The Escalator Effect: Making and Keeping Donors
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Presented at the Spring 2012 ArtsReach Conference. Eight out of ten new customers for the arts never come back after the first visit. How’s an organization supposed to raise donors against those odds? Jill Robinson, President of TRG Arts, applies two decades of arts patron behavior research to illustrate how donors grow with good cultivation and customer service by every member of an organization’s team. Get an expert overview on your organization’s best donor prospects, what you have to do to win them, and how you can keep them moving up (not down) the patronage escalator. Presented here are ideas you can implement whether you are a member of the development, marketing or ticket office team.
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The Escalator Effect: Making and Keeping Donors
- 1. The Escalator Effect: Making & Keeping Donors Jill Robinson, President Copyright © 2012 TRG Arts All Rights Reserved
- 3. National Census of Arts and Culture D D D D D D
- 4. 20,000,000
- 5. 50,000,000
- 6. Meet Dr. Jaylee Mead
- 8. Lifetime Value $35 MILLION GIFT
- 11. The State of Patron Relationships 10- 15% 85- 90%
- 12. Only 1 in 5 first time patrons ever return 4 out of 5 new buyers come once and NEVER come back.
- 13. Only 1 in 5 first time patrons ever return 87% of Tryers LAPSED
- 14. Patron Evolution Advocate / Investor Donor Subscriber / Member Multi Ticket Buyer THE ESCALATOR New Repeat EFFECT Ticket Single Buyer Ticket Buyer
- 15. Tryers: Stepping onto the Escalator New or Lapsed Buyer: “I came [or came back] when I heard they were doing [Your Hottest Event]”
- 16. Tryers: Stepping onto the Escalator New or Lapsed Buyer: “ COME BACK !
- 17. The Magic of “AND” Donor Subscriber / Member Multi Ticket Buyer MAKING BUYERS Repeat New Ticket Lapsed Buyer Ticket Buyer
- 18. The Making of BUYERS Multi-buyer: “We love to go a few times each year – it’s a treat we give ourselves.”
- 19. The Making of BUYERS Multi-buyer: “We love to go a few times each year – it’s a treat we give ourselves.” SUBSCRIBE ! JOIN !
- 20. The Impact of Inventory Management on Loyalty Multi-buyer transition to subscriber: • What seats are you making available to STBs? • How much are they paying? • Your strongest subscription offer: – subscribers get guaranteed seats to sold-out shows, – AND receive ACCESS to the best seats – at the best price.
- 21. The Making of BUYERS New Subscriber/Member: “Subscribing means we’ll go to the theater more often and see different kinds of events.”
- 22. The Making of BUYERS New Subscriber/Member: “Subscribing means we’ll go to the theater more often and see different kinds of events.” RENEW !
- 23. The Impact of Inventory Management on Loyalty First time subscriber to renewing subscriber: • Your renewing or upgrading your package ENSURES that you retain your same great seat • Or improve it!
- 24. The Making of BUYERS Long-term subscriber or member: “After 25 years, we still get goosebumps when the lights go down and the curtain comes up!”
- 25. The Making of BUYERS Long-term subscriber or member: “After 25 years, we still get goosebumps when the lights go down and the curtain comes up!” GIVE !
- 26. The Making of BUYERS Long-term subscriber or member: “After 25 years, we still get goosebumps when the lights go down and the curtain comes up!” GIVE ! 32%
- 27. The Impact of Inventory Management on Loyalty Subscriber-Donor • Loyalty is honored at XYZ Theatre Company • Your renewal will be prioritized first. • Desire changes in your seating location? We ensure our subscribers who are donors receive seat-change priority. • Other fees waived.
- 28. Potent 2% Advocate Donor Subscriber / Member Multi Ticket Buyer $1,000-$2,500 Repeat New Ticket Single Buyer Ticket Buyer
- 29. The Impact of Inventory Management on Loyalty Advocates • Loyalty is honored at XYZ Theatre Company • We’ll talk with you about when you’d like to renew your seats. On your schedule. • When you can’t use your seats, we’ll return them to a VIP list so other VIPs can access them. • No fees, of any kind, for Advocates.
- 30. Patron Loyalty Cast SALES & SERVICES JOB: Acknowledge relationship Make buying easy Address logistics FRONT OF MARKETING & Affirm order; upgrade HOUSE/ DEVELOPMENT FACILITIES JOB: PRE-SHOW JOB: Welcome patrons as Get the phone to ring guests & friends POST-SHOW JOB: Set the stage for an Invite them back! excellent artistic Upgrade experience THE SHOW/ EXHIBIT JOB: Give patrons a great experience
- 31. Discovery: Loyalty Indexing Advocate Buyer Tryer
- 32. Discovery: Multi-Variate Model Transactions Demographics Spending
- 33. Questions? www.trgarts.com www.blogspot.trgarts.com Copyright © 2012 TRG Arts All Rights Reserved
Notas do Editor
- TRG is the data-driven arts and entertainment consulting firm, working with a variety of organizations throughout the U.S. and Canada.
- TRG Arts has 19 data networks nationwide.
- The data networks compile the data of 20 million arts patron households.
- And, 50 million arts patron transactions.
- A colleague of mine met this lovely woman and her husband Gilbert at a dinner for a seemingly random group of theater subscribers in Washington, DC some 25 years ago. The Meads were both – literally – rocket scientists, having spent three decades working for NASA. Dr. Mead and Gilbert LOVED the theater. Her eyes lit up as she talked about favorite shows and how she and Gilbert saw just about everything the Washington DC theater community had to offer. After this event my colleague asked why this unassuming theater lover who was about to retire had been invited to this special dinner. “We’re getting to know the Meads,” her development officer told her. Jaylee and Gilbert Mead did give a major gift to my client’s organization. And, their generosity didn’t stop there. Since then, the entire arts industry learned a lot more about Dr. Jaylee Mead.
- Dr. Mead – the theatersubscriber -- also got involved with Arena Stage.
- Before Gilbert died, he and Jaylee gave thirty-five million dollars to Arena Stage – the largest gift ever to a regional theater.
- It enabled Arena’s fantastic new Mead Center for the Arts, which you heard Chad Bauman speak about yesterday. And that was just one way Dr. Jaylee Mead…unassuming subscriber and theater lover …has contributed to the arts. Every one of you could probably tell an important donor story likeJayleeMead’s. And, so you’ll get this ….
- A decade of TRG patron behavior has led us to conclude about loyalists – the patrons whose attendance and investment keep our art on our stages and in our exhibition halls. Loyalists are MADE, not FOUND. Like Dr. Mead…and all the other Major Donors that development officers all over the country are trying to find aren’t going to just materialize – YOU and your colleagues across the hall in marketing, the box office, and the executive offices are going to cultivate them.Let me tell you what ELSE our research tells us.
- Patron loyalty in the arts is sitting on an unstable foundation. For more than a decade, TRG has been doing a trademarked form of loyalty analysis that we call theAdvocate, Buyer, Tryer Pyramid. We look at all the households and all their transactions as recorded in an organization’s database. We study the recency, frequency and monetary investments by each household. The resulting analysis ranks everyhousehold from top to bottom. Patrons in the top rank, we call, Advocates – these are the organization’s most loyal patrons . One defining characteristic is: they are donors. More on Advocates shortly. The next group, Buyers, are actively engaged in the organizations we study. They are subscribers….members…frequent ticket buyers and visitors. “And” is the defining factor among Buyers….hold that thought. So two loyal, actively engaged groups of patrons, right? And, here’s the sad truth: Advocates and Buyers together account for 10% or less of all patrons. The rest of the story from our research over the past decade is clear. Nine out ten patron households in the databases of arts organizations are patrons we call Tryers. They are one-time or infrequent and long-ago lapsed customers. In our terminology – Tryers – are the least loyal, hardest to acquire and hardest to hold onto. And, they form the foundation of arts patronage today. The instability created by too many Tryers in the patron base – the cracks in the pyramid so to speak – is a real threat to our arts organizations. So we bring this news to you – not be alarmist, although the numbers are alarming. We prefer to think of it as a call to action. And, in that call – pay attention to the dominant behavior pattern among Tryers.
- It’s a big sign that says: Exit.Large numbers of Tryers churn out from your active patronage pool every year. How so? Two ways.Tryers are predominately single ticket buyers. Every year most organizations generate large numbers of new buyers who take seats in our theatres and concert halls or visit our museums for the first time. And what does our research say about new single ticket buyers? According to national TRG statistics and other studies – 4 out of five make that first visit…and never come back. We have done client studies in recent years that say …among our clients, 2 out of 3 new patrons exit – better, but still more than any organizations can afford to lose. There’s a second kind of exit we need to attend to.
- When we study the households that make up Tryers in an organization’s database, the major finding is that… a very high proportion of them – 87% according to our most recent studies – have NO ….CURRENT …TRANSACTIONS. Tryers are missing in action – they still show up in your database but not in your theatres, concert and exhibit halls. They are lapsed…not engaging….not loyal. You may have lost them or are in the process of losing them.So…many, many newcomers, come once and never come back or stay away for a long lapse period. What do we do about this?
- Patron loyalty evolves…over a patron’s lifetime with your organization. Loyalty grows through a progression of mostly consecutive transactional steps. Ticket buying is a consumer initiative that can be motivated.Donor behavior has to be sought – cultivated. Development officers know that. Without good cultivation – the kind that development officers do so well – sustained patron evolution is challenged if not stymied. The longer and more engaged a customer is, the more they invest – in tickets, in memberships or subscriber, in contributions. The more loyal patrons an organization has, the more sustainable is that organization’s future. Building sustainability…through patron cultivation and evolution. We call this THE ESCALATOR EFFECT. It is conscious, conscientious cultivation to build stronger, longer patron relationships.Let’s break it down step by step.
- Every patron starts off as a new buyer. Most come in for blockbuster productions and exhibits…. Your most popular attractions. OK….there they are…in your house for the first time….or back again after a long while. What is the most important thing you can do?
- Ask them to come back.With Tryers, it’s most important to create a second time for first timers, and…An attendance “now” for those who haven’t been back in a while.In order to do this right and well, use your database right and well: Make sure you have collected patron’s contact information.Tag newcomers and recent returnees for more personalized follow-up communication.Employ everyone on your team – especially the box office and front of house staff – in the welcoming process. These first impressions count.Now, let’s revisit the escalator to talk about the next phase of loyalty development in the way it shows up in our research.
- Now we’ve done the hard work to beat the odds and the patron has come back. This patron is on the escalator – moving up – and on the way to a greater loyalty level that we call Buyers. At TRG, we’re data geeks so we think of Buyers as an analytic statement: The patron does this -- buys a subscription or membershipAnd this -- purchases an additional single ticketAnd that --makes a small donationIn other words, patrons become Buyers when they engage more–add “ands” to their transactional behavior. Buyers generally account for less than 10% of patrons in the database -- the more “ands” Buyers transact, the more likely they are to escalate to the highest levels of loyalty and investment. According to our study, escalation doesn’t happen unless Buyers are appropriately and continually cultivated. There’s huge risk here….and the risk occurs when organizations don’t work productively together – across departments -- to leverage Buyer behavior. Today, the numbers tell a sad story. Many patrons stay forever a Buyer. Or, worse yet, they are left unattended and take the Exit back into Tryer-land.Our data tells us that there are all kinds of ANDS….Buyers are a mix of all kinds of current and recent transactions. So let’s put a human face on the typical kinds of Buyer behaviors….the ANDs that make up this important loyalty group.
- Here’s where your database really becomes helpful. If you don’t have internal prospect codes on each household in your ticketing and development systems, look to further cultivate same-season multi-buyers. What might some cultivation efforts might be right for patrons who have come a couple of times this season?
- This group is generally are generally prime prospects for the value proposition of membership or subscription. Give them a reason to keep coming back by becoming a member or subscriber, namely a patron with benefits for deepening their loyalty.
- New subscribers and members are really patrons who are really starting to blossom as loyalists. It can take a lot of effort to get someone to subscribe or become a member, but once they do, their value to the organization increases exponentially. So, now what’s next for this group?
- Of course: Renewing. Renewing is a critical priority for this group. We know that, statistically, new subscribers and members renew at a much lower rate than long-term subscribers. Usually renewal rates among new subscribers and members fall in the 30 to 50% range, and with good cultivation, we’ve seen renewals for newbies go to 60% and beyond. Achieving first-time renewals is a different kind of campaign. It requires different messaging and more aggressive follow-up. When does that renewal decision start? Like multi-buyers, everything about the experience will make an impression. Their decision to renew starts when they are making plans to come for the first time as a subscriber or new member. And one last point on renewal: How many of you have one annual renewal date for all members? Our data on this operational details still is being compiled. However, we’re really challenging ourselves and our clients to think about renewal the way the PATRON thinks about renewal. If I bought a membership in September….and then get asked to renew in January, I may just say no because I feel like I just signed up. We’re beginning to see real lift from rolling out renewals monthly so that patrons renew in the same month one year after their original membership. OK…so….we’ve got that first renewal …and now…
- They are coming back as subscribers, as members year after year. Typically it takes less effort and fewer budgeted dollars to renew long timers. These are folks who – research tells us – signed on because they love the art form you offer and they love the way your organization offers it. It is a passion-based decision. In consumerism, passion-based decisions are based on really strong affinity – loyalty – These are decisions that aren’t easily swayed by circumstance or economic logic. These are patrons that can support you, stick with you.What would you say is a good offer for this patron?
- All subscribers, and especially long-time subscribers, are logical prospects for an annual fund gift. They have affinity and a history of investment that’s frequent and recent. It’s logical that subscribers or members are also donors. That’s what our loyalty research shows. But, recently, we did a data scan of a broad cross-section of performing arts organizations to see how many subscribers are also donors. Overall?
- Just 32% of subscribers are donors. There was a wide range of cross-over—some organizations – opera, for instance --had cross-overs in the 50% range. The fact remains that often--subscribers and members aren’t being cultivated, aren’t being asked …or aren’t being asked in the right way. Again – your database is key here. An ask to a long-term subscriber is a different kind of cultivation than a patron who is new or only been with your organization for a short time….there are other factors, of course, too – and, that’s where database analysis can be helpful.So…now…let’s think about how we get from Buyers – those very active, engaged, “AND” transaction patrons. Now we’re at the top the patron pyramid and the escalator.
- Here….at the top…is this relatively small group, less than 2% …of most organizations’ patron households. They are patrons who have arrived at this most-loyal status with frequent, consistent and current engagement. Advocates are responsible for the largest revenue investments on a per-household basis. In 99% of cases, Advocates are defined through philanthropic behavior. Whatever else they do, they are also donors. And what level of giving do you suppose is the qualifier in most organizations for Advocate status? It’s $1,000-$2,500. Even in large organizations,a relatively small gift will promote a patron into this top rank of loyalists. So, we’ve been talking today about a process thatConsciouslyConscientiouslyCultivates …loyalty in your organization.And, it’s everyone’s job.
- Collaboration that creates good experiences for the patron and clear communications within the organization moves patrons up the escalator. This kind of integrated, collaborative functioning builds a network that strengthens the patron foundation – that otherwise cracked pyramid we talked about at the very beginning.How this is done….and how well this is done…can have a huge impact on sustainability.The big issue we see….as we talk to organizations all across the country….is how to get started.Once you’ve decided to work across departmental lines on one or several components of loyalty development, a good place to start is with your database.
- This is a comprehensive snapshot that details and scores every household in your database from top to bottom.It creates patronage groupings as we’ve been discussing today – Advocates, Buyers, Tryers.And…on the campaign level…you have another means of prospecting for donors and for those “Buyer – ANDs”
- In trying to identify the very best prospects in your database for a specific campaign – that Advocate-level annual fund gift for instance…..database modeling analysis can be very helpful.Modeling tools look at multiple attributes of households you are trying to develop more of…the type of transactions they make, the amount they spend, even the timing of their transactions. Then… the model looks for households that most closely match the multiple variables and – essentially – provides that list of prospects to you.
- Finding and keeping donors is all about loyalty….loyalty is the key to sustaining our arts, our organizations. I hope you can take home some new thoughts that will help you make donors AND more loyal patrons.Thank you so much for attending.Now, may I take your questions?