Dynamic Pricing or Patron Loyalty? Do both in 2013-14
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TRG’s latest work has focused on how ticket pricing and inventory management practices impact patron loyalty. The conclusion? Pricing – especially top-end tactics like dynamic pricing – must recognize and reflect the impact of these strategies on the loyalty of subscribers, donors, group and single seat buyers alike. Why? The risk of reduced contributed revenues is too great to ignore. In this webinar, CEO Rick Lester and President Jill Robinson offer must-know insights about the new tools, processes, and revenue results that come from placing the most loyal patrons in the best seats at the best price.
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Dynamic Pricing or Patron Loyalty? Do both in 2013-14
- 1. Webinar Dynamic Pricing or Patron Loyalty? (Do Both in 2013-14.) Hosted by Rick Lester, CEO Jill Robinson, President Copyright © 2012 TRG Arts All Rights Reserved
- 3. Pricing Myths Higher prices are barriers to entry Higher prices make patrons less sticky Dynamic pricing is synonymous with bad customer service and damages loyalty Subscriptions are (finally) dead
- 4. Pricing Facts for Today Advocates want your company to thrive High value patrons generally buy “best” seats • Most expensive seats always sell first Season tickets are still a key to loyalty • Recency and Frequency: building blocks to loyalty Pricing plays a powerful role
- 5. TRG’s Patron Loyalty Study Quantifies each patron relationship • Transactional examination across all revenue sources • Demography overlaid on a household level • History of seating choices • Patron behaviors across TRG’s National Data Network Findings • Each patron household scored and ranked • Results plotted onto PLI Heat Maps • Grouped into commonly defined cohorts
- 7. What Makes an Advocate? Performance Attendance • Frequency of subscription • Recent single ticket purchase Donation Activity • Less consistent year over year
- 9. What Makes a Buyer? Active 3.5 Years • Buy many Tickets • 86% Recent Activity • 76% Recent Multi-Buyers Fewer are Donors • Much less likely to give • Only 39% recently Smaller Gifts • $359 annually vs. Advocates’ $7,500
- 11. Who are Tryers? 85% of All Patrons Very Little Loyalty •Only one year activity •Only 45% with recent purchase
- 13. Generational Impact on Loyalty Patron Loyalty Compared to Patron Loyalty by Genera on Community 100% 1% 2% 5% 8% 12% 100% 7% 7% 90% 90% 80% 31% 25% 22% 24% 80% 70% 44% 70% Gen Y Gen Y 60% 60% Gen X Gen X 50% 50% 49% Boomers 49% 50% Boomers 40% 40% Tradi onalists Tradi onalists 63% 30% 30% 20% 42% 20% 22% 19% 10% 10% 18% 0% Total Total 0% Organiza on Community Advocates Buyers Tryers
- 14. Loyalty by Price Section Subscription Sales Advocates Buyers Tryers 45% 20% 20% 40% 18% 18% 16% 16% 35% 14% 14% 30% 12% 12% 25% 10% 10% 20% 8% 8% 15% 6% 6% 10% 4% 4% 5% 2% 2% 0% 0% 0% M1 M2 M3 M4 M5 Box L1 L2 L3 L4 L5 U1 U2 G1 G2 T1 T2 M1 M2 M3 M4 M5 Box L1 L2 L3 L4 L5 U1 U2 G1 G2 T1 T2 M1 M2 M3 M4 M5 Box L1 L2 L3 L4 L5 U1 U2 G1 G2 T1 T2 Main Floor Boxes Lower Balcony Gallery Terrace Main Floor Boxes Lower Balcony Gallery Terrace Main Floor Boxes Lower Balcony Gallery Terrace Advocates as a Percentage of Total Sales Buyers as a Percentage of Total Sales Tryers as a Percentage of Total Sales
- 15. Loyalty and Subscription Subscription Purchases by Loyalty Group Advocate Subscrip on Buyer Subscrip on Purchases Tryer Subscrip on Purchases Purchases 35% 60% 35% 30% 50% 30% 25% 25% 40% 20% 20% 30% 15% 15% 20% 10% 10% 10% 5% 5% 0% 0% 0% al ce ce ce ce s ce ce ce ce al s e e e e s l O' O' a O' c c c c on on an an an an an an an an on an an an an CY CY CY rm rm rm rm rm rm rm rm rm rm rm rm i i i ad ad ad fo fo fo fo rfo rfo rfo rfo rfo rfo rfo rfo tr -tr tr r r r r n- Pe Pe Pe Pe Pe Pe Pe Pe Pe Pe Pe Pe n- n No No No 10 8 6 5 10 8 6 5 10 8 6 5
- 16. Scale-of-House Is your scale optimal? 5 3 1 A 116 115 114 113 112 111 110 109 108 107 106 105 104 103 17 15 13 11 9 7 5 3 1 B 116 115 114 113 112 111 110 109 108 107 106 105 104 103 21 19 17 15 13 11 9 7 5 3 1 C 116 115 114 113 112 111 110 109 108 107 106 105 104 103 23 21 19 17 15 13 11 9 7 5 3 1 D 117 116 115 114 113 112 111 110 109 108 107 106 105 104 25 23 21 19 17 15 13 11 9 7 5 3 1 E 116 115 114 113 112 111 110 109 108 107 106 105 104 25 23 21 19 17 15 13 11 9 7 5 3 1 F 117 116 115 114 113 112 111 110 109 108 107 106 105 104 27 25 23 21 19 17 15 13 11 9 7 5 3 1 G 118 117 116 115 114 113 112 111 110 109 108 107 106 105 104 27 25 23 21 19 17 15 13 11 9 7 5 3 1 H 117 116 115 114 113 112 111 110 109 108 107 106 105 104 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 J 118 117 116 115 114 113 112 111 110 109 108 107 106 105 104 Does the house naturally 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 K 117 116 115 114 113 112 111 110 109 108 107 106 105 104 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 L 118 117 116 115 114 113 112 111 110 109 108 107 106 105 104 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 M 117 116 115 114 113 112 111 110 109 108 107 106 105 104 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 N 118 117 116 115 114 113 112 111 110 109 108 107 106 105 104 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 O 117 116 115 114 113 112 111 110 109 108 107 106 105 104 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 P 118 117 116 115 114 113 112 111 110 109 108 107 106 105 104 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 R 119 118 117 116 115 114 113 112 111 110 109 108 107 106 105 35 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 S 118 117 116 115 114 113 112 111 110 109 108 107 106 105 dress? 37 35 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 T 119 118 117 116 115 114 113 112 111 110 109 108 107 106 105 37 35 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 U 118 117 116 115 114 113 112 111 110 109 108 107 106 105 37 35 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 V 119 118 117 116 115 114 113 112 111 110 109 108 107 106 105 35 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 W 120 119 118 117 116 115 114 113 112 111 110 109 108 107 106 A 3 1 35 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 X 121 120 119 118 117 116 115 114 113 112 111 110 109 108 107 106 B 3 1 35 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 Y 120 119 118 117 116 115 114 113 112 111 110 109 108 107 106 C 5 3 1 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 Z 121 120 119 118 117 116 115 114 113 112 111 110 109 108 107 106 D 5 3 1 33 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 AA 120 119 118 117 116 115 114 113 112 111 110 109 108 107 106 Does performance E 7 5 3 1 31 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 BB 121 120 119 118 117 116 115 114 113 112 111 110 109 108 107 106 F 7 5 3 1 29 27 25 23 21 19 17 15 13 11 9 7 5 3 1 CC 120 119 118 117 116 115 114 113 112 111 110 109 108 107 106 G 7 5 3 1 H 7 5 3 1 J 9 7 5 3 1 Grand Tier Boxes K 7 5 3 1 1 2 3 4 1 2 3 1 2 1 2 3 1 2 3 1 2 3 1 2 1 2 3 4 1 2 1 L 2 1 5 6 7 8 4 5 6 3 4 4 5 6 4 5 6 4 5 6 3 4 5 6 7 8 3 4 4 P O N M L K J H G F 3 4 9 2 5 8 X 1 6 7 1 6 7 2 3 5 4 8 9 W 2 3 6 V 1 4 5 1 4 5 U 2 3 6 2 3 6 T 1 4 5 1 4 5 S 2 3 6 2 3 6 R 1 4 5 1 4 5 P 2 3 6 2 3 6 O 1 4 5 3 4 5 Dress Circle Boxes N 2 3 6 2 3 6 M 1 4 5 1 4 5 L 2 3 6 2 3 6 K success impact per capita 31 29 29 27 27 27 27 25 25 25 25 23 23 23 23 23 21 21 21 21 21 19 19 19 19 19 17 17 17 17 17 15 15 15 15 15 13 13 13 13 13 11 11 11 11 11 9 9 9 9 9 7 7 7 7 7 5 5 5 5 5 3 3 3 3 3 1 1 1 1 1 A B C D E ## ## ## ## 127 129 129 129 129 125 127 127 127 127 123 125 125 125 125 121 123 123 123 123 119 121 121 121 121 117 119 119 119 119 115 117 117 117 117 113 115 115 115 115 111 113 113 113 113 109 111 111 111 111 107 109 109 109 109 105 107 107 107 107 103 105 105 105 105 101 103 103 103 103 101 101 101 101 Dress Circle A B C D E 102 102 102 102 102 104 104 104 104 104 106 106 106 106 106 108 108 108 108 108 110 110 110 110 revenues? Where do advocates sit? 47 45 43 41 39 37 35 33 31 29 27 25 F 17 15 13 11 9 7 5 3 1 F 112 111 Grand Circle 102 101 47 45 43 41 39 37 35 33 31 29 27 25 G 17 15 13 11 9 7 5 3 1 G 112 111 102 101 51 49 47 45 43 41 39 37 35 33 31 29 27 25 H 21 19 17 15 13 11 9 7 5 3 1 H 112 111 110 103 102 101 51 49 47 45 43 41 39 37 35 33 31 29 27 25 J 21 19 17 15 13 11 9 7 5 3 1 J 112 111 110 109 108 107 106 105 104 103 102 101 51 49 47 45 43 41 39 37 35 33 31 29 27 25 K 21 19 17 15 13 11 9 7 5 3 1 K 112 111 110 109 108 107 106 105 104 103 102 101 51 49 47 45 43 41 39 37 35 33 31 29 27 25 L 21 19 17 15 13 11 9 7 5 3 1 L 112 111 110 109 108 107 106 105 104 103 102 101 51 49 47 45 43 41 39 37 35 33 31 29 27 25 M 21 19 17 15 13 11 9 7 5 3 1 M 112 111 110 109 108 107 106 105 104 103 102 101 53 51 49 47 45 43 41 39 37 35 33 31 29 27 25 N 21 19 17 15 13 11 9 7 5 3 1 N 112 111 110 109 108 107 106 105 104 103 102 101 51 51 49 49 47 47 47 47 45 45 45 45 43 43 43 43 41 41 41 41 39 39 39 39 37 37 37 37 35 35 35 35 33 33 33 33 31 31 31 31 29 29 29 29 27 27 27 27 25 25 25 25 O P R 17 17 S 21 19 T 21 19 15 15 17 17 13 13 15 15 11 11 13 13 9 9 11 11 7 7 9 9 5 5 7 7 3 3 5 5 1 1 3 3 1 1 O P R S 112 112 109 109 111 111 108 108 110 110 107 107 109 109 Terrace Circle 106 106 108 108 105 105 107 107 104 104 106 106 103 103 105 105 102 102 104 104 101 101 103 103 102 102 101 101 Are areas selling out? 51 49 47 45 43 41 39 37 35 33 31 29 27 25 U 21 19 17 15 13 11 9 7 5 3 1 T 112 111 110 109 108 107 106 105 104 103 102 101
- 17. F E D C A B A
- 19. Supply and Demand Supply “Fixed” Demand (D) Price Demand (D) Price Supply (S) Supply (S) Equilibrium P1 A P1 A Quan ty Quan ty Q1 Q1
- 20. Supply and Demand D1 D2 D2 Demand (D) D1 Price Price Price P1 P2 P1 A P21 P3 Quan ty Quan ty Q1 Q1 Q2
- 21. Supply and Demand Demand (D) Price P1 A P2 B P3 C Quan ty Q1 Q2 Q3
- 22. Tools for Managing Demand Perception of success Per capita revenues Inventory management
- 23. Perceived Demand Drives: Organizational Relevancy Subscriber/Member Renewals Subscriber/Member Acquisition Single Tickets Contributed Revenues Sponsorship Irrational Behavior
- 24. Perceived Demand Drives: Organizational Relevancy Subscriber/Member Renewals Subscriber/Member Acquisition Single Tickets Contributed Revenues Sponsorship Irrational Behavior
Notas do Editor
- Good afternoon, everyone. It’s a real treat to be with so many of you today. Thank you for joining us. We come to you at an important time of year for arts managers. Seasons are underway. Patrons and visitors are coming to see the programs you have to offer. And, even as most of you are wrapping up your subscription campaigns for THIS season, you and your colleagues are already beginning to think about and plan for NEXT season. The decisions you make now – for this season and next – can be game-changing. That’s why my partner and colleague Rick Lester and I wanted to share our firm’s current thinking about pricing and loyalty. Most of us first heard the words “dynamic pricing” uttered by Rick Lester. He introduced the concept more than a decade ago. Rick pioneered TRG’s counsel on demand-based pricing and is our firm’s thought-leader on the subject. He has taught the field at industry conferences nationwide. He is now also teaching the next generation of arts managers as Distinguished Visiting Professor of arts management at SMU --Southern Methodist University—in Dallas. It’s my pleasure to introduce the founder and CEO of TRG Arts, Rick Lester. Rick…
- Pricing is a tool for connect many elements together.
- SAMPLE CASE – Real data. EVERY Case is different. NO two are alike. But this case offers a glimpse into the process.385 households contribute 15% of all revenueVery High FREQUENCY scoresAdvocates attend first, donate second
- Key Drivers: They do almost everything – and typically have ONE primary revenue driving activityAGAIN – every definition of an advocate varies from organization to organization
- This is a large group of active ticket buyers -- 21,630 households contribute 54% of revenue.Frequency: One less activity per year compared to Advocates – They do “something AND something else” – but NOT everything.
- Missing activities in red – not predictable. Keys to targeted activities.
- Huge number of patons – little total revenuesFrequency: a bit more than 1X per year.Recency: 15 times more likely to be a STB compared to donors activity (45 to 3)Finding success with Tryers requires very different strategies than success with Buyers.
- Look at all the MISSING transactions.
- Few differences when compared to other arts organizations in the market – slightly more dependent on older patronsSignificant differences by ABT grouping – Advocates are significantly older than Buyers and Tryers. Generational risk going forward for this organization.
- Frequency of attendance is a loyalty driver. The bigger the package, the more loyal the patron. Packages, offers AND PRICES must encourage frequency ------ and produce more loyal patrons.
- Inventors of Scale-of-HouseOdeon of Herodes Atticus, an amphitheater built on the south slope of the Athenian Acropolis, restored with new marble and used for theatre and musical events
- Very traditional scale plan.
- Traditional fill patterns with subscribers camped on the price breaks and sales results focused on high value locations: most and least expensive inventory
- Widely scattered with limited access to “best” seats.Limited access to expensive inventory – which isn’t enough to drive loyalty.
- Much greater result with better/best seating locations. Location matters to these more knowledgeable patrons.
- Much more narrowly targeted results. Advocates purchase patterns closely follow scale plans – with predictable outliers based on highly emotional subjective judgments about the quality of the experience – Gallery or Choral Terrace.
- Thank you so much for attending.There will be video of the webinar on the TRG website posted in the next week. We will send you an email with the link once it is posted. If you had any remaining questions, we would love to talk to you! Email us at info@trgarts.com.