Oh, How We Like our Awards

'Tis the season for award shows. Oscars, Emmys, Grammys, Golden Globes and the Tonys. We sure do enjoy our annual award shows. In Washington, DC, we have our own awards for theatrical excellence--the Helen Hayes Awards--which just announced their nominations last night. It reminded me that as marketers, awards present us with a significant question--how aggressively should we use these awards in our marketing campaigns?

You might be thinking that the answer to that question is relatively easy. Why shouldn't you celebrate your nominations and trumpet your awards? A few things to consider:

When you market an award...

• you are willing building the brand of the award. It is said that smart lawyers only ask witnesses the questions they know the answers to. That way, the lawyer is in control of the situation, and there are no surprises. In my relatively short time in the DC market, I have seen numerous companies trumpet their large number of nominations and awards year after year until the inevitable year comes when they are left out in the cold. By building the brand of an award, performing arts organization's leave their perceived success in someone else's hands. They are no longer in control of their own destiny. When you say to a consumer over and over again that an award proves your artistic excellence, what does it prove when you are left out? were you artistically insolvent that year?


• you are publicly endorsing the validity of the award. You should ask yourself if you have any serious misgivings about the awards process. If you do, then you should not prominently market them, as doing so implicitly gives your endorsement of the process. One cannot market the awards, and then second guess the process.


• you are sending a signal to the artists who work at your organization. And what might that signal be? Is an artist's work not as important to the institution if it isn't recognized with a fancy award? Should an artist take less risk knowing that the results of the risk might lessen his chances for public acknowledgement? Is one artist more important to a production than another simply because of a nomination?

Awards are fickle. They will come, and they will go. And most of the time, you'll have no clue as to why. The one thing they are good for is bringing together the artistic community one time a year for a great big party. So if you are a winner this year, enjoy your glass of champagne, because if there is one thing I can guarantee, it will be that you will get screwed in the future.

You're Mad -- What Are You Going to Do About It? (Reflections on Landesman's Speech)

Disclaimer: The thoughts and opinions in the post below are solely my own and do not necessarily represent the opinions of any institution I am employed by.

I count myself lucky to have been among the two hundred people that NEA Chairman Rocco Landesman addressed at the national new play development convening at Arena Stage on Wednesday, January 26, 2011. If you are interested in viewing the entire speech, it can be viewed here.

His speech caused a swift and emotional response from bloggers and media alike. Some of the more interesting responses are below:
Dear Rocco Landesman, We Don't Want Your Theater Death Panels, Arts Dispatch
Landesman Comments on Theater, The New York Times
Fighting Words from Rocco Landesman, Arena Stage Blog
On Rocco Landesman, Theatre Ideas

In his speech, Chairman Landesman said "there is a disconnect that has to be taken seriously — our research shows that attendance has been decreasing while the number of the organizations have been proliferating,” He continued by saying "You can either increase demand or decrease supply. Demand is not going to increase, so it is time to think about decreasing supply.” I must say that hearing those words spoken by the chairman of the National Endowment of the Arts initially struck me pretty hard, but then I decided to reflect upon them. Landesman isn't the first person to suggest that the arts are over populated. His partner on the stage that day, Diane Ragsdale, previously of the Mellon Foundation, had a few days earlier written a blog entitled "Overstocked arts pond: fish too big & fish too many" with a very similar argument. In fact, yours truly wrote a blog on the same subject matter on November 17, 2008.

A couple of hours after his speech, outrage over his comments took over social media platforms. The tone was frighteningly homogeneous--how dare the NEA Chairman say that we have too many theaters! However, I would challenge everyone to momentarily set aside your emotional reactions to a statement that rocks who we are as artists just long enough to look at the data and ask if his conclusion, although painful, might be rooted in logic. Study after study shows an environment where supply exceeds demand, from the National Capitalization Project to the Americans for the Arts National Art Index to local reports like this one from DC's Helen Hayes Awards.

The data shows that at this moment in time, there is too little demand and too much supply. That is fact, not opinion. Where I believe Chairman Landesman drew sharp criticism was at his suggestion that we have to decreased supply, because we can't increase demand. Many marketers, such as HowardW, immediately went on the defensive, stating that of course we could increase demand (it is the job of marketers to create demand for art, right?). I respond by saying if you could increase demand to meet the current supply, then why aren't you? This isn't an acute symptom we are discussing, but a chronic trend. Marketers are not super humans. We cannot on our own create an infinite amount of demand to meet the skyrocketing numbers of non-profit arts organizations. The data shows that we are out of balance, and whether we want to admit it or not, we can only live out of balance for so long before outside pressures will return the system to stasis. Don't get me wrong. There is nothing I want more than to prove Chairman Landesman wrong, but I wouldn't bet the farm on it.

From a motivational sense, what Chairman Landesman has done is remarkable. There is nothing that unites artists like telling them they can't do something. By nature, we are counter culture. We like to swim against the current. We need a challenge. Well, Landesman has thrown down the gauntlet. He has said that in his opinion supply will have to be reduced to meet demand. So, if you so passionately believe he is wrong, my question to you quite simply is--what are you going to do about it?

Perception is Reality: Managing Underperforming Productions

A couple of months ago, I wrote a blog post about managing success. Since that time, I have received several e-mails asking me how to manage in times that are not so successful. Non-profit arts organizations should be taking risks, and sometimes those risks pay off, and sometimes they don't. In times they don't, a marketer's job becomes focused on managing perception. The truth may be that there is very little demand for your current product, however there are several techniques that can be used to create the perception that a struggling product is actually quite successful.

1. Avoid mass public discounting if at all possible. Nothing sends a message that you have an unpopular product more than a mass public discount. Not to mention, it also upsets customers who have purchased earlier often at a higher price. GroupOn, Goldstar, Living Social, TicketPlace and TKTS are all examples of mass public discounting outlets. There are ways in which these outlets can be used successfully, but you have to have a very well thought out strategy. At some point in time, every organization will need to discount for one reason or another. However, discounts are best applied in one to one communications with limited abilities to forward on. In this case, viral marketing campaigns are not your friend. Here are some one to one discounting methods that I have used successfully:

• Cross-selling at the Box Office. Particularly in cases in which you have multiple venues, if one venue has a hit and the other doesn't, why not offer a very attractive discount to the less popular venue to all those who are purchasing tickets to the more popular venue? In this case, the discount offer is offered over the phone or in person and it cannot be forwarded. It also creates more multi-buyers which should increase the likelihood that they will respond to a subscription offer in the future.
• Robocalls. Before I say anything else, make sure you have the permission of those you call before you attempt to use a robocall. However, a short (30 second or less) robocall from an opinion leader (artistic director, celebrity, etc) with an attractive offer can be very successful.
• Direct Mail and E-mail. An organization can create a specific offer for a very segmented list, which will allow you to get an offer in front of people who are not subscribers, haven't purchased and are likely discount buyers with no history of purchasing full price tickets. If you are sending out an e-mail campaign, make sure to disable the "forward to a friend" option.
• Reward Sponsors. Offer a special discount to the employees of an important sponsor. The discount has to be significant enough to feel like a "reward." Often times, your primary contact will post the discount on a company message board or forward to department heads for distribution. This technique will help you fill the house, and will engage corporate sponsors.

2. Make sure you properly dress the house. When you place single tickets on sale, make sure you hold back certain inventory so that the house dresses itself from front to back, and from bottom to top. That way, when patrons take their seats even in a house that isn't full, the only thing they see in front of them are full seats, with the empty seats behind them. As patrons will be looking forward a great majority of the time, it creates the perception that the house is full. Some theaters are easier to dress than others. The easiest theaters to dress are proscenium houses with balconies. If the demand doesn't warrant it, then don't open the balcony and push all buyers to the orchestra. The orchestra will fill up, and you can close off the balcony. Seriously, how many people will stand up and turn around just to see if an upper balcony is full?

3. If you need to comp tickets, then make the comp tickets work for you. Ok, things are really desperate and you have found yourself in a situation where even discounts are barely working. You need to get some butts in seats, and your boss is telling you to just fill the house. In this situation, it is very important not to look desperate. Like everything else in life, you need a plan for dispersing complimentary tickets. Whatever you do, don't just throw out a comp ticket offer to a large group of people (i.e. listservs, message boards, etc). Like discounts, comping tickets is best done as a one to one activity. Use your comp tickets to:

• Reward your best customers first. Comp tickets can be used to thank new subscribers, reward donors for increasing gifts, to remedy customer service issues, etc. Even though you can't sell these tickets at full price, they still have value--make them work for you.
• Incentivize additional purchasing activity. Offer comp tickets to a poorly performing show as an incentive for additional purchases or upgrades.
• Reward your staff. Offer additional comp tickets above and beyond your normal policy to staff members as a way of thanking them for their hard work.
• Promote the production. Comp tickets can be given to media outlets, cab drivers, concierges, librarians, teachers, interest groups, convention and visitors bureaus, etc. in order to raise the visibility of the production and your organization.

The worst thing you can do when you have a poorly performing production is to take actions that make you look desperate. Like sharks, your patrons will smell blood in the water, and it will quickly kill an already under performing show.

Interestingly, a local theater company advertised that a recent production was one of the most successful shows in their company's history. However, for the entire run of the show, I kept seeing discount offers for tickets to that production all over the place, which led me to believe that the show was struggling. In this case, if it indeed was one of their highest grossing shows, in my estimation, they snatched defeat from the mouth of victory by creating the perception that the show needed to be discounted.

To wrap up, marketers are the masters of perception. It is our job to create and impact public perception for products that are popular and not so popular. But if we have done our jobs well, at the end of the day, our patrons won't be able to tell the difference between the two.

Customer Service from a Marketer's Point of View

I have been a lifelong customer of American Airlines. A frequent flyer, credit card holder, miles gifter--you name it. I started flying AA because they had direct flights into St. Louis, where most of my family lives. From there, I started to accrue miles, and soon enough, I booked all of my travel on AA. It became a habit. I knew their routes, the layout of their planes, and how to navigate Dallas Forth Worth airport like a local. In performing arts terms, I was a long time subscriber. That is until now.

My flight from St. Louis to Washington, DC was canceled the day after Christmas due to weather (even though DC didn't receive any snow, and my plane was at the airport ready to take off). I was informed by a robo call, which also told me that I was rebooked for a flight 26 hours later. The message ended by instructing me to call AA reservations if I had any questions or concerns. Knowing that I had to be at work the next day for two interviews with major media outlets, I tried calling the number given. After being hung up on four times, the automated telephone system said "we are experiencing high call volume. If you would like to speak with an agent, please call back later." Knowing that I wouldn't be able to speak with a human, I tried working out my problem on the AA iPhone App and on their website, neither of which were designed to handle cancellations. My last option was driving an hour and a half to the airport, which I did only to be met with an apologetic but complete ineffective gate agent. So with no other option, I boarded a flight 26 hours later, however I decided I would no longer be an AA subscriber.

As marketers, we know that it costs significantly more to attract new customers than it does to retain them. Customer service is one of the easiest ways to create brand champions or to drive loyal customers away. As the economic crisis continues, we are all being forced to examine our expenses and improve ROI. So here are some thoughts on customer service as a marketing tactic to reduce churn:

1. When dealing with a customer service complaint, take a holistic view of the customer. At Arena Stage, we are fortunate enough to have a robust database that allows us to see a holistic view of our patrons. Each time a patron comes into contact with our company, it is recorded. Any employee can log into the database, and see a lifetime's worth of interactions. Like most companies, Arena Stage has policies and procedures, however our greatest asset is the excellent judgment of our front line staff. They are instructed and empowered to thoroughly review a patron's file, and to depart from most policies and procedures if necessary to retain loyal customers. I would rather waive a $10 exchange fee for a longtime subscriber every once in awhile than spend ten times that finding a new subscriber. Senior managers must allow front line employees the flexibility to take care of highly valued customers.

2. Track all customer service issues, and start to look for a pattern. Each time a customer complains, be it to front of house, box office or anyone else, the complaint should be logged into your database and tracked. Every Monday morning, senior members of the Arena Stage staff are sent a CSI (customer service issue) report listing all the complaints that came in the previous week. These complaints are then put into a spreadsheet, sorted into categories and analyzed for any visible patterns. If the same issue continues to come up, you can bet that there are ten times the number of frustrated patrons with the same issue who haven't complained. It is then your responsibility to proactively address the issue swiftly to prevent future patrons from having a similar disappointing experience with your company.

3. Be proactive, rather than reactive. The best service comes from proactive management of customer service issues. Instead of relying exclusively on complaint tracking and analysis, be proactive and solicit opinions. Send customer satisfaction surveys. Benchmark numerical responses from year to year, and ask open ended questions. Aggressively solicit customer service issues and correct them before others have to experience them. In addition, if you notice a customer has experienced a problem, try to contact them before they contact you. We ask our house managers to get the names of all patrons who share complaints and/or concerns. This allows us to follow up with the patron and suggest a solution, apologize or offer some form of compensation before they contact our box office. Imagine receiving an apology and a compensatory offer from a box office before you even contact them to report an issue.

4. Even small gestures go a long way. After doing a little research on airline customer service, I was reminded by Time Magazine's Richard Zoglin in his article "The Airlines' Customer Complaint Lines: No Answer" that even small gestures go a long way. You might not be able to meet all the demands of an angry customer, but you should be able to offer a little something to most of them. A comp ticket to an under-performing show, a free drink at the bar, complimentary parking, an autographed poster or perhaps a handwritten response from your Artistic Director. In today's world of fast-paced, unfriendly, automated response systems to customer complaints, it shouldn't take much to stand out from the crowd. Differentiate yourself from your competition by making a small gesture to each upset patron.

By offering better customer service, you can reduce your marketing expenses by slowing down churn. Make it a priority to retain the customers you spent valuable time and resources attracting in the first place.

Why I Hate Comp Tickets

If there is one thing that can kill your earned revenue quicker than anything else, it is a misguided complimentary ticket policy. Someone asked me the other day why I hate comp tickets so much, so I decided to list my top reasons:

1. Comp tickets devalue what it is we do. For my entire career, I have watched artists struggle to make the argument that the arts mean business, and that an artistic career is just as viable an option as any other. However, these same artists then give away the fruits of their labor to anyone with the most feeble of reasons. In the past few days, a viral video entitled "Explaining the Arts Non-Profit," has been passed among my colleagues illustrating this point. It starts out with one bear saying how much he enjoys a choral group, and then asking for a comp ticket. The other bear responds by saying that putting on a concert is expensive, and would prefer it if the first bear would purchase a ticket. The first bear is befuddled by the response because he thinks the choral group is made up of volunteers who perform as a hobby. For many of us, the arts aren't a hobby--they are our livelihood, and we deserve to be compensated for work that enriches the lives of so many people.

2. People don't show because they aren't invested. Many organizations believe that they must give away comp tickets to "paper the house" in order to fill as many seats with butts when important people such as reviewers are in the audience. However, in many cases, it backfires on them. Those who receive comp tickets haven't paid anything for them, therefore they aren't invested and many don't bother to show up. An average no show rate for comp tickets is in the 30% range. Next time you are at an opening night performance, take a look at how many empty seats there are. I would bet dollars to donuts that those empty seats are a result of a faulty comp ticketing policy. Not only are organizations giving away free tickets, but they aren't even getting the results they want out of them.

3. Blood in the water. Nothing smells of desperation worse than massive public discounting and uncontrolled comp ticketing programs. You might as well put a sign on your theater that says "no need to buy because we can't give tickets away." Marketers are in the business of managing perception more than reality. Even with shows that are under performing, smart marketers have tools in their toolbox to create the perception of demand.

4. Comp tickets create box office nightmares. The old saying that "those who pay the least complain the most" definitely applies to recipients of comp tickets. Recipients of comp tickets, in my mind, are the most entitled and demanding group of patrons to serve. They demand the attention of box office and front of house staff, which in turn takes a significant portion of your limited resources away from your full paying audience.

That all being said, there are a few good reasons to use comp tickets in a controlled and well thought out strategy:

1. As benefits for full time employees and actors. In many organizations, comp tickets are an important part of the benefits offered to employees. Organizations want their employees to be proud of their work, and knowledgeable about what is on stage, so offering them complimentary tickets is well worth the loss in revenue.

2. For members of the press. Press members who have agreed to cover a particular performance should be offered a comp ticket. However, do not give out comp tickets to press who haven't agreed to coverage. If a press member wants to see a performance but isn't going to cover it or your organization, it is more than acceptable to ask them to purchase a ticket. Just because they are a member of your credential press corps doesn't automatically entitle them to a free ticket.

3. To cultivate potential investors and/or donors. Comp tickets can and should be used to host potential investors and/or donors as a means of cultivation. However, these tickets should be monitored and tracked. I have seen companies give away thousands of dollars worth of comp tickets to potential donors who were in the "cultivation" process for years without a single donation.

4. As a professional courtesy. Most organizations have a vested interest in other artists seeing their work. Agents, casting directors, affiliated artists, artistic directors, and producers comprise most of this group. In some cases, if a relationship is exceptionally important, offering comp tickets would be appropriate. In many cases however, a discount for industry professionals will work just fine.

In closing, here are a few quick thoughts on developing a comprehensive comp ticketing policy for your organization:

1. Create a budget for comp tickets. Used in much the same manner as an expense budget, this allows an organization to plan for a given number of comp tickets each year for various purposes. Make sure to get buy-in from all members of senior management as they will be responsible for managing the comp tickets for their departments.

2. Develop very clear instructions on how comp tickets are to be distributed. The key to a good comp ticket policy is clarity. Make sure your policies are easy to understand and simple to follow. For fairness, it is important that the same policy be in effect for your entire organization. Once a clear and concise policy is created, stick to it.

3. It's like a crack addiction--it will be tough to wean people off of them. If your organization has a serious comp ticket problem, you might need a couple of years to turn it around. Be prepared...you will piss people off. But we are talking about the livelihood of the organization and its artists. Why would anyone want to buy a ticket if they know that your organization gives them away at the drop of a hat? It will be tough, but worth it. I promise.

Managing Success

I was joking with my Managing Director a couple of days ago that managing success is just as time consuming as managing a flop. On the other end of a conference call, Adrian Bryan-Brown, whose press firm Boneau/Bryan-Brown represents Arena Stage, replied “yeah, but it’s a lot more fun.” Truer words have never been spoken.

At Arena Stage, we are fortunate enough to be in a situation where we have two record-breaking productions playing concurrently: Molly Smith’s production of Oklahoma! and Marcus Gardley’s world premiere of every tongue confess directed by Kenny Leon starring Phylicia Rashad. In the past two months, I have learned a lot about what it means to manage success. Below are a couple of things to keep in mind when a mega hit hits:

1. To ensure success in the future, you need to think about retention today. Having a smash hit is exciting—orders are flooding your box office, reviews are kind and generous, and you don’t have to stress about making your sales goals. But there will be a tomorrow, and inevitably you will hit a patch that isn’t as pleasant. So take the time today to maximize your chances of retaining all the new patrons that are coming through your doors. Help prepare them for the experience by sending them a pre-attendance e-mail that discusses the show, provides dramaturgical insight, offers tips on parking and transportation, and suggests possible dinner options. Think about greeting them with a welcome kit, or maybe a complimentary drink at concessions. Go the extra distance to ensure their first experience with you is memorable for all the right reasons, and then follow it up within 48 hours with an irresistible offer to come back for another production. Studies show that if you can get new patrons to come back to just one additional production during your season, you will significantly decrease churn.

2. Have a plan for what do if inventory suddenly becomes available. Even during high demand situations, inventory becomes available as you get closer to a performance date. Sometimes group leaders can’t fill their quotas, or maybe you get lucky and you have found a way to add a few more seats. In most cases, companies just blindly throw that inventory on the market and are satisfied when it sells. These tickets have a value beyond their price as in most cases there is significantly more demand than there is inventory. Perhaps you can maximize the value of these tickets by offering them to your highest donors first as a benefit of donating. Or you could choose to sell the tickets at a significant discount to the winner of an online raffle, thereby collecting hundreds of contacts that you can use to promote to in the future. Or a little more controversial, some companies, particularly TicketMaster clients, are setting up their own e-bay style auctions to maximize revenue.

3. Monitor discounts and comp tickets aggressively. I recommend incentivizing early purchasing behaviors by providing patrons the best possible discount when you put tickets on sale. Even in high demand situations, I would encourage people to protect a significant allotment of tickets to be sold at a substantial discount weeks in advance of performances. Once you are into performances, and demand is at its highest point, discounts need to be managed aggressively. I believe that most arts organizations have an obligation to make sure that all productions are accessible to audiences that might not be able to pay full price, but that doesn’t mean you have to offer discounts on demand. If patrons want to wait for a rave review before purchasing tickets, then they can purchase them at full price. The other option is to purchase well in advance. I would also recommend budgeting your comp tickets. If each department has a maximum amount of comp tickets they can use, then you won’t have to serve as the arbitrator when people request comp tickets. It will also help you project future sales as you can factor those seats out of your projections. Keep in mind though that just like full price tickets, demands for comp tickets increase when you have a hit on your hands. However, you need to ask yourself with each comp ticket request if honoring the request is worth the full price of the ticket, because I assure you, you will be able to sell that seat.

4. Save money on advertising, and build a reserve. Normally I would suggest spending more money on advertising a hit show as you are more likely to see a higher return on investment, however if you are in a situation where you feel relatively sure that great press coverage and word of mouth is enough to drive the needed sales to move all your inventory, then pull back on advertising expenses. Many companies enter into yearlong advertising contracts with vendors, so cutting advertising completely might not be an option. But you can build a reserve of the advertising expenses you saved on your hit production to help you later in the year when you have a production that isn’t selling as well.

5. As a follow up to bullet #4, encourage word of mouth. There is nothing more powerful than word of mouth. I know I have a hit on my hands when daily sales double the second week of performances, because I know that patrons who saw a show in the first week are talking. Think about all the ways in which you can help them spread the word. Maybe a post-attendance e-mail from the star asking them to tell all of their friends. Perhaps you should give patrons a complimentary souvenir to walk away with so they can show their friends. At Arena Stage, we are giving out complimentary hand fans to Oklahoma! attendees that have a replica of the 1907 Washington Post article announcing Oklahoma’s statehood on one side, and the lyrics to a song on the other (not to mention, The Washington Post is sponsoring them so there is no cost to us for 40,000 fans). Create a viral video featuring behind-the-scenes work, record a podcast with a leading star or even do a robocall message from a celebrity. The goal—getting them talking!

If you find yourself in the fortunate position of having a record-breaking hit on your hands, make sure you do everything in your power to have that show pay dividends well into the future. I liken it to winning the lottery—you can spend all the money today, or you can put it into a savings account and have it work for you in the future.

The Problems of Traditional Pricing and How Dynamic Pricing Can Increase Accessibility

Over the span of the last several months, there have been numerous emotional debates over pricing in the blogosphere, particularly among a small handful of very respected colleagues in the theater industry. I have remained, for the most part, on the sidelines as much as possible, because parts of the debate centered around practices that I have publicly endorsed at major conferences. As such, I didn't want to interfere in what was an open and honest dialog. However at this point, I feel the need to address some of the misinformation that has been posted on a few reputable blogs, and shed some light on what to me seems to be a misunderstanding of dynamic pricing by Isaac Butler (founder of Parabasis) and Adam Thurman (author of Mission Paradox).

Some things to think about:

1. Dynamic pricing in itself doesn't determine accessibility.

Dynamic pricing is simply a tool, or maybe it is better described as a philosophy. Like most things in life, the devil is in the details. How it is applied is much more important than the concept itself. Basic traditional pricing establishes a maximum price point usually determined by seating section and date of performance. Once tickets are placed on sale, they are usually released at the maximum price point. In contrast, with most applications of dynamic pricing, tickets are initially released at the minimum price point, and only increase to the maximum price point if demand warrants. This ensures that a certain amount of tickets are guaranteed to be sold at the minimum price point, whereas traditional pricing can allow an entire house to be sold at the maximum price point from the initial release date.

In addition, dynamic pricing doesn't dictate how an institution deals with allotments set aside for specific audience demographics. In the case of Arena Stage, we have six distinct savings programs that target specific audiences that are extremely important to us as an organization. Aside from the pricing of the general ticket allotment, most organizations that practice dynamic pricing protect ticket allotments for their savings programs, even for productions that are in very high demand.

From my vantage point, dynamic pricing is the Robin Hood approach to yield management. The very few people who wait until the last minute are charged the maximum price point to provide for those who are charged a much more accessible price by purchasing well in advance.

2. When debating pricing, the maximum price point is much less important than the average ticket price.

When determining how accessible major institutions are to the general public, it is much more important to examine an institution's average ticket price than to critique its maximum price point. To reach the maximum price point, at most institutions practicing dynamic pricing, demand has to be so high that 90% or more of available inventory is sold, meaning that only 10% of inventory is ever sold at the highest price. In looking at it from another perspective, 90% of all inventory is sold at some sort of discount. The only litmus test an institution has to determine how accessible they are to the general public is their average ticket price. To determine average ticket price, one needs to divide total ticket revenue (subscriptions + single tickets) by the total number of tickets sold. By looking at an average ticket price, one gets a complete analysis of all sales across the entire spectrum of their ticket allotments, including those sold through savings programs. The argument shouldn't be that non-profits shouldn't sell beyond a certain maximum ticket price. Instead, it should be that non-profits should maintain an accessible average ticket price. If you are focused on the maximum price point, you can't see the forest for the trees.

3. Dynamic pricing rewards behavior that is much more in line which subscription purchasing.

I have heard my colleagues bemoan the death of subscriptions for the past decade. I too am inclined to believe that generational differences in purchasing behavior will lead to the eventual demise of the subscription. However, traditional pricing practices have escalated the downturn of subscriptions.

In most institutions, subscribers are a group of patrons who purchase multiple productions and do so early in a show's purchasing cycle. For this, they are rewarded with a slight discount. The trouble with traditional pricing occurs when single tickets are placed on sale at the maximum price point directly out of the gate, only to be drastically discounted usually a week or two before the performance when management realizes there isn't the demand to warrant the initial price point. Subscribers then realize that in a significant percentage of cases, they can wait until the last minute to purchase, and will be rewarded with the same, if not better, discount than they would have received if they purchased months in advance. Pavlov proved that if you reward a certain behavior, it will increase. If you want to kill subscriptions, then continue with a pricing model that provides the best discount at the last possible minute.

Until someone much smarter than I figures out the solution to the subscription dilemma, I will always support a single ticket pricing model that encourages behavior more associated with subscription purchasing patterns. If an organization wants to increase its subscriber base, reward early purchasing decisions with the best possible prices, and make sure that those who purchase late, do so at the highest possible prices. I am convinced that this approach to pricing is why Arena Stage has significantly increased its subscriber base over the last three fiscal years in the midst of the global economic crisis.

Final Thought
When debating and analyzing pricing strategies for an organization, remember that "a little knowledge is a dangerous thing." Get all the facts. Study sales patterns. Talk to stakeholders. Hold focus groups. Look at peer organizations. Do your due diligence, and be prudent. Before moving forward, make sure you have a complete understanding of the various options and how your decision will impact organizational values. Prior to implementing a dynamic pricing strategy at Arena Stage, we thoroughly studied the model for more than a year, and had very thoughtful discourse among staff, leadership and the board.