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TRG Webinar: Demand and Success Factors for Museum Pricing

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President Jill Robinson, who leads TRG's counsel for museums and membership-based organizations, explains the demand-based pricing approach that has led TRG clients to sustaining revenues and lasting …

President Jill Robinson, who leads TRG's counsel for museums and membership-based organizations, explains the demand-based pricing approach that has led TRG clients to sustaining revenues and lasting patron loyalty over the last two decades. Jill makes a brief presentation on the success factors for optimizing admission revenues and then takes audience questions.

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  • About TRG -- Let’s ultimately combine slides 4 and 5 into one; add ANY that we can related to museums – EMT.
  • You can’t talk about museum pricing today without talking about the “fear factor”.Recently admission price increases at some of America’s highest profile museums have made news in major media and online. The dialog suggests that the further away from free or low-cost admission a museum gets, the more exposed the institution is to criticism on grounds of not making their collections accessible and affordable.
  • Recent debate implies that free and low cost tickets are the only way to express accessibility and that accessibility is the only reason for a museum’s being.[CLICK] It’s true that some museum missions are set on a foundation of accessibility. They maintain and preserve a collection that is made available and affordable to the broadest possible segment of the market. But missions are diverse, and accommodate all genres and sizes of membership-based organizations. Missions have also been built around visions to share specific themes in education, history, science, or entertainment and include the goal of accessibility in their mission. [CLICK]Then there’s funding. As you saw before, many debates around pricing center around public funding. Some museums exist because there is significant public, private, or foundation funding to support and even require free or low-cost admission. Many others, however, need some combination of ticket revenue and contributed income to bring their collections to the public. Accessibility and funding are considerations for pricing to be sure. [CLICK] But, they can’t be the sole basis for a museum’s admission price decisions. Pricing is a primarily mission-based decision. However, all museums have some need to maximize revenue from whatever they charge for admission or ask visitors to give. Optimizing revenue for every admission is where opportunity exists for museums.Those of you on the line today represent a kind of focus group of museum diversity, and I’m sure very specific mandates on mission. So, let’s take a 50,000-foot look at where this group is on the subject of price adjustments.
  • Recent debate implies that free and low cost tickets are the only way to express accessibility and that accessibility is the only reason for a museum’s being.[CLICK] It’s true that some museum missions are set on a foundation of accessibility. They maintain and preserve a collection that is made available and affordable to the broadest possible segment of the market. But missions are diverse, and accommodate all genres and sizes of membership-based organizations. Missions have also been built around visions to share specific themes in education, history, science, or entertainment and include the goal of accessibility in their mission. [CLICK]Then there’s funding. As you saw before, many debates around pricing center around public funding. Some museums exist because there is significant public, private, or foundation funding to support and even require free or low-cost admission. Many others, however, need some combination of ticket revenue and contributed income to bring their collections to the public. Accessibility and funding are considerations for pricing to be sure. [CLICK] But, they can’t be the sole basis for a museum’s admission price decisions. Pricing is a primarily mission-based decision. However, all museums have some need to maximize revenue from whatever they charge for admission or ask visitors to give. Optimizing revenue for every admission is where opportunity exists for museums.Those of you on the line today represent a kind of focus group of museum diversity, and I’m sure very specific mandates on mission. So, let’s take a 50,000-foot look at where this group is on the subject of price adjustments.
  • Based on the survey you took when you registered, many of you had recent price changes, but others hadn’t changed since 2007 or before. Everyone who did report adjusting prices reported raising them. However, we find it interesting that of your organizations that did raise prices – three out of four have not done so for a year or more and no one reported a price adjustment or increase in 2008 – that was the year of the economic meltdown in this country. And, it sparked great nervousness across non-profit and for-profit industries alike.Fast forward to today: All of the economic and institutional circumstances you face are real and they likely trigger legitimate concern, especially when discussion online and among industry insiders illuminate possible obstacles. That surely has made many museum managers nervous at best and too confounded to act at worst. As a result, there’s inaction at a time when organizations can be maximizing revenue IN SPITE of difficult circumstances. [Click]
  • For museums, demand management is built upon a series of Success Factors These are factors impact demand and – when considered alongside institutional mission, funding and revenue needs – can help optimize revenue. Each market and each museum has its own critical demand factors. In fact the variances are so broad that each museum’s situation will be slightly different. But each likely will be a contributing factor to a successful museum admission pricing strategy.Here are commonly shared, important demand success factors.First of all,[CLICK] Seasonality—Admissions peak during certain periods of every year. Visitation may be tied to a holiday, especially at year’s end when much of the public has time off. In some markets, the summer vacation months and times of year when tourists are visiting also can produce larger numbers of admissions.[CLICK] Day of week—Weekends often outdraw week days for museum admissions, but patterns vary market-to-market and with the operational program of each museum. [CLICK] Time of day—There are four generations of American consumers active with arts and culture organizations today and no two age or lifestyle groups use their time the same way. Public transportation, parking, commuter and weather patterns also produce situational variances that make some days of the week and some times of day more appealing than others.[CLICK] Opening and closing dates—The length of time an exhibit is available for viewing can have a substantial impact on the number of admissions it will draw. To be sure, long-running exhibits create greater opportunity for visitation and therefore generally larger overall numbers of admissions. But, limited engagements create urgency—a reason to attend now. [CLICK] Programming—Content matters above all else but inclusive of every other factor. There is a huge amount of variability of public demand for specific exhibits. Every museum has its blockbusters—the ones that become a hot ticket in the marketplace. There also will be museum offerings that, while worthy, cannot find an audience. With those, and every program in between, all demand factors come together dynamically to promote consumer response that can be managed for optimal revenue whenever sales patterns are soundly anticipated and monitored. [Segue coming….] Generally speaking, these demand factors help museums focus on the optimal price point for admission. And, price point must consider the way that price is varied for specific constituencies. This is a policy consideration …discount policy. [CLICK]
  • Smart museums have special prices that come in the form of “always-available” discounts. The intent? To make admissions more affordable, to be sure. More importantly: to add value to a customer’s decision to attend. Among the most important “always available” discount is the one you offer to MEMBERS.Members deserve to have the best access to exhibits at the best price. It is a quality–value price point that is intended to recognize and reward this very important constituent.The loyalty you’ve cultivated to create members is an important step UP in customer loyalty. As that loyalty continues, it contributes to your sustaining revenue and patronage. Now…let’s look at other kinds of “always available” discounts. [click]
  • Eligibility discounts are an excellent way to ensure your museum is affordable to those with acknowledged financial limitations —to name a few of the most common: military personnel, students, and seniors. [CLICK] The majority of you offer at least one eligibility discount, with the most popular being the senior discount. Others in the audience today named group discounts, public transit discounts, children under a certain age, and cooperative discounts with other museums.
  • We at TRG also counsel rewarding ticket buyers for behavior we want. I mentioned discounting as an incentive for memberships and that one of our attendees today provides a reciprocal discount for attending other museums in the community.Recently we’ve counseled discounts for buying online offer the public a more affordable price and, more importantly, provide a sound way for museums to collect contact information. Contacting ticket buyers, especially those new to the museum, is the first step in cultivating an ongoing relationship with them.
  • Putting together the factors and optimizing revenue from every admission is an integrative process. There’s no magical IT fix or tactical solution. TRG counsels a systemic approach to this process. Each demand factor must be measured using a museum’s admission data and then considered within mission, funding, and operational realities to arrive at a sound admission pricing strategy. Putting together Rubik’s Cube-like pieces that create revenue success for each client has been a TRG specialty for nearly two decades. I hope we’ve given you some insights today on some of the considerations we use when forming pricing strategies. I will now take your questions
  • Two prepared questions, Amelia will vet if needed. They are:How often should we adjust our pricing?Should discount policy change?
  • Thank you so much for attending.Therewill 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.
  • One of the most frequently-asked questions we get is: How often should we adjust our pricing?That’s especially important to our discussion today, because, in our view: Too many museums are not even addressing admission prices. Indeed, it’s been at least a year for most of you in this webinar today.Our counsel to you would be this:If you have not addressed pricing strategy – price point and price policy – in over a year, do it now. Demand factors – especially programming – is reason enough to examine price points every year. Good price point strategy starts with demand analysis and its application to upcoming programming. Price policy may need at least a review every year, even if it’s just a process of checking to be sure your eligibility discounts still foot with your mission, funding needs, market conditions, and revenue needs.
  • The policy for eligibility discounts is entirely situational to a museum’s mission, funding requirements and mandate. What can and should be challenged is your assumptions around the types of customers you make eligible for discounts. [CLICK] In today’s social and economic environment, the acknowledged sacrifice of military cannot be argued. Those of you who offer discounts for military personnel are doing so responsibly and with good reason. “Students” eligibility for admission discounts continue to be right in most markets. But what about seniors? Thirty or so years ago, when senior discounts began, folks 65-and older were generally retired, living on fixed incomes, and often in frail health. And today? “Seniors” are a large and very different segment of most markets. They populate the two oldest generations of American consumers [Click]
  • Traditionalists are consumers who are ages 66 and older. They are a big portion of arts and culture patronage – about 38% --than are their numbers in the US population, just 13 %. [Click]Older individuals who support you are probably well known to you – This is the life stage that limits mobility but not necessarily giving. they are disciplined and loyal; they think about and are deliberate in their giving. Cultivating relationships among persons of this generations require directness, understanding, and – for many of us – patience.
  • Baby Boomers – those mid-40s to mid-60s – today represent nearly half of arts and cultural patronage and about 1 in 4 Americans. Over the next few years, millions of Boomers each year are reaching age 65 – the age the used to be considered retirement age. But are these older populations acknowledged to be financially challenged? Not according to our study of arts consumerism.As consumers, Boomers are cause and value-oriented. To cultivate this large group consider that they generally earmark their budgets to give what they give. Think about how you can engage them in YOUR cause, leave a legacy with your organization.
  • When we examine the demographics of arts consumers of this age, we see:AffluentEducatedOften dual income householdsEmpty nestersThey have the time, money and interest to pursue their passions – like the arts.And, invest in the arts they do….[click]
  • Our firm recently did a pilot study on the contributed revenue behaviors of each generation. Our analysis looked at 2010 individual donor households from a select sample of performing arts organizations with consistent data and representing a mix of genres and U.S. regions. Across the bottom (horizontal axis), we’re measuring the age of the head of household. Each unit is a two-year increment from age 18-19 (far left) to 99-plus (far right).The four generations are denoted by the dotted vertical lines.The black bar height shows the percentage of total sample population in each two-year age increment. You can see that the age sample forms a bell curve that peaks in the Boomer generation between ages 58 and 63.and…in this chart we’ve added And.. The revenue associated with each two-year age group isseen in the red line cutting across the bars. You can see that the two older generations contributed more than 9 out of every ten donated dollars. When we looked at the average amount donated per household, here’s what we found…..Per-household revenue peaks at $1,557 with the eldest generation [click]Remains high among the huge number of Boomers [click]And drops off by nearly half among Generation X – 30-somethings at the height of the career- and family development life stage.Then, look at Generation Y comes along and….Average household gift is nearly $900. Those are the facts challenging our assumptions about seniors. We’d suggest you do the same.This reminds us that we can’t underestimate any prospect group…and underscores the importance of knowing WHO you are cultivating. Let me show you one more example of how understanding the audience on a generation basis can help shape cultivation activities.Here, you can see the generational divide with vast majority of donors in the older generations.Now let’s look at the donation revenue associated with each generation and age segment.In this pilot study, the median household gift was $1,238. The median for each generation:Traditionalists: $1,557 – 26% higher than median.Boomers: $1,207 – just about the medianGen X: $747 – 40% below median…..and for our youngest generation:Gen Y: $897 – still below the median but 20% more than Gen X.It means that in this pilot study group, the youngest donors are giving more per household than donors ten to nearly 20 years older.Given what other researchers are finding…with surprise, like the housing study that came out last month….this is an indication that younger donors should not be written off or overlooked.Let me show you a specific case where opportunity may be knocking among a Company’s youngest patrons.
  • Thank you so much for attending.Therewill 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.

Transcript

  • 1. WebinarDemand and Success Factorsfor Museum PricingJill Robinson, President
  • 2. Seattle ArtsFund Portland RACC Boston San ChicagoPittsburghArts Boston Berkshires League of Greater Arts Boston Philadelphia New Francisco Washington Chicago Pittsburgh GreaterTheater Bay Denver Jersey Los Theatres Arts Council DC Philadelphia Area SCC ArtPride Cultural Alliance Theatre Angeles Arizona Washington LA Stage Alliance for Atlanta Audience Austin Central Houston C4 Atlanta Austin Houston FL Ft. Myers Creative Arts Arts and Alliance Alliance Cultural Alliance for the Arts Alliance3
  • 3. “My two cents: I’ve never thought Museums and their patrons gain directthe public should be charged to and indirect support from public money.see their own belongings.” They owe meaningful access to--Paddy Johnson, arts blogger visitors. -Vera Zolberg, NY Times Fear Factor “Financial calculations and market opportunities should not trump social responsibilities.” -- Bruce Altshuler, NY Times 4
  • 4. Pricing Considerations Accessibility Mission5 Funding
  • 5. Pricing Considerations Accessibility Mission Pricing is a mission-based decision.6 Funding
  • 6. How recently did your organization adjust your admission prices?40%30%20%10% 0% 2007 or before/ 2008 2009 2010 2011 Dont know7
  • 7. How do you maximize revenue? DEMAND • We create demand (and its perception) • We control the supply of ticket inventory • We manipulate the perception of both Demand Management: The art of optimizing revenue from every admission
  • 8. Goals of Demand Management1. Force the perception of success2. Per admission revenues increase as exhibits fill3. Inventory management: reinforce the message of success – Discounts, comps, admission by time used purposefully
  • 9. Demand Factors Seasonality Day of Week Time of day Opening & Closing Dates Programming10
  • 10. Member Loyalty Membership discounts rewardloyalty, encouraging long-term patronage and movement up Advocates the loyalty ladder. Buyers Tryers11
  • 11. Eligibility Discounts seniors students military 58% 51% 41% What non-member discounts are always available at your organization?12
  • 12. Discounts that reward “good” behavior13
  • 13. 14
  • 14. Webinar Questions?Demand and Success Factors for Museum Pricing
  • 15. WebinarWhat’s new? What’s next? www.trgarts.comwww.blogspot.trgarts.com
  • 16. Price adjustments: How often?17
  • 17. Should discount policy change?Policy Foundation: Support Mission Funding MandateChallenging Assumptions 18 ? seniors students military
  • 18. Traditionalists % of % of study ConsumerAge population donors behavior Approach to giving Conservative, risk-adverse, disciplined, Deliberate, pre-66+ 13% 38% trusting meditated19
  • 19. Baby Boomers % of % of study ConsumerAge population donors behavior Approach to giving Time-stressed, cause-oriented, value good quality Budget earmarks, cause-46-65 25% 45% and service oriented, legacy seeking 20
  • 20. Arts Patrons 65+ Highly Dual educated income Own their Married own home couples High disposable income21
  • 21. Percent of Category 2% 4% 0% 6% 8% 10% 12%22 18 - 19 20 - 21 22 - 23 24 - 25 1% $897 26 - 27 28 - 29 Generation Y 30 - 31 32 - 33 34 - 35 36 - 37 38 - 39 8% 40 - 41 $747 Generation X 42 - 43 44 - 45 46 - 47 48 - 49 50 - 51 52 - 53 % HHs 54 - 55 56 - 57 44% 58 - 59 $1,207 Baby Boomers 60 - 61 62 - 63 64 - 65 % Revenue TRG DONOR DATA SET 66 - 67 68 - 69 70 - 71 72 - 73 74 - 75 Age (Head of Household) vs. Contributed Revenue 76 - 77 78 - 79 Median HH Gift: $1,238 80 - 81 47% 82 - 83 $1,557 84 - 85 86 - 87 Traditionalists 88 - 89 90 - 91 92 - 93 94 - 95 96 - 97 98 - 99 99+
  • 22. Webinar Questions?Demand and Success Factors for Museum Pricing
  • 23. WebinarWhat’s new? What’s next? www.trgarts.comwww.trgarts.blogspot.com