TRG Arts on the Impact of Loyalty: Success stories of growth through retention and engagement
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1) TRG Arts is a consulting firm that has worked with over 1,000 arts and cultural organizations over 22 years to help them grow sustainable patron bases through data-driven strategies. 2) Building patron loyalty is important as loyal patrons have higher lifetime value and renewal rates. TRG advocates treating patrons differently based on their loyalty level through a "loyalty pyramid" with advocates, buyers, and tryers. 3) Case studies show how organizations saw increases in retention rates, revenue, and numbers of loyal patrons by implementing loyalty strategies like membership programs, dynamic pricing, and focusing on reducing churn of first-time patrons.
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TRG Arts on the Impact of Loyalty: Success stories of growth through retention and engagement
- 1. TRG AMA Breakfast July 2018 Hosted by Christina Hill, Senior Consultant Copyright © 2018 TRG Arts All Rights Reserved
- 2. Your patrons can do more. Photo: r2hox (CC BY-SA 2.0)
- 3. Patron relationships are a sustainable source of income. Photo: Sean Fraga (CC BY-NC-SA 2.0)
- 4. we are true believers in the power of arts and culture to transform individuals and communities. At TRG,
- 5. Who We Are The Results Group for the Arts 1. 22 years, four countries US, Canada, Australia, UK 2. More than 1,000 arts/cultural clients Scalable products for sustainable patron growth 3. Colorado Headquarters & UK office 42 team members, 6 in UK
- 12. Not all patrons are equal Revenue Yield by Patron Type 1 Renewing Subscriber 2 New Subscribers 15 Single Ticket Buyers = =
- 13. ADVOCATES Donors & Consummate Loyalists BUYERS The magic of “and” TRYERS From 1st time to second or last time to NOW Patron Loyalty Pyramid RECENCY FREQUENC Y MONETARY GROWTH
- 14. TH E 2 RULE
- 16. ADVOCATES 2% of Households BUYERS 8% of Households TRYERS 90% of Households
- 17. Industry Average Single Ticket Buyers 66% New-to-File 75% Attrition 75% of new STBs don’t return. Over-prospecting, under-retaining.
- 18. Photo: James Jordan/flickr Balance new vs. loyal
- 19. “Sticky” Patrons What does that mean? 6% 9% 11% Buy membership Visit once Visit twice Visit 3 times renewal rate increase renewal rate increase renewal rate increase Participation, participation, participation!
- 20. Single Ticket Buyers New Subscribers Renewing Subscribers Subscriber Donors Per Patron Yield $53.84 $156.05 $341.51 $550.42 Cost of Sale 20% 25% 3% 3% Renewal Rates 23% 46% 69% 88% The Loyalty Effect
- 23. Tackling CHURN
- 24. Photo by Mike Kwasniak
- 25. If why we’re working so hard to get new audiences, haven’t audiences grown?
- 28. New-to-File Patron churn rate -Jeni Raw, Marketing Manager “This is the first time it’s dropped under 70% in 6 years. Average attendance of those coming to see us more than 2 times in the year is also on the up at 37.7%, and our active households has increased by 3%.” 75% 63% Before (15-16) After (16-17)
- 29. Multi-Buyers Results (from 14-1516-17: spring + autumn) 5% Growth in 2+ Multi-Buyers 26% Growth in 4+ Multi-Buyers 38% Overall Multi-Buyer Retention Rate
- 31. Photos by Jeni Raw
- 32. Season Ticket Holder Results (from 14-1516-17) 18% Household Growth 2015 (launch) - 2017 30% Revenue Growth 2015 - 2017 46% Overall Retention Rate
- 33. Membership Results 113% Household Growth 2015 (launch) – 2017 280% Membership Revenue Growth 2015-2017 55% Overall Membership Retention Rate “First focus was to transition current members over to the new scheme...personal conversations had with our current top level donors to share the new Director’s Circle…all members written to…upgrade their memberships to the new scheme and access new benefits immediately.”
- 35. Nottingham Playhouse Main Stage Case Study
- 36. 1 Member 3 STBs £34 £103 £- £20 £40 £60 £80 £100 £120 Single Ticket Member Revenue by Patron Type 2014-15 Season
- 37. 1st Time Attendee Invite to return to 2nd performance w/compelling offer 1st Time Attendee Responders What’s the invitation? ? ? 1st Time Attendee Non-responders What’s the invitation? ? ? Retention Plan
- 41. Crack in the Loyalty Staircase REPEAT SINGLE TICKET BUYER MULTI TICKET BUYER MEMBER 1ST TIME SINGLE TICKET BUYER SUB DONOR ADVOCAT E SEASON TICKET
- 42. 44% decline in subscription 2012-13 to 2016-17
- 45. …and more…
- 46. Funding the cool
- 48. • Strong organisation – and… o Public funding drop o Weren’t growing audiences as much as they wanted o Looking for the next thing that was analytical and data-driven • Goal: Sustainability o Audience numbers static, and less diverse than desired o Didn’t want to become too reliant on just increasing prices o Reality that Local Authority subsidy could disappear at some point The Next Big Thing Growing sustainability
- 49. All-in marketing campaigns Changed scale plans to maximise revenue Revitalised Membership model THEN, dynamic pricing. Sheffield TheatresMulti-tiered approach
- 52. Results • 10,000 ticket prices dropped • 14% increase in yield • Additional income of £323,000 in 2016/17
- 54. Results • 35% increase in Membership Households in two years £
- 55. Funding The Cool Artistic • Literary department • Commissioned new work • Bigger shows planned Governance • Board is talking about “what’s next” • Created new fund to support diversity Organisation • Gained more staff – membership officer, box office structural changes • Better experience for audiences
- 57. 1. Make loyalty your foundation Demand-based pricing + loyalty strategy = growth 2. Relationships are the thing Invest in them with your patrons 3. Not all patrons are equal More loyal patrons have higher revenue impact 4. Build a loyalty staircase Invite & incentivise next step actions 5. First step – reduce churn Get first-time single ticket buyers to return Takeaways
- 58. trgarts.com Learn More To learn more about how TRG Arts can work with your organisation, go to www.trgarts.com. @TRGArtsUK @TRGArts LetsTalk@trgarts.com
- 59. Copyright © 2018 TRG Arts All Rights Reserved
Editor's Notes
- Good morning. I’m Christina Hill, from TRG Arts, and I consult with arts organisations just like yours, all over the UK. Thank you for joining me today, as we talk about Loyalty, and how growing loyalty can help build stronger, more resilient arts organisations. TRG Arts on the Impact of Loyalty: Success stories of growth through retention and engagement
- What do I mean when I say patrons? I mean anyone who has transacted with your organisation – this can mean ticket purchase, donations, educational courses – anything. And -- your patrons can be doing more. Your patrons can be cultivated to support your organisation in ways that they currently are not.
- Our experience is that patrons are a sustainable source of income. Audiences can help sustain your arts organisation’s mission. Why would we call this sustainable income? It’s income that your company can earn for itself. In today’s environment, to us, that feels more important than ever.
- I would bet that everyone in this room believes this statement - that arts and culture can transform lives. This is the why creating more resilient organisations is so important. We believe in what you do, and we believe and know that we can engage patrons more deeply to make that important work happen.
- TRG is - The Results Group for the Arts. Our focus is always on results – our clients’ success is our success. We work closely, as partners, with our clients, to ensure those results. We’ve operated for 22 years, and across four countries We’ve worked with more than 1000 arts and cultural clients – of all different genres and sizes We’re based in Colorado, and have a team of 6 (including myself) here in the UK
- TRG Arts is a data-driven consulting firm. And what’s so important about data? Data has the power to motivate action. Data can strip away emotion, provide a road map, and measure results. Everything we do starts and ends with data.
- We think of ourselves as teachers, and we are obsessed with learning and sharing knowledge. We teach through our consulting work, through summits and workshops, publications of reports, studies, and more. And we learn through everything we do, and share that learning back to the field.
- we host professional development courses in our Center for Results, located in our beautiful Colorado Springs office (this is the view from our window there), and are also holding webinars and professional development programs here in the UK. We also learn from robust aggregated data sources – we operate data centers across North America, and partner with Southern Methodist University in the US, and with UK Theatre, to analyse and report on trends across the sector.
- And we do all of this across all arts and cultural genres and across four countries —the US, Canada, Australia and the UK. These are just a few of our clients, who are doing amazing things by being bold and inquisitive, by leveraging data and by building loyalty.
- There are two underlying foundational elements of the work that we do that foster loyalty and drive revenue. First – strategic demand-based pricing. Building your pricing and scale-of-house in a way that creates and leverages demand lays the foundation for revenue growth. and – partnered with the right programs and practices, also lays the foundation for loyalty. Because our incentives to purchase early are stronger when pricing reflects demand.
- Over the years we’ve been doing this work , we’ve identified and developed a methodology around loyalty that cr Why do I say long-term sustainable revenue? Because loyal patrons are more likely to come back, do more and spend more – they are a renewable resource, that can be relied on over time.
- What we’ve learned is that not all patrons are equal in terms of revenue impact. This is what we typically see in client data 1 renewing subscriber = 2 new subscribers = 15 single ticket buyers – when I say single ticket buyers, I mean infrequent, buyers of individual tickets (not packages, such as Membership, subscription or groups)
- At TRG, we have an orientation to patronage that purposefully blurs the lines completely between the traditional silos of single tickets, donations, subscriptions. This visual is our proprietary model that describes all of our patrons, based on their behaviour. It’s not TRG’s invention. It’s TRG’s description of what we’ve seen in the data over 20 years. Here’s how it works: Every patron is measured and then force ranked, based on four criteria: Recency – how much time has elapsed since their last transaction, frequency – how many transactions they’ve done with us, Monetary – how much they’ve spent, and growth – whether the other figures are growing or declining over time. So what you see here represents any organisation’s database. We know that patrons fall into one of three categories Advocates are those who score highest in those criteria. They are our donors and consummate loyalists. You probably know who these people are in your organisation. The next group are Buyers. Buyers are those who are taking multiple actions – what we call the magic of “and.” those who fall in this group vary at different institutions, but these are usually our Members and our Subscribers. At the bottom, are the group we call tryers – these are largely made up of single ticket buyers. Those who purchase and attend infrequently. Our goal is to get them from the first time to the next, or from the last time to now
- We’re all familiar with the 80-20 rule that says 20% of your customers Represent 80% of your revenue
- The reality that we’ve observed in arts organisations is that we experience more of a 90/10 rule On average across the our clients,, 90% of our database is made up of tryers. And 10% is made up of both Buyers and Advocates combined.
- To strengthen our organisations, we need to get patrons to do more This means creating a strategy in order to deepen relationships and move those patrons up the pyramid. To get closer to them, get them more engaged, and make them more loyal.
- Let’s look at single ticket buyers. When I say single ticket buyers – I’m talking about those who purchase individual tickets, rather than part of a subscription package or group. In a study of five years of data across 130 organisations, we found an average of 66% of single ticket buyers each year were new-to-file – had never been to the venue before. (note: need some clarification of the study results to be sure I’m stating this correctly) And of the new-to-file buyers, 75% disappeared in the last 2 years of the study (note: need some clarification of the study results) Imagine – we’re spending all kinds of money and time to get these single ticket buyers in the door, and 75% of them are just passing through and exiting after one visit. And these numbers mirror what we see when we work with clients every day. The takeway is that we are over-prospecting and under retaining. We need to find ways to retain and to build deeper relationships with our audience members, so that they come back, and come back again, purchase more, and give more to strengthen our organisations. From TRG Key Metrics (130 orgs) 2012-16
- So we need to find a balance between acquiring new patrons, and growing loyalty. This means how we think about patrons, and how we interact with them It also means investing to support loyalty growth – in terms of both time and money So that we can earn more sustainable revenue And afford to do all of the new audience development and outreach that we’d want and need to do
- So we have to start thinking about retention And engagement – how can we get people to engage more and do more This example from Denver Art museum When we analysed membership retention rates we learned something
- And when we begin to move patrons up this path, this is an example of the impact that that loyalty can have This is an overview of our findings for a US theatre client. It has become a platform for the organisation’s new patron loyalty initiatives. Looking at their single ticket buyers, the Tryers, we see some pretty typical numbers here. On average, they paid around $53 for their ticket. Cost of sale—how many marketing dollars went into selling that ticket—was around 20%. And it was rather difficult to get them to come back. Only about 1 in 4 single ticket buyers came back the following season. [CLICK] Looking at new subscribers, who are usually Buyers, it’s a different story. Cost of Sale has risen, but it’s paid off. Average order size tripled—this client is making a lot more money on a subscribers than single ticket buyers. As for renewal rates, another good showing. About half are renewing. [CLICK] As you might expect, average order size and renewal rates rise with the more seasoned subscribers, but the real story here is the dip in cost of sale. They are spending a lot less to make a lot more. [CLICK] Finally, this clients’ most loyal patrons, Advocates. Extremely high order size and renewal rate, and low cost of sale. Let’s look at this in aggregate: Look across the top and bottom rows of this chart --- Revenue yield and renewal rates INCREASE significantly with each successive buyer type – the more loyal a patron becomes, the more they spend and the more they continue to engage and invest. Now look at the middle line -- The cost of sale to create subscribers is high – the highest in this analysis. But look what happens to cost-of-sale after that – it does way down. It is indeed cost-effective to get a subscriber renewal or an upgrade to subscriber-donor. And here’s the big pay-off—once a patron becomes a donor….look at the revenue yield for renewing subscriber-donors. This metric supports a research finding that comes up time and time again. The number one reason subscribers subscribe is ….love of the art form. The number two reason: they like the way your organisation provides that beloved art form. So, subscribers are engaged at a passionate level – an affinity that can propel contributions. Yet, we find, that many organisations don’t have an active, integrated program to involve their loyalists as donors. Our analysis says: that’s one of the first steps you can take to develop an escalator effect. [click]
- The first element of a loyalty strategy is to construct a pathway for patrons to engage more deeply with us This staircase represents that patron journey It’s a series of consecutive steps that begins with New to file single ticket buyers, who we’ve already talked about. And the next step is to get them to buy again and become Repeat ticket buyers…. Multi ticket buyer… Member and/or Subscriber… To Donor…. To Advocate….
- What we need is to foster more loyalty in our audience members. Loyalty is about commitment, it’s about relationships Loyalty is saying – I like you. I want to spend time with you. Our relationships with our patrons are like any other human relationship. If we want our patrons to be loyal, to return, to be engaged, to spend money to be with us we need to engage with them And we need to romance them a bit We need to talk to them Invite them to do more reward them for their loyal behaviour
- Nottingham playhouse Stalled audience growth and revenue 70% of admissions were discounted in some way Low ticket yield – purchase behaviour focused on discounts: both membership & last minute problematic membership structure – was being used as a discount scheme, not a loyalty scheme No increased investment. No routine behavior like SUBs have. Higher cost-of-sale because we still have to market every event to them. Lower renewal rates than traditional SUBs.
- And yet – Membership value still holds true - It’s better than buying only single tickets, but not as good as subscription. We see at NPLA that a membership is equal to three single ticket purchases. Needed to focus on retention and acquisition Reshaped membership scheme, invested in marketing
- Created a retention plan that plotted each step based on behaviour 1st time attendee – invitiation to come back again Next offer Next offer Identifying the next step desired and the value proposition And then execution
- 34% growth in new membership That combine with demand management strategies saw a Nearly 200k increase in ticketing revenue Increases in the number of tickets sold to members And in the ticket yield
- Subscriptions (or season tickets) are not as prevalent here as they are in the US But they do exist – and despite some opinion that subscription is out of date or irrelevant in today’s world They absolutely alive and well – if they are structured and supported in the right way
- In our work with TRG, we initiated a renewed focus on season tickets, and we added Memberships
- 4 and 5+ show flex packages Historically, drama subscription replaced by flex in 16-17 Value proposition Revitalised marketing efforts multi-channel, multi-touch campaign Began marketing in November – advance mailings before brochure [DROP?] Multiple offers and deadlines – early bird, free cinema tickets Brochure placements and messaging Extended campaign – longer sales cycle Postcards, letters, brochure
- Set goal for 500 – finger in the air Results…..1838 new members through this launch campaign Spring YTD 50 so far
- Christina: So now, let’s hear from someone who has experienced success in demand-based and dynamic pricing firsthand. Claire – I know you have some exciting stories to share! Thank you so much for being with us today. Claire: Thank you, it’s great to be here. Christina: To start us out, can you tell the audience a bit about Sheffield Theatres, and your role there? Claire: We’re the largest producing theatre complex outside of London. We’re comprised of a beautiful old proscenium arch theatre (the Lyceum), a brutalist building which houses a large thrust stage (the Crucible), and a studio space seating anywhere between 2 and 400 people. Pricing was complex and inventory management difficult. The Lyceum’s three-tier block pricing structure varied per performance depending on expected demand, and all the entry-level tickets were placed at the back of the Balcony. Meanwhile, although one price applied to all seats, in the Crucible it varied per performance depending on expected demand. The audience consistently chose to sit in the central block rather than down the sides, so when Sheffield Theatres experienced a low selling show, it resulted in a poor experience for actors and audiences alike. The opportunity to create fuller looking houses and grow revenue was apparent.
- Christina: Claire, talk to us a bit about what was the impetus that drove Sheffield to work with TRG. What was it that inspired you to rethink how you were approaching pricing and demand management? Claire: Public funding accounted for 24% of our income in 2010. By 2015 that had fallen to 13% – about a £500,000 difference – and we were aware that our Local Authority funding could disappear. We didn’t want to become too reliant on increasing ticket prices and were experimenting a lot with different pricing plans, but there was no strategy to it. Audience numbers were also static, and mapping of that audience showed they came from the more affluent areas: staff were conscious they needed to do something different to reach local people on lower incomes. After Dan attended an Executive Summit in November 2015, Sheffield Theatres began a Capacity Building consultancy with TRG Arts in May 2016 and quickly identified these top priorities: To take a fresh look at scale-of-house and pricing strategies To grow membership, ticket sales and donations To take a holistic view of the organisation’s management and operations Christina: And the timing of this opportunity was good for you, wasn’t it? Claire: Yes, while we were tinkering with pricing, we knew there was more opportunity to be had. We also didn’t want to get to a place where ticket income was so high that we were beholden to that source only, and we didn’t want to price beyond some sectors of audiences. Finally, we wanted to pay the living wage foundation to our staff, and had a desire to reach out into community a bit more than we were.
- Christina: As we mentioned earlier, TRG has a multi-tiered approach to pricing strategy, including its relationship to loyalty. Can you tell us how that resonated with you, and your experience of how that unfolded over time? Claire: What made us really interested in developing a relationship with TRG though was that it would look at much more than just pricing. We felt that there was real scope for our membership scheme to grow, and naturally we wanted to optimise the revenue that could bring. The first thing we did together was to change the scale plans, which allowed us to drive more revenue in demand. Then we looked at the Membership model. TRG had shown us that growth in our audience database was driven by single ticket households, but that members bought three times as many tickets as single-ticket buyers. The existing scheme was cumbersome to communicate and administer, so we restructured it. We then reviewed and enhanced our marketing campaigns to target and maximise messaging to each segment, applying recommendations to drive demand. And finally, we instituted a regular practice of revenue pacing meetings, in which we jointly make demand management and dynamic pricing decisions based on data CLICK
- Dan to talk about changes made to the season brochure, as evidenced on the right hand side of this slide. Plus Will add theat we have moved on from this to a much simplified model.
- 35% increase in total membership numbers up by 614, from 1786 in 2015
- Jill to set-up and ask Dan to tell us about the results Quote from Caroline “giddy thing”
- The first element of a loyalty strategy is to construct a pathway for patrons to engage more deeply with us This staircase represents that patron journey It’s a series of consecutive steps that begins with New to file single ticket buyers, who we’ve already talked about. And the next step is to get them to buy again and become Repeat ticket buyers…. Multi ticket buyer… Member and/or Subscriber… To Donor…. To Advocate….
- Title slide 1: best for general presentations