The Lure of Star Power

I just finished reading Playbill.com's Top Theatre Stories of the Year. The leading story discusses how stars sell tickets, and in a year with a down economy, it seems that the only thing that sells tickets are the stars. From this little story it seems clear that if you don't have an A-list star in your show, don't even try a Broadway transfer.

Arena Stage in the past few seasons has been lucky enough to host a few stars, most notably Carrie Fisher in Wishful Drinking and Valerie Harper in Looped (and not surprisingly, both productions found their way to Broadway). From a marketing perspective, nothing makes my job easier than a star, particularly stars that are lovely to work with as both Carrie and Valerie were. But let's be honest, it doesn't take a marketing genius to sell tickets to star powered vehicles. And it isn't just New York that has a taste for the stars. The Shakespeare Theatre Company and the Kennedy Center just presented two star productions that sold out immediately: Phedre with Helen Mirren and A Streetcar Named Desire with Cate Blanchett. It used to be that New York and Los Angeles were the cities that needed stars to sell, but it looks like DC might be going that way as well. Or maybe the entire country.

But there are problems with stars as well:

1. Star productions are a gamble, especially for regional theaters. Most Broadway productions can guarantee stars, but regional theaters for the most part cannot. Regional theaters tend to announce productions and casts several months before a show opens in time to sell subscriptions and advanced single tickets. However, during the time between the announcement and the opening, a star can get a better offer from a Broadway production, television series or movie which will lead them to pull out of the regional production, leaving audiences with an expectation that theaters can no longer fill.

2. Most times even with a guaranteed star appearance, run lengths have to be shortened as the schedules of most stars won't allow them to appear for a run length of several weeks, meaning that these productions will more than likely be off subscription. To capitalize on the star production, many theaters use them to boost subscription sales by only allowing subscribers to purchase the very limited quantity of single tickets to the star show. However, often times, patrons will purchase the cheapest subscription package available only for the opportunity to purchase the star production, and then won't attend the rest of the subscription shows leaving theaters with half empty audiences throughout the season.

3. Are regional theaters building an appetite for something they cannot always feed? If theaters have a couple of successful years of bringing in stars for productions, what happens when they can't find a star production for a year or two? In essence, they have built an event based audience that they can't always feed. And in this case, these types of patrons aren't loyal to the company, they are loyal to productions that feature stars. They are the most fickle of any audience segment. The first time you don't deliver, they will move on to somebody that is.

4. Are regional theaters teaching hoards of future patrons that only star vehicles deserve their patronage by filling their programming with stars if and when they get them? Or even a larger concern for me, what about those companies that regularly program poorly conceived productions that showcase a star over a brilliantly produced production without a star? The Playbill article focuses on this issue, citing several poorly reviewed, star centric productions on Broadway that financially recouped along with numerous well reviewed productions that lacked stars which struggled from day one.

There is no doubt about it--a star production can be fun. Your audiences will love them, you will sell plenty of tickets, and they will bring national attention to your part of the world. However, like anything else, maybe some moderation is in order?

Make sure you keep one foot in both courts

Sometimes at the conclusion of a speech that I am giving, I have someone from the crowd come up to me and thank me for all the great information, exclaiming that they are going to end their direct mail campaigns in order to shift resources to technology based viral marketing campaigns. At that moment, I usually cringe and apologize, for I definitely communicated something that I didn’t intend to. For those that read this blog, you know by now that I am a proponent of using technology to grow audiences, building communities and diversify revenue streams. That being said, most major arts organizations find themselves with a foot in two different courts—how to please the audiences of tomorrow, and still serve the audiences of today.

We sometimes forget that there are four generations in play in our audiences: the Silent Generation, the Baby-Boomers, Generation X and the Millenials. Many books have been written, white papers drafted and speeches given (including by yours truly) on how to effectively target Generation X and Millenials as they are the future for arts organizations. However in doing so, some rabid believers have advocated throwing the baby out with the bathwater. Allocating all of your resources at any one of these groups, unless you have programming that only speaks to a certain generation, is foolish, certainly as foolish as not diversifying your stock portfolio.

Let’s take a look at subscriptions. Most arts marketing professionals agree that the subscription model is dated, and is dying a slow death. That doesn’t necessarily mean that we should pull the plug on them today when they still probably have a good decade left in them. Several performing arts organizations still receive a major portion of their earned revenue via subscription sales, and although Danny Newman might have published his treatise decades ago, his point that subscriptions protect a company from poor reviews and the fickle buying habits of single ticket buyers is still spot on. At every performing arts organization that I have worked for, I noticed a declining subscription base, and within two years with strategic changes have stopped the decline and started increasing the number of subscribers. I don’t say this to seem like a miracle worker (for which I am not), but it does make me wonder how much marketing directors are directly responsible for declining subscribers.

I am starting to believe that the decline of subscriptions might be in part a self-fulfilling prophesy. If a marketing director fully believed that subscriptions were dying, and that nothing could be done to affect declining subscription numbers, then he might be inclined to focus his limited resources on addressing the needs of his “future audience,” thereby ensuring the decline he was forecasting.

We know from surveys that subscribers tend to be older, and more than likely are part of the Baby-Boomer or Silent Generation. We also know that these generations have been purchasing tickets in this manner for years, are usually more comfortable with transaction conducted over the phone or via mail, and therefore respond better to some classic direct marketing techniques such as direct mail or telemarketing. However if you are underfunding direct marketing in order to fund other priorities (such as online marketing), then the decline in your subscription base might be caused by poor strategic marketing decisions.

When creating a holistic marketing campaign, a wise marketing director should always keep in mind that we are serving multiple masters—each master having a different set of expectations and desires. The key for all marketing professionals is putting the right offer in front of the right people using a communications vehicle that gives the message the highest possibility of success.

What if they are just tired?

In the last few weeks, I have been doing quite a bit of traveling. I have gotten the opportunity to speak with many of my colleagues from around the nation, and they are all saying the same thing -- ticket sales are down this year. Last year, I kept hearing that well branded products were doing very well, while less known fare was struggling. Now I am hearing that even annual cash cows (think A Christmas Carol and Nutcracker) aren't doing well. When a classic theater has problems selling Romeo and Juliet, you know something is up.

So it got me thinking about what is going on (and of course, this is just an opinion). We are all seeing reports that even though some aspects of the economy might be improving, many are still getting worse, such as unemployment. Unemployment is the highest is has been in 20 years. Last year when the stock market crashed and it became clear we were all in for what looked to be an unprecedented global economic crisis, many companies panicked. They didn't know how to project future revenue, so they opted to look at the side of the ledger they could control -- expenses. With that came the layoffs.

Those lucky enough to survive the layoffs took on responsibilities that were normally handled by two or three people. Many managers noted that the resulting model was unsustainable, but thought that most people could put up with the extra load for a short period of time, hoping that the economy would improve and that hiring would be possible. Well, it has been over a year, and unemployment is getting worse, so the unsustainable model of having one person carry the workload of three continues.

As arts administrators, I no longer believe our largest challenge is dealing with people's fears about the economy. That was so last year. Instead, we now have to deal with people who are simply exhausted, and when Friday comes, they want to do nothing more than spend the weekend on the couch in order to recuperate and be ready for the next grueling work week. Whereas last year, our largest competitors might have been other cultural destinations or sporting events, I am starting to think that our most significant future competitor might be cable television and a warm bed.

Blogging from NAMP...

Once again I find myself at the National Arts Marketing Project Conference, which is being held this year in Providence, RI. This is my fifth conference, and instead of presenting like I have done in the past, I really wanted to listen in on other sessions to hear what is being discussed. I have been asked to blog about my experiences for Americans for the Arts so these posts can also be seen on their blog.

This morning I was lucky enough to sit in on the Every Dollar Counts: Using ROI to Prove Marketing Effectiveness session. I decided to go to the session because one of my favorite arts marketing experts was presenting--Philippe Ravanas, marketing professor at Columbia College and former VP of Corporate Communications for EuroDisney. I have seen him speak at several conferences and he is always extraordinary.

This morning he discussed a situation he found himself in when he was the Manager of Client Development at Christie's in London. Each year, they would produce a beautiful catalog of auction items that they would send to most of their database. These catalogs were highly coveted, and cost the organization $20 a piece to produce, however Philippe noticed that his ROI (return on investment) for these catalogs was poor. It was costing him too much to produce and mail these catalogs in terms of how much revenue they were bringing in. After researching the problem, he found that they were mailing these catalogs to almost every purchaser, including those people who purchased once twenty years ago and people who only purchased a minor item just to get on the distribution list, as the Christie's catalog seemed to be a popular coffee table item. He soon cut back the distribution, and only sent the catalog to his higher end purchasers. This action greatly improved his ROI on the catalog.

It brought me back to a previous blog post I wrote about the future of the subscription brochure. If you read the post, you can see that I have some serious doubts as to whether or not a subscription brochure works as a sales piece. That being said, our subscribers at Arena Stage love our season brochure because it invites them into the process. There are articles by our featured artists, a letter from our artistic director, beautiful artwork, etc. We have heard from our subscribers that they anxiously await our brochure each year, and that these brochures have become collector's items. So they perform a very valuable function in maintaining relationships with our higher end purchasers, but they aren't necessarily needed to push acquisitions. In fact, we have found that other smaller pieces with a clear central message that cost significantly less to produce and mail actually perform better for acquisition campaigns.

As Diane Ragsdale says in her article Recreating Fine Arts Institutions : "Arts leaders may be tempted to think that the solution to dwindling audiences lies in better marketing, but if arts organizations are going to survive, they have to put more than the season brochure on the autopsy table." I completely agree with Diane...but what happens if an organization isn't even willing to put their season brochure on the autopsy table?

Thoughts on the Voodoo Art that is Branding

Many established arts organizations are finding themselves in the position of having to reinvent tried and true business models to adapt to the ever changing economic landscape. Diane Ragsdale, Associate Program Officer for the Mellon Foundation, offers a well thought out paper on this subject entitled Recreating Fine Arts Institutions. Although I don't agree with all of her arguments, I believe she outlines the overall dilemma very well.

So, what do most organizations do in this situation? They bring in a branding firm to slap a new coat of paint on the organization by creating revamped messaging rules, visual systems and logos. In guiding a couple of these rebranding projects myself, I have learned the following:

1. You can slap a little lipstick on a pig, but it is still a pig. Rebranding begins with artistic strategy. If an organization truly wants to address significant business or perceptual issues, it must do so with the product first. It doesn't matter how savy a branding firm is, if you don't reposition your artistic strategy, there is no reason to rebrand. In working on the rebranding campaign for Arena Stage at The Mead Center for American Theater, I believe this was handled in an excellent fashion by our artistic staff. The senior artistic staff members drafted an artistic plan that clearly outlined where we were, and where we wanted to go. It was a shift from a traditional regional theater model toward becoming a national center for the production, presentation, study and development of American Theater. Once given this clearly defined goal and the artistic strategies to achieve it, the rest of the rebranding process could officially kick off.

2. Say what you want, but your customers will tell you your brand. Have you ever noticed a clear disconnect between the official corporate messaging from a company and your perception of the same company? An example of this can be found in a blog post that I wrote about Hyatt Regency in 2007. Hyatt Regency corporate communications boast that they go above and beyond in customer service, but as you can see, that wasn't my experience. No matter what you say, your brand lives in the minds of your customers. We can craft the best messaging campaigns in the world, but it will not matter if we don't deliver. What we deliver on will become our brand.

3. Brand strategy can be crafted by marketing, but its success is determined by everyone. Think of the people who actually execute your brand -- front line sales associates who process orders; artists who develop the product your customers will experience; the parking attendant who most likely will be the first person to greet your patrons on the evening of their performance; the concessions staff who has to process a vast amount of orders in a very limited amount of time. And then think of the amount of time that a Marketing Director generally interacts directly with patrons. It's time to get over ourselves...brand strategy will live or die by the people who represent you on the front lines, not the pretty new colors you have selected for the organization.

All of this is to say that I do believe that messaging and visual systems are critical in conveying a brand, however they are not the most important factors in developing a brand identity. Artistic strategy and the day to day execution of your brand promises will always outrank the look and feel of any brand.

The Problem of Silos

I have just returned from a National Arts Strategies seminar entitled Managing People. One of the many things I love about their seminars is that they force you to take a hard look at strategic planning, and how strategic planning influences everything from marketing strategies to, in this case, human resources.

Upon my return from the seminar, I started to think about a common structural problem that many organizations encounter -- the problem of silos, particularly silos between the marketing and development departments. As non-profit arts organizations became more and more sophisticated, there began to emerge two distinct entities: a marketing department tasked with maximizing earned revenue streams and a development department responsible for overseeing all contributed revenue streams. It can be said that "marketing" departments have existed for much longer, and that even for major arts organizations, development departments are somewhat of a recent development (Arena Stage hired its first development director in the late 1980s). With two distinct departments tasked with being responsible for all revenue coming into an organization, all too often, the strategies devised by each department are done so with minimal thought to how they will affect or interact with the strategies of the other, causing the silo effect. As a consultant, I see this with many of the clients I work with, and it makes it difficult for an organization to make the best overall decision on how to move forward strategically.

In the last decade, many organizations have experimented with the "external affairs" model where one large department, housing both development and marketing, is tasked with revenue management. The problem with this model is that in most cases, although the department is united under one leader, there still exists marketing and development silos under the external affairs banner. Again this creates a problem because it doesn't allow an organization to view a complete picture of the customer as one side will look at a customer from a ticket sales perspective while the other will see his potential as a donor. Given the experience of the external affairs director, many times one division is stronger than the other depending upon the director's history.

So remembering a session from this summer's TCG conference, I thought what would I do if I had no rules to abide by and I were running the zoo? I believe I might blur the lines between development and marketing much more than they have been in the past in an effort to view the customer holistically and therefore provide better service. The heart of most of the roles in each department rely upon the same set of skills -- messaging, selling and promoting. Below would be a possible org chart for an external affairs department:

Director of Business Development (not so hot about the title, so it might change): This person would be responsible for all new business development. Chiefly responsible for getting new audiences into an organization, growing the reputation of the organization in targeted segments and organizing audience development events.

Direct Reports:

- Group Sales

- Inbound Sales

- Telesales

- Audience Development

Director of Loyalty and Retention: This person would be responsible for taking the current customer base, and moving them up the loyalty ladder from single ticket buyers to multi-buyers to donors. Also responsible for audience retention programs.

Direct Reports:

- Customer Account Managers: These individuals would oversee a given number of customers and would be responsible for their customers complete care with the goal of moving the customer from a multi-buyer to a subscriber to a donor, and then renewing them the following year. They would track the participation of each of their accounts, and provide customized personal strategies designed to enhance the relationship between the organization and the customer.

- Planned Giving

- Capital Campaign

Director of Brand Management: This person would be responsible for the overall brand of the organization from institutional messaging and design to public affairs and media relations.

Direct Reports:

-Media Relations

-Publications/Art Department

-Marketing/Communications

-Sponsorships

-Special Events

Director of Government & Institutional Affairs: This person would be responsible for being the liaison to all government offices (local, state and national) as well as foundations.

Direct Reports:

-Grant Writers

-Lobbyists

-Foundation Officers

Want to get into trouble? Concentrate on new audiences

If I had a quarter for every time I have been asked in my career how I planned on attracting new audiences to an organization, I would be a rich man. On the flip side, I am almost never asked about customer loyalty or retention. The quickest way for an organization to get in trouble from a marketing perspective is to ignore audience retention problems in favor of attracting new audiences.

Some common misconceptions:

1. In order to grow, you must attract new audiences. This statement is only true if you are attracting more new audiences than you are losing the audience members you currently have (and even if this is the case, it can be much more expensive...more to come on that point). Many of us are so captivated by the allure of attracting new audiences that we concentrate much of our attention on getting the new ones in the front door while the old ones are running out the back door. A recent study of nine of the most prominent U.S. orchestras conducted by Oliver Wyman showed that these orchestras were great at getting new audiences, attracting on average 57% additional new households in 2007, but had significant issues in retaining current audiences with 55% of unique households not returning in the same year.

2. New audiences are great for the fiscal bottom line. This simply isn't true. The only thing that new audiences are on their first visit is a losing proposition. New audiences only become financially beneficial to an organization over a significant period of time. The money invested in bringing in new audiences only pays off when looking at lifetime value. And to determine lifetime value, one must ensure the new audience member sticks around for more than one visit. A study conducted by Katy Raines in the United Kingdom showed that first time attendees spent on average half as much as their returning buyer counterparts. When looking at the Oliver Wyman and Katy Raines studies, one truth comes to light: first time attendees will spend half as much as regular attendees and on average 83% of them will never come back.

3. Spending money on programs specifically designed to bring in new target audiences is a good investment. The holy grail of new target audiences is the revered "young" audience. So, to get them in the door, organizations spend a lot of time and resources on developing young professional societies, throwing parties, putting together after hours events, and other similar tactics. But if your programming isn't of interest to the target demographic you are focusing your efforts on, you might as well just throw money right out the window. Having a late night club scene in your building might attract young people, but it won't convert them into experiencing your organization's central product. If you are truly invested in cultivating any specific target audience, you must find ways of making your core product attractive to them.

By nature, humans are attracted to what is new and hip. The grass is always greener on the other side, that is, until one reaches the other side. Don't be sucked into a strategy because it is shiny and new. Before digging new wells, make sure that your existing ones don't have any leaks.

So the next time someone asks how you plan on getting new audiences into your organization, you might want to begin the conversation with the status on your current audience. Are they loyal to you, or do they run for the hills after their first visit?