Spektrix partner TRG Arts shares their thoughts on how a dynamic pricing strategy can support audience loyalty.
Dynamic pricing is a tale of two critiques; either hailed as a revenue-maximising strategy or denounced for making high demand experiences unaffordable for many. Putting strong feelings either way aside, when used strategically, dynamic pricing is a sophisticated tool that can not only increase revenue by aligning price with demand, but it can also foster audience loyalty. This blog aims to shed light on how dynamic pricing can be an invaluable part of your audience loyalty strategy toolbox, benefiting both your venue and your audience.
Finding the Right Price: A Balancing Act
The right price is often elusive but incredibly vital. It represents not only what your audience is willing to pay but also must align with your organisation’s financial goals. The key to this sweet spot where financial viability meets consumer affordability can be found in your historical data.
What have been your best-selling shows, what seats typically sell out first, and what price points are most popular? TRG Arts helps clients create a scale plan by reviewing multiple years of data to understand customer behaviour unique to your venue. Leaning on data rather than assumptions allows your team to establish a perfect scale plan that serves as the foundation of your pricing strategy – before dynamic pricing is even executed. Make sure your plan offers various price points to cater to different audience segments, enabling you to meet both revenue and accessibility objectives.
Inventory Management: Timing Is Everything
In our client work, TRG Arts’ consultants also stress the importance of inventory management. A well-executed demand strategy ensures the house fills from front to back and side to side, which means holding inventory back at the on-sale and releasing it slowly as demand rises. Knowing which seats to open when and at what price can significantly impact both your revenue and the audience’s perception of a show’s value and success.
When your venue appears full and therefore “successful,” it makes the experience feel more valuable for the audience and performers alike. Reviews and word of mouth are still important means of advertising so perception of success can boost future sales for the current show and future ones by building a positive cycle of audience engagement. When you set the expectation with your audience that prices will rise with demand, you can incentivise earlier buying behavior and engagement in your loyalty programs by offering priority access to seats. Dynamic pricing helps you strategically reward behaviors that you want to encourage.
Dynamic Pricing: Beyond Revenue Maximisation
Dynamic pricing often carries the tag of being purely about revenue maximisation. While it’s an effective tool for leveraging high demand, its capabilities go beyond that. It can also serve as a powerful tool to foster audience loyalty. Here’s how:
- Reacting to demand: When a particular show or area in your venue is in high demand, dynamic pricing allows for incremental price increases. This does two things: it capitalises on the high demand, of course, but it also leaves room for you to offer discounted tickets, creating opportunities for price-sensitive audience segments or allowing you to reward loyal patrons.
- Strategic leverage: Dynamic pricing lets you leverage each seat as a strategic asset. By raising or lowering prices based on real-time demand, you can direct traffic to areas that are generally less popular but offer a similar experience. For example, if the front row middle seats are selling like hotcakes but the seats along the sides are still available, a small price decrease for those areas can incentivise ticket buying in those high visibility areas that you want filled.
- Positive communication: Transparency is essential in the dynamic pricing model. Help your audience understand that early buying behavior is rewarded, that there is a choice of price available AND, if your scale of house is optimised, that you don’t need to sit at the very back of the auditorium for an accessible ticket price.
Audience Loyalty and Dynamic Pricing: A Symbiotic Relationship
If executed strategically, dynamic pricing doesn’t alienate your audience; it builds a stronger relationship with them by providing options. While the top-tier pricing will always garner the most attention, communicating lower price point availability consistently ensures choice for the customer and allows you to manage and optimise demand.
This creates a win-win situation where you not only maximise revenue during high-demand periods but also offer choice during lower-demand periods. Offering deep discounts to fill a hall trains your audience to wait until the last minute to book if they want to scoop up the best deals. A demand strategy boosted with dynamic pricing will incentivise early booking and the behaviors you want from your audience.
Conclusion: Dynamic Pricing as a Strategy for Inclusivity and Success
Dynamic pricing is not just about squeezing out every possible cent from a high demand show. It's a nuanced strategy that, when executed thoughtfully, balances revenue generation with audience building and loyalty. It helps you better understand your audience, respond to their behavior and needs, and make the arts more accessible.
So, the next time you look at your pricing strategy, remember that each seat in your venue is not just a revenue opportunity; it's also a chance to build a long-lasting relationship with your audience. With dynamic pricing, you can ensure that both your venue and your audience find the 'right price', leading to a sustainable and inclusive future for live performances.
By leveraging data to fine-tune your scale plan, optimise inventory management, and implement a balanced dynamic pricing strategy, you can truly make your venue a space where everyone feels welcome, and everyone perceives value. That is the true power of dynamic pricing as a tool for audience loyalty.
In order to give you a full understanding of dynamic pricing, we're bringing together a chorus of voices from Spektrix and our partners, each with their own unique take.
Explore more perspectives:
- Championing Dynamic Pricing to Your Audience
- Get to Know Your Audience: How to Use Data to Build a Dynamic Pricing Model
- Dynamic Pricing: Double the Income or a Double-Edged Sword?
Grant Pauley is Content Manager at TRG Arts.