Art By Numbers: Art’s labour’s lost

Despite decades of investment in audience development and the current enthusiasm for all things data, arts organisations still aren’t getting it, says Michael Nabarro.

What would you say to a friend who continually made the same error over and over again? Imagine you’d watched for years as they took all the advice and guidance that friends and colleagues could muster, but somehow fell stubbornly into the same trap; month in, month out.

In 2015 that’s the situation too many arts organisations find themselves in: working hard to address chronic marketing and fundraising challenges in the wake of austerity, but resistant to changes that support audience development and deepen customer relationships. A small army of industry peers and consultants have tried to point a way through this, but somehow arts organisations won’t – or can’t – take the direction fully on board.

If that sounds like a sweeping generalisation, consider the results of our 2014 aggregate data study of the arts industry. Looking at over 10 million transactions and a billion web hits across 144 UK arts organisations, a frustrating picture emerges of opportunities repeatedly lost and chances continually missed.

Let’s start with our industry’s grudging inability to cross-promote its products. More than 90 per cent of tickets purchased last year were for a single performance. Whether it’s down to poor technology, lack of training or discomfort with active selling, it helps explain why nearly 75 per cent of theatregoers in 2014 attended just once in the entire year.

This is especially troubling given that a version of Pareto’s Principle applies to arts marketing as well – the 27 per cent of customers attending two or more performances drive half our revenue. Drilling down a bit further, the 13 per cent of customers attending three performances or more account for 32 per cent of revenue. As it’s half as expensive to keep a current customer as it is to find a new one, we clearly spend too much time chasing individuals who buy only once.

Another problem is where and how those sales are taking place. With more than 55 per cent of tickets last year sold on the phone or at the counter, it’s clear we have not grasped how to move customers over to online purchase – the least expensive channel available. How many millions of pounds have arts organisations spent on improving their e-commerce web sites over the past decade – only to see most people still opting to ring or visit the venue in person?

This is not to suggest that you’d want 100 per cent of purchases to happen online. A certain amount of personal communication is absolutely necessary to promote audience engagement and re-attendance. But we aren’t getting that right either. Only a quarter of counter sales in 2014 were made to a known customer; e.g., we spoke with and sold tickets to a whopping number of people – without having the complete picture of their attendance history, or in some cases even basics like contact information.

But look at what happens when we do create proper customer profiles and capture full contact details.

40 per cent of the customers in UK arts databases have not given permission to be contacted. That’s tens of thousands of people who we know want our products, but who we are barred by law from marketing ourselves to. Conversations with customers and industry colleagues lead me to believe this is as much to do with the fact that no one has ever asked, than an ingrained preference not to be communicated with.

It’s not as if we can rest on the effectiveness of our direct marketing campaigns. More than 70 per cent of arts marketing emails are never opened – quickly deleted and sent straight to the bin. Whilst a 30 per cent open rate is actually very good when compared to other sectors, it just isn’t powerful enough to overcome the other opportunities we’re missing.

The best way to grow and sustain audiences is to drive re-attendance in the form of frequency and loyalty. Being able to communicate with people who have actually been in our buildings is a baseline requirement, and in the current funding environment, arts organisations just can’t afford to let revenue opportunities slip away.

Why is it happening?

Part of the problem is ingrained attitudes and bad habits. There is still resistance in the arts to adopting a commercial mindset or encouraging staff to proactively cross-sell, up-sell or ask for donations. It’s also common for staff to miss opportunities to get complete information when people book tickets. Training and incentives can help overcome this but there has to be willingness to adjust the organisational culture as well. Those at the top need to actively promote behaviours that will maximise re-attendance, encourage donations and up the average spend per ticket.

Data literacy is another issue. Audience development strategies will always underperform if you don’t know how to use data to build meaningful relationships with customers. Understanding their behaviours means you can communicate with them in a more relevant way, design offers that reflect their interests and preferences and build strong, philanthropic relationships with them. Arts organisations need to invest in training to build up the skill sets for data-driven planning and decision making.

So what can you do?

In 2015 an effective audience growth strategy rests on good data and the willingness of staff to use it proactively to engage with customers. If your customer information is poor or difficult to access, the whole exercise becomes rather pointless. The same is true of attitudes and behaviours that stop us from becoming commercially minded. Organisational change is a big topic and arts organisations are clearly still adjusting to the realities of austerity. Yet in the short term there are practical operational fixes that can help you break out of the audience development doldrums

Up selling, cross selling and asking for donations can all be done effectively and less expensively online, so thinking of your website as an extension of the box office team is important. Make sure it’s in-sync with any changes you’ve made to your sales strategies, and appraise it every six months for content and functionality. Whatever you do, don’t penalise customers for saving you money by purchasing tickets online. Get rid of fees and offer as much functionality as you can; for example, enabling online seat selection from an EasyJet-style grid.

Recognise that audience members are not all the same. We all speak respectfully about ‘the audience’ but it is not a homogenous mass; there are sub groups with different expectations, who attend for different reasons and behave in different ways. In an ideal world we would create a personalised marketing approach for each person. The more manageable approach is to split the audience into segments with shared interests and needs. That allows you to tailor your offers and communications to the preferences and behaviours of each group.

To improve retention and re-attendance, make sure you can create a customer segment on your system for people who attended last year but haven’t yet booked in the current season. Look at it often and analyse why you’re losing them. Is the programming not quite suited to their tastes, or are they waiting for offers? Industry averages suggest that anyone lost in year two will cost five times more money to get back into your venue

Improving the effectiveness of email marketing campaigns will always be a challenge but the goal has to be a 100 per cent open rate. Take an iterative approach by measuring the open rates for different messages, segments and types of content used. Was the email targeted to the right segments? Did the subject line hit the right tone? Was the timing off? Testing requires an element of trial and error and the right systems should make this relatively painless.

Convincing customers to let you send them marketing messages at all can be tricky, but a willingness to ask is the starting point. Staff need to be trained to ask for email opt-in at every opportunity. Creating a segment that identifies your non-contactables will make it easier to have a conversation with them and either convince them to say yes, or learn more about their objections.

Then it becomes a matter of how you ask. We need to jettison the old ‘sign up for our newsletter’ call to action, which suggests to many people a lot of generic content clogging up the inbox. Frame the question around benefits instead. ‘Be the first to find out who we’re casting, which artists we want to work with next, and the special offers for events we think you’ll love.’

Identifying your best customers, selling more tickets, winning donations, effectively targeting communications and achieving a profitable balance between sales channels are all eminently achievable goals. Arts organisations just need to ditch some bad habits.

-Michael Nabarro is co-founder and CEO of Spektrix.