - the arts.
PEOPLE WHO LOVE YOU MOST WILL LEAVE YOU QUICKEST.
What this research – and the ensuing behavioral typology – suggests is that the people who love you most will leave you quickest if certain “conversion triggers� occur. These triggers change according to the category, but they line up around themes of betrayal of trust, disappointment, embarrassment, or disenchantment. Are these things being felt by non-returning audience members?
When we do churn analysis, we control for occasional audience members whose “fan status� drives them to travel considerable distances and spend considerable dollars to catch a favorite celebrity attraction., We study the core arts audience with a history of showing up regularly across a range of disciplines and artists.
This situation is analogous to a person receiving a blood transfusion that is insufficient in volume to keep up with a serious hemorrhage. If the outflow is greater than the inflow – or, in audience terms, if acquisition fails to balance attrition – the organization perishes.
Are we overstating the problem? Perhaps, but only to a slight degree. We have evidence that some non-returning audience members return in the guise of guests-of-other-audience-members. In fairness, we can assume that some current non-returning audience-members might someday return on their own.
IS OUR "CORE PRODUCT" - THE WORK ON STAGE - A PART OF THE PROBLEM?
Evidence suggests that some set of conversion triggers is driving a substantial segment away. Further, our research and analysis suggest that attrition forces are not limited to what we usually suspect: lifestyle changes (having a child, losing a job), infirmity, mortality, or moving away. Something else is going on.
Given arts audiences’ history of putting up with uncomfortable seating, cold facilities, dark alleys, snarled traffic, high prices, tiny lobbies, uncomfortable delays waiting for restrooms, and other hassles in order to experience something of interest, we are skeptical that poor location, bad service, or inconvenience are solely responsible. Many of the organizations we have studied are premium facilities with great locations, good service, comfortable seating, and nearly adequate restrooms, and convenient parking. So what’s left?
THE WORK ON STAGE MAY NOT ENGAGE.
Marketing and Public Relations Departments are not solely responsible for current challenges.
In the course of our work, our client organizations have discovered that their marketing departments have effectively acquired new accounts (some in the range of 60% to 70% of audiences as new or re-acquired) while the rest of the organization – most of which has held itself harmless in this dynamic – has failed to retain the audience that marketing has acquired.
If one uses the product-adoption continuum model (consumers move from awareness to consideration to choice to repeat), the consumption cycle is breaking down in the choice to repeat phase. In most product, service, or experience categories, marketing analysts would surmise that the numbers signal troubling dissatisfaction with the product (in our case, the experience) on the consumer’s part. In bottom line terms: their experience doesn’t meet their expectations.
Understandably, client emotions range from denial to dismay to shock when these findings have been presented. Organizations that have reflexively blamed the marketing department for failure to meet revenue targets and balance budgets are compelled to do some serious soul-searching about the quality, consistency, and range of their artistic work, as well as the quality of customer service they deliver.
This soul-searching is especially wrenching in the context of the industry’s current mythology: “We present only world-class, high-quality artists, companies, and attractions.� Certainly, arts marketers must hold themselves accountable for the health and vitality of this belief system, since they have crafted their organizations’ “talk,� if not its “walk.�
From the lowliest staff member to the Chair of the Board of Directors, everyone seems to have drunk the Kool Aid™. This “cult of quality� – or at least the persistent claim of it – prohibits even healthy discussions about programmatic integrity, artistic merit, or audience expectations vs. organizational promises.
The culture of many arts organizations has made this most important of subjects into the private preserve of what many arts organizations have created as the metaphorical equivalent of “high priests.� When it comes to addressing audience attrition rates, these “no-talk rules� about what takes place on stage and in galleries may provoke serious consequences for otherwise well-intended people and organizations.
Another troubling response in the broader arts community is the persistent assumption that declining attendance can be addressed with more and better arts advocacy arguments, e.g., research suggests that listening to Mozart makes a child smarter and more creative; or that a performing arts center will revitalize an urban center; or that the “creative class� will be attracted or retained by the presence of a vibrant arts community.
While these claims may or may not be true, the immediacy of the problem is not addressed by the time horizon of more effective advocacy strategies. Our patient may have died by the time the new hospital is built.
Arts-inclined audiences are leaving now. It is not unreasonable to assume that there is dissatisfaction, apathy, or worse driving this behavior. It is also not unreasonable to assume that, in some or many ways, we may have failed to meet expectations.
ARE ORGANIZATIONS OVER-PROMISING?
If this is true – and it is a hypothesis on our part – by continuing to make extravagant claims (everything is the best, the most unique, world-class, extraordinary, etc.), we may further impair our credibility, and make it more difficult to recover in the short term. We believe that the short term is critically important.
What we do know is that without primary audience research that determines why these high-value customers are churning out, organizations cannot formulate effective strategies to 1) re-acquire former audience members (In the best case we’ve found, approximately 15% of these audience members are churning back into the audience system at some later date) or 2) keep the new audiences that are entering the system now.
Top-line sales and attendance reports will not reveal these behavioral patterns. Only a diligent and detailed cohort analysis that tracks audience members over time will reveal these patterns. At the Roan Group, we have adopted anthropological and sociological methodologies and models to understand these complex behaviors.
Thank goodness, most of our clients have acquired ticketing database systems that make such tracking and modeling possible, even if the information contained within them is almost always imperfect. Unfortunately – and the reasons elude us – most organizations fail to employ the information that these systems were built to provide. Often, their actual daily use is primarily limited to the ticketing and accounting functions, and secondarily to generate mailing lists.
MARKETERS MUST GET IN THE "WHAT'S HAPPENING?" BUSINESS.
Despite the presence of sophisticated customer database technologies, these systems are not being used effectively to create segmentation or behavioral models that inform the development of strategy. Understanding consumer behavior requires taking the data, creating an analysis protocol, and finally going through a series of sense-making exercises that help the organization make reasonable hypotheses about what might be going on. These hypotheses, once created, should be tested – first in qualitative research, and second, in quantitative studies.
Organizations must resist the urge to see all audience members as equal, but rather, create segmentation models that profile and rank customer segments according to how they participate and how they express value. For example, does a family donate in addition to attending? It seems simple, but losing a customer that purchases 20 tickets per year ought to be more alarming than losing a customer that purchases only 2 tickets per year.
We believe that organizations must transform their focus from one that is tactical to one that is strategic and inquisitive. They must be willing to engage in muscular conversations about how programmatic and audience development agendas meet audience and community needs, and whether, in fact, programs are meeting audience expectations.
Artistic quality must stop being a conversation-ender and start being a conversation-starter. Marketing processes and priorities must be equally focused on revealing what’s happening as well as on selling. Strategies should emerge from actual audience behavior, not from assumptions about what’s worked in the past, or from the latest association workshop’s menu of “silver bullets.�
In closing, we are optimistic about the arts community’s ability to turn its fortunes around. Our client organizations have successfully modeled how these strategies can work effectively.
WE MAKE THE FOLLOWING RECOMMENDATIONS:
1. Organizations must develop reliable information about whether current programming selections or production quality is meeting audience expectations.
2. Seriously consider whether your organization is over-promising in its marketing messages. Dimensions of quality must be defined and described in order to be made meaningful and credible.
(Theodore Leavitt advised marketers many years ago that “Quality is an undifferentiated attribute.� We have to make it meaningful if we’re going to better manage expectations.)
3. If retention rates are to improve, marketers must shift some attention to existing audience behavior and not just focus relentlessly on new, external prospects.
4. Organizations must develop models and strategies to understand what’s going on. These include more effective segmentation strategies, a churn model, and a dashboard that reports 1) frequency of tickets sold per transaction, 2) total number of active accounts, 3) modality of number of events attended per segment class, and 4) modality and average yield per account.
5. Audience research (in addition to market research) must become a line item in organizational budgets.
6. Organizations should develop reliable information about both audience satisfaction and audience loyalty levels, then take action commensurate with what is learned.
Posted on January 22, 2006 06:11 AM | Permalink
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