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

Arts organizations continue to operate in a challenging financial climate. Funding from the federal government is being cut, and expectations from funding bodies is increasing as competition rises. The arts industry 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 release. Something like Netflix can be hard to fight against, as customers have already committed and Netflix is able to push relevant content directly to their customers.

With live arts, we’re offering a different experience. It’s not just about what’s on stage, but 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 capitalize on all of the spending opportunities.

How can you capitalize 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 a top priority for many funding organizations is accessibility. If you’re successful at this, then it can be a win for both your charitable objectives and your financial targets; as you bring in a wider audience, you’re building on your audience base and becoming less reliant on the traditional theatre-going audience, becoming more resilient.

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

1. Increase secondary spend

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

Unlike Netflix, arts organizations 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 available offerings. To encourage customers to spend more with you, it’s important to make them aware of everything available to them, particularly if this is the very first time they come into contact with your venue.

There are some great examples of arts organizations working really well in this way. Regent’s Park Open Air Theatre are aware of the importance of secondary spending. 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 capitalizing on this. 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. Capitalize 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 particularly lets us as consumers know that we can have what we want, 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 in London 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 initiative. Allocations can be used to bring in a new and more diverse audience, allowing you to reach out to certain geographic 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 show, 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 subsidize your audience development efforts.

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 purchase online. By setting your defined criteria, for example a specific city or town, you can then grant access to your specific allocation as soon as a customer meets this criteria. With more traditional audience development initiatives, tickets have often had to be bought on the day of the show 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 organizations 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 non-profit objects. 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 expose more people to your work.