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TRG Webinar: The Loyalty Business Model
The webinar discusses the loyalty business model in the arts sector, emphasizing how passion for the arts can drive revenue through increased patron engagement, subscriptions, and donations. It highlights key statistics on patron loyalty, retention rates, and the financial impact of loyal subscribers on organizations. The importance of collaboration between marketing and development teams in fostering patron relationships is also addressed.
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TRG Webinar: The Loyalty Business Model
- 1. Webinar The Loyalty BusinessModel: How to use passion for the arts to drive revenue Keri Mesropov, VP of Client Services
- 3. National Census ofArts and Culture Database Networks Nationwide D D D D D D
- 4. Webinar The Loyalty BusinessModel: How to use passion for the arts to drive revenue
- 5. What type ofloyalty promotion efforts does your organization currently conduct? 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Campaigns Subscriber/ Donor Don’t know None Other (blank) to get first membership cultivation timers to retention events and come back programs activities not related to asking for a renewal
- 6. How often doesyour organization communicate or interact with subscribers, donors, or members? 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% At At the At least At least Don’t None Other (blank) renewal opening of quarterly once Know time. a new via eNews annually season or or online via an major outreach invited program special event
- 7. At your organization,do the marketing and development teams have a joint plan for patron communication? 2% 8% Yes 24% No formal plan, but they often collaborate. 21% No formal plan, but they occasionally collaborate. No, the teams rarely collaborate. N/A 45%
- 9. Our presenters Sean Kelly Laura Willumsen VP of Marketing & Communications Senior Consultant 5th Avenue Theatre TRG Arts
- 10. PATRON LOYALTY SEAN KELLY –5TH AVENUE THEATRE LAURA WILLUMSEN – TRG ARTS
- 11. Patron Loyalty What are you passionate about? SK
- 12. Patron Loyalty How would we know? SK
- 13. Patron Loyalty How do you measure passion at your organization? SK
- 14. Patron Loyalty Why is passion important? It‟s what keeps patrons coming back and encourages them to get more involved. Or put another way: It brings in more $$$! SK
- 15. Patron Loyalty Driving revenue via loyalty is the only sustainable model for growth LW
- 16. Patron Loyalty There are two key drivers of loyalty Subscriptions Donations These two behaviors interact far more than we might realize! LW
- 17. Patron Renewing Subscribers DonateMore Loyalty They bring in 90% of sub-donor revenue Their average gift is 100-172% higher than new subs New Subscribers 2010 & 2011 • % who donate - 20% • Average per household $113 • $69,000 Renew Subscribers 2010 & 2011 • % who donate - 35% • Average per household $258 • $705,500 LW
- 18. Donating Raises SubscriptionRenewal Patron Loyalty Rates Renewal rates for subscribers who donate are 11-22% higher than non-donating subscribers Non-donors Renewing into 2011 & 2012 • 65% retention rate (4883) Donors Renewing into 2011 & 2012 • 86% retention rate (2913) LW
- 19. Patron 5th Avenue Subscriptions Loyalty Year over year 2012 - 13 Subscription Revenue 9M Renewal Deadline 8.473 M 8M 7.233 M 7M 6M 5M 12-11 11-12 3.909 M 4M 10-11 3M 2M 1M M Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May SK
- 20. Patron Loyalty The carrot and the stick Carrot Stick % of Total Packages Season 4 Show Full 2004/05 46% 34% 2011/12 14% 50% 7, 6 & 5 show packages account for 90% of 2011/12 revenue 31% of all subscribers upgraded in 2011/12 SK
- 21. Super Advocates $40,000 Patron 11% revenue Loyalty & Advocates $4,000 43% revenue Buyers $527 45% revenue Tryers $48 Patron Loyalty Index: Analysis LW
- 22. Patron Loyalty Who are the 180? 4 Profiles of Patron Loyalty SK
- 23. Patron Super Advocate –Single Tickets Loyalty Steve Tenge #104 He‟s been a subscriber since 1996 Has 4 season Subscriptions, all 7 shows Attends most shows 15-20 times, via see it again $20 ticket offer Making a $1,000 gift to the annual fund since 2009 His PLI is $31,014 since 2007 SK
- 24. Patron Super Advocate -Gala Attendee Loyalty Martha Dawson and Ron Corbell #31 Subscribers since ‟04 Make an annual fund contribution of $1,000 Attend the gala each year and since 2007 have spent nearly $40,000 Their PLI is $90,205 since 2007 SK
- 25. Patron Super Advocate -Non-BoardMajor Donor Loyalty Beth and Buzz Porter #17 They have been subs since 1999 Started giving $1,000 in „02 Now give an annual gift of $10,000 and attend the gala most years Their PLI score is $151,469 since 2007 SK
- 26. Patron Super Advocate -Group Leader Loyalty Sharon Ahlen #5 Subscriber since 1990 Make an annual fund gift of $1,500 Purchases nearly $55,000 in subs each year for groups Her PLI score is $441,966 since 2007 SK
- 27. Patron Who‟s Paying theBills? Loyalty 100 patrons over two years Renewing Subscriber/Donors Renewing • $101,604 Subscribers • $1,016 • $60,621 New • $606 Subscribers • $18,667 • $187 Single Ticket Buyers • $5,298 LW
- 28. Patron Loyalty Loyalty is building relationships Patrons respond because they already care. If we don‟t invite them, we are literally ignoring them! LW
- 29. Patron The saddest wordsin the English language… Loyalty “What party?” MARKETING & DEVELOPMEN T SK
- 30. Patron Loyalty What is a Patron‟s first experience with the theatre? Handing their ticket to the usher Why is that important? What is a Patron‟s first experience with the theatre? Because there is an inherent promise in that interaction. SK
- 31. Patron Loyalty Who is responsible for building relationships (be specific)? The Director of Development SK
- 32. Patron The Patron Experience Loyalty Front of House FRONT OF HOUSE The Show ! Customer Marketing Sales & & Devo Services SK
- 33. Patron The Patron Experience Loyalty Front of House FRONT OF The HOUSE Sho w! Customer Marketing Sales & & Devo Services SK
- 34. Patron ThePatron Experience Loyalty JOB: Acknowledge Custome relationship r Sales & Make buying easy Services Address logistics PRE-SHOW JOB: & MARKETING FRONT Affirm order; upgrade Get the phone to DEVELOPMEN OF ring T HOUSE Marketin g Front of House & Devo POST-SHOW JOB: JOB: Cultivate & Upgrade Welcome patrons as guests & friends The Set the stage for an JOB: Show! excellent artistic Put on a experience terrific SK performance!
- 35. Patron Every Interaction Counts Loyalty MARKETING & Enhances DEVELOPMEN T Detracts SK
- 36. Patron Loyalty Implementation Timeline To ensure a sustainable transition to the new patron loyalty model. Jan Feb Mar Apr May June July Aug Sep Advocate Front of Staff 20 Most Concierg 1st Gift House Rollout Likely e Experienc Integrated 180 Gala e Subs + Custome Points Give r Service Campaign Initiative SK
- 37. Patron Getting Started Loyalty Choose from the menu! Carrot Stick Upgrade Retain Minimum Ask for a gift Calculate total Free Parking package size to with every subs revenue for with full season see #1 show piece each patron Free Wine with Discounted “Super Who is your blind faith parking for Subscriber” “180” renewal partial package $2 surcharge Lengthen your 6 week Free Chocolate for exchanges subs campaign promotional with renewal with partial pre-seat cadence season release SK
- 38. Webinar What‟s new? What‟snext? www.trgarts.com www.blogspot.trgarts.com
- 39. Webinar Thank you! If you have further questions, email info@trgarts.com.
Editor's Notes
- #3 First a word about TRG:TRG Arts is a consulting firm that helps arts and entertainment clients grow revenue and patronage. Since TRG’s founding in 1995, the firm has honed a laser focus on getting results in the non-profit arts industry where the risks are great and margin for error is razor-thin. TRG has helped generate millions of dollars for more than 1,000 clients in the United States, Canada and abroad, including performing arts organizations, museums, commercial Broadway, resident entertainment, and touring companies. Our staff team brings decades of industry experience and leadership to each client partnership and project.
- #4 TRG also manages 18 community databases around the U.S.We’re America’s largest provider of permission-based data sharing networks. Data networks are a powerful information resource for patron research, prospecting, advocacy, and data analysis.
- #5 This topic is of core interest to TRG. We are boldly saying and are now hearing our clients say loyalty is the only sustainable business model.However, the loyalty business model is not what we’re seeing in the industry. It is loyalty tactics, not a loyalty strategy or operating system that are the rule.We see this in our consulting work, in conversations with practitioners and in industry conferences year after year. For instance, in the survey that accompanied the sign up for this webinar, we saw some examples:
- #6 Most of you do SOME kind of loyalty promotions:Most (79%) have donor cultivation events.Most (70%) have subscriber/ membership retention programs not related to asking for a renewal.And, most of you have campaigns to get first time ticker buyers to come back.
- #7 Most of you do some kind of communication with your loyalists. Check this out:77% At renewal time. That says that not 100% of you communicate at renewal time.Most have other forms of communication with your loyalists.
- #8 Only one out of four of you have a joint marketing and development communication plan.
- #9 In the big picture, loyalty tactics don’t add up to a retaining and growing patrons over their lifetime. Today you’re going to hear from an organization that’s talking the talk and walking the walk.
- #10 Sean Kelly is the Vice President of Marketing and Communications for The 5th Avenue Theatre. He has also been the Director of Marketing for TheatreWorks and City Theatre. Before embarking on this career in theatre marketing, he worked for Starbucks Corporation in their product and marketing division. He has two degrees in Theatre, a BA from San Francisco State University and an MFA from the joint program of Harvard University and the Moscow Art Theatre School.Laura Willumsen has been with TRG for four years. During her tenure, she has led successful business development initiatives with numerous clients, increasing revenue and patron loyalty for theaters, symphonies, presenting organizations, and opera and ballet companies throughout the US and Canada. Previously she has held positions as Marketing Director at Pittsburgh Opera, Executive Director of the Pittsburgh Center for the Arts, and Executive Director of the Wheeling Symphony in West Virginia.From the beginning, the focus of our work together has been on fostering patron loyalty with a major focus on building the subscriber base and then subscriber-donors. Under Sean’s leadership, the 5th has experienced extraordinary growth. We’re delighted to have him and Laura here today to share some of the strategies that made these results possible.
- #16 We can’t grow simply by selling more single tickets. So many single ticket buyers come once and never come back. But when we move these Tryers into higher levels of loyalty through subscribing or donating or both, they’re cheaper to retain, they stay around longer, and they buy more.More transactions per patron. More money per transaction. The longer you are able to retain someone, the more they invest. Retaining is less expensive then acquisition. Integrated operations are more efficient (and more fun!). All patron interaction can then be leveraged.
- #17 Subscriptions and donations. People subscribe because of their passion for the art form, they donate because of their passion for the organization. These two loyalty drivers actually strengthen each other, and they interact far more than we might realize!Both interrelated and measurable, Subs = PASSION DRIVEN HABIT!You need to make theatre a habit. The more shows they come to in a season, the stronger the habit. To drive subscriptions utilize the stick and the carrot. Think of a donation as an investment from that patron. Donations are a testament to their commitment to the organization and their faith. Giving is the defining factor at highest level of loyalty = advocacy. All it takes to be defined as an advocate = gift at the level of $1,000 - $2,500.
- #18 32% of subs donate across all art forms; theater = 24% (internal scan only)At the 5th, 90% of donations with subscriptions come from renewing subscribers. They not only donate at a higher rate – 35% vs. 10% of new subscribers, but as their package size increases, so does their average gift. Contrary to the belief that if we ask a subscriber to donate, they’ll buy a smaller package, it’s the passionate 7-show subscribers that give the most generously! What was truly exciting to discover is the impact that donations have on the 5th’s renewal rates. For every package size, renewal rates went up significantly when subscribers donated, as much as 22%! For the 5th’s largest package, the 7-show, renewal rates increased from 82% for non-donating subscribers (pretty high already) to 93% for subscribers who also made a gift!We’ve known for years that asking subscribers to give with their order is smart. Now we know that donating makes subscribers stickier so getting them to donate helps grow our subscriber base. Sean, I’ve love for you to share some of the terrific success you’ve had from focusing on loyalty…
- #21 Free Parking when you take all seven showsLes Miserables only available for packages of 5 shows or more7, 6 & 5 show packages account for 90% of 2011/12 revenue31% of all subscribers upgraded in 2011/12
- #22 Tryers = 92% of all households – typical. The Patron Loyalty Index has become a key tool to build loyalty because it takes a 3-D view of a patron’s involvement over time, capturing everything they do with us from buying single tickets to subscribing, donating, attending the auction, serving on the board, all of it. What we found in the 5th’s PLI is that they have a universe of about 150,000 households that have been active in the past five years. 92% of them are Tryers, at the entry level of loyalty, mostly current and lapsed single ticket buyers. These Tryers provided 45% of the 5th’s revenue, but they cycle in and out like butterflies.Just 8% of households are Buyers, these are the 5th’s subscribers and smaller donors, but these 12,000 households bring in 43% of total revenue (140K Tryers).What was revelatory for the 5th and is often surprising for clients is the tiny number of Advocates and Super Advocates on the top. Just 180 households bring in 11% of total revenue! All of a sudden, retention starts feeling really important just imagine how many Tryers you need to replace just one of those 180.This made the 5th start asking lots of questions. Who are these people? Are there some we don’t know or aren’t paying attention to? Sean, what did you find?
- #28 100 patron sample, over two years, total spend of the 100 and average spend per household.So often in our business we’re focused on the quick buck – how to hit our next budget goal, so gross revenue dominates our thinking. Loyalty has a different metric: NET revenue. That’s the money left after expenses that we need to pay the artists, the production expenses, overhead. To calculate it, we include three variables: gross revenue, cost of sale and retention rates. We looked at four patron types at the 5th, single ticket buyers, new subscribers, renewing subscribers, and subscriber-donors, to compare the net revenue that each contributed over two years. Here’s what we found: STBs spend on average about $54 per ticket. It costs about 20% of that to attract them, and about 80% never come back. Add that up over two years, and these 100 patrons provide about $5,000 bucks to pay the bills. New subscribers cost a lot to acquire, but they spend more and renew at higher rates than singles so 100 of them contribute about $19,000 towards the bills.Renewing subscribers have a much bigger financial impact because they score high on all three variables. Over two years, they’ll contribute $60K in net revenue.And when they become subscriber donors, we’ve hit nirvana. Their average order size is higher, their cost of sale is lower, and their retention rates are a whopping 88%, so these beloved 100 patrons provide over $100K to pay the bills.
- #29 It’s not about up-selling or trying to squeeze more revenue out of patrons.That’s what we’re good at in nonprofits– we care deeply –and we attract patrons who care. Focusing on loyalty simply means deepening these relationships. Instead of just looking for new people, we need to invite the people we’ve already got to get more involved, to take the next step with us. Inviting them means recognizing how much they care. The irony is, when we don’t invite them to come closer, we’re actually ignoring them, aren’t we?
- #39 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.
- #40 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.