The joy of subscription

The joy of subscription

Acquiring new customers costs at least five times as much as retaining existing ones. So, if you can persuade a retained customer to attend ten times in a year, each of those ticket sales is FIFTY times more cost effective. It’s a wonder, then, that more organisations don’t pursue schemes to increase frequency of attendance. In the Nordic countries, many of our clients are still very focused on subscription programmes because they understand their role in realising artistic ambitions – a fixed series provides a base of sales no matter what the repertoire.

To listen to some you would believe that subscription was a thing of the past, but many organisations are reporting growth, including The Sage Gateshead and The Halle.

Subscription is under stress in the US, principally because many major institutions have been so heavily reliant on subscription selling upwards of 80% of their seats. The Philadelphia Orchestra took a new look at subscription and came up with three different models, designed to suit the needs of different market segments. It has continued with a full series subscription that has served it well for many decades and has, like many, introduced a more flexible ‘pick your own’ alternative to run alongside. It has also created an ‘EZseat’ (‘easyseat’) where people pay up front for the ability to buy tickets at a discount at the last minute. Perhaps the most interesting feature of this strategy is that it prices the alternatives neutrally, i.e. all options offer the same equivalent single ticket price because they want customer preference to drive the choice of scheme, rather than price.
 

CASE STUDY: OCTAGON THEATRE

Based in Bolton, the Octagon Theatre is a producing theatre with a season running from September to July. Historically, season tickets were sold with up to a 40% saving for customers who bought for all productions, and accounted for 32% of sales (excluding the festive production). By leading on price, the theatre made committing to a whole season feel less daunting for a customer, as well as creating a foundation of ticket sales for every production. Season tickets also provided a sizeable advance and, more importantly, encouraged the theatre’s core audience to sample work that they might not otherwise see.

However, season tickets were eating into ticket yield and in 2010 the Octagon Theatre commissioned Baker Richards to undertake a comprehensive review of pricing, including reviewing the season ticket offer. A number of changes were implemented as a result, including improving the scaling within the auditorium to increase price differentiation and refining the prices to maximise yield and enhance the season ticket structure.

A simple headline promotional message was retained – see all eight shows for a bargain price – and the saving on an eight-show season ticket increased to 44% (a bigger saving for customers than in the past), while the price was raised by 11%. A ‘premium’ season ticket was also introduced,
with additional benefits including free parking and a reserved table for interval drinks.

Following these changes, the Octagon increased ticket yield by 12% while maintaining lower prices for price sensitive customers, and increased attendances, selling more season tickets than at any point in recent history, with 70% of season ticket customers opting for the full season or the premium season ticket.

Membership matters

Simple membership schemes can be used to create additional revenue streams when the opportunity presents, such as the Young Vic’s Priority Pass, promoted on the back of a new season including Michael Sheen – simple, but beautifully executed. Other theatres, notably the Theatre Royal in Norwich and the Theatre Royal in Newcastle, have built significant bases of friends’ membership off the back of priority booking that provide both additional income and a core of committed customers who will attend more difficult repertoire.

Even the best established programmes require continual adjustment to keep supporting objectives, and Baker Richards has been working with Glyndebourne to restructure membership and marketing strategies, devising a more co-ordinated approach, through data mining and attitudinal research (with Alan Brown), and in-depth customer analysis to forecast future trends.

A co-ordinated approach between marketing and development is behind some of the more innovative new initiatives in the US, such as the example from Center Theatre Group (previous page) or the Saint Paul Chamber Orchestra, which reduced all ticket prices in order to stimulate greater levels of donations (written up at www.thinkaboutpricing.com). The Pricing Institute has recently been working with San Francisco Museum of Modern Art (SFMOMA) on pricing for both admissions and membership, and one of the key considerations was the inter-relationship between the two and the need to achieve a very delicate balance – an increase in admission prices not only maximises turnstile income, but also increases the value of a membership with free admissions attached. But just how far can those prices be pushed? We have worked with SFMOMA to model demand in order to find the optimum balance.

One small and easy to implement initiative is what in the US is called a ‘check-off’ donation, where all customers are asked to supplement their ticket order with small donation. It works everywhere. If you’re not doing it already you’re missing out on a valuable margin.