tag:blogger.com,1999:blog-338123692024-03-10T05:16:28.256-05:00Arts MarketingThis blog has been created to discuss arts marketing related issues in the United States.Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.comBlogger188125tag:blogger.com,1999:blog-33812369.post-68828899267739195112017-11-30T09:54:00.002-05:002017-11-30T09:55:05.885-05:00Tastemaking in a Post-Newspaper WorldFrom time to time, I will write on topics of arts marketing and media on my <a href="http://www.managingcreatively.com/">new blog</a>. When that occurs, I'll cross post here.<br />
<br />
<span style="background-color: white; color: #1a1a1a; font-family: "merriweather" , "georgia" , serif;">For November’s “Managing Expectations” article in </span><em style="background-color: white; box-sizing: inherit; color: #1a1a1a; font-family: Merriweather, Georgia, serif;">American Theatre Magazine</em><span style="background-color: white; color: #1a1a1a; font-family: "merriweather" , "georgia" , serif;">, I was asked to share my thoughts on the current state of theater criticism in the United States. Check it out: “</span><a href="http://www.americantheatre.org/2017/11/28/tastemaking-in-a-post-newspaper-world/" style="background-color: white; box-shadow: currentcolor 0px 1px 0px 0px; box-sizing: inherit; color: #007acc; font-family: Merriweather, Georgia, serif; text-decoration-line: none;">Tastemaking in a Post-Newspaper World</a><span style="background-color: white; color: #1a1a1a; font-family: "merriweather" , "georgia" , serif;">.” In the coming week, I'll post a companion piece as well. </span>Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-66541733904980761322017-08-27T17:24:00.002-05:002017-08-27T17:24:56.061-05:00New Blog - Managing CreativelyDear friends,<br />
<br />
For those who have followed my arts marketing blog over the years, thank you! As I've transitioned from being a chief marketing officer to a managing director, most of my day-to-day activities are outside the realm of marketing. As such, I've been exploring writing on a wider array of topics.<br />
<br />
After a three year hiatus, I've recently launched a new blog that focuses on arts management. It's called Managing Creatively. Please check it out:<a href="https://managingcreatively.com/"> https://managingcreatively.com/</a>.<br />
<br />
ChadChad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-7078323981814292662016-05-11T16:12:00.000-05:002016-05-11T16:17:13.658-05:00New vs. Existing: A Time for Every Patron<div style="box-sizing: border-box; margin-bottom: 2.6rem; padding: 0px; text-align: justify;">
<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;"><i>This post is part of a series in conjunction with TRG Arts on developing relationships with both new communities and existing stakeholders through artistic programming, marketing and fundraising, community engagement and public policy. (Cross-post can be found at Analysis from TRG Arts.)<br /></i></span></span><br />
<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;">As a chief marketing officer, consultant and now managing director, I’ve participated in my fair share of marketing committee meetings. One of the most hotly debated topics is whether to focus resources on developing new audiences or on increasing loyalty to bolster return on investment and per capita revenue. Two camps usually square off – the artistic team and trustees vs. the professional marketing staff.</span></span><br />
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<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;">Can you guess which sides of the argument they typically represent?</span></span><br />
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<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;">Nothing is sexier to most artistic directors and trustees than developing new audiences. On the other hand, marketing directors with limited resources are constantly trying to find ways to do more with less, which means developing ways to increase returns, and naturally, some shy away from audience development because it requires significant upfront capital, both monetary and personnel, with limited short-term gains.</span></span><br />
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<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;">Here are three things I’ve learned over the years…</span></span><br />
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<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;">1<b>) If your company is in financial trouble, a heavy focus on new audiences might be the nail on the coffin. </b>The first order of business is to understand why you’re in trouble to begin with. I once had a client that was posting million dollar plus deficits year after year, and they couldn’t understand what was going wrong, as the number of new households that were purchasing was up 24% in two years. But, for every new person that was walking in the front door, twice as many were running out the back. There was an abrupt and substantial change in programming which accomplished what they intended – large numbers of new audiences were coming, however it also had the unintended consequence of driving an established core audience away. Subscriptions were in a free fall, but a new under-30 membership program was skyrocketing. The financials were problematic. It cost $0.13 on the dollar to renew current subscribers and $0.62 on the dollar to acquire new under-30 members, while at the same time, the per capita revenue from the under-30s was 42% less. If the company was capitalized well, over time the gamble might have paid off. But they completely underestimated the costs of a heavy acquisition campaign over multiple years, and found themselves in the position of taking loans from their endowment to cover payroll.</span></span><br />
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<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;"><b>2) If your company is financially stable, not investing in new audiences will slowly kill you.</b> When I was the director of marketing and membership at the Smithsonian Associates, my immediate predecessor was somewhat legendary, known for being a great analytical strategist. I joined just as the world economy was starting to rebound from the global economic crisis, and to help shepherd the organization through rough waters, every department at the Smithsonian was asked to find ways to do more with less. On the surface, the data and financials in my department looked pretty healthy – we were spending less and revenues were steady, which was about all you could expect at that time. But under the surface was something troubling. To reduce cost of sale and increase ROI, a decision was made to cut expenses earmarked to acquire new visitors and patrons, and developmental money was jettisoned for new programs and experiences. For the time being, on paper, things were great. But in looking ahead, we didn’t have a pool of cultivated prospects to convert into members; even with a great membership renewal rate of above 85%, without new prospects and patrons, we were in trouble. The Smithsonian is the world’s largest cultural organization, and perhaps the most financially stable. It was clear that a sizable investment to develop new visitors and patrons would not risk the overall health of the organization, but without an investment, memberships would steadily decline thereby jeopardizing key programs in the coming years.</span></span><br />
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<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;"><b>3) Product is the most important of the marketing P’s in developing new audiences.</b> When I was in my 20s, I was often hired as a technology and marketing consultant who was tasked with helping mature organizations reach Millennials. However, most organizations viewed audience development as a marketing activity, and few paid enough attention to product development. Facebook + Twitter + Snapchat does not = younger audiences. Those tasked with developing new audiences should work closely with their artistic colleagues to create experiences that are attractive to their targeted demographics. Without the right product, other strategies will fall on deaf ears.</span></span><br />
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<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;">In coming to Milwaukee Repertory Theater in 2013, I was fortunate to join a company that was on the rise. They had a talented staff, a relatively new Artistic Director that had excited audiences, and the stability of being a large LORT theater with a 60-year history. However, over more than a decade, the company had amassed an accumulated operating deficit of nearly $1 million and was coming off an unexpectedly rough year with some unusual circumstances leading to a near $375,000 operating deficit, although the company had increased in size by almost 20% in the prior three years. Along with members of the senior leadership team, TRG Arts and Management Consultants for the Arts, we conducted an exhaustive situational analysis of all of our business lines. One finding I did not expect – we were heavily underinvested in marketing, which for a company that has a 65/35 split between earned and contributed revenue, probably wasn’t good. Some wanted to increase marketing expenditures substantially and immediately to acquire new audiences, but the data showed that doing so would have exacerbated our underlying structural deficit. So, we decided to temporarily reduce our operating budget by nearly 5%, maintain our marketing expenditures, focus on building loyalty, and launch an aggressive fundraising campaign to widen our evergreen base of annual fund donors.</span></span><br />
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<span style="color: #222222; font-family: roboto, sans-serif;"><span style="line-height: 26px;">In that first year, we ended with a 5% operating surplus, and two years later, have not only restored all cuts, but have significantly expanded. Also, our accumulated operating deficit stemming back to 2004 was completely eliminated, and we’ve been able to use operating surpluses to build cash reserves so that when the next recession hits (and it will), we’ll be prepared. Our operating budget is now the largest it has ever been supported by a business model that has proven to operate in the black consistently for three years. Circumstances have now changed. If we don’t invest in cultivating new audiences now, we will be in as much trouble in a few years as if we would have invested in new audiences just a few years ago. Data drives strategy. Don’t go on a hunch. And realize that sometimes there isn’t a right or wrong approach, merely the right time to pursue each.</span></span></div>
Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-53691061609891573102014-08-24T16:25:00.000-05:002014-08-24T16:25:49.518-05:00Fearing Fear Itself
<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Several
months ago, my former employer Arena Stage hosted a </span><a href="http://dctheatrescene.com/2014/02/19/arena-stages-first-summit-peter-marks-sparks-debate/"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">series of
conversations entitled “The Summit”</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"> curated by <i style="mso-bidi-font-style: normal;">Washington Post</i> theater critic Peter Marks. In the first of three
conversations, Mr. Marks began the discussion by citing the falling attendance
rates at theaters as put forth by the NEA’s most recent </span><a href="http://arts.gov/news/2013/national-endowment-arts-presents-highlights-2012-survey-public-participation-arts"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">Survey of Public
Participation in the Arts</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">, and asking five theater leaders to discuss various
factors that may have led to declining attendance. Towards the end of the
evening, a question was asked about gender parity in regional theaters, both in
the terms of female directors and playwrights. It set off a </span><a href="https://storify.com/bostonturgy/thesummit"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">passionate discussion</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"> about why women
aren’t better represented at our nation’s regional theaters. </span><br />
<span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><br /></span><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Fast
forward a couple of months, and we received news that San Jose Repertory
Theater would be closing its doors after 34 years. Many of us knew that San
Jose Rep had been struggling, and questions surfaced as to why a regional
theater could not seem to sustainably operate in the resource rich Silicon
Valley. Soon after the announcement was made, some began to declare that San
Jose’s closing was due to their inability to deeply connect with their
community. In an interview with the </span><a href="http://www.mercurynews.com/entertainment/ci_25947584/san-jose-rep-shuts-down-files-bankruptcy"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 10pt;">San
Jose Mercury News</span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">,
local scholar and director Tlaloc Rivas stated “This is what happens when your
theater is deliberately indifferent to the diversity of your city.” <span style="mso-spacerun: yes;"> </span><o:p></o:p></span><br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">As
501(c)3 non-profit organizations, we have a responsibility to represent our
communities, and in some cases, our communities have changed or are rapidly
changing and our arts organizations haven’t adapted. It is almost as if some
are programming their organizations to reflect the 1960s version of their
cities. But why? I believe this is occurring at least in part not because of
the reasons that have already been discussed, but primarily as a result of
fear. During the global economic crisis, several theaters exhausted their cash
reserves and dipped into their endowments to offset plummeting sources of
contributed revenue. Many survived, but emerged on life support. Earned revenue
became much more of a driving factor as support from state and local
government, corporations and foundations nose-dived. It became clear that in
order to stay alive, many would have to rely on box office revenue as their
primary revenue source. As marketers, we know that when looking at the 4 Ps of
marketing (product, place, price and promotion), that by far product is the
most impactful on box office revenue. In an attempt to adapt to the worsening
economic environment, some theaters began to program “safer” seasons, and
increased ticket prices to drive more revenue. Many adopted models that looked
far more similar to Broadway than the regional theater just a few years prior. I
don’t say this to be judgmental, only to illustrate that desperate times
required desperate measures for some. </span><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><o:p> </o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">As
a consultant, I noticed that many of my clients during this time selected their
seasons from a place of fear. And I couldn’t blame them. The one thing they
could control was their operating expenses as no one could reasonably predict
revenues. Shows got smaller, cheaper and less “risky” (though as I have </span><a href="http://dctheatrescene.com/2012/04/17/what-is-safe-in-the-theater/"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">previously blogged
about</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">,
trying to determine what is “safe” in the theater can be a fool’s errand).Given
their financial positions, one wrong move and it was over. Gone were the days
of unrestricted operating grants, endowment draws and investment gains that
could offset programmatic risks. Many Artistic Directors needed to ensure that
the audiences they had would stay with them through the storm, and therefore,
some programmed “tried and true” plays that they believed would please their
audiences. Perhaps necessary at the time, this is not a forward-thinking
strategy. </span><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Five
years after the market crash, the stock market is at an all-time high, and experts
are declaring that we’ve emerged from the recession. But some temporary
programmatic measures adopted during the recession continue today at some
theaters across the country. And I believe there is an easy explanation.
Theatre Communications Group in its most recent </span><a href="http://www.tcg.org/pdfs/tools/TCG_TheatreFacts_2012.pdf"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">Theater Facts reports</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"> shows that working
capital at theaters nationwide has decreased by 82% from 2008 to 2012. In
addition, growth in cash reserves lagged inflation by 16%. The working capital
ratio for theaters dropped by 25% in four years. So, what does all this mean?
Many theaters remain as risk-adverse today as they were during the height of
the recession because there is no safety net. However, those that are waiting
until sunnier days to make programmatic adjustments are living in a fool’s
paradise. And I would argue that it is perhaps riskier not to make programmatic
adjustments to better reflect the communities you serve than it is to “play it
safe” and make programming decisions for an audience that is rapidly
decreasing. </span><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><o:p> </o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Some
unsolicited advice for arts organizations that find themselves in this
situation:</span><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><o:p> </o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">1)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Build an artistic
capital fund if possible</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">. Typically, I would say that nothing is less sexy than
hitting up donors to help create cash reserves. But, you need risk capital. If
you are living constantly on the edge, you’ll never be able to look beyond
today. And as your community changes, you’ll stagnant. Consider this an
innovation fund. Something that gives you the freedom to risk and improve
without the fear that a small failure will cause your demise. <o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">2)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Look at the unmet needs in your community, and develop
programming for them. </span></b><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">You don’t have to radically change everything overnight,
but take incremental steps to program to underrepresented and underserved
populations in your community. <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">3)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Marketers must become relationship builders as much as we
are revenue generators.</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"> To be successful, we’ll need to develop new
relationships and outreach strategies. I’m impressed by recent initiatives at </span><a href="http://pasadenaplayhouse.org/blog/2014/02/20/introducing-consensus-organizing-for-theater-tcgcircle-org/"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">Pasadena Playhouse</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"> riffing off concepts
pioneered by </span><a href="http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&ved=0CB0QFjAA&url=http%3A%2F%2Fwww.woollymammoth.net%2F&ei=3mndU6vsGpKhyASMloDADw&usg=AFQjCNGx0rCOGnEUqrjBEUK2VNtBip3t-w&sig2=G60dz3RSfCvMCPxdGshlhQ&bvm=bv.72197243,d.aWw"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">Woolly Mammoth
Theater Company’s</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">
Connectivity Program where they have marketing staff that are much more akin to
community organizers. If you are new and trying to build new relationships,
don’t be surprised if some view you as suspect. In some cases, you might be
speaking with someone, to use a term coined by </span><a href="http://www.amazon.com/Invitation-Party-Building-Bridges-Community/dp/1559362308"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">Donna Walker-Kuhne</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">, who has never been
invited to the party before. So they may be curious why now? <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">4)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Don’t give up quickly. </span></b><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Don’t<b style="mso-bidi-font-weight: normal;"> </b>expect immediate results, and avoid developing transactional
relationships. This is about becoming a better citizen of our communities. Arts
organizations that have excellent track records for developing young and
diverse audiences have committed countless hours and significant resource for
years. <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
<br />
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">5)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Listen.</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"> We don’t operate in vacuums. We operate in
complex and evolving communities. Don’t assume that you know what’s best for
your community. Invite people into the process. Hear their voices. You may be
much more successful at certain initiatives than you thought, and you could
find that you need to dedicate more time and attention to initiatives you’ve
never considered. If you are a larger institution, be careful that national
aspirations don’t trump local needs. Many of us operate in both national and
local communities, but unless you are a destination organization, your
audiences are local. I think I’ll call this the </span><a href="http://www.politico.com/story/2014/06/eric-cantor-primary-election-results-virginia-107683.html"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"><span style="color: #0563c1;">Eric Cantor</span></span></a><span style="font-family: "Arial","sans-serif"; font-size: 10pt;"> principle. <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
<br />
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<!--[if !supportLists]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt; mso-fareast-font-family: Arial;"><span style="mso-list: Ignore;">6)<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><!--[endif]--><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">As we’ve been taught, the biggest thing to fear is fear
itself.</span></b><span style="font-family: "Arial","sans-serif"; font-size: 10pt;">
I’m always amazed by the number of managers who would rather stick with a
failing business plan that is destined to lead to disastrous results than risk
throwing it out the window for a shot at success. Why rearrange the chairs on
the Titanic? Put on a life vest and take a leap. In an attempt to keep your
organization afloat by maintain status quo, you may ensure you’ll be alive
tomorrow but you can be certain you’ll be dead soon thereafter. <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: "Arial","sans-serif"; font-size: 10pt;">Adopting
temporary tactics to whether a storm is perfectly understandable in some
respects. But non-profit arts organizations cannot adopt long-term strategic
plans that focus primarily on staying alive. If we aren’t fulfilling our
missions or serving our communities as they are today, then what is the point?
We have an obligation (and the privilege) to produce art that is reflective of
the diverse communities we serve. To employ artists that push us beyond our
comfort zone. To engage, develop and nurture a heterogeneous talent pool that
challenges us to examine the issues our communities grapple with from multiple
perspectives. And if fear of taking a leap into the unknown is what is holding
you back, what you really should be afraid of is becoming irrelevant – because
I can guarantee that will happen. And then it is over. <o:p></o:p></span></div>
Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-63686085117746359392013-07-24T22:20:00.000-05:002013-07-24T22:20:02.759-05:00On Hiatus Until FallHello world. Sorry I haven't participated as much as I usually do both on this blog and in dialogue on other social media outlets. As I've accepted a new position as Managing Director of Milwaukee Repertory Theater, all of my energies have been focused on relocating to a new city and learning about my new theater. Looking forward to reentering the blogosphere in the fall, and to participating in conversations in the near future!<br />
<br />
ChadChad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com1tag:blogger.com,1999:blog-33812369.post-27826445243421800672013-03-03T15:35:00.001-05:002013-03-03T19:27:41.061-05:00What if you didn't have to guess?In decades past, the success of a marketing director depended heavily on his or her ability to predict the future, often times by guessing. Guess well, and you were a success. Guess poorly, and your marketing career was short-lived. Marketers became adept at reading the tea leaves, and depending upon their gut and experience to make educated guesses. <br />
<br />
As my friend Rick Lester says, "prayer should not be a marketing strategy." On this blog, I've written several times about the importance of using data to make decisions. Often times companies have years of transactional data that can be invaluable when developing strategy for future campaigns. That said, I've somewhat neglected another important tool that I've used throughout my career to help guide decision-making - market research. Combined, market research and data analysis form a formidable team. One should not be chosen over the other, but they should be used in tandem, and if done so, the need to guess is almost virtually eliminated. <br />
<br />
Data analysis is best used to help inform future operating decisions that closely align with past performance. For example, when rescaling a house, marketers can be relatively certain which seating sections can withstand a price increase by analyzing sales patterns and looking for sections that are in constantly high demand. We can also tell which households are most likely to subscribe and what package and price point to pitch based upon their interactions with us. But what happens when you are faced with the unknown? Over the years at Arena Stage, I've been faced with challenges that have very few, if any, precedents. There wasn't any data to pull from, either internally or from other companies. We were in uncharted waters. And that's when market research became critical. <br />
<br />
Since moving to Washington, DC seven years ago, both at Americans for the Arts and Arena Stage, I've depended on the wise counsel of <a href="http://www.shugollresearch.com/service_management.html">Mark Shugoll</a>, CEO of <a href="http://www.shugollresearch.com/about_management.html">Shugoll Research.</a> Throughout the years, Shugoll Research has conducted many studies that have helped inform my decision-making, and below are just a couple of instances where market research was invaluable:<br />
<br />
<strong>Arena Restaged. </strong>In January 2008, Arena Stage moved from its SW DC home into two temporary locations - a theater in the basement of a Marriott in Arlington, VA and the Lincoln Theatre in NW DC on U Street. We would remain in these temporary locations for two years and eight months while the <a href="http://www.arenastage.org/plan-your-visit/the-mead-center/">Mead Center for American Theater</a> was built. During that time, we had to minimize patron attrition caused by the move, and work to grow our audience base, as the new building would require a significantly increased patron base. I searched the country for a good precedent to learn from, but not a single one surfaced. Feeling on our own, I turned to Shugoll Research to help map out a strategy. I wanted to know what barriers existed for our patrons in moving to our temporary locations. What would motivate them to stay with us through the construction years? What competitive advantages existed at our temporary locations that were good selling points? How we could make the move less onerous? We tested messaging, sales strategies and tactics. From that, I learned a great many things. I learned that if our patrons got lost on their first trip to our new theaters, they wouldn't return. I learned that we had to make sure that parking and public transportation was readily available. I learned that dining options were incredibly important. From this, I spent months on signage plans. With the Crystal City Business Improvement District, we installed more than 100 new directional signs within a two mile radius of our temporary theater in Virginia. In coordination with the MidCity Business Association, we aggressively marketed the restaurants on U street and offered valet parking for every performance, as the neighborhood had very few parking options. We sent out <a href="http://arts-marketing.blogspot.com/2008/01/were-herewait-where-is-here.html">personalized websites</a> to each of our subscribers which among other things offered up step-by-step directions from their house to the new theaters. For these efforts, Arena Stage was recognized with the Box Office of the Year Award from INTIX and the Helen Hayes' Washington Post Award for Innovative Leadership in the Theatre Community. More importantly, we were budgeted to experience 7% attrition during the move and only realized 1.9% - and it all started with market research.<br />
<strong></strong><br />
<strong>Branding. </strong>Forget the high gloss, four color brochures that list your mission statement and vision. We all know that our brands, regardless of what we say, actually live in the minds and hearts of our customers. Over the years, I've almost always found a disconnect between what an institution thinks their brand is and what their customers view their brand as being. In 2008, Shugoll Research conducted a series of brand focus groups for Arena Stage. Only two years later, we would be opening the Mead Center for American Theater, so as a new marketing director, I wanted to test the current state of our brand before launching a rebranding campaign repositioning Arena Stage as a national center for American theater. Inside the company, it was clear to most at the time that Arena Stage was a home for American voices, something that Molly Smith had focused on since coming to Arena Stage in 1998. But when tested in focus groups, less than 20% of our subscribers and donors knew that we focused on American voices, and almost none of the single ticket buyers. We had to be much more aggressive in marketing our brand, so we developed a tag line ("Where American Theater Lives"), commissioned a series of spotlight articles on the American voices in each season, developed a new color palette which was a play off of red, white and blue, and eventually put the word "American" in our new logo and name. Two years later, we retested and found that more than 80% of those asked knew our American focus.<br />
<br />
<strong>Customer Service</strong>. As I've <a href="http://arts-marketing.blogspot.com/2011/11/customer-service-as-competitive.html">written about previously</a>, I view customer service as a very valuable competitive advantage. So, how is your organization doing? Beyond diligently tracking and responding to complaints, what are you doing to monitor customer satisfaction? We've hired Shugoll Research to develop and deploy customer satisfaction surveys, and benchmark us against peer organizations and ourselves for the past several years. I'm proud to report that we've received "industry leader" marks every year since 2008. But more importantly, each year we learn where we can improve, and we know where we should invest time and resources to improve our customers' experience. For example, in our first year in the new building, we received exceptionally high marks for our parking lot; we were delighted to see that our parking attendants were routinely going above and beyond to take care of our patrons. And the patrons noticed. That said, some of our elderly patrons reported that it was a challenge to walk up the ramp from the parking garage to the main lobby. So we responded by offering valet parking at the same price as standard parking for those who needed some extra assistance.<br />
<br />
<strong>Pricing. </strong>We spend a lot of time discussing pricing at Arena Stage. As marketers, we want to devise strategies that keep our institutions accessible to our communities all while developing price points that lead to sold-out houses. Get too aggressive with your prices, and your percent paid capacities will drop (hence why the <a href="http://www.nytimes.com/2013/02/27/arts/music/metropolitan-opera-to-reduce-ticket-prices-next-season.html?_r=0">Metropolitan Opera</a> announced that it would be lowering prices next year). But if your prices are too low, then you are leaving money on the table, something that most non-profit arts organizations can't afford to do in today's economic climate. So are you charging the right price for the right seat at the right time? To help us navigate pricing, we sought the assistance of <a href="http://www.trgarts.com/">TRGArts</a> and Shugoll Research. TRGArts created heat maps, advised us on the rescaling of our halls, and analyzed sales data to determine optimal price points. Shugoll Research conducted focus groups and surveys to determine price elasticity, and to procure feedback from customers. Did our patrons think we were over-priced? would they be willing to pay more for certain dates/times? what could we do to make our pricing more attractive to our patron base? One of the most interesting questions we ask is how satisfied patrons are with the value we provide. Each year we ask the question, our satisfaction ratings on value are in the "industry leader" range indicating that customers perceive that they are getting good value for the money they spend on a ticket. Something every marketing director loves to hear.<br />
<br />
The days of reading tea leaves, consulting the gods, and leaping into the unknown are over. A healthy combination of data analysis and market research allow modern day marketers to make informed strategic decisions. I for one am thankful, as I've never been particularly lucky when it comes to guessing. In decades past, I know I would have been fired.Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com2tag:blogger.com,1999:blog-33812369.post-33488949410216391542013-02-03T14:46:00.002-05:002013-02-03T14:46:58.359-05:00The Subscription Equation (and other tactics)
<span style="font-family: Calibri;">Probably the most frequent question I am asked is if I
believe subscriptions are dying. <span style="mso-spacerun: yes;"> </span>And if
you would have asked me five years ago, I would have answered in the
affirmative. I, like many others, believed the subscription model was
outdated--a worn out old chestnut that needed to be replaced. I even had data
to prove it. From our peak in 2002 until 2007, Arena Stage had lost 40% of its
subscriber base! I was convinced we had held onto a failing business model for
far too long, until I started testing alternatives.</span><o:p><span style="font-family: Calibri;"> </span></o:p><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">In 2008, working with <a href="http://www.shugollresearch.com/">Shugoll Research</a>, we developed several focus groups
with specific target audiences, including current subscribers, lapsed subscribers,
multi-show buyers and single ticket buyers. During these focus groups, we
presented several alternatives to the traditional subscription, many of which had been recently introduced by other theaters, and to my
complete horror, none of them tested anywhere near as well as the traditional
subscription. Even if I wanted to abandon our subscription model, I didn’t have
any attractive alternative.<span style="mso-spacerun: yes;"> </span>Then the
realization came – if our customers still want subscriptions and our subscriber
base is rapidly declining, then the way we sell, market and promote subscriptions
if fundamentally flawed (it should be noted that we also tested satisfaction
with artistic product and found that was not a challenge for us). In short, we
were killing subscriptions.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">As our 2012-13 season comes to a close, I’m happy to report
that we have experienced significant increases in our subscription base
for four consecutive seasons, almost achieving a record high number of
subscribers and <span style="mso-spacerun: yes;"> </span>since 2008, have increased our subscription revenue by 115%. Even more surprising, the turnaround started
to occur in 2009 at the height of the global economic crisis and a full 1.5
years before the opening of the new Mead Center for American Theater. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">If I were to articulate the formula of our success, it would look like this:</span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<b style="mso-bidi-font-weight: normal;"><span style="font-family: Calibri;">great artistic
product + best seats + best price + outstanding customer service = more
subscribers<o:p></o:p></span></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><u>Artistic Product</u>: Whether we like to admit it or not,
the most important of the 4Ps of marketing is product. If your customers are
not satisfied with the artistic product of your organization, you will not see
an increase in your subscription base.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><u>Best Seats at the Best Price</u>: Being able to get the best seats in the house at the best possible price is a powerful value proposition for subscribers. If you have a robust
subscription base, often times the only way to get the best seats in the house
is by subscribing. Make sure to message that in your sales materials. Also, be
very careful of undercutting your subscriber average ticket price, particularly
at the last minute. A substantial last minute discount may provide a lift to an
under-performing production, but the long term side effects could be much
worse.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><u>Outstanding Customer Service</u>: Let’s be honest –
customer service usually sucks these days. So it’s the perfect opportunity to
shine. Steward your subscribers like development does their donors. Be
proactive in finding ways to provide exceptional service. For example, if inclement weather is coming, instead of waiting for subscribers to call you to
exchange their tickets, why not send them an email alerting them of the
inclement weather and offering to make the exchanges on their behalf?</span><o:p><span style="font-family: Calibri;"> And if you don't already, find ways to thank your subscribers throughout the year. For example, there is a theater on the west coast that partners with a winery each year to give their subscribers a free bottle of wine when they renew their subscriptions as a way of thanking them for their support.</span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">Beyond the formula, below are a couple of significant
strategic changes we made that made all the difference:</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Lengthen the
Subscription Campaign</b>: Prior to 2009, Arena Stage would announce its season
in March and would continue to sell subscriptions until October,
providing for an 8 month subscription campaign. These days we begin our
subscription campaigns in January and sell through March of the following year,
thereby lengthening our campaigns to 15 months. <span style="mso-spacerun: yes;"> </span>Avoid delaying the start of your subscription
campaign at all costs. Each week you lose will be very costly, and you cannot
replace lost weeks.</span><b style="mso-bidi-font-weight: normal;"><o:p><span style="font-family: Calibri;"> </span></o:p></b></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Don’t Forget About
Upgrades: </b>When I was taught how to market subscriptions, I learned
to break a subscription campaign into two parts: renewals and acquisitions. Today, we have
an additional focus on upgrades. Our goal is no longer just to renew
our subscribers; we want to upgrade them as well year after year. Primarily we focus on
getting subscribers to increase the number of plays on their subscription, but
you can also have them upgrade into better seats, add parking to their orders,
or increase their annual fund donation. This year we are even experimenting
with add-ons for café meals to great success. In FY13, almost ten percent of
our subscription base upgraded into larger packages, which doesn’t sound like much
until you consider that amounts to roughly $175,000 in additional revenue. On
top of which, full season subscribers have a renewal rate 25 percent points
higher and give donations that are 4 times larger than partial season
subscribers. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Speak to Subscribers
Like You Know Who They Are – Because You Do:</b> Gone are the days when you can
create one beautiful season brochure that speaks to all of your patrons, and
then mail it over and over again until you beat people into submission.
Subscription renewals and solicitations should be highly targeted. You know
what types of productions each patron likes and on what nights they like to
attend. If you sell café meals and parking through your box office, you even
know if they like to park and what they like to eat. You know if they are a
full price or discount buyer, how many shows they attend a year on average, and
how many people are usually in their party. So why are we still wedded to one
size fits all solicitations? Our job is to get the right offer in front of the
right prospect at the right time. And we have all the data we need to
accomplish that.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Develop a Sales
Pipeline. </b><span style="mso-spacerun: yes;"> </span>Even up to a few years
ago, we would mail subscription solicitations to traded lists. Then we started
to look closely at our response and tracking reports. Guess what – we found that
list trades were not working, not even close. It would have been just as
effective to drop season brochures out of a helicopter over the city. And this
was considered a “best practice” that every major arts organization in the city bought into. However, we were not measuring efficacy. The failure of these
campaigns is easy to understand. In short, we were asking people to marry us
before we went on a first date. Most of these targets had never seen a show
at Arena Stage. Why would they invest hundreds of dollars when they had never stepped through our front doors? We changed tactics and concentrated our efforts on
developing a sales pipeline. We would trade lists for single tickets, primarily
to our most popular productions. This in turn would create an influx of new
single ticket buyers. Once they had their first experience at Arena Stage, we
would send them an offer to return to a second show. Once a patron had seen two
or more shows, the likelihood that that would then respond to a subscription
solicitation quadrupled. Don’t waste time and money mailing to poor prospects.
Instead concentrate your resources on developing more multi-show buying patrons
as those will be your best leads in your next subscription campaign.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Testing and Failing. </b>The
only way to succeed is to fail. The key is to succeed on a grand scale, and
fail on a small one. Aggressively measure the success of every campaign, no
matter how small. And test something new at least every week. Tactics will
change from year to year, and you’ll need to adjust in order to maximize return
on investment. As we doubled our subscription revenue over the past four years,
we actually started to <u>spend less</u> as we grew more efficient. For example, I
like to test new offers in our telesales room. Over the period of a week, we
may have three or four offers in the telesales room. By the end of the week,
after a thousand or so calls, we usually have a clear winner among the offers
tested. That offer is then rolled out in an email solicitation, and if it
responds well, then we’ll include the offer in a large direct mail campaign
and then test it against the current control package to see if we achieve a
better ROI. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">If you are currently experiencing less than stellar results
on your subscription campaign, before throwing the baby out with the bathwater,
I’d encourage you to examine each of the variables in the subscription formula above, and
then vary your tactics to see if you get better results.<span style="mso-spacerun: yes;"> </span>Sometimes it isn’t the model that is dying,
it is how we apply the model that is responsible for our underwhelming results. At least it was in our case.</span></div>
Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com2tag:blogger.com,1999:blog-33812369.post-87738694998337766472012-12-16T14:49:00.000-05:002012-12-16T14:59:49.939-05:00I have a hit! Should I extend?<span style="font-family: Calibri;">As I have <a href="http://arts-marketing.blogspot.com/2012/09/good-intentions-can-interfere-with.html">written about previously</a>, often times marketers
get themselves into trouble because they focus too much of their attention on
under-performing productions causing them to ignore opportunities to better capitalize
on productions which are over-performing.</span><br />
<br />
<span style="font-family: Calibri;">So, now you have a hit on your hands, and you know you have
to strike while the iron is hot. Sometimes hit productions can be few and far
between, so what you do next could make or break your season. When a hit does
occur, many entrepreneurially minded non-profit producers start to consider an
extension to their previously announced runs. Before announcing an extension,
here are a couple of things you should consider:</span><o:p><span style="font-family: Calibri;"> </span></o:p><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Feasibility. </b>Is
it even possible to extend your run? Oftentimes non-profit subscription houses
have another show coming in right on the heels of the previous one, and there
is no room to extend. Are your actors available for an extension? Many times
actors have other projects already lined up, and they are unavailable for an
extension. And if some actors are unavailable, can you continue a run with
replacement actors? </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Extension Costs. <span style="mso-spacerun: yes;"> </span></b>How much will it cost per week to run an
extension? Make sure that you include all relevant costs, such as:<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Casting and put-in costs for replacement actors</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Any increases in fees due to extension clauses</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Marketing and press fees to promote an extension</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Applicable overhead costs such as house
management, box office, etc.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Cost of sales fees such as credit card service
charges</span></div>
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0pt 0.5in; mso-list: l1 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">Increases in royalty payments<o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">The higher the weekly operating costs, the more risky an
extension will be. The decision to extend a popular play with a modest cast
size will be much easier than the decision to extend a large musical, which can
have weekly operating expenses 4 to 5 times higher than a play.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Current Sales and
Inventory. </b>How many tickets did you sell in the previous couple of weeks
and how much in single ticket revenue did you realize? Even if you are
currently achieving more revenue in single ticket sales than what you are
projecting as your weekly operating costs for an extension, it may not be a
good decision to extend. For example: production X has sold 2,000 single
tickets for $100,000 in single ticket revenue per week for the past three
weeks. You have projected that your weekly operating costs for an extension
will be $80,000 per week, leaving a $20,000 positive differential between
current weekly revenues and projected weekly operating costs leading you to
believe an extension is advisable. But, when you take a look at your available
inventory for the remaining 6 weeks of your run, you notice that you have
18,000 tickets left to sell in your 1,000 seat theater. Selling at a pace of
2,000 tickets per week with 6 weeks left, you will sell 12,000 additional
tickets which represents only 67% of your remaining inventory. In this
situation, it may not make sense to extend, as you could avoid additional extension costs
and maximize net revenue by selling out your remaining inventory. </span><o:p><span style="font-family: Calibri;"> [note to reader: I chose to use relatively large round numbers as the arithmetic is easier, and they illustrate arguments in a more succinct manner. These concepts are easily scalable for smaller or larger houses.]</span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Burn and Sell Ratio. </b>Are
you realizing more in single ticket revenue for future performances than you are
burning off each week? For example, in your 1,000 seat theater with an average
ticket price of $50 and a 60% paid capacity for a performance schedule with 8
shows per week, you will burn off $240,000 in ticket revenue each week of
performance. If you are selling more than $240,000 each week for future
performances, and your weekly operating expenses for an extension are below
$240,000, it is a good indication that an extension is viable.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Time to Sell. <span style="mso-spacerun: yes;"> </span></b>If you decide to extend a run in your 1,000
seat theater for an additional week, with an 8 show per week schedule, you will
bring an additional 8,000 seats online to sell. Do you have adequate lead time
to sell the extension? If you have relatively low weekly operating costs, the
financial risk may be low, but you don’t want to announce an extension only to
play to 30-40% paid capacity because you didn’t have enough time to adequately
promote it. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">Other random thoughts…<o:p></o:p></span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo2; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">Extending a popular production can ensure an
influx of new patrons, which can lead to an abundance of excellent leads to
develop new multi-show ticket buyers. That said, scarcity can also be a very
valuable marketing tool. Nothing encourages early ticket buying behavior better
than sold out houses.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo2; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">Extensions are not always extensions. Some
theaters have developed business models which involve “extending” almost every
show they produce. At other theaters, extensions are very rare. Why is this?
For those that always seem to have extensions, most “added performances” are
likely built-in and planned as part of their original run lengths, but tickets are held
off sale until a predetermined date, thereby creating the perception that when
tickets are placed on sale, the production has indeed extended. It’s quite a
clever marketing strategy until you go to the well too many times, and the
public starts to understand what’s going on. At which point, I would guess that
marketing a production as “just extended” starts to lose some of its value. </span></div>
Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-89342865921834666512012-11-17T14:38:00.000-05:002012-11-17T14:38:31.023-05:00Is Your Organization Fun?<span style="font-family: Calibri;">Last weekend was my annual pilgrimage to the <a href="http://www.artsmarketing.org/conference/2012/social-media">National ArtsMarketing Project Conference</a> hosted by Americans for the Arts. It has become my
favorite conference of the year, not only because I get to catch up with
friends from all over the country, but because it reminds me that sometimes the
most profound marketing decisions are the most basic ones.</span><br />
<br />
<span style="font-family: Calibri;">I attended a session entitled “<a href="http://www.artsmarketing.org/conference/session/2012/curated-arts-experience">The Curated Arts Experience</a>”
featuring <a href="https://twitter.com/CeciDadisman">Ceci Dadisman</a>, <a href="https://twitter.com/deekshagaur">Deeksha Gaur</a> and <a href="https://twitter.com/spinstripes">Nella Vera</a>. During this session,
Nella started talking about something really fundamental – having fun. She gave
several great examples of organizations that went out of their way to create fun and memorable experiences for their audiences. Immediately prior, we were treated to a lunch
session featuring <a href="http://www.cdzamusic.com/">cdza</a>, a trio of guys who create musical experiments.<span style="mso-spacerun: yes;"> </span>With their experiments, they make classical
music fun and accessible, and in doing so have millions of viewers worldwide. I have to wonder
how many people have been introduced to classical music via their performances?
</span><br />
<br />
<span style="font-family: Calibri;">Cdza’s success is really pretty simple:<o:p></o:p></span><br />
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">They feature the work of brilliant artists –
Michael Thurber is the “chief music guy,” a young man who from age 14 spent his
life in a music conservatory and graduated from Juilliard. </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">2)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">They don’t take themselves too seriously</span></div>
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">3)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;">They create memorable and fun experiences</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">Their motto: “first build your audience by offering them
dessert before you introduce vegetables.” Simple. Clear. Brilliant. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">In </span><a href="http://arts-marketing.blogspot.com/2012/01/art-or-audience-chicken-or-egg.html"><span style="color: blue; font-family: Calibri;">previous
blog posts</span></a><span style="font-family: Calibri;">, I’ve mentioned that when building audiences, you must program
“gateway drugs” – a couple of options that are easily accessible and offer up a
fun evening of entertainment in an attempt at proving that the non-profit arts
can be a viable entertainment alternative to audiences that currently don’t view
them as such. Great art doesn’t have to be devoid of entertainment value. It is
possible to have art of the highest quality that is fun.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">Earlier this week, <a href="http://www.missionparadox.com/the_mission_paradox_blog/2012/11/getting-along-fine-without-you.html">Adam Thurman of Mission Paradox</a> reminded
us that we need new audiences more than they need us. And here’s the painful
truth – since art is essential to our lives, we like to believe that they are
essential to everyone. That just isn’t the case. A good amount of the
population does just fine without the arts. That isn’t to say that I believe
the arts couldn’t enrich their lives, it is merely meant to point out that in
the hierarchy of needs, we’re closer to the bottom. In today’s economy, merely
meeting basic existence needs has become difficult, so convincing someone to
spend their remaining disposable income on a discretionary item like the arts
is harder than ever. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">We have to make our organizations inviting, accessible and
fun. And understand that providing a fun experience doesn’t equate to
sacrificing artistic credibility. We don’t have to sacrifice the core of who we
are to attract new audiences, and those that make that argument, in my opinion,
are short-sighted.</span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">New audiences need to be cultivated carefully. Create a path
for them. Give them an easy entry point. Provide an amazing experience. Steward
them so they return soon after their first experience. Build their confidence
with multiple experiences, and then provide an opportunity to sample something
a little more challenging. Introduce them to new experiences. At some point, if
you don’t provide them with a challenge, they will grow bored. We are responsible
for cultivating our audiences’ artistic growth. If we lack audiences for
classical, challenging or new work, perhaps it is because we try to short
circuit the system, and ask that new audiences sample what they would at first
perceive as vegetables before getting to the dessert. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">In some circles in Washington, DC, the Kennedy Center has
been criticized for programming work that isn’t as challenging as some would
like. I however, appreciate the role the Kennedy Center plays in our ecosystem.
Each year they introduce thousands of people to the performing arts for the
first time. This in turn acts as a feeder system to other arts organizations. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">A balanced meal is important, but so too is the order of
consumption. Start with dessert, and the chances increase that the full meal
will be finished. Roll out complex foods to a novice palate, and you may not
make it past the first course. </span></div>
Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-66393931773516306642012-10-21T09:24:00.000-05:002012-10-23T12:17:18.717-05:00The Plight of the Newspaper (and Preparing for the Future)<span style="font-family: Calibri;">A couple of years ago, I was speaking at a conference and
someone from the audience asked me what I believed to be the biggest marketing
challenge of the next five years. I answered with the death of the newspaper,
which surprised many, who thought I would point to declining subscription bases
or overall drops in arts participation.<span style="mso-spacerun: yes;">
</span>We had just experienced the death of four major newspapers – the <i>Seattle
Post Intelligencer</i>, the <i>Rocky Mountain News</i>, the <i>Tucson Citizen</i> and the
<i>Christian Science Monitor</i> – at a time when most non-profit arts organizations
had important symbiotic relationships with their hometown newspapers. </span><o:p><span style="font-family: Calibri;"> </span></o:p><br />
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">So let me pause to ask – if your newspaper were to go out of
business today, how would that impact your organization? </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">And here’s why I am asking. According to the <a href="http://www.naa.org/">Newspaper Association of America</a> (NAA):</span></div>
<br />
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">Total print advertising has dropped from $47.4
billion in 2005 to $20.6 billion in 2011 – the lowest print advertising has
been since 1983 (not factoring for inflation).</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">In 2011, the total daily circulation of all the
newspapers in the United States was 44.4 million, the lowest on record since
1940.</span></div>
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<span style="font-family: Symbol; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;"><span style="mso-list: Ignore;">·<span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span><span style="font-family: Calibri;">Citing a 2010 Scarborough report for adults 18+,
47% of the U.S. population 35 years and older read an average issue of a daily
newspaper in comparison to only 26% of the population under 35. <o:p></o:p></span></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">According to <a href="http://pewresearch.org/databank/dailynumber/?NumberID=1191">The Pew Research Center</a>, since 2003, the
Internet has been on par or more popular than newspapers as a news source, and
currently just 21% of young adults report newspapers as their primary source of news. As the
Internet has become increasingly popular as a news source, newspapers have
invested tremendous amounts of resources in building their online presence, but
here’s the problem – for every </span><a href="http://www.bloomberg.com/news/2012-03-19/newspapers-lose-10-dollars-in-print-for-every-digital-1.html"><span style="color: blue; font-family: Calibri;">$1
gained in online advertising, newspapers lost $10</span></a><span style="font-family: Calibri;"> in print advertising in
2011. And the reason? In print advertising, newspapers are dominate, but
online, they compete in a very crowded marketplace, where Google and Facebook
combined will share just under </span><a href="http://www.emarketer.com/newsroom/index.php/google-display-ad-leader/"><span style="color: blue; font-family: Calibri;">30%
of total online display advertising revenue</span></a><span style="font-family: Calibri;"> in 2012. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">Using the statistics provided online by the NAA, in 2005
1,452 daily newspapers shared $47.4 billion in print advertising for an average
of $32.6 million in print advertising per daily paper. Six years later, 1,382
daily newspapers shared $20.6 billion in print advertising for an average of
$14.9 million in print advertising per daily paper. </span><o:p><span style="font-family: Calibri;"> </span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">In six years, the average daily newspaper lost more than 50%
of its print advertising revenue, placing in jeopardy the entire business model
of most newspapers and leading to drastic changes. Newspapers around the nation
are slashing their newsrooms, laying off veteran reporters and in the best case
scenarios, replacing them with freelance reporters with little experience. In worst cases, they aren’t replaced at all. </span><o:p><span style="font-family: Calibri;"> Just recently the theater world received news that veteran <i>Philadelphia Inquirer</i> arts writer and critic <a href="http://blogs.phillymag.com/the_philly_post/2012/10/12/philadelphia-inquirer-theater-critic-howard-shapiro-takes-buyout/">Howard Shapiro</a>, after 42 years with the paper, was reassigned to cover South New Jersey in what seemed like an attempt to make him miserable enough to leave. And it looks like it worked.</span></o:p></div>
<br />
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<span style="font-family: Calibri;">With fewer reporters and less experience, not only has
coverage decreased, but quality has diminished as well.<span style="mso-spacerun: yes;"> </span>Many of us shook our heads when a small
online magazine named <i style="mso-bidi-font-style: normal;">Pasadena Now</i>
hired </span><a href="http://en.wikipedia.org/wiki/Pasadena_Now"><span style="color: blue; font-family: Calibri;">two writers in India
to cover local events</span></a><span style="font-family: Calibri;"> but just recently we’ve learned of </span><a href="http://www.financial-news.co.uk/6208/2012/07/us-newspapers-increasingly-outsource-journalism-to-the-philippines/"><span style="color: blue; font-family: Calibri;">Journatic,</span></a><span style="font-family: Calibri;">
a company that outsources journalism to the Philippines for US newspapers. <span style="mso-spacerun: yes;"> </span>Others have transitioned from primary
reporting to aggregating content from other news sources and then
providing commentary on the aggregated material. When I was at the Smithsonian,
one such company drew inaccurate conclusions by providing editorial on
aggregated stories. When I called to tell them of the inaccuracies and offer to
set up interviews so they could report on the story directly, the freelance
writer told me they didn’t pay him enough to do any original reporting.
Unfortunately for us, other outlets picked up his story. <span style="mso-spacerun: yes;"> </span>I understand cutting as much fat as possible
from budgets during tough economic times, but at some point, there isn’t any
fat left, and what remains is only muscle. Cutting further sacrifices your
ability to deliver an excellent product, which is why I advise arts
organizations to avoid cutting investments in the artistic product itself if at
all possible when making budget adjustments.<span style="mso-spacerun: yes;">
</span>By sacrificing quality, I’m afraid newspapers could be pouring gas on an
already blazing fire.<span style="mso-spacerun: yes;"> </span></span><o:p><span style="font-family: Calibri;"> </span></o:p><br />
<o:p><span style="font-family: Calibri;"><br /></span></o:p></div>
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
</div>
<div class="MsoNormal" style="margin: 0in 0in 0pt;">
<o:p><span style="font-family: Calibri;">Every great arts city has a great newspaper. Every great theater town, a well respected critic. If your city is affected by cuts to arts coverage, let your voice be heard. Activate your bases. Support outlets with extensive arts coverage with your advertising dollars. That said</span></o:p><span style="font-family: Calibri;">, I advise non-profit arts organizations
to prepare themselves for the possibility that their local newspaper could go
out of business. <span style="mso-spacerun: yes;"> </span>Cultivate relationships
with bloggers, social media mavens and other influentials in your community.
Develop online communities where your audiences can speak to one another.
Produce and distribute original content yourself. Diversify your advertising
strategies. Budget resources to grow your database. Hopefully these efforts
will be for naught, but if the day comes that your local newspaper declares
bankruptcy, you’ll be better prepared.</span></div>
Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-67541224377805346702012-09-23T15:06:00.001-05:002012-12-02T21:46:12.173-05:00Good Intentions Can Interfere with Success<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbcyiS42djxDRqgE91vVcV-7zVrqV6xgbG2lIvRgPmSo_wV3EDmIP2VgWuJ0gFmioQ2zCeZyLbZiG4YjTVTYVNBqGI67UxtcTTqyloQVsTr-b69fnh6cseSCLyy_dbizZUid0M/s1600/hardsmart.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a><br /></div>
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbcyiS42djxDRqgE91vVcV-7zVrqV6xgbG2lIvRgPmSo_wV3EDmIP2VgWuJ0gFmioQ2zCeZyLbZiG4YjTVTYVNBqGI67UxtcTTqyloQVsTr-b69fnh6cseSCLyy_dbizZUid0M/s1600/hardsmart.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="186" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbcyiS42djxDRqgE91vVcV-7zVrqV6xgbG2lIvRgPmSo_wV3EDmIP2VgWuJ0gFmioQ2zCeZyLbZiG4YjTVTYVNBqGI67UxtcTTqyloQVsTr-b69fnh6cseSCLyy_dbizZUid0M/s320/hardsmart.jpg" width="320" /></a>To say that these are challenging times for non-profit arts organizations is probably an understatement. We're still struggling with the after effects of the global economic crisis. Previously viable business models are imploding. The elimination or severe reduction in government funding has resulted in a very quick need to replace public support with private funds. And who knows what is around the corner.<br />
<br />
But, artists and arts administrators are a resilient bunch. One of our strengths is our never say die attitude. We confront each challenge head on in a "show must go on" fashion. We are inherently hard working. To make it in this field requires years of rebounding from rejection. When the going gets tough, we redouble our efforts.<br />
<br />
After years of struggle, the fight in us undoubtedly begins to wane, as we contemplate the permanency of the current climate. And this isn't necessarily a bad thing. In moments of crisis, we ring the alarm and all hands arrive on deck to face the upcoming challenge, but this response is unsustainable for years on end. After downsizing, one human being can only do the work of three for so long before collapse. Our initial reaction of working stronger, harder and faster must give way to working smarter. <br />
<br />
In the past few months, I've seen a couple of instances where hard working marketing departments, desperate to keep their heads above water, were working well beyond capacity, but were resistant to taking measures to improve efficiency for fear that if they took any time away from their current tasks, they would risk imminent financial peril. All while knowing that the current situation was unsustainable, they continued each day just like the prior, hoping that the financial climate would improve before they hit the point of exhaustion. <br />
<br />
But for those already at the point of exhaustion, I'd like to offer up a few quick suggestions to improve efficiency in hopes of lightening the load:<br />
<br />
<strong>Maximize Success to Minimize Risk.</strong> Often times marketing departments get into trouble when they have one business line or product performing very well, and a couple of others underperforming. Our natural instinct is to abandon the overperforming product in order to focus our attention on improving the underperforming others. Please don't do this. If you are understaffed and under-resourced (and who isn't), where and how you use your limited resources is incredibly important. If you reappropriate resources to aid underperforming products, at best you will most likely see minimal results, whereas if you applied your resources to the overperforming products, your returns could be exponentially better. High tech firms have built incredibly successful business models off of failure. They expect a very high percent of their products in development to fail, banking on the revenues from the one or two that will take off. And when a product does hit, the entire efforts of the company are focused on maximizing results. A good rule of thumb - spend 75% of your efforts on improving the results on overperforming products, and 25% on improving underperformance. All too often, we do the opposite, thinking that helping struggling products is what is best for the organization.<br />
<br />
<strong>Analysis & Measurement, Before Action. </strong>Just a few weeks ago, I was in a meeting with a senior marketing executive in charge of a sizable national advertising campaign. He had a hunch that he was under-promoting a certain section of his business in the New York market, and had set aside a significant amount of money to test a new print campaign in New York dailies. When I understood what he was trying to accomplish, I asked him how he would measure success. He responded by saying that it was very hard to measure the exact outcomes of his new campaign, and besides, with his reduced staff and resources, he was doing his best just to get the campaign done and out the door. This is a common occurrence. When resources are cut, one of the first things to go is analysis, tracking, reporting and measurement. But when looking to work smarter, the one thing you need is what you have just cut. Before launching any major marketing campaign, make sure you have the tools in place to track results, analyze sales and measure success. Over the years, I have had more than one staff member get frustrated with me when I asked them to set aside the time they would normally spend promoting a production in order to create more sophisticated reporting tools. But without clear and reliable data, your campaigns will never improve, and if you do see an uptick, you won't be able to replicate what worked. <br />
<br />
<strong>Don't Save Your Way to Trouble. </strong>Several months ago, I visited a client that was deep into their subscription campaign. The campaign was going well, but the company was financially struggling for other reasons. The marketing director, being incredibly conscientious, thought that every dollar saved, was a dollar earned for the company, and started to decrease the amount of money he spent on his subscription campaign in order to come significantly under his budgeted expenses. He wanted to save, and give back the money in order to help the company. His intentions were admirable, but his plan would have placed the company in an even worse financial position. His cost of sales reports were showing that for every dollar he spent on the subscription campaign, he was selling five dollars worth of subscriptions. This wasn't the time to under-invest, in fact, this was the perfect opportunity to spend more if cash flow allowed. If your cost of sale is below $1, for every dollar you don't spend, you place your company at additional risk. You only want to consider cutting your marketing expenses if your campaigns are resulting in negative net revenue, and even then, it is risky if you are <a href="http://arts-marketing.blogspot.com/2012/04/purposeful-acquisition.html">cutting acquisitions.</a> <br />
<br />
Sometimes working smarter means doing the opposite of what's intuitive. Have the courage to challenge systems, the ability to measure results and the good fortune to discover efficiencies. Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-58579985956930669322012-09-09T18:58:00.000-05:002012-09-09T20:43:41.181-05:00The Law of the Few (and the Future of the Many)About a year ago, I began designing a <a href="http://www.american.edu/cas/arts-management/arts-management-technology-certificate.cfm">graduate certificate program</a> for American University focused on technology issues in arts management, and this past summer, I taught my first course focused on the intersection of technology and marketing. To open the course, I asked students to read Malcolm Gladwell's <em><a href="http://www.american.edu/cas/arts-management/arts-management-technology-certificate.cfm">The Tipping Point</a></em>, which if you haven't read it, describes how social epidemics evolve, providing a great platform to discuss word-of-mouth marketing and how technology can be used to ignite a movement. <br />
<br />
Early in the book, Gladwell discusses "The Law of the Few," which boiled down is a riff on the 80/20 principle - 20% of the people are responsible for 80% of the work. As marketers, we latch onto this principle, as it correctly argues that if we can identify and cultivate relationships with a select group of influential people called "connectors," then our returns can be maximized. One connector can be worth his weight in gold, and easily as valuable as ten non-connectors.<br />
<br />
As I was giving my lecture, it struck me that most non-profit arts organizations have designed their business models on the "Law of the Few" principle, not just in their approaches to marketing, but in how we program, fundraise and communicate. A previous supervisor of mine used to say that a grassroots movement begins with the grasstops. But if we are all focused on the few, are we ignoring the many? <br />
<br />
I ask this question, because as society shifted away from a one way,<a href="http://en.wikipedia.org/wiki/Web_1.0"> web 1.0</a> world towards an interactive, <a href="http://en.wikipedia.org/wiki/Web_1.0">web 2.0</a> one, the ways in which we do business and view the world radically changed. Previously companies had much more control of their brands as they could carefully craft messaging, but today, brands have a life of their own in the virtual universe. We used to seek out experts when we needed information, now we rely upon the collective of Wikipedia or Google (when was the last time you consulted an encyclopedia?). At one time knowledge was proprietary, but presently, a growing number of us look to the commons (and companies trying to maintain business models built upon charging for knowledge are struggling). We used to rely on authority figures to inform us, but now in moments of crisis, millions flock to Twitter, where we learned an hour before President Obama confirmed it that Osama Bin Laden had been killed.<br />
<br />
I believe that many of us used to defer to the knowledge and experience of a small few, placing trust in their expertise to guide the rest of us. But when a handful of very powerful and experienced bankers plunged the world into a global economic crisis resulting in the loss of 40% of the world's wealth, the masses started to wonder if the few could be trusted to lead. In the web 1.0 world, most were passive recipients, willing to receive content as delivered. Today, the least among us now demands a seat at the table, and via web 2.0 technologies, an even playing field has begun to emerge.<br />
<br />
So how will this affect the non-profit arts? Here are just a couple of examples:<br />
<br />
<strong>The Citizen Critic (and the Future of Arts Journalism)</strong><br />
A couple of weeks ago, Barry Hessenius, former director of the California Arts Council, issued his <a href="http://blog.westaf.org/2012/08/2012-fifty-most-powerful-and.html">annual list</a> of the most influential people in the arts. On the list were a handful of notable bloggers, including <a href="http://www.fracturedatlas.org/site/bios/staff/20/Ian%20David_Moss">Ian David Moss</a>, <a href="http://www.artsjournal.com/jumper/">Diane Ragsdale</a>, <a href="http://www.artsjournal.com/newbeans/">Clay Lord</a>, <a href="http://www.artsjournal.com/diacritical/">Doug McLennan</a> and <a href="http://www.thomascott.com/">Thomas Cott</a>, however not a single traditional journalist was mentioned as there wasn't a category for journalists. Was this an oversight, or a trend? <a href="http://socialcommercetoday.com/word-of-mouth-still-most-trusted-resource-says-nielsen-implications-for-social-commerce/">Nielsen recently reported</a> that 92% of consumers trusted word-of-mouth from friends and family, while only 58% trusted editorial content such as newspaper articles. <a href="http://litreactor.com/news/amazon-customer-ratings-vs-professional-book-critics">Harvard University</a> recently published a study that contended that average reader reviews on Amazon.com were just as trustworthy as book reviews from professional critics. Even <a href="http://artworks.arts.gov/?p=8692">Maura Judkis</a>, a writer for the <em>Washington Post</em>, in her article for the NEA's blog ArtWorks states "readers of my generation, the Millennials, are more likely to want to see a movie or play because their friends like it than because a critic does." Word of mouth has always been powerful, but advances in technology have allowed connectors to broadcast their thoughts to followers instantaneously, and others, the opportunity to feed into social networking, user review sites like Yelp.com. So where does that leave us? Ask yourself - if you were visiting New York, and thousands of patrons had described a Broadway play positively in online reviews, would it have more of an impact on you than negative reviews by professional critics? [could this explain the mysterious success of <a href="http://blogs.hbr.org/cs/2012/08/the_turnaround_that_kept_spider_man.html">Spiderman</a>?]<br />
<br />
<strong>Crowdfunding and Microfinancing</strong><br />
In her article "<a href="http://hyperallergic.com/56248/it-is-broke-we-should-probably-fix-it-the-nonprofit-model-and-the-arts/">It is Broke, We Should Probably Fix It</a>," Alexis Clements argues that many non-profit organizations chase a few, large foundations, whose money would have been public via taxation but is now controlled privately. She goes on to say that via grants from private foundations, wealthy individuals can "funnel money to organizations that will uphold their personal beliefs." That is a pretty charged statement, but I do wonder how often arts organizations manipulate their missions in order to receive a large grant or donation from a private funding source? How many arts organizations are alive today primarily due to the generosity of one or two major donors, and for those, do the donors in question wield too much influence? In 2008, President Obama demonstrated the power of the collective when he raised unprecedented amounts of money from small donations. As of August, the crowd funding website <a href="http://en.wikipedia.org/wiki/Kickstarter">Kickstarter</a> has raised $275 million in funding for projects, and has grown exponentially since its founding in 2009. And we aren't just talking about tiny amounts of funding either. The top 10 projects funded on Kickstarter all raised more than $1 million. And Microfinance website <a href="http://www.kiva.org/about">Kiva</a> has leveraged $346 million in funds from 823,474 lenders to launch projects aimed at combating poverty in 63 different countries. <br />
<strong></strong><br />
<strong>Crowdsourcing Curation and Programming</strong><br />
When I was at the Smithsonian, an internal debate was occurring about the "<a href="http://americanart.si.edu/exhibitions/archive/2012/games/">Art of Video Games</a>" exhibit at the American Art Museum. The Smithsonian invited the public to help curate which video games would be featured in the exhibit, and in doing so, more than 3.7 million votes were cast by 119,000 people in 175 countries. Pretty impressive. However, questions began to arise about the role of the curator. For the most part, non-profit arts organizations are lead by artists with extensive training and sometimes decades of experience. As the resident experts in their fields, they are regularly called upon to make value judgements on what art to present, and how to present it. In the past, the public has remained a passive receiver of said art, but a growing number of patrons today would like to play a more active role. Technology has changed what used to be a one way conversation into a dialogue, and in turn, many community stakeholders now expect to be able to exercise their voice. I believe this phenomenon prompted <em>Arts Journal</em> editor Doug McLennan to host the "Lead or Follow" debate early this year. If you didn't catch it, here is a <a href="http://www.artsjournal.com/leadorfollow/">good recap</a>. <br />
<br />
Understandably, non-profit arts organizations have built models based on the "Law of the Few," and I am not advocating for the abandonment of those models. I am however suggesting that there is wisdom, money and resources to be found in the collective as well. This isn't an either/or proposition between the few and the many; it's a both/and situation. There is a significant role to play for the few and the many. But to tap into the collective, I believe we must become vital and essential to our communities again. I fear that for many non-profit arts organizations, if they were to disappear, we'd barely hear a whimper, when there should be protests in the streets.Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com2tag:blogger.com,1999:blog-33812369.post-40471602507345453662012-08-22T07:20:00.000-05:002012-08-22T07:20:55.973-05:00The Myth of the Ubiquitous Solution<br /><span style="font-family: Calibri;">Today I tread lightly into the “new models” discussion which
has recently been at the forefront of chatter among arts managers. For a good
recap, please read the following:</span><br />
<span style="font-family: Calibri;"><br /></span><span style="font-family: Calibri;">“<a href="http://online.wsj.com/article/SB10000872396390444508504577593073546227962.html">Why Arts Managers Short of Cash Are Looking at Detroit</a>,” by
Terry Teachout, The Wall Street Journal<br />
“<a href="http://www.washingtonpost.com/entertainment/theater_dance/theaters-look-for-new-ways-to-draw-in-subscriptions/2012/08/08/b821bad0-dd98-11e1-8ad1-909913931f71_story.html">Theaters Look for New Ways to Draw in Subscribers</a>,” by Nelson Pressley, The
Washington Post<br />
“<a href="http://www.huffingtonpost.com/michael-kaiser/the-new-model-part-2_b_1623893.html">The New Model, Part 2</a>,” by Michael Kaiser, The Huffington Post<br />
“<a href="http://www.fracturedatlas.org/site/blog/2012/06/19/swimming-downstream-in-the-current-of-history/">Swimming Downstream in the Current of History</a>,” by Adam Huttler, Fractured
Atlas Blog</span><br />
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: Calibri;"><br />As Michael Kaiser states “the world is changing – but it has
always been changing.” I agree with Mr. Kaiser to a point, but I’d like to
point out that the amount of change organizations have faced in previous
decades probably pales in comparison to the change they have confronted in the
past ten years. In a one decade, pretty much everything we have been taught is
now in question. How many of us were taught that the key to financial stability
was saving money in order to purchase a house? For those of us who purchased
prior to 2007, becoming a homeowner could be the dumbest financial decision we
make in our entire lives. Who knew that we would experience a global economic
crisis so severe that it would destroy </span><a href="http://www.fas.org/sgp/crs/misc/RL34742.pdf"><span style="color: blue; font-family: Calibri;">40% of the world’s wealth</span></a><span style="font-family: Calibri;">,
or that people would actually opt for negative investment returns in order to move monies into safer investment vehicles? For the first time in the
history of the United States, Standard & Poors <a href="http://en.wikipedia.org/wiki/United_States_federal_government_credit-rating_downgrade,_2011">downgraded</a> the credit rating of the federal government to below AAA status, and the </span><a href="http://www.thedailybeast.com/newsweek/2009/10/13/a-path-to-downward-mobility.html"><span style="color: blue; font-family: Calibri;">youngest
Americans will most likely be worse off than their parents</span></a><span style="font-family: Calibri;">. Staples of
American life, such as <a href="http://www.businessweek.com/articles/2012-03-06/goldman-sachs-social-security-and-medicare-are-weaker-promises-than-debt">Social Security and Medicare</a>, seem to be imploding, and new college graduates are entering the work
force with <a href="http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?pagewanted=all">record high student loans</a>. <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>And this is to say nothing of the arts. States
and municipalities are slashing funding, arts education barely exists in school
curriculums and the lack of discretionary income is affecting ticket sales.</span></div>
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">As they say, necessity is the mother of invention. It shouldn’t
come as a surprise to anyone that arts managers are engrossed in discussions
about new models. Many organizations had reserves to weather a couple of bad years, but recently we’ve begun to ask – what if this is the “new
normal?” And how arts managers describe the “new normal” reminds me of the Hindu
tale of the </span><a href="http://www.wordfocus.com/word-act-blindmen.html"><span style="color: blue; font-family: Calibri;">Blind Men
and the Elephant</span></a><span style="font-family: Calibri;">. As the story goes, six blind men were asked to touch and
describe an elephant. Each man’s description varied widely depending on the
part of the elephant the man touched, and as the tale says “each in his own opinion
exceeding stiff and strong, each was partly right, and all were in the wrong.”</span></div>
<div class="MsoNormal" style="margin: 0in 0in 10pt;">
<span style="font-family: Calibri;">Our descriptions of the “new normal” are as different as our
points of views, and thus our responses to our changing environments should be
as unique as each of our institutions. <span style="mso-spacerun: yes;"> </span>I fear anyone who offers a panacea to
all proclaimed from his or her own mountain top, as the view from my mountain
may be different. For example, in his mostly </span><a href="http://online.wsj.com/article/SB10000872396390444508504577593073546227962.html"><span style="color: blue; font-family: Calibri;">excellent
article</span></a><span style="font-family: Calibri;"> about the Detroit Institute of Arts, Terry Teachout chides theater
companies that “cling to the old-fashioned subscription model.” Similarly, in
Nelson Pressley’s article “</span><a href="http://www.washingtonpost.com/entertainment/theater_dance/theaters-look-for-new-ways-to-draw-in-subscriptions/2012/08/08/b821bad0-dd98-11e1-8ad1-909913931f71_story.html"><span style="color: blue; font-family: Calibri;">Theaters
Look for New Ways to Draw in Subscribers</span></a><span style="font-family: Calibri;">,” Tony Heaphy, Director of Marketing
at Centerstage, describes subscribing as “a chestnut.” I have no doubt from
their perspectives these comments are valid, but theaters that have experienced
significant growth in their subscription base might view the situation
differently. What works for one, rarely works for all. </span><br />
<br />
<span style="font-family: Calibri;">Therefore a customized approach tailored to your institution is wise. W</span><span style="font-family: Calibri;">hen looking at possible adjustments to your business model, I
would suggest:</span></div>
<div class="MsoListParagraphCxSpFirst" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">1)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";">
</span></span></span><span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">A test a
day.</b> Test a new idea, small in scale, each day. Every day
that an organization doesn’t test, is a day that it doesn’t learn. </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">2)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Test small, miss small. </b>Identify a
challenge. Develop a hypothesis. Test a solution. But don’t bet the farm on it.
Conduct each test fully expecting a negative result. </span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">3)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Test ideas that are easily scalable. </b>In
order to minimize risk, I’ve tested ideas that performed very well on a small
scale only to realize that putting them into play in a larger way would be cost
prohibitive.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">4)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Identify your <a href="http://en.wikipedia.org/wiki/Sacred_cow_(idiom)">sacred cows</a>, and test those
first. </b>Often times we shy away from testing solutions to a known issue
simply because that issue is a sacred cow. If you are looking for meaningful
impact, identifying sacred cows is a good first step.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">5)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Be informed, but question everything – even
“experts.” </b>Read everything you can. Follow experiments at other companies.
Conduct research. Analyze data. But don’t accept anything or anyone as
infallible. Even the best are human, and they speak only from their experience.</span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin: 0in 0in 0pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">6)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Be careful of “one size fits all”
solutions. </b>I can’t tell you the number of times I’ve heard marketing
directors wonder why something that worked so well in one city, bombed in the next.
There are few universal truths in the marketing world. </span></div>
<div class="MsoListParagraphCxSpLast" style="margin: 0in 0in 10pt 0.5in; mso-list: l0 level1 lfo1; text-indent: -0.25in;">
<b style="mso-bidi-font-weight: normal;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;"><span style="font-family: Calibri;">7)</span><span style="font-size-adjust: none; font-stretch: normal; font: 7pt/normal "Times New Roman";"> </span></span></span></b><span style="font-family: Calibri;"><b style="mso-bidi-font-weight: normal;">Overcome your fear of change. </b>As
humans, we are all programmed to fear change. You’ve identified a challenge.
Formed a hypothesis. Tested a solution with impressive results. Developed a
plan to scale the solution. And now it is decision time. Some people are
paralyzed by fear of change. Be comforted by knowing that if you desire
different results, you must act differently. Some difficult decisions are easy
because they are demanded by circumstance. <b style="mso-bidi-font-weight: normal;"><o:p></o:p></b></span></div>
Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com1tag:blogger.com,1999:blog-33812369.post-35338530566097203482012-07-22T18:05:00.004-05:002012-07-22T19:27:26.294-05:00The Perfectionist and the Jack of All Trades<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTwI6m8VZTxmZL22P4Zt9mtq-KBHSx7FmCZV18_qxNUr1Qz30y_eYwjnf11g3DKDk9WjRfsXTpsdT0CVKENAm9BrBf-l9MiywtrcxvuQmh7twCV7L-YpuCgh-Z0-f1s6S4z5dO/s1600/Priority_Cartoon-resized-600.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTwI6m8VZTxmZL22P4Zt9mtq-KBHSx7FmCZV18_qxNUr1Qz30y_eYwjnf11g3DKDk9WjRfsXTpsdT0CVKENAm9BrBf-l9MiywtrcxvuQmh7twCV7L-YpuCgh-Z0-f1s6S4z5dO/s1600/Priority_Cartoon-resized-600.png" /></a>I've been called a perfectionist, and until recently, I've always accepted that description as a compliment. However as a leader, one of my primary responsibilities is to help prioritize the work of the departments that report to me, and in doing so, it is very important to understand that most nonprofits are under resourced. In a world where there is never enough, either in terms of money or human time, where and how nonprofits commit their limited resources becomes very important. Perfectionists struggle in these environments because by nature, when we start something, it's hard to walk away with even the slightest flaw remaining. On the other hand, marketers routinely leave projects behind when a greater return on one's resources can be found in other places, bowing to the law of diminishing returns. To be both a marketer and a perfectionist has caused a few schizophrenic debates for me over the years, but I've come to learn to focus on core competencies, and to strive for excellence, rather than perfection, in those areas.</div>
<br />
I've chosen to write about this today because I've recently worked with two very well respected marketers that I observed struggling with the same issue. The first was a technology specialist who was known for making even the most complicated systems work. He was part of a team that over time found their marketing costs rising while their returns fell (not a good place for anyone). I was brought in to conduct a marketing audit. In my first week with them, I observed this marketer spending 25 hours working on a fix for a technology enhancement that this organization was hoping to roll out to their members. After inquiring, I learned that he had been working on this fix for over a month, and had put in well over 100 hours on it. When I asked him if this particular technology enhancement was worth so much effort, he replied that it was to him because he had never failed to deliver before. From an outsider's perspective, it was easy for me to see that he was chasing perfection to the detriment of the organization. After looking at the demographics of their members, and the usage statistics from the previous technology enhancements the organization had launched, it was easy to project that less than one half of one percent of their membership base would likely use this new feature. So why focus so many resources on it? <br />
<br />
At almost the same time, I was advising an organization who had hired a strategic planning and market research firm to audit marketing and membership operations. The organization had selected one of the best firms in the business, but was experiencing cost overruns on projected labor expenses in the early stages of the project. The organization in question was large and complex, and one of the first things the firm did was request financial information in a variety of formats. Once delivered, a new junior member of the firm started analyzing the data sent, but in doing so, she couldn't get the financials to match perfectly between the various formats. She continued to work on the financials in an effort to get them to match to the penny, and in doing so, soared past the projected work hours set aside for the initial phase of the project. When I discovered the issue, I asked her how far off the financials were, and the gap was less than $1,000 on a $40 million operating budget. Even if she had found a way to reconcile the remaining funds, the conclusions from her analysis wouldn't have changed in the slightest. Her fear was that if this data was shown to the board of the directors, she would be held at fault because they didn't balance perfectly.<br />
<br />
Perfectionists sometimes lose their way in an attempt to achieve something that might not be achievable, or if achievable, probably isn't worth the cost of the achievement. Perfectionists struggle with concentrating too much on one task, while others (I'll call them Jack of All Trades) struggle with just the opposite - not being able to decide where to focus their attention. During times of strife, marketers can find themselves getting friendly advice from a wide-range of well meaning others - board members, executive directors, senior staff members, artists and even spouses. People love to brainstorm, and send all their ideas to the marketing department. This isn't to say that ideas should be ignored. Great ideas can come from anyone, but the same can be said of poor ideas. <br />
<br />
A couple of years ago, I spent some time with a new managing director of a mid-size regional theater. It was his first time leading a company, and he wanted to get it right. The company was known to have serious challenges, and when he started, everyone started sending him helpful hints on how to solve the issues. When I visited, he confided he didn't know where to start, and most important to him was pleasing the board that just recently hired him. So he vigorously pursued each idea that was sent to him from board members, and hadn't achieved much except exhausting himself. Over lunch one day, I asked him what the theater's most important challenge was; the one that if left unaddressed, would result in catastrophy. His answer was quick and clear - the theater's debt. I asked him what would happen if he focused all his energies on eliminating the theater's debt. He was afraid the general operations of the company would falter. He feared that the board would be upset because he wouldn't have time to focus on each issue they brought to his attention. And he was afraid of failure, so he tried to be a jack of all trades in an attempt to be everything to everyone. In the end, he decided to concentrate on dealing with the debt issue, and six months later, had identified a foundation that was willing not only to eliminate the theater's debt, but also wanted to establish a working capital fund for future operations. <br />
<br />
Deciding what to focus on and more importantly what not to focus on takes courage of conviction. Perfectionists get lost in single projects, and Jacks of All Trades try to address everything at the same time. I've been both in my career, and over time, have become better at prioritizing. Below is a basic matrix that may help:<br />
<br />
In priority, concentrate on solutions that provide the following:<br />
<strong>High Impact on Critical Issues/High Revenue Line Items - </strong>these should be few in number but receive the most amount of your attention.<br />
<strong>Low Impact on Critical Issues/High Revenue Line Items </strong>- even a small improvement on a critical issue can result in an excellent return on investment.<br />
<strong>High Impact on Minor Issues/Low Revenue Line Items </strong>- only spend time on these projects if all critical issues and high revenue areas are performing well.<br />
<br />
If you are in a nonprofit, and have the time to concentrate on solutions that will provide a low impact on a minor issue/low revenue line item, then perhaps you are overstaffed (or have reached the holy grail of the nonprofit sector).Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-18868534574192678222012-06-30T08:55:00.000-05:002012-07-22T19:30:44.248-05:00The Assembly Line and Failure<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioyamKXlil4s7DHN46K5slB7fKOp851RjaP-8lj7xoFUccMpMWefo28wvm06SYNx04DKw9ku5MlREMjzXaF9q8zruRkDMHYeLRK9zgZiVDulrRPfhiGYSW8pz80Zt3L43Xle3F/s1600/RiskNotTakingRisksCartoon.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"></a></div>
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioyamKXlil4s7DHN46K5slB7fKOp851RjaP-8lj7xoFUccMpMWefo28wvm06SYNx04DKw9ku5MlREMjzXaF9q8zruRkDMHYeLRK9zgZiVDulrRPfhiGYSW8pz80Zt3L43Xle3F/s1600/RiskNotTakingRisksCartoon.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="285" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEioyamKXlil4s7DHN46K5slB7fKOp851RjaP-8lj7xoFUccMpMWefo28wvm06SYNx04DKw9ku5MlREMjzXaF9q8zruRkDMHYeLRK9zgZiVDulrRPfhiGYSW8pz80Zt3L43Xle3F/s320/RiskNotTakingRisksCartoon.jpg" width="320" /></a>I've recently returned from Theatre Communications Group's <a href="http://www.tcg.org/events/conference/">Annual Conference</a>, where the theme was "model the movement," focusing on new models and transformative ideas from the field. I was particularly excited to attend this year, as the speakers included <a href="http://www.woollymammoth.net/">Woolly Mammoth Theatre Company</a>'s Artistic Director <a href="http://woollymammoth.net/about/history.php">Howard Shalwitz</a> and author/marketer extraordinaire <a href="http://www.sethgodin.com/sg/">Seth Godin</a>.<br />
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Howard kicked off the conference with his speech "Theatrical Innovation: Who's Job Is It?," in which he compared the systems of our regional theaters to that of an assembly line, a theme that would resurface multiple times over the course of the conference. As regional theaters grew and became more complex, often times non-profit managers were encouraged to borrow best practices from corporate entities, designed to improve efficiency, streamline processes and increase return on investment. And it worked...until it didn't. You see, the process of creating art cannot be controlled by an assembly line system. We don't create widgets. And as one artist said to me, "if I was exclusively concerned with return on investment from a monetary perspective, I wouldn't create art, and I certainly wouldn't have had children."<br />
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This isn't to say that theaters shouldn't have systems. Systems have helped us reduce waste, maximize time and better utilize our resources. But an over reliance on particularly inflexible systems can also guarantee failure, at least from an artistic perspective. Theater is a particularly risky business, even when producing so called "cash cows," as I have previously written about <a href="http://dctheatrescene.com/2012/04/17/what-is-safe-in-the-theater/">here</a>. To quote one artistic director, "theaters eat risk for breakfast." But as the economy has contracted, have we become too reliant on our systems? and if Woolly Mammoth is wrestling with this issue, a company that is known to be nimble and innovative, then it must be a significant challenge for others. How often do we as marketing directors get handed a project that we can't wait to work on, knowing that we will need to call upon all of our creativity to develop innovative audience development strategies, only to think - shit, if I give the time and attention this project requires, the next three shows will suffer? Which then results in trying to pound a square peg into the round hole that is our assembly line, which is a disservice to both the artist and the marketer. Great work will push boundaries across all departments within an organization, and senior managers need to create systems and budgets that not only allow space for custom approaches, but that encourage them.<br />
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As managers, we like to mitigate risk, thinking that if we could just control our variables just a little more, that we would reach a utopia of risk free theater producing. It's a fool's errand. Since the beginning of the global economic crisis in 2008, the stakes have risen so high that it can feel like we don't have room to fail. <a href="http://arts-marketing.blogspot.com/2010/07/are-you-expert-you-must-be-failure.html">But in failure, we find success</a>. It sounds counter intuitive, but making today as failure free as possible will ensure a less successful tomorrow. Even Mr. Godin, a titan in the business world, in his bio proudly proclaims "as an entrepreneur, he has founded dozens of companies, most of which failed." So the question we should all be asking, particularly in the budget process, is - are we building enough room for experimentation and failure? <br />
<br />
Recently, I had the opportunity as a consultant to work with a few senior managers who were tasked with reinventing a business model for a program that was part of a much larger institution. Due to funding cuts, the program needed to become revenue neutral over time, and pro formas were developed to guide that process. Along the way, the program hit some unforeseen challenges, but as the pro formas were the only measurement of success, decisions were made that allowed the organization to "stay on target" by hitting financial benchmarks as scheduled at the expense of future operations. When I began my work, I was asked if I thought the program could reach revenue neutral status on the timeline outlined in the pro formas. I said that I believed it was possible, but then followed up by saying the question asked really should be whether the program can remain a going concern after hitting revenue neutral status given the short-sighted decisions that would be necessary to get there. In other words, does it really matter if we got the patient to the hospital in record time if the patient dies in route? How many decisions do we make each year that only considers the financial position of the company during the fiscal year in question? and would we make different decisions if we considered the pros and cons over multiple years? The financial strain on many arts organizations is tremendous, but if we continue to sprint to obtain single year targets while we ignore the conditions that wait for us at the finish line, over time we can snatch defeat from the jaws of victory. Unless an organization is under dire financial constraints, and death is literally knocking at the door, all major decisions must be viewed in a multi-year context.<br />
<br />
Studies have shown that people are motivated more by <a href="http://heatherlench.com/wp-content/uploads/2008/07/larrick.pdf">avoiding failure than by achieving success.</a> As this article states, some professional <a href="http://www.podiumsportsjournal.com/2010/05/04/is-your-focus-on-achieving-success-or-avoiding-failure/">athletes like winning, but they really hate to lose</a>. This would explain why limiting risk is so appealing, even if it jeopardizes our ability to succeed. But I would argue that mindset breeds mediocrity, and that artists and arts administrators are different. We know that our best work comes from taking risks, and this is something we need to remember as we head back into work tomorrow.Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com1tag:blogger.com,1999:blog-33812369.post-85916491961482569052012-06-02T13:06:00.000-05:002012-06-02T13:50:46.304-05:00The First Key to Success -- Defining It<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyn_BwimNDGJEhF3tTNBqHR9EYoR2hH3-MNIzjp8MKrq9JRqwEwVVQWnH3V39Mn-w2tdVF_9tv3luRRngRiesHXFPD0k-h0MgBdX9QLa2QUyEiFZE-t7rpis9sFAY52o6-rDoh/s1600/neil-armstrong.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgyn_BwimNDGJEhF3tTNBqHR9EYoR2hH3-MNIzjp8MKrq9JRqwEwVVQWnH3V39Mn-w2tdVF_9tv3luRRngRiesHXFPD0k-h0MgBdX9QLa2QUyEiFZE-t7rpis9sFAY52o6-rDoh/s1600/neil-armstrong.jpg" /></a>Without clear direction, success can never be achieved. We’ve
all experienced situations where we run toward a goal as fast and furious as we
can only to have the goal posts moved on us in route. When this happens over and
over again, an organization is guilty of foolishly wasting precious resources
at a moment when most are under resourced as it is.<br />
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Success begins with leadership. As Michael Kaiser discussed
in his <i>Huffington Post</i> blog, <a href="http://www.huffingtonpost.com/michael-kaiser/there-must-be-a-leader_b_969399.html">there
must be a leader</a>. All too often, arts managers try to lead by consensus.
They don’t want to be the bad guy. They don’t want people to be upset with
them. In complex situations, many times the answer isn’t clear, and trying to
get a wide variety of stakeholders moving in the same direction can be tough.
But this isn’t a time to postpone critical decisions in an effort to get senior
staff, board members and other various stakeholders to agree on a course of
action. The executive has been hired to lead, and lead they must. Part of
leadership is gathering all the data necessary from various perspectives, and
then making a timely decision. Waiting for full consensus is folly because more
often than not, time does not bring consensus. </div>
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When a problem reaches the desk of an executive director,
usually it means that an easy solution isn’t available, because if there was a
simple answer, senior managers would have resolved the situation. The life of
an executive director involves making imperfect decisions daily. It isn’t a job
for the lighthearted. Failure is often public and wide reaching. But make no
mistake about it – inaction or a delay in decision making is a decision in
itself. Taking no action in an attempt to build consensus around an issue that
will never result in a consensus decision is even more costly than setting a
clear course toward a defined goal. As
an outside adviser, I was once asked to participate in a meeting where
senior managers from an organization were divided on a particularly divisive
issue. Each argued their position passionately and articulately. At the
conclusion of hours of conversation, the room looked to the executive director
for a decision, at which time he asked for a vote of hands. I about fell out
of my chair. Unfortunately for them, there were an even number of people in the
room, and it was hopelessly deadlocked with a leader who would not make a
decision because he desperately wanted consensus. </div>
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Someone has to lead, and one of the most important decisions
a leader makes is defining success for the organization. Senior managers can
and should be relied upon to develop strategies for success, but the leader
must define the destination before a map can be created. </div>
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When defining success for arts organizations, here are just
a few things to consider:</div>
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<b style="mso-bidi-font-weight: normal;">Growth vs.
Sustainability.</b> In a previous post, I asked if “<a href="http://arts-marketing.blogspot.com/2012/04/can-right-sizing-be-as-sexy-as.html">right-sizing
could be as sexy as expansion</a>?” We live in the country of manifest destiny,
super-sized meals and McMansions. Bigger is always better. But this mentality
has led to obesity being an <a href="http://www.cdc.gov/obesity/data/adult.html">out
of control epidemic</a>, people purchasing homes they could not afford, and
boom or bust economic trends. I see the same success metrics in play at
non-profit arts organizations. Chief marketing and development officers are
measured solely by growth, and if an organization tries to right size, top talent
will leave because their numbers will shrink, not because of sub-par work, but
merely because of a decrease in tickets to sell or programs to fundraise for.
Why do we constantly equate success with growth, when it is entirely possible
to demonstrate significant growth to the detriment of sustainability? If it
costs you $2 for every additional $1 in growth, and that equation doesn’t
equalize over time, then you will demonstrate growth until such time as
your lines of credit are maxed out, your board becomes unwilling to conduct
emergency fundraising campaigns, and the community becomes tired of your pleas
for help. This is how once stable and reputable organizations get into trouble.
Success should be defined, at least in terms of business models, by
sustainability, not growth, which is not to say they are necessarily mutually
exclusive, but all too often, we succumb to pride and make growth the more
highly prized success metric.</div>
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<b style="mso-bidi-font-weight: normal;">Quantity vs. Quality.
</b>Similar to growth, I’ve found that some arts organizations in part define
themselves by the quantity of work they produce. I’ve never understood this.
Most artists are motivated by creating the highest caliber of work, but then
arts organizations feel pressured to produce a certain arbitrary amount of
plays, concerts or performances each year, with an increase in offerings
usually regarded as a sign of success by board members, funders and the press.
The highest quality products in the world are not produced in mass as mass
production doesn’t usually dovetail with world class quality. Case in point, if
asked, I’m sure Steve Jobs would have been happy to have the best computers on
the market, even if his market share was significantly less than competing
products. And today, TedX is experiencing brand erosion because of quick
expansion resulting in it losing in part its competitive advantages. Long ago, I used
to work for a company that only produced one or two plays a season because the
average gestation time on a project was several years. Although some objected
to the avant-garde nature of the work, the company was almost universally
lauded for artistic excellence. However, if quantity of productions were the
litmus test for success, it wouldn’t be considered a successful theater.</div>
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<b style="mso-bidi-font-weight: normal;">Impact vs.
Financials. </b>Alan Brown, Clay Lord and Theatre Bay Area have spent the last
two years working on <a href="http://intrinsicimpact.org/">measuring the intrinsic impact of live theater</a>. I won’t go
into the specifics now as this study deserves its own blog post, but I must say
that I am excited that the study is changing how people, especially funders,
are defining success. This study has developed a new system to quantifiably measure
the intrinsic impacts theaters are having on audiences, and funders are
starting to understand that previous metrics, such as audience
members served, might not deliver the full picture. Along with financial and
attendance data, what if theaters started to define their success by the impact
they are having on their communities, which for the first time can be
benchmarked, measured and tracked year over year. </div>
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The first step on any journey is to clearly define the
destination and to establish success metrics. <br />
<br />
<b>Leaders</b>—set the course and the direction. Don’t fear lack of consensus. Be
bold. Be ambitious. And be decisive. </div>
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<b>Senior managers</b>—establish clear success metrics, and track
them relentlessly over time.</div>
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<i>“<span lang="EN">I believe that
this nation should commit itself to achieving the goal, before this decade is
out, of landing a man on the moon and returning him safely to the earth.” –
President John F. Kennedy, in an address to a joint session of Congress on May
25, 1961.</span></i></div>Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com1tag:blogger.com,1999:blog-33812369.post-55966914281999688492012-05-19T20:14:00.004-05:002012-05-19T20:19:40.984-05:00Lost in the Crowd<div class="separator" style="clear: both; text-align: left;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMwlVBGTjFVLxVKh7FehdNS_7gWKmyD4C0pN7BfZw4SvpkbXChd2AFEMQQVi942BhAlNq3wqzcYIZT0wa84Hy3HObfVRw_ArSKx5M2raVeypsZcWnLXHL5FAhyphenhyphenfE55wGdOp8wf/s1600/Crowd_.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMwlVBGTjFVLxVKh7FehdNS_7gWKmyD4C0pN7BfZw4SvpkbXChd2AFEMQQVi942BhAlNq3wqzcYIZT0wa84Hy3HObfVRw_ArSKx5M2raVeypsZcWnLXHL5FAhyphenhyphenfE55wGdOp8wf/s320/Crowd_.jpg" width="320" /></a>Direct marketing practitioners know that success is primarily a numbers game. That's not to discount the work that goes into tweaking a control package, testing messages, building list models and analyzing data. However, the foundation of any direct marketing campaign, be it for ticket sales, subscriptions, memberships or donations, is the number of qualified leads in your database.</div>
<br />
A few months ago, I wrote a post about how many of us <a href="http://arts-marketing.blogspot.com/2011/12/who-are-your-best-customers-and-why.html">didn't know who are best customers</a> were. Since that time, I have come to realize that many of us don't know who many of our regular customers are. <br />
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Performing arts organizations have a distinct advantage over a majority of museums as gathering leads usually stems from capturing information during the ticket buying process, although challenges do exist. Organizations that have a robust group sales business know that it's all about personal relationships as one group contact can bring in hundreds of patrons, and although that's good for revenue, it is a challenge for lead development. For the most part, performing arts organizations have no clue as to who attends as part of a group as they don't gather information for each attendee. And in some cases, private group sales agents don't want to release information as it would require handing over lucrative contacts. And aside from groups, performing arts organizations are becoming more reliant on third party vendors to move unsold inventory, but in doing so, in most cases, they sacrifice the ability to collect contact information. And how many of us track individual people attached to multi-subscription packages? If the leader of the subscription group decides not to renew, we don't have the ability to contact the others. <br />
<br />
We estimated a couple of years ago at Arena Stage that at any given time, on average we only had the contact information for roughly 60% of the people in the house. I always wondered what the value of the other 40% was.<br />
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Over time, we put into place various mechanisms to assist in collecting more leads. Group leaders were given financial incentives to provide contact information for each individual in their group. We reached out to subscription purchasers and asked them to identify the other people on their account. And we instituted a policy that required complete contact information for all comp tickets, and started ticketing almost every free event.<br />
<br />
Now that I've been in the museum world for all of two months now, I've noticed that their challenges are much more significant than those that face performing arts organizations. Some museums have millions of visitors each year, and they only capture contact information for a very small percentage of their visitors. Highly popular free admission museums don't want to institute time consuming procedures to capture information for fear that it would impede timely access to the museum (can you imagine the lines that would form?). On the other hand, most free museums have membership and fundraising circles that rely upon qualified leads. How do you fundraise in a cost effective manner if you don't know who your visitors are? It seems that I am by far not the first to stumble upon the holy grail of marketing challenges that museums face, but given my newness to the field, I was surprised how daunting capturing information could be.<br />
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Here are some possible ideas to collect information from those lost in the crowd:<br />
<br />
1) <strong>Collect information at multiple contact points.</strong> Prior to getting to a museum, most people visit a website. Take public transportation. Park their vehicle. Why not identify new visitors to your website and feed them a small roadblock ad asking them to sign-up for information from your museum, including future discount offers and exclusive content. Could you station "visitor concierges" outside subway stations who offer tips on exhibits and museums, and collect information during the process? Could you partner with your parking lot to develop a way to capture visitor data? <br />
<br />
2) <strong>Offer exclusive content. </strong>Exhibits are becoming more and more interactive every day. With more than <a href="http://www.bgr.com/2012/03/08/comscore-more-than-100-million-smartphone-users-now-in-u-s/">100 million smart phone users</a> in the United States, could exhibits feature exclusive interactive content using QR codes that also captures data in the process? As museums build out content online, what if you placed some exclusive content behind a free "pay wall" that requires registration to access? or what if an exhibit offered to send you a free memento of your experience via email?<br />
<br />
3) <strong>Ticket events.</strong> Many museums offer a large variety of free and popular educational programming and docent lead tours. Even though they are free, why not require a ticket or an RSVP? Visitors can register well in advance, or they can do so quickly on site at ticket kiosks.<br />
<br />
I am sure these suggestions only offer a way to make a small dent in the overall problem, but the challenge is clear -- finding easy, affordable and efficient ways for visitors to self identify themselves as wanting more information from musuems is of utmost importance to our direct marketing strategies.Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com1tag:blogger.com,1999:blog-33812369.post-1825262245302921182012-05-06T14:06:00.000-05:002012-05-06T14:33:58.949-05:00Planning a Turnaround<a href="http://www.bizplanhacks.com/wp-content/uploads/2116823972.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="239" src="http://www.bizplanhacks.com/wp-content/uploads/2116823972.jpg" width="320" /></a>Deficit budgets have started to accumulate. Core audiences have began to slip away as smaller and smaller houses become the norm. And there is a palpable sense that a once formidable company has lost its way as a growing group of stakeholders from donors to press start asking what happened?<br />
<br />
Almost certainly, the marketing department is pointing its finger at the artistic staff laying the blame for the downturn solely at their doorstep, while the artistic staff believes that if they only had better marketing, the issue would disappear. Reality is that if a company is experiencing a significant decline, usually there are issues in both areas that need to be resolved.<br />
<br />
At some point, the financial position of the company becomes untenable, and a turnaround team is brought in, usually in the form of a new artistic director, but sometimes a new executive director and marketing director as well. If executed well, strategic shifts in programming along with a well thought out rebranding and promotional campaign can lead to exceptional results. But a turnaround is only as good as its implementation.<br />
<br />
Some things to consider when planning a turnaround...<b> </b><br />
<br />
<b>Identify Toxic Assets. </b>The new guy hired to design and implement the turnaround knows one thing--what the company has been doing isn't working, and that the board desperately wants a change and they want it quickly. It can become overwhelmingly tempting to cut old programs immediately, and start from a completely fresh slate. However often times even the most struggling company has positives in which to start building from. Cutting everything quickly in an effort to rebuild from a new baseline can eliminate valuable assets. In for-profit turnarounds, the idea is to separate toxic assets from the others in an effort to give a new leader at least some base to work from. Throwing the baby out with the bathwater may be quick and it might provide an immediate signal that there is a new sheriff in town, but it usually isn't the most efficacious strategy. Instead of a hatchet, bring out the scalpel. Make precision cuts in an effort to save what can be used to help regenerate a new future.<b> </b><br />
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<b>Develop a Bridge for Audiences. </b>When considering radical programming changes, make sure to design and implement a bridge for your current audiences. In a turnaround, the new is always given priority over the well established, but loyalty is something that takes years to cultivate, and I'd rather reinvent from a partial base than none at all. This is not to say that one should shy away from making needed programming changes, it is only to say that as much thought needs to go into how to introduce them into the market as went into designing the programs themselves. I've seen companies attempt to reinvent themselves overnight with little thought to patron migration, and as a result, they lost a majority of the base they had cultivated over prior decades. Major donors can provide venture capital to introduce new programming if engaged well, and audiences can be successfully transitioned into new programming if done so in a gradual and considerate manner. I know because I've done it on multiple occasions.<b> </b><br />
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<b>Market Research Doesn't Have to Influence Programming to be Helpful. </b>When asked about market research, Steve Jobs famously told <i>Business Week</i> that he doesn't conduct market research because "a lot of times, people don’t know what they want until you show it to them.” Similarly, Julie Taymor in an interview with <a href="http://www.nytimes.com/2011/06/20/theater/julie-taymor-discusses-spider-man-and-twitter-critics.html?pagewanted=all"><i>The </i><i>New York Times</i></a> said she didn't believe in focus groups stating that "if focus groups had been used on <i>The Lion King</i> there would be no death of Mufasa because groups would have reacted negatively." Given that <i>The Lion King</i> is <a href="http://www.hollywoodreporter.com/news/lion-king-broadway-top-earner-disney-309685">Broadway's top earner of all time</a>, and at the time of Mr. Jobs' death Apple was the <a href="http://bits.blogs.nytimes.com/2011/08/09/apple-most-valuable-company/">most valuable company in the world</a>, there is wisdom in these remarks. However, I bet the marketing people working with Ms. Taymor and Mr. Jobs would have loved market research, not because they wanted it to influence product development, but it would have informed them on how to message the introduction of the product into the market. Even though in many cases "the new" is absolutely necessary and people may desire it without knowing, marketers have to break through an initial resistance barrier.<b> </b><br />
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<b>Artistic Planning is Where it all Starts. </b>I attempted to rebrand a company once without a clearly articulated artistic strategy. We were told that exciting new programs were going to be introduced to replace well worn ones, but when pressed, there were very few details. Feeling that we couldn't wait any longer, I started the first phase of the rebranding process thinking that the details could come later. Boy was I wrong. Two months later, everything came to a screeching halt when we were trying to develop a communications matrix around an amorphous programming change. We couldn't message what didn't exist. Luckily for everyone, the artistic team came to the same realization, and within a short amount of time, a brilliant new artistic strategy was developed, and we were back on the fast track. I learned an important lesson that day--for a complete turnaround to be successful, it all starts with a detailed new artistic strategy. <br />
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<b>Cultivating New Audiences is an Expensive Proposition (at first). </b>Marketers know that retention is cheap, and acquisition is expensive. We also know that both are absolutely critical. When introducing new programming, it is important to know that acquiring audiences for newly developed programs will require a dedicated effort over an extended amount of time as well as considerable resources. The "build it and they will come" assumption is flawed. Audience development is a process, and in the short term, often times it will result in a negative impact to the bottom line. New programming and audience development are investments in the future of the organization. That said, depending on the severity of an organization's finances, the necessary resources for such an investment may not be readily available, which can lead to the premature cancellation of new programs. If that occurs, it is a waste of time and resources.<br />
<br />
In his book <i><a href="http://www.amazon.com/The-Art-Turnaround-Maintaining-Organizations/dp/1584657359">The Art of the Turnaround</a></i>, Michael Kaiser discusses his classic mantra "good art, marketed well" as a centerpiece for a successful turnaround. I agree with Mr. Kaiser that often times turnarounds require adjustments to programming or marketing, and in some cases, both. But over time, it has become an alarming trend to see an increase in the number of failing organizations that do both relatively well. I've started to wonder, as many others have, if mature organizations are failing because their business models haven't fundamentally adjusted to the rapidly changing external environment in the past fifty years. In moments like these, I'm reminded of a quote from Buckminster Fuller, who said "you never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” I'm fearful that training institutions are teaching models that are dying a slow death, and that major institutions continue to look to senior managers entrenched in failing systems for the cure. I believe that co-management hybrids pairing the wisdom and experience of more senior leaders with the inventiveness and curiosity of Gen X'ers and Millenials could be the best bet. But one thing is for sure--rearranging the chairs on the deck of the Titanic won't save the ship. For that, you have to find the fundamental cause of the problem. It could be programming. It could be marketing. It could be both. Or, it just might be that we are clinging on to a business model that is rapidly failing us.Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-49988762592114638842012-04-21T18:37:00.001-05:002012-04-21T18:49:14.938-05:00Can right-sizing be as sexy as expansion?<span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">On Thursday of last week, <a href="http://www.thomascott.com/"><span style="color: blue;">Thomas Cott</span></a>
featured several articles on "right-sizing" in the arts in his daily
"<a href="http://www.thomascott.com/"><span style="color: blue;">You've Cott
Mail</span></a>." As many of his emails tend to do, it has stuck with me
for days. See his email came at an opportune time for me. I had just given the
plenary speech at <a href="http://www.american.edu/cas/performing-arts/eals/index.cfm"><span style="color: blue;">American University's Emerging Arts Leaders Symposium</span></a>
which partially focused on NEA Chairman Rocco Landesman's "<a href="http://newplay.arenastage.org/2011/01/fighting-words-from-rocco-landesman.html"><span style="color: blue;">supply and demand" speech</span></a>, and soon thereafter, Rebecca Novick
authored a blog entitled "<a href="http://www.giarts.org/article/please-dont-start-theater-company"><span style="color: blue;">Please, Don't Start a Theater Company."</span></a>
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">A central theme from these various
sources began to emerge, which was packaged quite nicely by Rebecca when she
said: "In the past fifteen years, the number of nonprofit theater
companies in the United States has doubled while audiences and funding have
shrunk. Neither the field nor the next generation of artists is served by this
unexamined multiplication of companies based on the same old model. The NEA's
statistics on nonprofit growth, set against its sobering reports on declining
arts participation, illuminate a crucial nexus for the field, a location of
both profound failure and potential transformation."
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">If data indicates that the field
continues to expand at an unsustainable rate propagating the continuance of a
model that is considered by some to be out of touch with current realities,
then why do we continue in such a manner? My thoughts below...
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<b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">It's as American as apple pie</span></b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">. Let's face it, expansion is sexy. We are the children of
manifest destiny. Starting from nothing and growing an empire. Conquering new
frontiers. These are all American ideals. Hell, many of our childhood
boardgames indoctrinate this philosophy. Is it any surprise that as adults we
equate expansion with success? And this perception of success is handsomely
rewarded. Grow your audience and your revenue, and you will increase your
likelihood of additional contributed revenue. But if those metrics decline,
you'll need to do some explaining.
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<b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">Follow the money</span></b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">. In the 1990s, educational programming became a funding
priority, so every theater across the nation rushed to create an education
department. To some, it didn't matter if the programming was sub par, they just knew
they needed a department to be competitive. In the 2000s, capital projects
became a priority, and more than a decade later, we have new buildings all
across the country. Some were desperately needed as aging infrastructure was
failing, while others were less of a necessity but were built on hopes of
significant future returns. After opening, some organizations thrived in their
new facilities, while many others struggled almost from day one. In his article
"<a href="http://kauffman.kansascity.com/articles/new-facilities-arent-always-an-unqualified-success/"><span style="color: blue;">New Facilities Aren't Always a Qualified Success"</span></a>
in the<i> Kansas City Star</i>, Scott Cantrell discusses the challenges of
several major new performing arts centers, including Dallas's <a href="http://www.attpac.org/"><span style="color: blue;">AT&T Performing Arts
Center</span></a>, Philadelphia's <a href="http://www.kimmelcenter.org/"><span style="color: blue;">Kimmel Center</span></a> and Miami's <a href="http://www.arshtcenter.org/"><span style="color: blue;">Adrienne Arsht
Center</span></a>. All of which opened without finishing their fundraising campaigns
and operated with multi-million deficits. Two years into the new decade, it
seems that funders have started to realize the magnitude of the problem, and
are now beginning to focus on sustainability as a priority, providing working
capital to companies to right-size, rather than providing incentives to expand.
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<b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">Build it, and they will come. </span></b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">Prior to launching a capital campaign, most organizations
commission at least one feasibility study to determine whether or not the
company has the capacity to raise the necessary funds to pay for capital
improvements. But how many thoroughly study whether or not there is enough
support in their communities to sustain an expansion for decades to come? When
Arena Stage opened the <a href="http://www.arenastage.org/plan-your-visit/the-mead-center/"><span style="color: blue;">Mead Center for American Theater</span></a>, I was thankful
that the new building only increased overall capacity by 6% in comparison to
the previous structure. Although renovations and improvements were desperately
needed, I wasn't convinced that we could introduce a large amount of additional
inventory into a city which was already trying to support five previously built
new theater complexes. If desired and demand warranted, Arena Stage was able to
increase inventory by expanding beyond its typical 9 month season, but they
weren't forced into an expansion due to a large increase in the capacity of the
new complex. The challenge for Washington at this moment is clear--we have
dramatically increased supply over the past decade, and with our capital
projects now complete, we must develop and support new audience development
campaigns with as much gusto as our capital campaigns. We have to build our
audiences, which up until now, we haven't successfully done in the last decade.
This is the real challenge. Ten years from now, will our new theaters be empty?
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<b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">Can you display it? </span></b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">I find it fascinating that many museums have an aggressive
acquisition plan but only display a very small percentage of their current
collection. There seems to be a commonly accepted premise that major museums
only display 10% of their collection because they are limited in terms of space
and resources. I can understand acquiring new objects that aren't in display
condition for research purposes, but why expand a collection of display quality
objects if you don't have the opportunities to display what you currently have?
Again, I'm a novice in museum studies, but it would seem to me that before
expanding, a museum might consider shifting its resources to developing
traveling exhibits so its current collection can be seen. What's the point of
acquiring items with very little likelihood of every displaying them to the
public?
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<b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">What's going on in Ohio? </span></b><span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">I've been closely following two non-profit arts
organizations based in Ohio over the past few years, as I believe they can be
an example to us all. The first, the <a href="http://www.columbussymphony.com/"><span style="color: blue;">Columbus Symphony</span></a>, was featured in Thomas Cott's
aforementioned email. After struggling for years, they conducted a study that
indicated that the city of Columbus could only support a symphony with an $8
million operating budget instead of the $12.5 million budget they currently
had. From this, they decided to "right-size" their organization to
match the current demand in their market by <a href="http://www.nxtbook.com/nxtbooks/symphonyonline/Spring_2012/#/38"><span style="color: blue;">joining forces with the Columbus Association for the
Performing Arts</span></a>. Meanwhile across the state, the 90 plus year old <a href="http://www.clevelandplayhouse.com/"><span style="color: blue;">Cleveland
Playhouse</span></a> laid off several senior staff members, dropped two
productions from its season and <a href="http://www.cleveland.com/entertainment/plaindealer/tony_brown/index.ssf?/base/entertainment-0/1232011878322260.xml&coll=2"><span style="color: blue;">trimmed its budget by 18% in 2009</span></a>, prior to
moving to the newly renovated 515 seat Allen Theatre in 2011. Previously, the
Allen Theatre boasted 2,500 seats, but when the Cleveland San Jose Ballet left
town, the Cleveland Opera downsized and Broadway tours dried up, the Allen
Theatre was only in use 90 days out of the year because it was too big for most
productions. The solution--the Cleveland Playhouse, Cleveland State University
and PlayhouseSquare <a href="http://www.cleveland.com/arts/index.ssf/2011/09/the_renaissance_of_clevelands.html%20"><span style="color: blue;">partnered resulting in a newly renovated Allen Theatre</span></a>
with 1,985 fewer seats! And it seems that it has worked out quite well for all
involved. Revenue for the <a href="http://www.cleveland.com/arts/index.ssf/2012/01/relocation_to_playhousesquare.html"><span style="color: blue;">Cleveland Playhouse more than doubled</span></a> and an
underused space became the new talk of the town.
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<span style="font-family: "Times New Roman","serif"; font-size: 12pt; mso-fareast-font-family: "Times New Roman";">This isn't to say that expansion is
always bad, sometimes it is absolutely necessary. However, it isn't always beneficial, even during moments of great success. If your theaters are playing to capacity, perhaps you have
discovered the sweet spot for your organization. Push just a little further,
and too much of a good thing could tip the scales in an unfavorable direction,
leaving you wondering how you managed to snatch defeat from the jaws of
victory. Expansion can be attractive, but stability is pretty damn sexy too.<o:p></o:p></span></div>Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-27303211003597258332012-04-08T16:39:00.011-05:002012-04-08T18:25:45.347-05:00Purposeful Acquisition<div>Several years ago, I wrote a post entitled "<a href="http://arts-marketing.blogspot.com/2009/08/want-to-get-into-trouble-concentrate-on.html">You want to get into trouble? Concentrate on new audiences.</a>" At the time, I was confused and frustrated with the relentless focus on developing new audiences. The field's obsession with the new to the detriment of the loyal seemed illogical. My good friend <a href="http://www.linkedin.com/pub/laura-willumsen/4/48/737">Laura Willumsen</a>, senior consultant at <a href="http://trgarts.com/">TRGArts</a>, summed it up quite nicely by saying "we should find a way to love the one we're with, before we start courting others." Pretty safe advice that came at the perfect time for me.<br /><br />Three years later, I have come to realize that healthy arts organizations have equally robust campaigns focused on new acquisition and retention, and increasingly we are focusing on improving the overall lifetime value of our customers.<br /><br />For those with retention problems, I would still advise spending a majority of your resources reducing attrition before launching costly acquisition campaigns. There is nothing worse than spending a significant amount of resources enticing new patrons in the front door while your current customer base runs out the back door. And from a financial perspective, that is one of the easiest ways to sink the ship.<br /><br />That said, if attrition and renewal rates are within the range of industry standards, more than likely it is time to concentrate on acquisition. Here are a couple of thoughts...<br /><br /><span style="font-weight: bold;">Programming</span>. If you are looking to acquire new audiences, either you can dig a little deeper in your current well, or you can dig a new well altogether. If untapped audiences remain within your core programming, then continuing to dig deeper in your current well probably makes the most sense. If however, you find that your current programming has tapped out its audience base, digging a new well with expanded programming might be the key to acquiring new audiences. Digging a new well requires developing mission driven programming focused on an unmet need within your community. New programming initiatives are usually costly, and often times are prematurely abandoned when they don't hit a desired net revenue goal in a short period of time. Arts organizations need to view new programming initiatives as an investment in future audiences which will pay out over years instead of months. While digging new wells, it is important to maintain and cultivate your current well. Don't abandon the old for the new--let the returns from the old provide the investment capital for the new. Often times marketers are afraid of new programming because they don't want to risk offending current subscription audiences, but if you maintain a base level of traditional programming while offering an opportunity or two to test drive new programming, you will mitigate your risk of subscriber attrition. And for those who have highly subscribed houses, new programming might be the only opportunity that you have to get new audiences into your theaters which would otherwise be mostly sold out on subscription. During my final week at Arena Stage, I had to chuckle when a reporter asked me if we increased our number of musicals in the upcoming season because they were "cash cows." If only he knew that most musicals we produced actually lost money. Aside from artistic reasons, from a marketing perspective, we increased the number of musicals to attract more first time audiences, which we will then try to convert into lifetime patrons.<br /><br /><span style="font-weight: bold;">Direct Marketing.</span> During the last year, I have heard of several companies eliminating acquisition efforts entirely due to budget cuts, thinking that investing exclusively in retention campaigns would result in higher returns over time because the ROI was better than comparable acquisition campaigns. Unless you are in desperate shape, please do not kill your acquisition efforts entirely. And here's why--if you currently have a healthy 80% renewal rate for your members/subscribers, it means every year you will lose 20% of your base. Statistics show that even if you have a flawless renewal campaign, you will still lose 10% due to changes in lifestyle or death. To replace those lost, you must invest in acquisition or budget for a reduced base each year that you don't. If you cut acquisition entirely, with an 80% renewal rate, you will lose half of your entire base in three years. And getting them back is going to be incredibly expensive! When looking at acquisition costs, often times it will take two to three years for a new member/subscriber to produce a net positive result, but over a lifetime, these new acquisitions will be responsible for years of renewal revenue.<br /><br /><span style="font-weight: bold;">Robbing Peter to Pay Paul.</span> When the economy took a nosedive in 2008, marketers responded by looking for places to cut by thoroughly monitoring the cost of sale for individual campaigns. Normally, I would encourage such behavior. But I believe it has resulted in a zero sum game of gains and losses among the various theaters in the Washington, DC area. Studies show that even as venues have dramatically increased their capacities, <a href="http://www.washingtonpost.com/entertainment/theater-dance/washington-dc-theaters-have-they-overbuilt/2011/12/23/gIQAm6TIfP_story.html">theater audiences in our nation's capital have not grown</a>. And as we all looked for opportunities to reduce our marketing expenses, we refocused our acquisition campaigns to aggressively target the list segments that performed the best, which frequently were qualified leads of theatergoers from other companies. The most cost effective means of acquiring "new" audiences was soliciting patrons from other theaters. Acquiring "new" audiences didn't actually mean developing new theatergoers as much as it meant marketing to previous theatergoers who had never visited your theater before. This wasn't dirty pool. It is standard operating procedure in any highly competitive marketplace. But as I left Arena Stage, being incredibly proud that we had almost doubled our subscriber base in three years, I found myself being more interested in the number of none theatergoers we were able to convert into theater patrons. And the truth is I don't know because we never tracked it. As a community, the greatest challenge we have is developing truly "new" audiences in Washington, DC. If we are using each other as a primary source for our "new" audiences, then we aren't creating a healthier community as our individual successes come at the expense of others. Therefore I encourage marketers to look at acquisition in terms of developing completely new audiences for the community as well as acquiring new audiences for your organization. The latter will improve your individual health, while the former the health of the artistic ecosystem.<br /></div>Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com2tag:blogger.com,1999:blog-33812369.post-85684592904697651102012-03-25T15:23:00.007-05:002012-03-25T16:48:55.675-05:00Quick reflections on a changing media landscape<div> </div><div><strong><span style="font-weight: bold;"><span style="font-weight: bold;"></span></span><span style="font-weight: normal;">Just a few thoughts on the changing landscape of arts journalism...<br /><br /><span style="font-weight: bold;">Content aggregation vs. reporting.</span></span></strong><span style="font-weight: bold;"> </span>As newsroom staffs are being cut, an alarming number of original source reporting outlets are shifting to content aggregation. Very few media outlets now have dedicated full-time reporters that are assigned to the arts. With an increase in content aggregation and a decrease in original reporting, editorial power is shifting to the fewer outlets that are creating content which in turn feeds the increasing number of aggregators. Just a short time ago, it used to be that a significant story would be covered by several local and national outlets, allowing a well-rounded view of the story to emerge. Today, whatever the view of the originating source becomes the defacto view of aggregating outlets, thereby often times giving a single reporter the responsibility of judge, jury and executioner. That said, I have found that there are some journalists who aggregate content, and then editorially expound upon amassed content. I have found that in doing so, these journalists feel the pressure to produce original editorial based upon what others have said, but they do not view themselves as primary source journalists, meaning that they will comment on previous work, but will not expend the energy to actually conduct interviews or investigate if forgone conclusions are accurate.<br /><br /><span style="font-weight: bold;">The rise of "gotcha" journalism.</span> It used to be that purposefully snarky reporting was the realm of the social blogosphere, or at best, the weekly alternative paper. In a surprising turn of events, the <span style="font-style: italic;">Washington Post</span>, one of the most respected new sources for arts journalism in the country, sent out the following message in late February: “Got a grievance to air about the Washington arts scene? Is complaining your favorite form of catharsis? Our Sunday Arts section is seeking critics like yourself, who are interested in giving our local and cultural scene some tough love.” Why would such a reputable news source specifically solicit grievances and nothing else? Wouldn't they want a balanced view from the community on the impact of the arts in our nation's capital? particularly at a time when arts funding is getting slashed? I fear that ill-conceived attempts at gaining readership will result in using tactics that just a few years ago would have been laughed out of the newsroom. Quality arts reporting, as it rapidly diminishes in communities across the nation, should become a strong competitive advantage for those that continue to invest in it. For another viewpoint, please check out Howard Sherman's excellent post <a href="http://www.hesherman.com/2012/02/24/hey-washington-post-ive-got-a-gripe/">here</a>.<br /><br /><span style="font-weight: bold;">Pay to play, and the abandonment of journalistic ethics. </span>I have a feeling that even prehistoric publicists had to deal with "news outlets" that refused editorial coverage unless advertising money was attached, but it used to be that these outlets were few and came with tarnished reputations in their communities. Today it is almost as likely that a marketing director will arrange an editorial feature via an account rep as it is a publicist via an editor. And outlets aren't shy about it. Previously a publisher might say to you with a wink that he would see what he could do, but now they flat out tell you if you want to be reviewed, you need to buy an ad! If a feature article, and much more so a review, is attached to an advertising buy, journalistic ethics have been thrown out the door. Just on principle, even when I did have the resources to make an ad buy, if an offer was made, I walked away from the table. There has to be a line.<br /><br /><span style="font-weight: bold;">To tweet, or not to tweet? </span>If you are an executive of an arts organization, and you are considering joining Twitter, here are a couple of things to consider:<br /><ul><li><span style="font-weight: bold;">Twitter is a community.</span> If you do not have the time to adequately nourish online relationships in Twitter, don't join.</li><li><span style="font-weight: bold;">You are always on the record.</span> It is an open community in which anyone can ask any question at any time. Don't let the relaxed environment fool you. Every 140 character response is on the record. For a good laugh, please refer to the <a href="http://flavorwire.com/140457/the-top-10-celebrity-twitter-scandals#1">top 10 celebrity Twitter scandals</a>. It is easy to understand why journalists encourage joining, as many a good story have come of it.<a href="http://flavorwire.com/140457/the-top-10-celebrity-twitter-scandals#1"><br /></a></li><li><span style="font-weight: bold;">Silence speaks volumes.</span> Thinking about joining, and then side-stepping the tough questions? Often times what you don't say communicates even more than what you do say. You should be prepared to answer questions that you won't want to. And in this environment, "no comment" doesn't go over quite so well.</li></ul>That all said, if you have the time and are comfortable with complete transparency, then a Twitter feed can provide for strong relationships between you and a wide audience.<br /><br /><br /></div><span style="font-weight: bold;"><br /></span>Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-22311715991408750942012-02-28T15:25:00.007-05:002012-03-01T10:52:59.516-05:00Learning from the Past, Looking toward the FutureA little more than a week ago, I announced that I would be leaving Arena Stage to lead the marketing and membership efforts at the Smithsonian Associates at the end of March. I've been overwhelmed by the kind words and best wishes sent my way. For that, I am very grateful.<br /><br />Some have also asked if I plan to continue blogging. As you may have noticed over the years, my blog covers topics that I am passionate about, often times motivated by current trends and experiences. As I move from a performing arts organization to a museum and research institution, <span id="SPELLING_ERROR_0" class="blsp-spelling-corrected">undoubtedly</span> my perspective will evolve over time. However, I hope to continue to contribute to online dialogue and debate.<br /><br />My four-and-a-half years at Arena Stage have been the most rewarding and exhausting of my career. When one decides to pursue a career in a field they love, like many theater artists I know, these two adjectives are not mutually exclusive; in fact, many would argue that you can't have one without the other. When joining Arena Stage, I knew there were very few precedents for what we needed to accomplish, and with the opening of the Mead Center and a 2.5 year transition ahead of us, a clear path wasn't always available. It was an opportunity that intimidated me, but I knew that I would get an education of a lifetime.<br /><br />In looking back, I've learned quite a bit along the way...<br /><ul><li><strong>Always give an "exclusive" to your best and most loyal customers. </strong>Trust me, if they read something important in the daily paper before they hear it from you, they won't feel like part of the family.<br /></li><li><strong>Customer service can be a significant competitive advantage. </strong>When the whole world has come to expect awful customer service, it creates an easy opportunity to shine.<br /></li><li><strong>When hiring, if you have to pick between the two, a "fire in the belly" always trumps experience. </strong>One can teach skills, but one cannot be taught to take pride in their work.<br /></li><li><strong>Resources are an investment--monitor and expect returns. </strong>Marketing directors have two primary resources: human and financial capital. Where and when to invest each is a critical decision. When budgets are tight, monitor cost of sale and make data driven investments rather than emotionally driven ones.<br /></li><li><strong>Decisiveness is critical. Leap or die. </strong>Would you rather sip <span id="SPELLING_ERROR_1" class="blsp-spelling-corrected">champagne</span> and listen to the violins on the Titanic, or slap on a life vest and jump into the unknown? The unknown may be scary, but the known isn't an option. A delay in decision-making will almost always be costly, as it is rare for circumstances to change, but options will diminish. The non-profit theater landscape in the United States is changing rapidly, and adjustments must be made.<br /></li><li><strong>Maximize successes to mitigate risks. </strong>Unless you present nothing but bankable commercial successes, risks are inherent in the theater. When you catch a break, ride it for all that it's worth in order to mitigate the risk that is right around the corner.<br /></li><li><strong>Looking for improvements? Track results. </strong>By tracking, you send a signal to the company that something is important. Important enough to monitor. By not tracking, you send an equally powerful signal that something isn't worth the effort. Know your vital statistics, and track them aggressively.<br /></li><li><strong>Marketers are masters of <span id="SPELLING_ERROR_2" class="blsp-spelling-corrected">perception</span>, not reality</strong>. Unless you are talking about financials, marketers should keep their attention on perception. Perception, as we know, is reality for most.<br /></li><li><strong>Subscriptions aren't dying, theaters are killing them. </strong>If patrons can get great seats at a significant discount at the last minute, the value proposition of a subscription doesn't exist. Best seats at the best prices = more subscriptions (as long as the product is good).<br /></li><li><span style="FONT-WEIGHT: bold">Develop a strong team, and hire to your weaknesses.</span> Major accomplishments are always a team effort. Honestly assess yourself, recognize your weaknesses, and hire people that are better than you in areas where you need improvement.<br /></li><li><span style="FONT-WEIGHT: bold">Comp tickets are disrespectful.</span> There are a few good reasons to give a comp here or there, but nothing devalues the work of an organization or artists more than giving away free tickets. Why do we expect society to value the arts if we don't?<br /></li><li><span style="FONT-WEIGHT: bold">Make decisions for tomorrow instead of today.</span> Often times we are faced with decisions that could result in a short term gain, but a long term loss. Unless you are in desperate times, always set yourself up for a better tomorrow, even if it makes a more difficult today.<br /></li><li><span style="FONT-WEIGHT: bold">Take a Pavlovian approach to discounting.</span> Use discounting as a means to encourage desired behavior. Want people to purchase early? Avoid late discounts whenever possible.<br /></li><li><strong>Marketing and Development are two sides of the same coin. </strong>Look at revenue generation as a team with the goal of raising the most revenue at the least cost. Consolidate resources, eliminate redundancies, invest in campaigns that perform the best across the departmental divide, and look at your customers holistically with an eye toward building loyalty and lifetime value.<br /></li></ul>I will always remember my time at Arena Stage fondly, and am thankful for the education I received.<br /><p>Looking forward to catching a performance in the near future--this time though as an audience member (and yes, I will buy my tickets).</p>Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com0tag:blogger.com,1999:blog-33812369.post-51236656774875729372012-01-28T14:16:00.002-05:002012-01-28T14:25:41.827-05:00Art or Audience; Chicken or Egg?Doug McLennan, Editor of <em><a href="http://www.artsjournal.com">ArtsJournal</a></em>, invited me to participate in an online debate on leadership in the arts. To kick things off, a panel of bloggers were asked to respond to the following prompt:<br /><br /> "Increasingly, audiences have more visibility for their opinions about the culture they consume. Cultural institutions know more and more about their audiences and their wants. Some suggest this new transparency argues for a different relationship between artists and audience. So the question: In this age of self expression and information overload, do our artists and arts organizations need to lead more or learn to follow their communities more?"<br /><br />There has been vigorous debate on this issue, and to check out all the arguments, please visit the "Lead or Follow" online discussion <a href="http://www.artsjournal.com/leadorfollow/">here</a>.<br /><br />As for me, below is my response to the aforementioned prompt:<br /><br />This week we examine the nature of leadership in the context of developing the most fruitful relationships with our audiences. Good relationships often strike a healthy balance between competing interests, and frequently this balance is forged over the course of many years. Arts organizations have relationships with their patrons, donors and communities, and those relationships are constantly evolving. As such, I find the framework of this debate limiting, as I would argue that great arts organizations lead and follow, and that we shouldn’t be asking if we should do more of one than the other, but instead ask if we are doing the leading or the following at the appropriate times.<br /><br />There are moments when arts organizations must lead, and that leadership becomes a catalyst of great change. In 1948, the National Theater in Washington, DC closed its doors rather than integrate, and a twenty-four year old Zelda Fichandler decided it was time for the city to have a producing theater of its own. She was an early proponent of the idea that communities should reclaim ownership of their theaters, and now sixty-one years later, there are more than 1,900 non-profit regional theaters in cities across the nation. It took a leader.<br /><br />There are also times when we follow. As of 2008, minorities accounted for <a href="http://www.fema.gov/pdf/about/programs/oppa/demography_%20paper_051011.pdf">48% of all births</a> in the United States. The <a href="http://www.census.gov/">U.S. Census Bureau</a> projects that by 2050, the Asian and Hispanic population will double, African-Americans will increase and the white population will decline by 9%. In addition, the percentage of the population that is elderly will almost double. Look at your board of directors, staff, donors and audiences—do they reflect your community? Is the physical structure of your building suitable for a growing number of elderly patrons? As a field, we are behind the curve, and we have much to learn from following as our communities are changing faster than we are.<br /><br />In terms of audience development, it is important for arts organizations to play both roles well. Our principal challenge as arts marketers is presenting art as a viable option for leisure activity. We have many barriers—ticket prices, transportation and parking, lack of arts education in our schools, inaccessible and aging infrastructure, etc. Not to mention, the abundance of free and easily accessible alternatives from our competition. A <a href="http://www.arts.gov/news/news09/SPPA-highlights.html">2008 Survey of Public Participation in the Arts</a> published by the National Endowment for the Arts (NEA) found that American arts audiences are getting older, and their numbers are declining at significant rates. In 2011, NEA Chairman Rocco Landesman delivered his now famous “<a href="http://www.artinfo.com/news/story/36871/its-time-to-prune-the-arts-says-embattled-nea-head-rocco-landesman/">supply and demand</a>” speech from <a href="http://www.arenastage.org/">Arena Stage</a>, indicating that demand for the arts is currently outpaced by supply, and suggesting that we consider pruning our numbers. We have a problem in this country. And if we have to produce more populist work in order to overcome potential barriers for first time patrons, I am fine with that. In fact, I am more than fine—it is what we should be doing.<br /><br />Populist work is often, for lack of a better term, a gateway drug. Lure them in with a musical, roll out a comedy, put in a Broadway touring production. Do what it takes. Once they have an exceptional first time artistic experience, art becomes an option and then we work to get them addicted. From the perspective of an arts marketer, once a new patron walks through our doors via a “gateway” play, my job is to get them back. Once they have had a few experiences, my responsibilities shift. I now focus my attention on broadening their experiences and pushing their boundaries. And they will be ready. But forcing them to run before they crawl will end up in a disappointing experience for all.<br /><br />Each patron has an individual relationship to an arts organization. We have a responsibility to offer up a balanced diet that feeds each artistic soul. For those with a developed palate, we lead, push, challenge and sometimes offend. And for those new to us, it is perfectly appropriate to offer up a piece of cake in order to get them to sample the exotic quiche.<br /><br />Currently at Arena Stage, we have a tremendous production of John Logan’s <a href="http://www.arenastage.org/shows-tickets/the-season/productions/red/">Red</a> directed by <a href="https://twitter.com/#!/RobertFalls201">Robert Falls</a>. In the script, painter Mark Rothko’s assistant Ken delivers a powerful speech, in which he says:<br /><br />“You know, not everything has to be so goddamn important all the time! Not every painting has to rip your guts out and expose your soul! Not everyone wants art that actually hurts. Sometimes you just want a fucking still life or landscape or soup can or comic book.”<br /><br />Remarkable arts organizations are more than just temples of art. We are relationship builders. Today we lead, tomorrow we may follow, but we take our cues from our communities, for whom we were built to serve.Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com2tag:blogger.com,1999:blog-33812369.post-38920846350775172362012-01-16T14:42:00.008-05:002012-01-16T16:34:02.375-05:00Partners or Competitors? My Favorite Frenemies<div>A little more than a week ago, the <span style="font-style: italic;">Washington Post</span> in an extraordinary effort by a daily newspaper, published a series of articles on the <a href="http://www.washingtonpost.com/entertainment/theater-dance/the-state-of-dc-theater/2012/01/03/gIQADvwIfP_story.html">state of theater in Washington</a>, DC. As part of that series, Nelson Pressley, a frequent contributor for the Post, wrote an interesting piece on the <a href="http://www.washingtonpost.com/entertainment/theater-dance/washington-dc-theaters-have-they-overbuilt/2011/12/23/gIQAm6TIfP_story.html">financial status of the community</a>. In it, he notes that in terms of capacity, the Washington theater community has grown tremendously over the past decade, while government funding has decreased significantly and according to<a href="http://theatrewashington.org/"> theaterWashington</a>, the annual theater attendance has remained the same since 1988. Mr. Pressley also cites that each theater that has expanded reports significantly increased audiences, and several have recently set all-time sales records.<br /><br /></div><div> </div><div>In the Twittersphere, this article raised the same question that NEA Chairman Landesman asked in his now famous "<a href="http://arts-marketing.blogspot.com/2011/01/youre-mad-what-are-you-going-to-do.html">supply and demand</a>" speech given at Arena Stage in January 2011. Is there enough demand to support the increase in supply? This isn't a new question. It is something I questioned in this <a href="http://arts-marketing.blogspot.com/2008/11/asking-unpopular-is-there-too-much-art.html">blog</a> in 2008, and it is something that arts administrators discuss at every conference I have ever attended.<br /><br /></div><div> </div><div>Setting aside for the moment the data from theaterWashington, on a positive note, I've seen some extraordinary things in the DC theater community in the past few years. I'd heard that the city can only support one or two major hits at any given time, however in the late fall of 2010, several theaters reported exceptionally strong attendance numbers for multiple shows running at the same time, including <span style="font-style: italic;">Oklahoma!</span> and <span style="font-style: italic;">every tongue confess</span> at <a href="http://www.arenastage.org/">Arena Stage</a>, <span style="font-style: italic;">Candide</span> at <a href="http://www.shakespearetheatre.org/index2.aspx">Shakespeare Theatre Company</a>, <span style="font-style: italic;">Sunset Boulevard</span> at <a href="http://www.signature-theatre.org/">Signature Theatre</a>, and<span style="font-style: italic;"> A Christmas Carol</span> at <a href="http://www.fordstheatre.org/">Ford's Theatre</a>. Well, there went that long held belief. When Arena Stage was considering a 13 week summer remount of <span style="font-style: italic;">Oklahoma!</span>, I was told that the city could not support a long sit down production of a major musical in the summer as August was completely dead in these parts, and we couldn't succeed with Congress out of session and everyone heading to the beach. Surprise, surprise when not only Arena Stage experienced sold out houses at the height of the summer doldrums, but <a href="http://www.woollymammoth.net/">Woolly Mammoth Theatre Company</a> did as well with their remount of <span style="font-style: italic;">Clybourne Park</span>. As a community, I don't think there is anything we like better than being told we can't do something, and then proving that we can.<br /><br />But to Nelson's point, we have a significant challenge ahead of us. In discussing his article on Twitter, playwright <a href="https://twitter.com/#%21/playwrightsteve">Stephen Spotswood</a> asked me "how much do DC theater companies feel like they are in competition with each other?" Soon thereafter,<a href="https://twitter.com/#%21/petermarksdrama"> Peter Marks</a>, theater critic of the <span style="font-style: italic;">Washington Post</span>, asked me to answer the question on the record. And this is my attempt...<br /><br /><span style="font-weight: bold;">Are DC theater companies in competition with each other?</span><br />Yes. In my opinion, to think otherwise would be naive. People have limited disposable income, especially during tough economic times. However, we are very lucky. Washington, DC is weathering the economic downturn<a href="http://www.msnbc.msn.com/id/35768355/ns/business-forbes_com/t/ten-cities-managing-weather-recession/"> better than any other city in the nation</a>. Although we have had our challenges, we have a leg up on everywhere else, and perhaps this is why we have been able to expand during turbulent times. <span style="text-decoration: underline;"></span>But in terms of how people are going to spend their leisure time, theaters are in competition with each other as much as they're in competition with movies, sports, other performing arts, museums, television, YouTube, video games, etc. To say that we aren't is simply untrue.<br /><br />That being said, if I am in competition for discretionary spending dollars, I want it to be with another theater. Why? I can't get patrons to come to my theater if they don't see theater as an option in the first place. My primary responsibility as a theater marketer is to get people interested in the theater. To increase the stability of our community, we have to grow the base of theater patrons in our city. We don't have any other option, and to do that, we have to view ourselves as partners first and competitors second. If we focus on cannibalizing each other's audiences, it will be a losing battle. One theater may win one year, but inevitably it will lose the next. The only way everyone wins, including the city, is if we cultivate a growing audience for all of our theaters.<br /><br />In responding to Stephen's question, I would also say that I tend to think that competition in the marketplace is good. When competition is stiff, it pushes everyone to do their best. To produce work of the highest quality. To provide the best customer service. To nurture the best local talent, and to present preeminent artists from around the globe. Please forgive the personal anecdote, but I know I have a more rewarding workout when there is a strong runner on the treadmill next to me. If there is no one by my side pushing the pace, I won't exert as much energy. I want to keep up. I want to compete. And because of our competitive spirit, DC audiences will get to experience the best efforts of all.<br /><br />As I look into the new year, I resolve to elevate my gaze whenever possible from being exclusively on the theater where I work to the community as a whole. I hope that competition will improve us individually, and that working together will improve us as a whole.<br /></div>Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com3tag:blogger.com,1999:blog-33812369.post-14510803719852145312011-12-15T20:48:00.008-05:002011-12-15T22:21:31.887-05:00Who are your best customers (and why many don't know)?<div>Some time ago, I was at the box office when a major donor who lives out of town came up to the window. I instantly recognized her even though she hadn't visited us in quite some time. After warmly welcoming her back, I stepped away briefly to attend to another matter, and when I returned to continue our conversation, I was startled to see that she was being charged an exchange fee to transfer into another performance. When I inquired, the box office associate rightly told me that she wasn't a subscriber, and that waiving exchange fees was a subscriber benefit. In this case, the patron wasn't a subscriber because she lived thousands of miles away, however she was an incredibly generous donor, giving both to our annual fund and our campaign. Her giving over the years easily made her one of our most valuable customers, but because she wasn't a subscriber, the box office didn't grant her one of our entry level benefits.<br /><br />This wasn't a human error, but a systemic one. At the time, we were operating a ticketing software that didn't reflect giving history, so there was no way the box office associate could have known the patron's lifetime value. And even if the ticketing system notified the box office associate of the patron's giving history, the associate would have had to override the benefits structure we had in place as complimentary ticket exchanges were a subscriber benefit, not a donor benefit.<br /><br />We had a problem. Fundamentally, how we defined our best customers changed depending upon which department was asked, and the company as a whole had yet to identify our best customers in a holistic manner.<br /><br />Two years ago, we took the first steps to address this issue. First, we replaced our antiquated ticketing software with an integrated database that housed all transactional data across our various departments allowing users to see an overall picture of each patron. Once in place, we had to develop a system for defining our best customers from the perspective of the entire company. We hired <a href="http://www.trgarts.com/">Target Resource Group</a> to develop an algorithm that incorporated all transactional possibilities with our company, and then apply that algorithm to our database to develop a Patron Loyalty Index score for patrons in our system based upon transactions over the previous five fiscal years. The index scores allowed us to separate our database into four major categories, and today, certain overriding benefits are assigned to the higher level categories.<br /><br />If the aforementioned major donor were to come to our box office today and request an exchange for a single ticket purchase, an associate would enter her information into our database, and the database screen would immediately turn red--our signal that we are interacting with someone with a very high Patron Loyalty Index rating. The associate would then know that an exception to the exchange rule would be in order as a result of the major donor's lifetime value to the organization.<br /><br />The way the communications and development departments do business at Arena Stage has fundamentally changed over the course of the past two years. We view ourselves as full partners in building patron lifetime value. We work together to increase loyalty, reduce attrition and grow revenue. Subscriber renewal rates are at an all-time high, patron churn has decreased by 7%, the number of full season subscribers has increased 18%, and our membership program is pacing well ahead of last year.<br /><br />Knowing who our best customers are has made all the difference.</div>Chad M. Baumanhttp://www.blogger.com/profile/11006981818882000169noreply@blogger.com3