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Customer Retention is Broken. Here's How to Fix It.

If I told you you’d lose 68% of your customers next year, you’d probably be a bit worried, right?

The recent Spektrix Benchmark Report highlights a concerning issue for the arts: we’re just not doing well at retaining our customers. And not much has changed since we last did this report in 2014 where the retention rate was 31%.

On average arts organisations retain just 32% of their customers in the year following a visit (year two), and just 27% in year three.

This means you will probably lose around 68% of this year’s customers. That’s a lot of people. Let’s say you have 30,000 customers a year, that’s 20,400 customers. Ouch.

But, the step change in the number of customers you retain in year three is evidence of the value of customer retention. If you can get your customers to come back in year two, you’ll only lose a further 5% of them in year three.

How do the arts compare to other sectors?

The arts are doing a little better than some sectors, such as clothing who retain 24% but worse than the health and drug supplements industry who retain 44% of their customers.

But some companies are achieving great retention rates. Apple retained 92% of iPhone customers in 2017 whilst Amazon Prime keep 96% of their customers.

What are the benefits of increasing retention?

It’s around five times more expensive to acquire new customers than it is to retain customers. If we think about the resources we need to invest in getting in a new customer, such as expensive advertising, compared with the cost of emailing a customer who has already visited you once, it’s clear to see the return on investment is much greater when retaining customers.

For arts organisations, this means building a core audience who are loyal, will take risks with you and in general are easier to sell to. These customers are also more likely to support your charitable aims.

So why do the arts struggle?

In recent years there’s been a growing need to increase audiences. With funding cuts and the average age of audiences getting older, many organisations are focusing on getting in new audiences from all walks of life. And whilst this is valuable and necessary, we’re ignoring our existing customers in the process.

What are some examples of good retention strategy?

Okay, so you don’t have a budget like Apple or Amazon but you can steal the guiding principles behind their strategies and apply them to your own efforts.

Case study: Apple

Let’s look at Apple. They release a new iPhone pretty much every year at the same time. When they released the iPhone 6 in September 2015, it’s likely that they already had the iPhone 7 ready to go. Apple carefully manage the timing of their new product releases because they know that releasing a new phone every month won’t keep retention rates up. On the other hand, releasing a new phone every year is in tune with when customers naturally start thinking about getting a new gadget. A parallel in the arts is the way that you manage your programme. If you programme the best two events of the year back to back, how will you get a customer to come back in 12 months? Wouldn’t it be better to have a great excuse to get your first time bookers back around six months after their first visit?

Case study: Amazon Prime

Amazon Prime does two things:

  • they offer benefits members want
  • they make it easy to stay a member with auto-renewable membership

Neither of these are expensive to offer and they keep their customers engaged. In a venue, it’s easy to monitor the uptake of member benefits so you can make sure members are getting the benefits they want. You can also offer auto-renewable membership with significantly increased retention rates

4 Things You Can Do Right Now

As well as using inspiration from the above, there are a few more things you can do to increase your retention rates.

1. Make that first visit really great

Everything leading up to a customer's first visit has to be great; from booking a ticket, to finding out all the information about their visit, to getting from the front door to their seat. Their experience has to be positive and everyone in your organisation contributes to this.

Firstly, staff have to be friendly and approachable. If you can flag up first-time bookers to front of house staff, do it and make sure staff know how to greet these customers.

Cut queues wherever possible. Whether it’s queues in the car park, at the box office, for the toilets or at the bar. Offering print at home tickets, advance dining options and plenty of information on when to arrive can mean your customers go from standing around and getting frustrated right before the show, to having a great evening even before the curtain’s up.

2. Make sure you can contact them

It’s no use investing marketing resources in getting new customers through the door if you don’t capture permission to contact the customer. Our Benchmark Report showed that, on average, venues have permission to contact 61% of their customers which means they can’t get in touch with 39% of them.

Offering a data promise and making sure the box office team are happy asking customers to join a mailing list is a simple way to encourage customers to agree to be contacted and make sure you can advertise to them in future.

Keep customers engaged in your marketing by making it relevant to them through segmentation. This means once they are on the mailing list they’re likely to stay there.

3. Pay attention to the morning after the night before

So your customer has had a brilliant evening and you have permission to email them. What could be better timing than getting in touch the next morning, just as they’re raving to their work colleagues about the great night they had last night?

Capitalise on the post-show high by inviting first-time bookers back with an incentive. Something as simple as 10% off tickets or a free drink is a great way to drive them back to your website and thinking about their next purchase.

4. Always make one last attempt

With all the best strategies in the world, some customers might not come back, and that’s okay. But before you give up, send lapsed bookers one last amazing offer, and make it really special such as £5 tickets, access to a sold out show or a free meal. Not all of them will bite, but the ones who do are much more likely to come back again.

What retention strategies have you tried that have worked? Let us know in the comments below.