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Commercial Behaviour and Charitable Objects: 4 Tips on How to Make Sure They Co-exist

Arts organisations continue to operate in a challenging financial climate. Funding from central government is being cut, and expectations from funding bodies are increasing as competition rises. The arts is also facing stiff competition, not just from the world of live entertainment, but also from entertainment offered in people's homes.

It's becoming much harder to get people out of the house and away from the latest Netflix box set. Something like Netflix can be hard to fight against, as customers have already committed the payment and Netflix are able to push relevant content directly to viewers. All the consumer is left to do is pick up the remote and choose what to watch.  

With live arts, we’re offering a different experience. It’s not just about what’s on stage; it extends to everything wrapped up in that experience. So, once you’ve gone through the hard work of reaching out to your audience, you’ll want to capitalise on all of the spending opportunities.

How can you capitalise on spending opportunities?

It’s important that you make the most of your assets, especially when working with a finite inventory, limited by the seats in your auditorium. At the same time, you want to make sure everyone has access to art and culture and this is a top priority for many funding organisations, including Arts Council England and Creative Scotland. By reaching out to a wider audience you benefit from achieving your charitable objects, and also move to being more resilient as you widen your audience base, becoming less reliant on one core group.

Being more resilient is likely a priority of any arts organisation, so how can this be achieved?

1. Increase secondary spend

We’ve already started to see a change in the way cultural organisations are behaving and looking at not just what’s offered on stage, but the entire experience.

Unlike Netflix, arts organisations are able to offer their customers a more rounded experience; the idea of making the trip to the theatre a ‘great night out’.

This isn’t new. Theatres have always had bars, but it’s the way you sell all these other offerings that are available to the eager punter. However, they aren’t always very good at telling people what they can get alongside their performance experience. It’s important to make customers aware of this the very first time they come into contact with you if you’re going to encourage them to spend more with you.

There are some great examples of arts organisations working really well in this way. Regent’s Park Open Air Theatre are aware of the importance of secondary spend. On their website, they set the scene for what the night is going to entail, selling the overall experience as much as the show itself.

Given that we know there are audience members who are willing to pay more for a premium experience, you shouldn’t shy away from capitalising on this. If you aren’t able to grab the attention of your audience, then they are likely to spend their money at the restaurant down the road, instead of in your venue. If pitched in the right way, and if supported by the right technology to help you manage these various add-ons, working this way can be more easily achieved.

2. Capitalise on those willing to pay more for convenience

Thanks to Uber, and our experiences booking flights and train tickets, we’ve come to expect that we have to pay more for the convenience of booking last minute. Uber lets us, the consumer, know that we can have what we want and when we want it, but if demand is high then this comes at a price.

The New Wolsey Theatre implemented a demand-based approach to pricing, working with TRG Arts (full case study here). Working in this way allowed them to increase revenue, even when they were already selling at near full capacity for most events. Approaching pricing in this way can remain accessible. By making sure your messaging is clear, your audiences know that they can still get tickets at a low price, but they need to book early to do so.

3. Remain accessible

We’ve seen some good examples of how this can work, with venues holding back allocations of tickets for certain audiences. The Barbican held back one hundred £10 tickets for Hamlet, and the Lyceum in Edinburgh hold back ‘Secret Seats’, to give audiences the chance to experience drama for £10.

By pushing higher prices to those who can pay more, you can afford to offer an allocation as part of an audience development drive. So, organisations can start to balance the books in this way, and have a mixed model for your business and your pricing. Allocations can be used to bring in a new and more diverse audience, allowing you to reach out to certain postcode areas or provide access to an allocation of seats for those who have a certain promo code.

It can be hard to focus on bringing in a new audience when you’ve got a hit production, and tickets are flying out the door but actually this is the best time to bring in a new audience, as you benefit from the exposure and publicity of having a successful run. With a sellout show, you’ve got the ability to push prices to that well-heeled audience and the additional revenue to help you to subsidise your audience development schemes.

When thinking about providing allocations for specific groups, you want to allow customers to engage with you in the same way as they do for other purchases they make. Customers need to be able to make these bookings online. By setting your defined criteria, for example, a specific postcode ward, you can then grant access to your specific allocation as soon as a customer meets this criteria. With more traditional audience development schemes, tickets have often had to be booked on the day and in person, but this limits your potential audience hugely.

4. Measure and refine

When testing different ways of working, you should always monitor the outcome. You’ll want to make sure you’ve got the tools to measure the success of what you’re doing so that you can continue to refine your approach. It’s also important to look at the bigger picture, so make sure you’re using all of the tools available to you, for example, segmentation models and other data sets.

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Arts and cultural organisations should absolutely view themselves as charities, but this doesn’t mean you have to shy away from increasing earned revenue. It’s a balance, where a diverse business model allows you to achieve your charitable objectives. Making money shouldn’t be seen as incompatible with being a charity, in fact, it’s an important part of it, helping you build resilience and in turn involve more people to your work.