FULL HOUSE Turning Data into Audiences - ARTS Australia

INTRODUCTIONThis new Manual is fundamentally about what artsand entertainment organisations can do to betterutilise the data they have regarding customers andtheir transactions and build ongoing relationships.The original Manual published in the UK in 1993 wasintended to help all those who wanted to get moreout of the Box Office, usually the main point of contactwith customers. More was wanted from the staff whoworked there, and more from the data on customersand their transactions which should be available from acomputerised system. This needed a fundamental changein attitude both to customers at every contact pointand the customer-facing functions. Most importantly,it required recognition that arts and entertainmentorganisations needed to build relationships with theirattenders. They needed to use the knowledge theyhad about them to create more effective relationships,to the benefit of the attender and the organisation.Some might argue that this has been achieved. Yet theevidence is that in 2006, many arts and entertainmentorganisations are still not recognising the value of data ontheir customers’ behaviours, and are as likely to be ‘productfocussed’and not necessarily ‘customer-focussed’. In the21st century, many are still only slowly realising the valueof building close and valuable relationships with attenders.Many still sell tickets through agents and only have an‘arm’s length’ relationship with their customers; and as aresult lack full information on them and their transactions.Change is slow. It was the early 1980s when the firstcomputerised ticket selling systems arrived in largervenues. These were soon followed by systems designedto combine marketing and fund-raising facilities withticketing functions, offering fully developed integralcustomer databases, list management facilities, and thecapability to record more information about customersand their purchasing habits. This transformed boththe function of the box office; and transformed themarketing capabilities as well as the relationshipbetween the customer and the box office.In the 1990s, systems set out to create a single databaseto support customer-facing functions, encompassingnot just ticketing and marketing, but also memberships,subscriptions, season tickets, donations, corporategiving and fund-raising, to be served up to the staff atevery customer ‘touch-point’. The challenge has been tointegrate these different marketing activities and coordinatethe various ‘silos’ of customer information oftencollected by different departments with different tools.In 2006 this is evolving to yet a new level. The Internethas transformed how customers can find out aboutarts and entertainment organisations and how tocommunicate directly with them, in a tailored andpersonalised way, using the data from their relationshipin all transactions. From website to ticket sale and atevery contact point, it is possible to know who thecustomer is and deal with them according to theirspecific needs and interests. We have to put an end to“faux” relationship marketing, as Don Pepper refers toit (and is explained more in Chapter 2). The customersknow what we know about them, and expect us to useit in relating to them. This needs a fundamental changein approach to using and managing that knowledge.This manual is about managing that change,and getting the best out of it.. Don Pepper and Martha Rogers, The One to One Futurepublished 1993, then 1996, and as Fieldbook in 1999. Theconcept of “faux” relationship marketing is described as notusing what is known about the customer when communicatingwith them.viiiFULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

20 REASONS FOR USING DATA ON CUSTOMERS..3.4.5.6.7.8.9.0...3.4.5.6.7.8.9.0.use the available information to provide better service at all customer touchpointsanalyse peak sales periods to better manage customer service and staff allocationmonitor customer feedback collected by customer-facing staffidentify and differentiate distinct customer segments based on behaviouraland demographic characteristicstailor marketing activities, messages and offerssave marketing spend by targeting hot prospects and meeting bulk mailing standardscompare audiences between events and venues and use this informationfor cross-selling or programminguse customer data responsibly to comply with the Privacy Actmanage and monitor direct marketing and email campaignstrack marketing response and undertake detailed post-campaign analysisforecast and predict sales and receive advance warning of events undersellingagainst anticipated targetscreate detailed reports for marketing research and planninguse geodemographic profiling tools to measure marketing penetration and potentialundertake drive-time analysis to define your current and potential catchment areasdemonstrate your geographical reach and impact convincingly to fundingagencies or councilsunderstand Recency, Frequency and Monetary value (RFM) of attendances foreffective Customer Relationship Managementcalculate your rate of customer churn and create tactics to manage itfollow-up first-time and lapsed attenders with appropriate communicationanalyse ticket yield and unsold capacity to manage price breaks andmaximise revenuemine your database for potential group bookers, friends, subscribers ordonors based on high-value transactions, loyalty and frequent attendance20INTRODUCTIONix

How to Use this Manual?Each section of the Manual is divided into Chapters. At the end of each Chapteris a Review Agenda and recommended Action Plan. The Review Agenda liststhe key areas arising for consideration from each Chapter. The Action Planthen identifies the main points recommended for implementation.Users of the Manual are expected to consult each chapter as they need, though thechapters are arranged in logical sequence so the manual can be read as a book.If you want to get the most out of customertransaction data to build relationships…Start with Section 1 then move to Section 4.If you want to develop the application of data from transactions in marketing:First read Section 4.Chapter 10 covers the profiling of the catchment area and audience.Chapters 11 and 12 cover direct and online marketing.Chapter 13 covers diagnostic techniques to help marketing campaigns and increase salesThen refer to earlier chapters as necessary.If you want to develop the effectiveness of the customer-facing staff:Read Section 1 and concentrate on Chapters 2 and 3, which cover themanagement of the point-of-sale.If you want to build up customer records in the system database:First read Section Two – Chapter 4 covers the information which can be compiled in customerrecords. Chapter 5 covers privacy and data access and electronic communication.Then refer to other chapters as necessary.FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

If you want to expand the data on customers and analyse your information:If you have not already done so, read Chapter 4 on the informationwhich can be compiled in customer records.Then read Section Three.Chapter 7 covers the expansion of the records and the additionof profiling, mapping and other proprietary systems.Chapters 8 and 9 delve into statistical analysis and the differentways of presenting the data for interpretation purposes.THE KEY TO SUCCESS?Organisations need to understand their customers’ behaviour and what theirtransactions tell us about them. They must, therefore, have control of the data on theircustomers, and understand their behaviours and what their transactions can tell usabout them. Getting the most out of the customer database will involve changes inbusiness practices, management structures and strategy. In addition, it requires thedevelopment of staff skills, implementing the right software and finding out how touse it. The place of marketing and sales in the functioning of the organisation andthe position of marketing in the management hierarchy will have a major effect onthe staff motivation and the effectiveness of marketing thinking. This will also impacton the contribution of marketing to the success and sales of the organisation.Without the right structure and relationship between customer-facing staff andthose responsible for managing the strategy for relating to customers, the relevanceof the information in the customer database will remain locked inside it.INTRODUCTIONxi

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1. The heart of marketingThe customer database is the heart of the information needs aboutcustomers, and should pump out accurate and comprehensive datawhen requested.KEY items– Strategic and Tactical QuestionsIn organisations which charge for admission, ticketing is atthe heart of marketing, providing data to drive relationshipsof all kinds with customers. Someone in every group ofpeople attending an event has to contact the point-of-sale,traditionally the Box Office, directly or indirectly, to purchasethe tickets. Whether they telephone, turn up in person,buy on the Internet, write a letter, fill in a booking form orcontact a ticket agent, there is an opportunity to collectsome information about the customer and that transaction.Ticketing is a derived demand – the primary demandis for the event. The ticket is merely a means to an end,the end being attendance of the event. No one buys aticket for an event without marketing having persuadedthem to be interested in buying it first. Simply tellingpeople ‘what’s on’ has the limitation of ‘preaching to theconverted’ and only reaching people already appreciatingwhat is on offer. Marketing sets out to create audiences, toidentify potential attenders and persuade them to attend.For marketing purposes, it is essential for organisationsto have full access to information collected on thecustomers. The box office owned and managed by theorganisation is obviously the best way to guarantee thecustomer care and customer relationships needed. It isalso the best way to ensure that data on customers canbe appropriately collected and compiled through eachbooking method, and made fully available for subsequentuse. Other business arrangements of the sales channelsare possible, but it is essential that the data is collected inthe first place and effectively ‘owned’ by the organisation.The booking methods which involve dialogue with thecustomer provide the opportunity to find out more.Internet transactions guarantee capture of key informationabout the purchaser and can be extended with collectionof personal preferences and online surveys. It is nowpossible, according to some organisations, to compileinformation on 99% of the ticket-purchasers. This can thenbe enhanced by specific information from memberships,Friends and ‘loyalty schemes’, subscriptions, donationsand fund-raising, and from all the other points of contactwith people. This is a powerful resource of information.“Good information is a facilitator of successfulmarketing, and indeed, seen in this light, marketingmanagement becomes first and foremostan information processing activity” . M. Christopher, and others, Introducing Marketing, 1980,Pan, London.FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

Detailed knowledge of the current attenders ensures betterunderstanding of the potential attenders, so that marketingactivities can be better tailored to each market segment.Analysis of research into potential attenders by AndrewMcIntyre of Morris Hargreaves McIntyre shows that, forexample, attenders for different kinds of theatre productionsin the same venue are affected by different factorsaccording to their frequency of attendance and type ofproduction attended. Andrew McIntyre has used telephoneresearch and focus groups to understand attender’smotivations and perceptions. He argues that it is necessaryto think through the messages being communicated, tomatch people’s social, intellectual, emotional and spiritualmotivations for attending. These issues point to theneed for different marketing messages to be targeted atdifferent market segments. The information to divide thepotential attenders into different marketing segments isonly available from records in the customer database.The information to dividethe potential attendersinto different marketingsegments is onlyavailable from records inthe customer database.Analysis of who attends specific events now, from customerdata, can enable the identification of people who havesimilar characteristics to the current attenders, who mayalso be persuaded to attend. They might be missing outsimply because information is not reaching them. Theymay need a specific marketing approach and only theinformation from customer database records can guidethis. The customer database helps identify prospects.This means arts organisations need to develop tailoredcommunications according to behaviours – for example,what do people need to know before they considerattending? Fundamentally, this is centred on the CRMethos of one-to-one marketing and having a separateapproach and development strategy for each customer.FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

Information compiled from transaction data capturedeither at the point of sale or from other relationshipswith the organisation may be drawn from virtually100% of the purchasers or customers: the universe. Onthe other hand, audience surveys, and other researchmethods used to obtain information about people, drawconclusions only from samples. The audience survey,when applied as an instrument for the performing artsin Australia, has been developed to collect a wide rangeof information with a reliable methodology. But it canonly present information from samples or subsets ofthe attenders, not on everyone who has purchasedtickets. However, audience surveys can be used toexpand on customer database records. Aggregateddata can provide extra detail to profile customers. Evenpreference questionnaires, either for mailing lists or onlineprofiles are less than reliable and completed only by aproportion of the total attenders. Online registration andcustomer profiles or preferences need to be carefullydesigned to collect relevant information where thecustomer understands the options being offered.STRATEGIC AND TACTICAL QUESTIONSThis puts every customer touch-point at the heart ofcustomer relations and therefore central to marketingand all the customer-facing functions, from single ticketsales through to memberships and subscriptions, tofund-raising, sponsorships and public relations. Theinformation which can be compiled in the customerdatabase is of direct practical use to marketing people, whoneed reliable information and a detailed understandingof their actual customers to help them plan. Analysisof customer data can provide the information to helpanswer both strategic and tactical questions. Marketingpeople need clear answers to these questions ifmarketing action is to deliver the right results.Some of the urgent tactical questions thatcan be answered by customer data are:•••How do we know in advance whether anevent is underselling against anticipatedattendances and income?What action do we take, aimed at whom, toincrease attendances for a poorly selling event?What discounts or special offers, if any, shouldwe offer to whom, to trigger a response?Good marketing managers will know the rightstrategic questions to ask and must know:WHO•••WHICH••WHERE••WHY•••are our current customers?should our customers be?are we not reaching currently?segments should be targeted toincrease current penetration?segments should be targeted todevelop new audiences?are our current customers?are we not attracting customers from now?do customers attend now?do some potential customers choose notto attend?do we remain in existing markets?1. THE HEART OF MARKETING

DO YOU KNOW THE ANSWERS?The key strategic questions involved in planningany marketing campaign should be:••••who to target as potential customers,in order to expand?how to reach and persuade potential customers?how to monitor the response to marketing action?what to charge for tickets to maximise income andattendances, and to open up new market segments?In practice, relatively straightforward analysis ofinformation contained in a customer database willprovide detailed knowledge to answer these questions.Given Christopher’s argument above that “Marketingmanagement becomes first and foremost an informationprocessing activity” (ibid), it is clear that marketing staffand all customer-facing staff ought to be indivisible,naturally on the same team. This is dealt with next.!REVIEW.What information is available at present,and where from, to answer the strategicand tactical questions on page 5.ACTION PLAN.Prioritise the key information gapswith sources known to you.FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

AVAILABLE AUDIENCESDiagram 2-1: Attendance Frequency Bull’s EyeKeith Diggle 3 argued eloquently from the 1970s (he wasinvited to present lectures in Australia and New Zealandin 1979) that the arts had to recognise that there was acurrently ‘unavailable’ audience, as well as the currentattenders. He analysed what he saw as:•the core frequent attenders, probably attendingonce every two or three months, who most artsorganisations see as the ‘bulls eye’ on their sales target;Non-attendersLess than once a yearOnce a yearTwo or three times a yea•beyond them, the less frequent attenders who hedescribed as ‘intenders’ – they value the arts as a ‘goodthing’ and always mean to attend but don’t often makethe visit, so they end up attending perhaps two orthree times a year;Every two to three montAt least once a month•beyond them, those who only ever attend veryinfrequently – research shows anything from once ayear to once every three years or so.And, of course, beyond them are the really unavailableaudience – those who appear to reject most artsattendance opportunities. Keith Diggle argued, perhapscontroversially, that these people were ‘hostile’ and thatit was more practical and healthy to concentrate onestablishing a strong relationship with those who hadalready attended. However, he also argued that artsorganisations must take steps to attempt to continue togrow audiences.3. Keith Diggle, Marketing the Arts, an introduction and practicalguide, 1976, City University, London; Guide to Arts Marketing,1984 and Arts Marketing, 1994, Rhinegold Publishing, London.www.audience-development.net/Non-attendersLess than once a yearOnce a yearTwo or three times a yearEvery two to three monthsAt least once a monthSource: Theatre Attenders Target Group Index Data,Arts Council EnglandThose familiar with geometry will appreciate that in archeryor darts, the bull’s eye is hardest to hit because it is thesmallest area of the target. And each band outwardsrepresents an increasingly large combined area to target.The same is true for the attenders – the core frequentattenders usually form a very small percentage of thepublic, and a relatively small proportion of total attenders.Sadly, the outer ring of the ‘unavailable’ or ‘hostile’ representthe largest percentage, and the easiest to hit – and miss!10 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

In a study of ticketing data for 28 regional theatres around Australia for the three-year period 1996-1998, an average of 55%of customers had not purchased any tickets at the venue for at least one year. 6 Analysis of theatre attenders in the UK is asobering reinforcement of the detail of this trend for Australia. The following table is drawn from the Arts Council of Englandanalysis of the Target Group Index data for theatre-goers from the British Market Research Bureau. We should be unhappythat this indicates less then 36% of the public is attending theatre, so more than 64% are yet to be converted. But in factan even smaller proportion of the public are attending frequently: only 6.3% more often than two or three times a year.Compared with the ‘norm’ quoted above in the Baker-Richards work:16.9% of theatregoers buy 54.3% of the tickets sold per annum29.7% of theatregoers buy 31.1% of the tickets sold per annum52.6% of theatregoers buy only 14.5% of the tickets sold per annumFrequency ofattendance% of all adults whoattend theatre% of theatre-goerswho attend atdifferent frequencies% of attendancesmade bytheatre-goersattending at differentfrequenciesVisits/ticketsbought perannumAt least once a month 2.1 5.1 29.6 12+Every 2 to 3 months 4.2 11.8 24.7 52 or 3 times a year 10.6 29.7 31.1 2.5Once a year 9.7 27.1 11.3 1Less often 9.1 25.5 3.2 0.3Totals 35.7% of the public 100% of theatre-goers 100% of attendancesSuch is the distortion of the ‘average’ frequency of attendance by the large proportion of attendances made by thoseattending most frequently, that the mean number of attendances is in the range 2.3 to 2.7 times per annum. Since the coregroup contained in the bull’s eye already attend this often, this means a remarkable 83.1% of theatre-goers and 29.4% of thepublic present the opportunity to increase their frequency of attendance.6. Eedle and Roberts, Ticket2Research: National Market Research and Development Project for the Regional Performing Arts Industry, 1999,Australia Council for the Arts, p15 www.artsoz.com.au/ticket2research.htm12 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

1210Theatre Attendances8642Mean attendances in range 2.3 to 2.7 time per annum0At least oncea monthEvery 2 to 3months2 to 3 times a yearOnce a yearLess oftenDiagram 2-2: Visits/Tickets Bought per AnnumResearch by Morris Hargreaves McIntyre in the UK suggests that some of this pattern may be self-inflicted by artsorganisations. Andrew McIntyre argues that much marketing information is geared to meeting the needs of the corefrequent attenders, the ‘bull’s eye’. Unfortunately this information then deters the rest of the potential attenders. His figuresalign with those on the distribution of attendance frequency, suggesting that, for example, the printed brochure for aseason of activity might be effective in persuading 15% of attenders to attend, and frequently. But, in the process, that samebrochure could be failing to persuade the other 85% of current attenders, possibly even dissuading them. So to increasefrequency of attendance, marketers need to segment the market and communicate appropriately, according to eachattender’s past attendance patterns and what is known about them.The later Chapter on direct marketing (Chapter 11) makes clear that, to be effective, the message must match the market,and this will not be achieved by ‘broadcasting’ the same message to everyone. While the opposite – ‘one-to-one’ marketing– may be logistically unachievable in reality, Andrew McIntyre has argued that if there are 20,000 attenders on a database,then perhaps 20,000 audience development strategies are needed. Realistically, we are talking about communicating toattenders according to their individual needs and circumstances, so we must group them into contactable segments basedon their transactional behaviour.2. PEOPLE NOT ‘BUMS ON SEATS’, CUSTOMERS NOT ‘PUNTERS’13

CUSTOMER RELATIONSHIP MANAGEMENTThe first edition of this Manual, in the UK in 1993, did not refer specifically to ‘customerrelationship management’ (CRM). This term has since emerged as the description forseeking loyal customers and building relationships with them to capture their potentiallifetime value for the organisation. Actually, arts organisations have been using CRM forcenturies, in the form of season tickets and subscriptions, ‘Friends’ and other ‘membership’schemes. All of these are designed to identify the likely more frequent attenders and thendraw them closer to the organisation. One strategy to achieve this is to create a ‘virtuouscircle’ so that the relationship with attenders can be developed.Diagram 2-3: The Virtuous CircleFocusingAmbassadorsSubscribers• relationship refinedProspects• Not known to usCapturingPotentials• Identified& PersuadedNurturingWelcomingAttenders• Details captured14 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

This circle assumes that ‘prospects’ (people who arepersuaded to join a mailing list or to register on a website)are then persuaded to provide more information aboutthemselves via a ‘preference questionnaire’ sent to them orthe ‘personal profile’ for self completion on the website. Thisis done so that they can then be targeted appropriately as‘potentials’ and persuaded to attend for the first time. Ofcourse, that first visit is crucial. According to internationalconsulting firm Gartner 7 , it can cost up to ten times asmuch to acquire a new customer as it costs to retain anexisting one, so first-time attenders are very valuable.Once they have visited the venue, they know what theexperience and the ambience is like, and they understandbetter what is on offer and what they get out of a visit. Itis to be hoped the organisation now knows who theyare, what they attended, what price they paid and, ifrelevant, where they sat. Now the challenge is to nurturethe relationship with them and bring them back again.This is where some science comes in, because it will notbe appropriate to expect everyone to become a frequentattender. So venues must learn to understand all theirattenders and communicate with them accordingly.‘ambassadors’ 8 as part of their New Audiences programme.Mel Jennings visited Australia and New Zealand as a guestspeaker on this topic in 2004. Others support people whoorganise groups, perhaps from their workplace or socialorganisation, while others offer ‘Test Drive’ schemes to helppeople make and enjoy that first visit.If this sounds like hard work, it is – reaching and persuadingnew audiences will always require considerable effort.However, the rewards are long-lasting when people can bedrawn into an appropriate relationship.“The easiest kind ofrelationship for meis with ten thousandpeople. The hardest iswith one.”– Joan Baez (1941 – )Those people who are persuaded to become frequentattenders are of course very valuable to the organisation.Not only do they attend frequently and therefore bringin more income, they are also likely to be ambassadorsfor the organisation in recommending the experience totheir friends. They are also more likely to make donations,offer other kinds of support, and use their social and worknetworks to obtain sponsorship, and so on.So the virtuous circle is completed when the supplyof potential attenders comes from introductions by‘ambassadors’ who know the organisation well. Someorganisations have formal schemes for this. The ArtsCouncil of England has a publication by Mel Jennings on7. www.gartner.com8. Mel Jennings, A Practical Guide to Working with ArtsAmbassadors, 2003, Arts Council England. www.artscouncil.org.uk/publications/publication_detail.php?rid=0&sid=&browse=recent&id=3712. PEOPLE NOT ‘BUMS ON SEATS’, CUSTOMERS NOT ‘PUNTERS’15

LIFETIME VALUEThe effort in reaching and persuading new audiences needsto be placed into context by understanding the potential‘lifetime value’ (LTV) of each attender. Lifetime valueestimates the likely value of an individual over their entirepotential future with an organisation, projected from thevalue of the transactions that they make per annum. Forexample, the Sydney Symphony Orchestra identified thatsome of its subscribers, now elderly, had been subscribingcontinuously for 40 years. On that basis, new subscribersare potentially very valuable people if they can be lookedafter and similarly retained.LIFETIME VALUE CALCULATIONA simple calculation of the LTV of a new attender is as follows:Annual value of attender ticket purchases multipliedby predicted life of them as an attender.FOR EXAMPLE:To calculate the value of a new subscriber:Annual Subscription cost = $300Expected subscription duration = 7 yearsA new subscriber pays only $300 in year one, but will pay a total of $2,100 over seven years.(This may well vary as prices increase, but for simplicity the current price is multiplied.)Given the amount that may be earned from such a new customer, what sort ofmarketing effort is appropriate and what discount or benefits is it appropriate tooffer to gain a total of $2,100 worth of business over the next seven years?The benefits may go beyond monetary value and the guaranteed income andstability such attenders offer an arts organisation. A lifetime value calculationcan consider all the contributions of a lifetime involvement, includingvoluntary work, fund-raising and promotion, not just ticket income.16 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

The figures required to provide the base for calculatingLifetime Value need to be sourced from the informationon attender behaviour in the customer database. Clearly,in the example quoted above, it is straightforward tocalculate the average subscription duration in order toarrive at the multiplier, though this will be limited by thepast transaction history contained in the database. Someorganisations appear to have better records of subscriptionon paper than in computerised customer databases,because changes of systems have led to loss of continuityin their data. For most other purposes, it is necessary topredict the likely life of an attender on the database. This isas much affected by external factors such as the proportionof people who move each year and the life expectancy ofthe attender.When not using subscribers, for example, it is necessary toanalyse the frequency of attendance to predict LTV, in orderto identify the multipliers for people attending at differentfrequencies. The most reliable basis for this is to take athree-year period and process the percentage of attendersat each frequency. If this data is produced in bar chart form,it is usually possible to identify visually how best to groupattenders according to their frequency of attendance. Theymay conform to something similar to the 15:35:50 pattern,discussed above on page 11. It is then necessary to processthe data for attenders at each group of frequencies to arriveat their average annual transaction value. Once this figure isknown, it can be multiplied by the predicted life of such anattender on the database.A good resource for use in LTV calculations is the “HarvardBusiness School Lifetime Value Calculator”www.hbswk.hbs.edu/pubcontent/lifetimevalue.xlsLifetime value is most disrupted by the effects of ‘churn’– the proportion of customers lost each year througha variety of factors, some external. Churn quantifiesthe degree of audience turnover, based on the rate atwhich new audience members are acquired and existingaudience members are retained or lost. Analysis ofticketing-transaction customer databases over the years hasindicated that many arts organisations suffer a high degreeof churn – consistently bringing in some new audiencesevery year but also losing a proportion of attenders wholapse – (appear to cease attending). The Ticket2Researchstudy of 28 regional theatre databases around Australiafound that 60% of purchasers bought one pair of ticketsonce, and only once, in a three-year period. 9 However,research by Morris Hargreaves McIntyre shows that manyof these lapsed attenders do not perceive themselves ashaving lapsed: they are simply waiting for an appropriatelydescribed attractive event to stimulate them to return.CHURN CALCULATION“An analytical procedure for quantifying the degree ofaudience turnover, based on evaluating and comparingthe rate at which new audience members are acquired,and existing audience members are retained or lost.” 10A = number of customers at the start of the periodB = number of new customers gained during periodC = the number of customers lost during periodD = number of customers being carried forward to thenext period = A + B – CPercentage Churn = B – C x 100 or D – A x 1009. Eedle and Roberts, 1999, p15.www.artsoz.com.au/ticket2research.htm10. Stephen Cashman, An A-Z of Commonly Used Terms andProtocols Relating to Box Office and Audience Data,November 2005, ADUK.aA2. PEOPLE NOT ‘BUMS ON SEATS’, CUSTOMERS NOT ‘PUNTERS’17

For first-time attenders, it is useful (and salutary) to analysewhen they next attended in order to help predict likelyfrom actual behaviour. The arts marketing challenge is toinfluence that behaviour. The recognised way to influencebehaviour is to develop a relationship with the attender.THE LOYALTY LADDERCustomer Relationship Management theories oftenrefer to the ‘loyalty ladder’. The virtuous circle above is adifferent way of describing that ladder for the arts, but itcan be useful to consider both models and how you canapply them for marketing your organisation’s activities.Diagram 2-4: The Loyalty Ladder5. ADVOCATES4. CLIENTS3. CUSTOMERS2. PROSPECTS1. SUSPECTSAs with the virtuous circle, the bottom rung of the ladderstarts with ‘suspects’ – people we don’t yet know – andmoves up rungs through ‘prospects’. Further up the ladder‘customers’ are those people with low purchasing valuesand low frequency of purchase compared with ‘clients’,who have high purchasing values and high frequencyof purchase. At the top are ‘advocates’, doing more thansimply being purchasers. In fact, most organisations willhave more than one rung within each of these categories.The traditional indicators of where a customer mightbe placed on the loyalty ladder are ‘recency’, ‘frequency’and ‘value’ (often quoted as RFV and sometimes asRFM or RF$, since value means monetary value here).1. RecencyCustomers who purchased or attended recentlyare more likely to buy again compared withcustomers who have not purchased in a while.2. FrequencyCustomers who purchase or attend frequently aremore likely to buy again compared with customerswho have made just one or two purchases.3. ValueCustomers who have spent the most money in total aremore likely to buy or attend again. The most valuablecustomers tend to continue to become even more valuable.Each category needs specific communication to persuadethem to purchase. The classic argument from Pepperand Rogers, the US gurus of CRM, is based on the ideaof treating each type of customer differently to createlong-term, mutually beneficial relationships with them.Such organisations create a ‘customer feedback loop’ inwhich they say, “I know you. You tell me what you want.I’ll deliver it – and I’ll remember for next time.” Peppersand Rogers call this process a “learning relationship”,delivered in four steps with the acronym IDIC:18 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

IDICIDENTIFYyour customers at allpoints of contact.DIFFERENTIATEyour customers based on their individualneeds and value to your organisation.INTERACTwith your customers intwo-way dialogue.CUSTOMISEsome aspect of your products or servicesbased on what you learn from your customers.As noted before, Don Pepper also refers to the dangerof “faux relationship marketing” (ibid). In the arts, thiswould occur when the attender clearly knows what theorganisation knows about him or her, but the organisationdoes not use this knowledge in their contact with theattender. This could be sending out a direct marketingcommunication about an event for which the attenderhas already booked or writing to an infrequent attenderwith familiarity appropriate to a frequent attender.Qualitative research has found that sometimes infrequentattenders cannot recall accurately a particular venue– they value the opportunities to attend the venue, butcannot completely remember the details specific to it.Equally, many arts organisations fail to deploy their entireknowledge about their relationship with an attender,because the information might be distributed acrossa number of databases. It is not uncommon to findseparate databases for ticketing, subscription, fundraisingand public relations. In some organisations therecan be even greater separation, because each of thesedatabases reside in separate departments with differentpractices, not to mention systems. The ideal model,increasingly adopted across the world, is to integrate thecustomer data so that staff can use all the knowledgeabout that attender at every customer touch-point.This integration of databases, centred on the computerisedticketing and marketing system, leads to integrationof the customer-facing departments so that staffhandling customers become multi-tasking and capableof handling all customer transactions. Many report thesimple advantage of synchronising all their data oneach customer, so they at least get addresses, telephonenumbers and email addresses consistent. This createsthe concept of one-to-one marketing at the heart of CRMand one source of customer knowledge to facilitate this.RE-ENGINEERING TO FOCUS ONTHE CUSTOMEREvery arts organisation should review its current customerinteractions (every point at which a customer is incontact – directly or indirectly, physically or virtually,served or self-service) and consider what changes thecustomers might require to gain an improvement intheir experience and relationship with the organisation.Every arts organisation should review what it wants outof the customer interactions and whether its proceduresallow it to achieve these successfully. Increasingly,customer databases are enabling the ‘one-stop-shop’database to be centred on computerised ticketingand marketing systems, but are also meeting theneeds of all other customer-facing departments.2. PEOPLE NOT ‘BUMS ON SEATS’, CUSTOMERS NOT ‘PUNTERS’19

In summary, organisations should ask:..3.What is being done now to managecustomer touch-points?What needs to be done to improve customer service?How will this be done or facilitated in the future?The Sydney Symphony (see case 3) is a good exampleof this in action. It is a holistic strategy that needsto be driven from the top down. It must be closelyconnected to the company strategy with supportingprocesses and policies in place to ensure the coordinateddelivery of a relationship-focussed culture.“One of the most valuable aspects of the Sydney Symphony’sCRM & Ticketing Systems review is that it has refocussedthe entire company, encouraging cross-departmentalownership of patron issues and a commitment to a‘customer-centric’ approach.” says Victoria Doidge, theSydney Symphony’s Director of Market Development. “Thejourney we’re taking is an ongoing one – we’re learningmore about our customers’ needs all the time. But it wouldnot have been possible without strong commitment andenthusiasm from everyone involved, from board andmanagement right through to our box office team.”Case 3SYDNEY SYMPHONYORCHESTRA CRMEXPERIENCEThe Sydney Symphony started in 1932, the sameyear as the Sydney Harbour Bridge opened. Today,it has grown from 24 to 110 musicians and presentsover 150 concerts in and around Sydney to over350,000 people.In 2004, the Sydney Symphony had no integratedsystems and their fundraising and other VIP listswere managed in Excel. No redundancy or backupof the knowledge of customer relationships existedwithin the organisation. This valuable asset was alljust held in someone’s head, yet that person couldwell leave the next month. No documentation orformalisation of systems usage was in place andthe ticketing system was just that (as applied): aticketing system.DECISION PROCESSThe Sydney Symphony realised that it needed anorganisation-wide system to manage the variouscustomer relationships. The Symphony made thedecision to keep ‘box office’ in house. Outsourcingwas potentially cheaper, but the Symphony wantedto build relationships themselves given the depth ofthe orchestra’s loyalty ladder.20 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

VISIONBy developing one-to-one customer relationships thatrecognise the behaviours and attitudes of an individual,the Sydney Symphony will create deeper relationshipsresulting in increased commitment and value forboth parties.IMPLEMENTATIONDirector of Market Development, Victoria Doidgebelieves that important elements to a successfulimplementation process are:•••people – a team where enthusiasm is as importantas technical ability;CEO commitment – such a major organisationalchange needs to chaperoned from the top;board consultation and cross-company buy-in.VENDOR ANALYSISA thorough analysis of the four short-listed vendors wasconducted with two-day comprehensive sessions witheach vendor. The vendor was required to upload 500fictitious accounts and then execute a variety of detailedcase studies or simulations. The vendors were scoredagainst a matrix of requirements.SYSTEM TRANSFEROnce the selection of a vendor had been made, the taskwas to install the software and import existing customerdata and set up new systems and processes. The datatransfer of 85,000 names involved more than a millionrows of data. The fact is that no time is ever a good timeto embark on such a complex project.Aaron Curran, Marketing Manager – CRM recommends:•••••Hire an IT project manager to assist you through theprocess.Do loads of preparation in advance of any change.Develop a plan for cultural change to adopt CRMthrough the whole organisation.Develop business rules and document them.Work closely with the system vendor.RESULTSJust over a year later Sydney Symphony reports avariety of improvements, including:•••••360-degree customer view is accessible from everydesk in the organisation;online subscriptions – live to Tessitura for renewalsand new subscriptions;online single ticket sales – 300% year-on-yeargrowth;online account management – customers canmanage their own details;more effective interaction with customers at keypoints in the lifecycle – e.g. churn management, upsell/cross-sell opportunities.2. PEOPLE NOT ‘BUMS ON SEATS’, CUSTOMERS NOT ‘PUNTERS’21

20 Things Sydney SymphonyOrchestra Wanted From a NewTicketing/CRM System..3.4.5.6.7.8.9.0...3.4.5.6.7.8.9.0.direct mail and eDM contact trackingmanaged associations between customerscomprehensive and personalised user friendly account screenimproved online purchasing – personalised online accountsautomated payments (pledges)simple deferred payment plansuser-friendly task managementautomated receipting and invoiceslead generationflexible loyalty programmessimple and integrated customer feedback managementeasy integration with current systems e.g., sun finance systembetter reporting toolsmore sophisticated segmentationcompany wide resource – improved information for allimproved post campaign analysislong term financial benefitsimproved customer lifecycle management‘future proofing’ – compatibility with developing technologiesimproved vendor support giving all staff confidence2022 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

A MULTITUDE OF CUSTOMER TYPES,BUT ONE VIEWThe use of the word ‘customer’ in the arts is increasinglymulti-dimensional and multi-level. An organisation hasmore types of customers to service than just ticket buyers.These can include first-time attenders, regular attenders,subscribers, members, donors, patrons, Friends, boardmembers, funding organisations, schools, sponsors, industrymembers; the opening-night invite list, and so-on. All needto be recorded and the evolving (and often inter-related)relationships managed. All staff need to understand thesemulti-level relationships, so information must be sharedwithin the organisation to build on these relationships ina coordinated manner. In fact, in Australia, the legislationin the Privacy Act has imposed an obligation to managethis information resource accurately and responsively (readmore about this issue in Chapter 5: Permission Marketingand Privacy).A broad definition of customers also means that peoplecome into contact with, or are serviced by, different parts ofan organisation. Hence, implementing CRM involves manyparts of an organisation and requires cross-organisationand cross-departmental engagement. The complete or360-degree view of a customer relationship entails collatinginformation into one database from all the areas of theorganisation which have dealings with them.Effective CRM can add value, make incremental sales, andmove attenders up the loyalty ladder, because it is possibleto use the 360-degree view of the attender and theirbehaviour in every customer contact and every transaction.This provides the information that enables the staff of theorganisation to respond personally and specifically to theinterests and preferences of the attender. By respondingselectively, individually and flexibly, based on the attender’shistory of attendance, it is possible to progress people upthe loyalty ladder, from the uninvolved person on the streetto, eventually, a committed supporter.The development of a relationship, and in particularbuilding trust, is particularly important for the arts becausethe ‘product’ can be a significant financial purchase, yet berelatively unknown to the potential attender (e.g. a newtheatre company from overseas). For some people theinformation around the decision to purchase tickets can beintangible and complex. Loyal customers are often valuableadvocates because they attend early and generate wordof mouth to confirm the attraction to the more ‘reticent’mainstream market.RELATIONSHIP ROUTESIt is therefore necessary for each organisation to develop aplan to develop the relationship with attenders, so that itcan encourage attenders up the loyalty ladder and, ideally,create that virtuous circle.There are six rungs to success:1. RecruitmentTo introduce people we need their contact details.Websites enable people to register and complete personalprofiles and preference questionnaires. Campaigns canbe aimed at recruiting people to lists or encouragingpeople to make exploratory visits (e.g. open days). Personalrecommendation from existing attenders can provide leadsto new attenders. These are all ‘suspects’ until we knowsomething more about them to enable a personalisedand tailored approach, once they become ‘prospects’. ‘TestDrive’ schemes and incentives can be effective ways ofencouraging first visits.2. WelcomingWhen prospects make the leap to become first-timeattenders, they deserve a warm welcome. Should therebe a welcome pack explaining all about the venue,the programme, and introducing the people of theorganisation? Will they be met by the front-of-house2. PEOPLE NOT ‘BUMS ON SEATS’, CUSTOMERS NOT ‘PUNTERS’23

manager? Unrealistic perhaps, but the spirit of what isrequired is in that idea. However, the biggest challenge isnot in that first visit, because all the evidence points to thechallenge of bringing them back for a return visit.3. ReturningFor new attenders, some organisations follow up thenext day (if not that night) with a ‘morning after’ email ordirect communication which proposes further events inthe programme and possibly an incentive to return. Forthose attenders who don’t respond, many venues saythat whenever an event occurs which matches their firstattendance, a simple direct communication can trigger ahigh response.4. NurturingDeveloping frequency of attendance does require someunderstanding of the attenders and their life-stage andcircumstances. How frequently is it realistic to expectpeople to attend? If 85% of attenders actually attendinfrequently, why assume everyone is a prospectivefrequent attender. Success could be in achieving just twoor three attendances per annum. This requires sensitivityand not bombardment with direct communication. Othermedia than direct marketing, such as newsletters andmagazines, can be an effective method of communicatingwith people without the hard sell and can provide arounded view of the organisation and its activities,so people can respond as they wish. Importantly,communication needs to be differentiated, and withdifferent messages for the most frequent attenders fromthose sent to the relatively new attenders. These peoplemay still feel they are ‘outsiders’, not understandingthe jargon and terminology that is the norm for thekeen advocate.5. FocussingWhat do we want from the attenders on our databaseas we develop the relationship with them? Someorganisations want to use subscription schemes to recruitpeople to relatively frequent attendance, usually heavilyincentivised with discounts and other added-value offers.This can be effective in converting some attenders intofrequent attenders. Some marketers say they are creatinga ‘walled garden’ in which their attenders can be safelycommunicated with and promoted to, being treated withrespect as knowing ‘insiders’. Can we focus this by invitingthem to join a Friends or membership scheme? Liz Hilland Brian Whitehead, publishers of Arts Professional, pointout in their book The Complete Membership Handbook 11that there could be more than 12 different concepts forsuch schemes. In terms of ‘loyalty’, the most successfulschemes are run by the organisation itself, firmly focussedon attendance and participation, and offering clear andtangible benefits to people who consciously choose toparticipate. Understand that schemes can be multi-level,so members are segmented according to the membershiplevel they choose, and hence will then need separatetailored communications.6. SupportingImportantly, at this stage the support is two-way. Theattenders should be supporting the efforts of theorganisation, through advocacy, acting as ambassadors,volunteering, making donations and helping with fundraising.And the organisation needs to support theattenders so they understand the messages and what theycan do to help. Again this could require multiple levelsaccording to what activity people are willing to engage inand the level of commitment they are comfortable with.1. Liz Hill and Brian Whitehead, The Complete MembershipHandbook, 2004, Directory of Social Change in association withArts Professional24 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

FRIENDS AND MEMBERSHIPSIn terms of building relationships, computerised ticketingand marketing systems offer increasingly integratedfunctionality to manage Friends and membership schemesand to track activity and administer the benefits. Websitescan now handle separate prices for people accordingto their status, and some allow the use of points andcredits much like ’frequent flyer’ schemes. All are designedto increase attendance and also to develop taste andappreciation by widening the range of events peoplechoose to attend. These are classic steps in buildingrelationships with customers.Friends and membership schemes do require detailedattention in their initial design and continuously in theirmanagement, especially now that websites can managecustomer recognition from log-ins and increase theopportunities for dialogue, feedback and interactivity.See Chapter 6: Beyond TicketingSUBSCRIPTIONSThe most implemented scheme to achieve both loyaltyand frequent attendance, and create a close relationship,are ‘subscriptions’. These are often regarded in the arts asthe pinnacle of customer relationships, because people arerelatively locked in to a high frequency of attendance. Forsome organisations, this delivers them a substantial reliablesource of income received in advance.The original implementation was straightforward: ifcustomers chose to commit to purchase all the events in aseason, they received a discount, reflecting the cumulativevalue of their multiple purchase. Subscriptions had valueto the customer in introducing (or committing) them tothings they might not have otherwise chosen to see, andso expanding their understanding and appreciation. Theyadded value for the organisation in persuading morepeople to attend more often, and creating a core audienceof broadening taste, while bringing in guaranteed incomein advance. In order to incentivise the purchase further,discounts were increased, especially if packages of differentsizes were offered, say, 15% off six events, 25% off nineevents, and 33% off 12 events. This certainly increasedsubscriber numbers, championed by Danny Newman’s‘Subscribe Now’ techniques from the US. 12However, in recent years, some organisations have offeredever more complex packages and schemes. The dangeris that, in doing so, they may give more away to thecustomers than is necessary in terms of both discountand flexibility.Perhaps the subscriber does have the ultimate relationshipwith an arts organisation, but this Manual is aboutunderstanding that perhaps only 15% of an organisation’saudience might reach that category, while the remaining85% also represent an opportunity of huge value.However, the latter group will need different treatment ifthey are to reattend. One obvious challenge is how arts andentertainment organisations communicate effectively withpeople attending at different frequencies, not only in printand email communications but also in dialogue.1. Danny Newman, Subscribe Now: Building Arts Audiencesthrough Dynamic Subscription Promotion, 1981, Consortium BookSales and Distribution.2. PEOPLE NOT ‘BUMS ON SEATS’, CUSTOMERS NOT ‘PUNTERS’25

!REVIEW.Is your organisation ‘product-focussed’ or‘customer-focussed’?.3.4.What kind of relationships does yourorganisation want to have with customers?How important to your organisation is theidentification of individual customers andachievement of return attendances?Does policy and practice need changing?ACTION PLAN.Plan to identify customers according to theirfrequency of attendance and behaviours..3.Develop strategies for moving customers upthe loyalty ladder.Consider Friends, memberships and subscriptionschemes and their role in increasing frequencyas well as understanding and enjoyment forcustomers, but also ask what opportunities lessfrequent attenders represent.26 FULL HOUSE: Turning Data into Audiences © Roger Tomlinson & Tim Roberts

Full House gives arts and entertainmentorganisations the knowledge they needto better utilise their customer dataand build ongoing relationships.New technologies are transforming our abilityto collect data, analyse patrons’ behaviourin meaningful ways, communicate directlywith audiences and identify new marketsegments. This manual is about managing theseopportunities, and getting the best out of them.Full House, is a new and revised Australian editionof the original Boxing Clever published in theUK 1993. Authors Roger Tomlinson and TimRoberts are both highly respected consultantsand practitioners in the areas of box officesolutions, internet ticketing and arts marketing.In Full House, they share their extensive knowledge,along with recent best-practice case studies fromlocal and international arts organisations andvenues, to create a hugely valuable resource forAustralian arts marketers and box office managers.“The customer database tells the storyof the current audience and provides theresources to develop the audience forthe future. The Australia Council is proudof this practical resource to develop artsorganisations’ use of that asset.”Ron Layne, Australia Council for the Arts$24.95 inc. GSTISBN 978-1-920784-35-51-920784-35-7