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TRG Webinar: Dynamic Pricing is NOT the Story
 

TRG Webinar: Dynamic Pricing is NOT the Story

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Dynamic pricing, the tactic of raising prices after tickets go on sale, has often been in industry headlines these days. However, when it comes to growing revenue and increasing patron loyalty, it’s ...

Dynamic pricing, the tactic of raising prices after tickets go on sale, has often been in industry headlines these days. However, when it comes to growing revenue and increasing patron loyalty, it’s not the whole story. While it’s true that Vancouver's Arts Club Theatre Company (ACTC) generated six-figure revenue from dynamic pricing, the real news is how ACTC increased the number of its most loyal subscribers. Presented in August 2011, TRG consultants and ACTC staff retell ACTC’s $3 million client success story, including how:

- Loyalty strategies -- not pricing tactics -- led to sustaining revenue.
- Unified, company-wide change in focus brought about increased revenue and subscribers.
- Dynamic pricing made subscribing more valuable.

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  • Laura: It’s a pleasure to be with you today. Let’s start at the beginning of this story. Howard?HOWARD: Introduce ACTC
  • [There will be one or two AILEY folks in this webinar, but none who were part of this story. You don’t have to acknowledge them.] HOWARD: At a marketing conference, we heard for the 1st time about dynamic pricing at a session where Alvin Ailey talkedabout their work with TRG and their amazing results. It attracted our attention because we were having real challenges with flat revenues…
  • HOWARD:Like Ailey, we’d been doing pretty well, but since 0405, our main subscription series at the Stanley was stuck around 7,000 subscribers. Also our single and group admissions had declined about 30% in the previous two years, which was a worrisome trend. Overall revenues were relatively flat, and we regularly missed budgeted goals.
  • HOWARD: Got very excited and decided to immediately try one of the new inventory management tactics we’d heard about, seating patrons from front to back and side to side to improve the perception of success. The standard practice at the time was for our box office to seat patrons in the center all the way to the back of the halls, leaving lots of visible empty seats on the sides of the main floor. Seemed like a pretty straightforward change but what happened was…
  • HOWARD: Our union box office went crazy. They felt the best customer service was to direct patrons to the center so this new concept was manipulative and wrong! So what was our takeaway? There are no magic bullets! Introducing a new idea without creating understanding and buy-in and without providing training was counterproductive. We got box office backlash, communication difficulties, and actually succeeded in creating a new level of resistance. We needed help so…This taught us that with such entrenched habits and deeply felt convictions, we needed outside help to facilitate change, and we couldn’t skip the step of bringing everyone on board from the beginning. When TRG was ready to deliver it’s audit, we dedicated the entire annual staff meeting to it so we had lots of time for reactions, questions and concerns. And that was only the beginning!
  • HOWARD: Challenging first impressions …aggressive concepts, foreign to theater cultureWe went through an extensive audit process and then had TRG present findings and recommendations to everyone on staff at our annual staff meeting. It was controversial, but turned out to be critical to our long-term success to help create that understanding up front. We also needed to do something that would make a difference fast to give everyone confidence in the process.Laura: Leadership is key to success…if Howard and Bill weren’t fully on board and conveyed that commitment to the staff and board, the bumps and controversies that inevitably arise could have led to very different results.
  • HOWARD:And then in Fall 2008 the recession hit, so were even more nervous about some of the changes TRG was suggesting.
  • LAURA: 1 in 3 tickets were discounted, some twice (corp seniors)
  • LAURA
  • LAURAFEAR = everyone will buy the cheap seats! Per caps will go down!Cyrano de Bergerac Nov 22, 2008359 seats soldSeats in the back of the balcony on hold so they aren’t available to sell
  • LAURA: Even though we lowered the entry price, with all the other changes, we got more per ticket while providing a more accessible range of prices every night.$4.91 per ticket over two yearsPER CAPITASubscriptionsSinglesTOTAL2007-08 $ 27.17 $ 34.29 $ 31.05 2008-09 $ 27.96 $ 37.17 $ 33.83 2009-10 $ 31.67 $ 38.29 $ 35.96
  • LAURA: The koolaid of flexibility – another assumption in our business.The result – overwhelming our audience with options and making the case that everything is equally good. No recommendations – no helpful guidance – this is our “best value package where you get best seats AND Les Mis for free!” In ACTC’s case, the box office pushed flex passes because they were often a cheaper alternative to single tickets so we’re underselling ourselves.TERRIBLE renewal rates
  • LAURA
  • LAURA - LesMis singles in 0809 and Buddysingles in 0910 became TM hottest leads…the contrast between a $99 single ticket and a 6-play subscription for as low as $135 was an impressive sales pitch.
  • LAURA
  • NOTE: 0809 had Les Mis; 0910 had an extra summerblockbuster showSUBSCRIPTIONS UP 52% - almost $1 million from 0708 – 1011: Sub revenue % inc/dec Inc/dec2007-08 $1,772,694 2008-09 $1,912,326 8% $139,632 2009-10 $2,300,782 20% $388,456 2010-11 $2,686,808 17% $386,026 from 0708 to 1011 52% $ 914,114

TRG Webinar: Dynamic Pricing is NOT the Story TRG Webinar: Dynamic Pricing is NOT the Story Presentation Transcript

  • WebinarDynamic Pricing is NOT The Story
  • Welcome Rick LesterChief Executive Officer
  • Please:• Keep your phone on mute. To ensure everyone hears the webinar audio, you were placed on mute when you signed in.• Use Q&A feature to ask questions. – Lower right corner of your screen. – Type your question in the text box. – Send. – Moderator will field and ask questions following the presentation. View slide
  • The tactic of dynamic pricing is the practice ofraising ticket prices after they go on sale forprograms that have high patron demand.It’s demand strategies – not tactics -- that leadto sustainable patronage and revenue.DYNAMIC PRICING View slide
  • Presenters Howard Jang Executive DirectorArts Club Theatre Company Laura Willumsen TRG Senior Consultant
  • ARTS CLUB THEATRE COMPANY
  • ALVIN AILEY: One-Season Success $1 Million Increase in Revenues 64,000 $4,500 Sales Revenues (thousands) 62,000 $4,000 60,000Admissions $3,500 58,000 $3,000 56,000 $2,500 54,000 52,000 $2,000 2000 2001 2002 2003 2004 2005 2006 Seats Sold 58,245 62,221 55,603 56,512 59,193 56,873 60,634 Revenue $2,511 $2,669 $2,622 $2,742 $3,028 $2,960 $3,958
  • BOX OFFI CE REVENUE 2003- 2008$6,000,000$5,000,000$4,000,000$3,000,000 Total Revenue Budgeted goal$2,000,000$1,000,000 $-
  • “If Ailey made $1 million, wouldn’t it be greatif we could make $200K?”
  • REVOLT!
  • Enter the Americans
  • Timing is everything!
  • Step 1: Prices not right TOO MANY DISCOUNTS • Groups, Seniors, Students 1-PRICE HALL • Different price each night STUCK IN THE MIDDLE • Top price too low • Bottom price too high That approach led to…
  • Medium sold show at the Stanley 2007-08 Stanley Theater 08-09 10172008 RIGHT BALCONY CENTRE BALCONY LEFT BALCONY 149 148 147 146 145 144 143 142 141 140 8 8 110 109 108 107 106 105 104 103 102150 149 148 147 146 145 144 143 142 141 140 7 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 7 111 110 109 108 107 106 105 104 103 102 101150 149 148 147 146 145 144 143 142 141 140 6 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 6 111 110 109 108 107 106 105 104 103 102 101150 149 148 147 146 145 144 143 142 141 140 5 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 5 111 110 109 108 107 106 105 104 103 102 101150 149 148 147 146 145 144 143 142 141 140 4 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 4 111 110 109 108 107 106 105 104 103 102 101150 149 148 147 146 145 144 143 142 141 140 3 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 3 111 110 109 108 107 106 105 104 103 102 101150 149 148 147 146 145 144 143 142 141 140 2 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 2 111 110 109 108 107 106 105 104 103 102 101150 149 148 147 146 145 144 143 142 141 140 1 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 1 111 110 109 108 107 106 105 104 103 102 101 RIGHT ORCHESTRA CENTRE ORCHESTRA LEFT ORCHESTRA50 49 12 35 34 33 32 23 22 21 20 12 2 1 11 29 28 27 26 25 11 10 30 29 28 27 26 25 10 9 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 950 49 48 47 46 45 44 43 42 41 40 8 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 8 11 10 9 8 7 6 5 4 3 2 150 49 48 47 46 45 44 43 42 41 40 7 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 7 11 10 9 8 7 6 5 4 3 2 150 49 48 47 46 45 44 43 42 41 40 6 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 6 11 10 9 8 7 6 5 4 3 2 150 49 48 47 46 45 44 43 42 41 40 5 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 5 11 10 9 8 7 6 5 4 3 2 150 49 48 47 46 45 44 43 42 41 40 4 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 4 11 10 9 8 7 6 5 4 3 2 150 49 48 47 46 45 44 43 42 41 40 3 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 3 11 10 9 8 7 6 5 4 3 2 150 49 48 47 46 45 44 43 42 41 40 2 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 2 11 10 9 8 7 6 5 4 3 2 1 48 47 46 45 44 43 42 41 40 1 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 1 11 10 9 8 7 6 5 4 3 46 45 44 43 42 41 40 A 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 A 11 10 9 8 7 6 5 STAGE Highly visible holes up front and on sides
  • Solution 1: Rescale, Price Right NO AUTOMATIC DISCOUNTS 3-PRICE HALL: all available every night • Helped fill visible holes $25 LOW-ENTRY PRICE • Advertised everywhere Results from the new approach…
  • Medium sold show at the Stanley 2008-098 149 148 147 146 145 144 143 142 141 140 8 8 110 109 108 107 106 105 104 103 1027 150 149 148 147 146 145 144 143 142 141 140 7 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 7 111 110 109 108 107 106 105 104 103 102 1016 150 149 148 147 146 145 144 143 142 141 140 6 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 6 111 110 109 108 107 106 105 104 103 102 1015 150 149 148 147 146 145 144 143 142 141 140 5 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 5 111 110 109 108 107 106 105 104 103 102 1014 150 149 148 147 146 145 144 143 142 141 140 4 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 4 111 110 109 108 107 106 105 104 103 102 1013 150 149 148 147 146 145 144 143 142 141 140 3 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 3 111 110 109 108 107 106 105 104 103 102 1012 150 149 148 147 146 145 144 143 142 141 140 2 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 2 111 110 109 108 107 106 105 104 103 102 1011 150 149 148 147 146 145 144 143 142 141 140 1 135 134 133 132 131 130 129 128 127 126 125 124 123 122 121 120 1 111 110 109 108 107 106 105 104 103 102 101 RIGHT BALCONY CENTRE BALCONY LEFT BALCONY12 50 49 12 35 34 33 32 23 22 21 20 12 2 111 11 29 28 27 26 25 1110 10 30 29 28 27 26 25 10 9 9 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 9 8 50 49 48 47 46 45 44 43 42 41 40 8 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 8 11 10 9 8 7 6 5 4 3 2 1 7 50 49 48 47 46 45 44 43 42 41 40 7 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 7 11 10 9 8 7 6 5 4 3 2 1 6 50 49 48 47 46 45 44 43 42 41 40 6 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 6 11 10 9 8 7 6 5 4 3 2 1 5 50 49 48 47 46 45 44 43 42 41 40 5 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 5 11 10 9 8 7 6 5 4 3 2 1 4 50 49 48 47 46 45 44 43 42 41 40 4 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 4 11 10 9 8 7 6 5 4 3 2 1 3 50 49 48 47 46 45 44 43 42 41 40 3 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 3 11 10 9 8 7 6 5 4 3 2 1 2 50 49 48 47 46 45 44 43 42 41 40 2 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 2 11 10 9 8 7 6 5 4 3 2 1 1 48 47 46 45 44 43 42 41 40 1 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 1 11 10 9 8 7 6 5 4 3A 46 45 44 43 42 41 40 A 35 34 33 32 31 30 29 28 27 26 25 24 23 22 21 20 A 11 10 9 8 7 6 5 RIGHT ORCHESTRA CENTRE ORCHESTRA LEFT ORCHESTRA  Moved patrons from back to front Filled visible holes on sides
  • The Payoff Arts Club Theatre 16% increase Per Capita Growth = $5 per$80 ticket!$70$60$50$40$30$20$10 $- 2007-08 2008-09 2009-10 Subscriptions Singles
  • Step #2:Comp Tickets Out of Control 22,000 comps in 0708 • At average ticket price of $35, worth $ 770,000 • Required a culture shift The steps we took
  • Solution #2: Get Control of Comp Tickets Arts ClubStrict new policies Total Ticket Revenue vs. Comp Tickets •Especially for high- $8,000,000 25,000 $7,000,000 revenue shows 20,000 $6,000,000 $5,000,000 15,000Reduced comps by $4,000,000 10,0007,000 in two years $3,000,000 • $266K value $2,000,000 5,000 $1,000,000 $- - 2007-08 2008-09 2009-10 Total Revenue Comps
  • Step #3: Stop selling late!“Everyone here waits to the last minute to buy!”
  • Solution #3: Reward early buying! WHITE CHRISTMAS: THE MUSICAL OPENING NIGHT SOLD OUT!$1,200,000$1,100,000$1,000,000 $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 YTD Actuals Sales Goal Previous pattern = 25%-40% revenue made during the production
  • Step #4: Confront Flexibility EVERYONE ACTC Stanley Subscriptions FY05 - FY09wants 8,000 7,000flexibility, right ? 6,000 5,000ACTC offered 4,000 3,000multiple flex pass 2,000 1,000options throughout 0their campaign 2004-05 2005-06 2006-07 2007-08 2008-09 Stanley 6,870 6,779 6,891 7,075 7,014
  • Arts Club TODAY Focused on High-Loyalty Subscriptions STANLEY SERIESUP • High renewal rates ACTC Stanley Subscriptions FY05 - FY11 up 33% (average 77%) 10,000 • Units up 33% 9,000 • Revenue up 62% 8,000 7,000 6,000 TRGFLEX SERIES 5,000 TRG 4,000DOWN 3,000 • Low renewal rates 2,000 (13%-48%) 1,000 0 • Units down from 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 40% of subs in 0708 Stanley 6,870 6,779 6,891 7,075 7,014 8,609 9,328 to 22% in 1011
  • Oh yes….we did dynamic pricing! $430K $4.4 million We had the programs!
  • Dynamic pricing REVENUE: 10% of all single & group revenue (0809) NEW WAY TO WORK: Revenue Pacing Meetings • New sales pacing reports • Heat maps • Sold capacity by performance & price point • Comps & holds
  • But wait…there’s more! Dynamic pricing helped sell subscriptions!
  • So what did it take? Willingness to change Leadership ensuring that everyone is on board Intense focus on high-loyalty packages • Greater investment = greater benefits Relentless focus on demand • Pricing based on demand • Inventory management to improve perception • Programming that generated demand RESULTS?
  • Arts Club RESULTS 66% increase in All ticket revenue through 0910 revenue from 0708 almost $3 million ACTC Ticket Revenue FY04 - FY10$8,000,000$7,000,000$6,000,000$5,000,000$4,000,000$3,000,000 TRG$2,000,000$1,000,000 $0 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10Single Tickets $2,857,899 $3,030,655 $3,428,298 $2,965,951 $2,684,263 $4,463,706 $5,115,463Subscription $1,183,290 $1,414,451 $1,559,292 $1,644,498 $1,772,694 $1,912,326 $2,291,351
  • AND THE SURPLUS BUILT… Improved Facilities for Patrons!
  • Webinar Questions?Dynamic Pricing is NOT the Story
  • WebinarWhat’s new? What’s next? www.trgarts.com