Gene Carr's Patron Technology Blog

Back to the E-Future: What a Difference (Nearly) a Decade Makes!

We started Patron Technology exactly nine years ago this week, and as I thought about how to mark this anniversary, I was reminded of an article I wrote that was posted on our website in 2002.

Here’s how it started:

Arts marketers, mark this moment. We're witnessing the dawn of a new and astonishingly powerful age - the age of e-mail marketing. The promise of the web to transform our lives is only partially correct. It's e-mail marketing that will make the real difference.

The prevailing wisdom at the time was that most e-mail would never been seen as anything more than spam, and that nothing good could come by creating more of it. However, smart marketers got on board and began using professional approaches to editorial and design, and many arts patrons now find e-mail their preferred means of staying in touch with arts organizations.

Later in the article, I noted:

...a recent survey of 20 New York area arts organizations reveals that arts marketing hasn't really changed much in the last few decades. Marketing budgets are still a mix of print ads, flyers and brochures, direct mail, telemarketing and radio spots.

Well, we certainly can’t say the same for change in the last decade! There have been profound changes to the arts marketing landscape, and the rate of change is continuing today, if not increasing.

In these nine years, I’ve given hundreds of seminars around the country. I've recently noticed an undercurrent in the community of arts managers, which I felt mostly strongly at a meeting at the Houston Arts Alliance last Friday. The energy in the room was palpable; there now seems to be a real sense of urgency for innovation and improvement.

It’s time for new approaches to arts management, and these approaches will be supported by new technology. Nine years ago we put a stake in the ground and bet that the key factor in moving the field ahead would be e-mail marketing. Likewise, we’re now putting our money on Customer Relationship Management, the most important new technology for arts managers to come along in the last 50 years.

The Future Is CRM

We launched our newest product, PatronManager CRM just a few weeks ago. If you missed the article I wrote last month introducing it, you can read it here.

This time around we’ve taken a new approach to product development by partnering with a $1 billion Silicon Valley company, Salesforce.com, and its Salesforce Foundation. This partnership enables us to bring Fortune 500-grade technology that combines ticketing, subscriptions, day-to-day task, fundraising, and e-mail marketing in one web-based system. We designed it specifically to meet the needs and budgets of small and mid-sized arts organizations. Because most clients don't pay an annual fee, we’ve created quite a stir.

I was thrilled last week when Fox Business News picked up on what we’re doing. They invited me to come talk about CRM and why I think it will revolutionize the arts.

You can watch that interview here:

Rethinking Arts Marketing for the 21st Century

It has always been our philosophy that our role in the arts community is not only to bring innovative products to market but also to help introduce and educate arts managers about how new technology and techniques can dramatically improve audience development.

Toward that end, I’m pleased to announce our fourth annual full-day “E-marketing E-mersion E-vent,” taking place on September 16th in New York and subtitled "Rethinking Arts Marketing for the 21st Century."

This year we’ve assembled a stellar group of invited speakers to join our staff in presenting an overview of the most important trends in arts marketing and technology.

I’m going to start the conference by revealing the results of our most recent national arts patron survey. Each year we survey tens of thousands of arts patrons, to understand why they go online and what they expect from arts organizations on the web. I think you’ll find the results eye-opening.

You’ll also hear from Damian Bazadona, the president and founder of Situation Interactive, the marketing and advertising agency that was responsible for 2009’s “Next to Normal” Twitter performance. Damian’s company is on the forefront of using social media on Broadway, and what they are doing is inspirational.

Ken Davenport is one of the most innovative of the next generation of Broadway producers. His blog, “The Producer’s Perspective,”has become a must-read for me on a daily basis. He always has smart and thought- provoking posts. Ken runs interactive workshops for aspiring producers every year, which are a hot ticket. He’s going to recreate his magic for us.

If you follow my blog you know I believe the next big online media shift will be the proliferation of live streaming video. The implications of this for the arts are profound. The fact is, Europe is way ahead of us in this area, which is why I invited Chris Hunt, co-founder of Classical TV, to speak about what his company is doing. ClassicalTV.com is the largest destination for performing arts videos online. If you want a glimpse of the future, this is where you’ll find it.

Way back in December, I wrote an article about dynamic pricing which got a strong reaction. So, we’ll have a session by Rick Lester, of TRG fame, devoted to that subject. You'll learn the basic principles for using pricing to maximize revenues and create fuller-looking houses.

And, of course, the day wouldn't be complete without beginner and advanced sessions on social media, CRM, and e-mail marketing. The conference will end with a panel discussion, with our guest speakers looking at what lies ahead for the next decade.

I think this is our best conference line-up yet, and I hope you’ll find an excuse to spend a day with us in New York this September. We have a limit of 175 seats, and there are only 75 left. You can register for $99 here.

Even if you’re on the west coast, there are plenty of upcoming opportunities to connect with us . We’ll be doing our annual technology pre-conference day at the ArtsReach conference on October 21 in Los Angeles. And looking ahead to mid-November, I hope you’ll plan to come to the NAMP conference in San Jose, CA, where I’ll be leading a panel discussion about CRM, featuring some great speakers: Steven Roth, who co-authored three studies on CRM published by the Direct Marketing Association, Brian Sayre from the Cleveland Playhouse, and Ruth Davidson from Emerson University.

Looking Ahead

Our mission as a company has always been to bring innovative technology at an affordable price to the arts industry. Today we have over 1,750 PatronMail clients, and we’re soon to reach our first 100 PatronManager CRM clients.

I’m gratified that we’ve developed a fantastic and spirited staff that works hard every day to help us achieve our mission, and you to achieve yours. Thank you for your support, your ideas and your commitment to changing the arts.

We look forward to the next nine years!

Revolutionizing the Arts with Technology: Introducing Customer Relationship Management & PatronManager CRM

Last month at the League of American Orchestras annual conference in Atlanta, the Duke Foundation’s Ben Cameron delivered a knock-out introductory speech about the challenging world that confronts arts managers. Afterwards, the audience of over 400 orchestra leaders was asked to quantify the amount of change arts managers believe their industry needs, on a scale from “no change” (1) to “radical change” (5). It shouldn’t be a surprise that over 90 percent of the audience voted 4 or 5. People know that the status quo isn’t working.

Yes, it’s time for new approaches to arts management, and new technology is one way to get there. This article is all about Customer Relationship Management (CRM) — the most important new technology for arts managers to come along in the last 50 years. I believe it can, and will, revolutionize the arts industry.

A CRM system is used by a company to track and organize all of its contacts in one database. Every interaction with a customer is recorded in the system, and is accessible online by all employees across the organization.

CRM isn’t a newfangled ticketing system with a donation module bolted on. It’s an entirely new approach to managing your relationships with your customers. Remember when the iPhone was introduced, and the whole notion of what a cell phone is was instantly transformed? CRM is that kind of change.

Hundreds of thousands of corporations already use CRM systems. One of the industry-leading CRM providers, Salesforce.com, is a Silicon Valley company started about a decade ago that currently has 80,000 corporate customers. The corporate world has figured out that CRM is a better way to run their businesses!

Today, I am proud to introduce PatronManager CRM,

a product we’ve been developing quietly for the last three years. PatronManager CRM is an all-in-one system for ticketing, subscriptions, donations, fundraising, day-to-day activities, e-mail marketing, and calendaring.

Our goal in creating PatronManager CRM  was twofold: To build a system that could dramatically improve the way the industry operates, and to make it affordable for small and mid-sized non-profit organizations which make up the majority of our 1,750 PatronMail clients. We’ve achieved this through a partnership with Salesforce.com and the Salesforce Foundation, enabling us to offer a low-cost powerhouse of technology capability that has never been seen before in the arts industry.

Let’s look at why CRM really matters. 

The Problem That CRM Solves

Today, most arts organizations are hampered by the technology that they use to run their businesses -- it is outdated and conceptually flawed. We know from our clients that many organizations have an office full of PCs, and on each of these PCs are one or more “transactional systems.” These systems are:

• Stand-alone: The software program itself, and all the data it houses, are stored on a single computer, and accessible only to the person using that machine.
  
  
• Operation-oriented: The program is designed to help the user complete specific tasks in an efficient manner. Whether that’s processing a donation or completing a ticket sale, the system is designed to help office workers be more efficient in doing their jobs.
  
  
• Department-focused: The system is designed to help a single department run better. The development department has donation software, the marketing department has e-mail systems, and the box office runs ticketing software.

For the last few decades, these kinds of systems represented the state-of-the-art for business technology -- but in today’s world, they are not good enough. The fundamental shortcoming is that while these transactional systems help departments run better, none of them were designed to optimize communication with a patron.

With systems like these, you never have a 360 degree view of any one patron. And if you don’t know everything about a patron at a glance, it’s very hard to maintain a professional relationship with her and provide excellent customer service.

Additionally, for executive directors or boards, transactional systems cause difficulties on a larger scale. Without aggregated data, it's impossible to get meaningful reports that can help you run your organization. The box office manager might be satisfied with the ticketing system, and the development director is an expert at using the specialized fundraising software, but when it’s time for the executive director to prepare for a strategic planning meeting with the Board, and she wants to run a report of all the people who bought a ticket in the last six weeks who have also donated over $100 in the last six months, the shortcomings of those systems become clear. Gathering information like that requires an integrated system, not separate transactional ones.

How CRM Solves It

Enter Customer Relationship Management systems, an entirely different approach to office operations. What makes a CRM system so radically different is that it is fundamentally not a transactional system. Rather, a CRM system starts with a different goal: It puts the customer at the center by integrating the functions of all departments into one aggregated database and management tool.

CRM provides office workers and managers with a single place to capture and store all of their interactions with a patron. With customer information collected in this format, managers can report on it, act on it, and continually update it. Each and every e-mail campaign, ticket purchase, donation, or any other kind of interaction with a particular patron (including individual e-mail correspondence and documented phone calls) resides in a single database entry, all associated with the patron’s record. The history of that patron’s relationship with your organization is evident in the accumulation of all of those data entries over time.

Because all staff members can access the same system, everyone is empowered to help patrons get what they need. Imagine that Shannon calls the box office to upgrade her seats, and at the same time she happens to ask for a replacement copy of her last donation acknowledgement. Because she's got someone on the phone, she wants her problem solved right away. She's not thinking of this as a request that belongs to a different department; from her perspective, she has a relationship with the organization as a whole. Without a CRM system, it could take a while before Shannon gets what she wants -- the box office manager has to ask around and get someone from development to take care of it. But in a CRM environment that enables departments to be more integrated and collaborative, her request could be taken care of before she even hangs up the phone.

The Biggest Benefit of All

CRM systems create institutional memory.

Think of it this way: Every day when your staff comes to work, as they do their daily tasks and document all their interactions with your patrons as described above, they are, in fact, writing the history of your organization into your CRM system.

Because the CRM system is web-based, all of this knowledge is instantly accessible and searchable by everybody else in the organization, from today onward and forever into the future. There’s never a chance that your history with your patrons is going to get lost, misfiled, or walk out the door when a staff member leaves.

CRM Will Change Your World

I hope you can see now why running your organization with a CRM system will do far more than simply replace your current systems with better ones. Adopting a CRM system will enable you to do better e-mail marketing by segmenting your patrons better. It will allow you to do smarter fundraising because the inherent reporting capabilities will streamline your operations. It will allow your staff to collaborate and be aligned in a way that they have never been before, whether working in your office, at the venue, or even from their homes.

With a CRM system, your organization will be more efficient, you will run a more collaborative and professional operation, and your staff will be more productive.

Just as we started our company nine years ago with a bet that e-mail marketing would become central to the efforts of every arts organization, today we’re making that same bet with CRM.

If you’d like to schedule a live demonstration to see PatronManager CRM in action, click here.

If you'd like to learn more about PatronManager CRM, click here.

Testing for Fun and Profit

My colleague Michelle Paul came across this site a few days ago and sent it around to the staff. Though I had seen it years ago, it still amazes me. It's a whole site of nothing but A/B test examples and results.

Which Test Won?

Try the one on the front page: Look at the examples, submit your guess, and then see the answer...

Then look at the archive for more tests.

How many do you get right?

I think this pretty much makes the case for A/B testing. It's clear that in many of the examples, small changes in layout or copy make a very big difference in results.

If you're not doing this kind of testing as a matter of course, I hope this inspires you to give it a try.

2020 Predictions with 2020 Foresight?

My colleague Chad Bauman, who runs marketing at Arena Stage, wrote me a few weeks ago with an intriguing idea. He's invited a group of leading arts execs and thought leaders to write guest posts for his blog, responding to the question "what's the biggest marketing challenge in the next 10 years."

There are already two excellent entries by Rick Lester at TRG and Tom Cotts, from Ailey. His blog is http://arts-marketing.blogspot.com. Here's a preview of my entry, which should be posted in the next few days:

The biggest marketing challenge arts marketers will face in the next decade is not technology, budgets, or audiences — it’s THEMSELVES. As the Web continues to evolve, arts patrons and consumers will have more choices and options literally at their fingertips. Will arts marketers step up and innovate, or be left behind?

A decade ago, in the middle of the dot-com crash, few would have predicted the rapidity with which the Internet would not only rebound, but forge unexpected and profound changes in how we now communicate with each other. In a short decade the very fundamentals of marketing have been challenged and reshaped.

During these past 10 years, the corporate world embraced this transformation much more quickly than did the arts. It wasn’t simply because they had more money, because the truth is smart Web-based marketing doesn’t need to be expensive. Those entities that the arts compete with for consumers’ time quickly recognized the potential that new technology could afford them, and made huge strides in improving their Web sites, generating paid Web traffic, selecting easier to use e-commerce technology, and investing time and effort in leveraging social media.

In fact, the commercial entertainment industry was one of the first to embrace social media. Even Broadway producers (not often known for innovation) are catching on. Though a few forward-thinking arts organizations have made strides in improving their online presence, not enough have.

According to our 2010 Patron Technology National Arts Patron Survey (March 2010), in which 10,000 arts patrons responded, only 20% indicated that they “always, or almost always” rely on arts organizations’ Web sites for their arts-going planning. And just 39% indicated that arts Web sites had improved in the last year.  There’s a lot of ground to be made up here. 

Looking ahead towards the next decade, I think it seems obvious that the rate of change wrought by the Web will continue to accelerate. In the next few years, the computer monitor will morph into your home television screen. Watching a live theater performance or concert produced by a cultural organization streamed over the Internet will become commonplace. The Met Opera has already proven what that kind of thing does to generate demand for the live event itself.

Geo-location technology will also be a game-changer. Your mobile device will be able to tell you (while you sit at a restaurant checking your e-mail) what movies are starting within a mile of your location, in the next hour.  Will arts events be listed as well? 

Will arts leaders embrace changes like these and be like the creative entrepreneurial people they clearly are when they focus on producing for the stage? Or will they lag behind on the technology front and watch other forms of entertainment race ahead, as has happened during the last decade?

If arts marketers decide collectively to convince their boards and funding community that it is imperative that they get ahead of the technology curve, then there's a chance that the arts industry can blaze a trail that other entertainment art forms will envy.

The biggest challenge is not the change itself, but whether we've got the guts as an industry to embrace the change and go after it.

The Demanding World of Dynamic Pricing

If airline flight prices change daily, why is it that theater ticket prices are fixed? And why do we issue a zillion discount codes? Isn't there a better way?

"Dynamic Pricing," "Demand-Based Pricing," and "Variable Pricing" are all words that describe the notion of changing ticket prices day by day, like the airlines do. This concept has cropped up on a regular basis over the last few years in the arts, and it seems to be happening with increasing frequency. As a check on the state of the industry, I attended a session dedicated to this topic at a ticketing conference in January. Given that the room was packed with hundreds of attendees, it seems like dynamic pricing is the "it" topic across sports, live music, and the arts. And, as I found out, for good reason.

Before I went to this session, I thought that dynamic pricing was simply some new technology that automatically changes ticket prices in relation to demand from consumers. I thought dynamic pricing was a feature you could buy, as a new way to optimize theater pricing using a sophisticated technique to eke out every extra penny. While that's sort of true, it somewhat misses the point. Dynamic pricing is actually a good deal more complex than that.

Let's start with the facts. Dynamic pricing in the live-event world is still in its infancy. There are few if any fancy software systems in general use that are designed to handle dynamic pricing, and even large and well-respected venues such as the New York Philharmonic are only now dipping their toes in this water.  

Before we talk about dynamic pricing, it helps to review some general philosophy. First let's look at the notion of pricing itself. Setting prices for any product is perhaps the hardest aspect of any business, and in the live-event business, it's even harder. In my view, it is certainly is most underestimated and under-appreciated of any of the tasks of a marketer, and one that we spend disproportionately little time on relative to its ultimate impact. I've been in those pricing meetings, and if the ones you sit in are like mine were, pricing decisions are typically based on "gut feel" and/or comparisons to last year, and are driven mainly by one goal: to achieve budget. The problem is that none of those approaches has the customer's needs front and center, nor will they necessarily help you arrive at the best pricing scheme. 

And what's really frustrating about pricing is that you can't ask your consumers and get a reliable answer. If you research consumers and ask them what they would pay, you will get a different answer from what they actually do pay.  

 Now, an economist would have you set prices using a classic demand curve. The place where the two lines meet is the exact price you should charge to optimize your results.

But what would it take to understand the exact consumer demand for a single performance during a run of a show to create this demand curve? Well, you would have to consider all of the outside factors that come to bear in the decision-making of your target audience. You've got the particular performance on the stage (the art itself), the day of the week, the stars of the show, the weather, the venue. And that's just what you know before the show opens. Then you've got "stuff that happens," like traffic patterns, holidays, road closings, mass transit problems, and news. All of these things matter—even what's on television that night, such as the Olympics! 

If you magically had perfect information, you'd hit the demand curve, price perfectly, and sell out the house and maximize your potential revenue. The odd but unassailable logic is that in this case, dynamic pricing would not be necessary at all! Of course, the problem is that you never have perfect information at the time you price the show. Thus the need for something else.

Here's an analogy that might help:

Think about a pilot trying to land an airplane. He or she has a lot of technology, software, and guidance systems, as well as the window out front, to help aim the plane down a very narrow runway. The pilot makes mid-course corrections while descending 30,000 feet to the ground in about 20 minutes, based on a lot of variables including the wind, the temperature of the air, the weight of the airplane, crosswinds, and the length of the runway. As the pilot is descending he (and the computer) are making minute adjustments along the way. 

Let's superimpose this concept onto pricing. In a fixed-price world, you're like a pilot who sets the flaps and the rate of descent before before takeoff, and that's it. You just hope for the best. I wouldn't want to be on that plane!

Historically, we've printed the ticket price on the ticket, advertised that ticket price, and we're done. We are, very much like in the example above, stuck with what we've decided on before we even start. So no matter what the variables are, we end up steadfastly sticking to our initial guess, even if it's clear that we're way off course. And if we run into problems with too few tickets being sold, our current method of solving this is issuing discount codes, which are a crude way of lowering prices along the way. While discount codes can work, they only work in one direction—down!

Now imagine the opposite approach. It starts with the notion that you are going to sell tickets to a group of people for a particular night. Using my analogy, that night is your runway. Once you set your ticket prices, you start your descent (your onsale for that show). Your prices stay the same until you encounter information that causes you to make a mid-course change. All of the variables surrounding that particular performance come into play, such as the ones that I described above (perhaps it's very rainy, or perhaps your star is sick that night; or conversely, maybe there's a big convention in town that night, and you've got tremendous extra demand). These are, just like the changing wind patterns, things that alter the ultimate outcome, the demand for your product.

This is where dynamic pricing comes in. It's a methodology by which a marketer takes a regular look at the demand for a particular performance and adjusts the ticket price up or down depending on the nature of that event along the way. It's a mid-course correction based on inputs that you're getting from the marketplace. Dynamic pricing is really all about recognizing that you're not going to get your price right at the beginning, and you are going to need to make corrections to meet the demand curve as it changes.

Doing this means you'll probably end up with more revenue than you would have before. If demand is high, you raise prices, and vice versa if demand is low. There's also the possibility that you pull tickets from sale for a time as a way of generating demand. You may very well make extra money using dynamic pricing this way. The difference (the incremental improvement) shows the gap between your opening price with imperfect information, and your best guess at the proper ticket price based on varying the price as demand for a show changes. 

So isn't this the answer to our dreams and to meeting our budget every time? Well, the fallacy in this logic is that this incremental change cannot last forever. The more that you do dynamic pricing, and the better you are at matching the demand for your product, that increased revenue will begin to level off or diminish, because you're going to get better at pricing your performances in the first place.

Once I had digested this philosophy, I became convinced that dynamic pricing is very smart, and I wondered why our industry hasn't embraced it so far. In subsequent conversations, one industry expert suggested to me that the problem may be less about philosophy, and more about technology. The fact is that most incumbent ticketing systems can easily create discount codes on the fly. However, changing the actual face value of the ticket during the run is hard, if not impossible.

And there are also significant issues relating to budgeting and accounting. If you budget the gross potential of a show at the start then, with dynamic pricing, you are now essentially changing that gross potential number along the way. I'm sure there are a few accountants and bookkeepers whose heads are spinning at the mere thought of this. But the tail should not wag the dog.

The complexity doesn't negate the logic or the need. If you're wanting to start exploring this yourself, there are a few organizations that are worth paying attention to. In the larger sports and entertainment industries, as you might imagine, there are some sophisticated things happening. QCue claims it has "the world's only dynamic pricing engine for live entertainment events." But in our field, where the number of seats per performance isn't in the tens or hundreds of thousands, the approach is necessarily different. I'm aware of the success of two companies who are actively working in this arena. Both have their own "secret sauce" for how to do this, including consumer research, historical analysis, and day-to-day action. And both have results anyone would be proud of.

TRG, lead by Rick Lester, reports that it had recent success with the Arts Club Theatre Company (ACTC) in Vancouver. During ACTC's first season working with TRG (2008-09), ACTC monitored the houses as they were filling for each performance and made daily decisions—seating section by seating section—to adjust prices up or down based on demand. ACTC finished $1.6 million ahead of prior season results for single and group sales (not including subscriptions) for a total of $4.4 million. Of these sales, ACTC earned $430,000 from dynamic pricing strategies alone, about a 10% increase. The Pricing Institute (lead by Steven Roth, Tim Baker, and Alan Brown) has seen similar results from its clients. The Geffen Playhouse implemented a dynamic pricing strategy for a production that brought in an additional $60,000, which represents a 23.5% increase in sales for that production. And at the Yale Rep, dynamic pricing brought in an additional $50,000 of revenue for a production, which boosted single-ticket revenue for that production by 37%.

That said, relatively speaking, only a small percentage of organizations in the field are actually using dynamic pricing in this way, either with a consultant or on their own. Linda Forlini, director of customer relations at the New York Philharmonic, reported that she manually changes ticket prices for about 10% of the over 150 concerts that her orchestra presents each year. She has engaged in a sophisticated research study that showed her exactly where there were seats available on a per-performance basis using a pretty spiffy heat map. Linda says that she never changes the ticket prices by more than perhaps 5% or 10% in either direction. There is no wholesale ticket price slashing. Also, all of the price corrections that she makes are handled somewhere between the highest ticket price and the lowest ticket price. In other words, they never raised the price of their top ticket level, nor did they lower the price of their bottom—it all happens in the middle.

This begins to get us to the main point, which is how you can implement this on your own, if you have the conviction, the technology, and the staff to try it. There are some tips and tricks of the trade which make sense.

Someone in the audience at the panel I attended asked whether people who are sitting next to each other in a theater ever chat with each other and get angry learning that their tickets were different prices. Of course, Linda got a laugh when she reported that people in New York City don't talk to each other at all, so it wasn't much of a problem! But it's worth keeping in mind: If you're going to reprice, it's smart to change prices across an entire row rather than having seats next to each other at different prices.

Perhaps the biggest tip I learned about dynamic pricing is that if you want to do it at all, the most important thing is that you should not print your ticket prices anywhere. I don't mean you hide them. You just print a range—"tickets start at $15" or "tickets range from $15-$65." But don't print the actual prices on your tickets, or in your brochure, or at the box office. Otherwise you won't to be able to change them.

In the end, while I was surprised to learn that there really isn't any magic computer program that's running in the background doing this kind of dynamic ticket pricing, I was impressed with what I heard. All of this is in its infancy, and this is still very much a manual operation. And it makes sense that it's manual at this point, since it's as much an art as it is a science. Surely you have some productions you know will sell out now—that suggests that your top ticket price could move higher. And the reverse is true. If you lower prices along they way for performances that you know will not sell, you can meet the demand curve much more effectively, and reduce the number of truly discounted tickets you have to send off to third-party discount sites and services.

It seems clear to me that in 5-10 years, if and when dynamic ticket pricing is adopted broadly by the field, our halls will be more fully filled—and presenters will generate more revenue. I hope that this brief introduction to dynamic pricing offers food for thought. I am now convinced that dynamic pricing makes a ton of sense and has a role in the live-events world. I think it's time for our industry to start aggressively experimenting with this and start doing what other industries have been doing for decades with great success.

Last Gasp Indeed!

This is a quick follow-up from my recent post about the "last" analog Olympics. I wrote last week that I was sure that the Twitterverse would be up in arms over the tape-delay nature of NBC's coverage. And, well, here's some evidence that I was right:

The People of Twitter Think NBC's Olympics Coverage Sucks

I don't know about you, but I'm failing at avoiding online spoilers during these Olympics. Several good competitions have already been ruined for me by Twitter, Google News and Facebook. (Even the official Olympics page on Facebook has taken to posting results before NBC airs them.) So I'm with the angry mob on this one.

The Last Gasp for Analog Olympics

It's been a while since I've posted here, because it's been a while since I've felt inspired. But reading about the Olympics these past few days has gotten my juices flowing.

Seems to me we're about to witness a pretty big technological thunderstorm.

On the one side we have NBC, the owner of the digital content for the Olympics. Before the Web, you could only get Olympics information direct from NBC, as they were the sole carrier for these events (here in the U.S.). In the last few Olympic years, the Web has started to seep in, and some events were streamed live online, and some highlight videos were posted as well, to supplement the nightly TV coverage.

I read that NBC will carry most things live this year because Western Canada's timezones work with ours, but it is planning to withhold some events for later rebroadcast, so as to improve its ratings. (And while they're offering online coverage, it's restricted -- here in NY, for instance, if you're not a cable subscriber, you're locked out of certain on-demand content.)

Come on -- this is pre-Internet thinking.

Because on the other side, you have digital news sources and bloggers, who care not at all about when NBC wants to announce who has won. These sources will reveal what's happening instantly. And if that's not quick enough for you, pay attention to Twitter. I predict that in the next few days, Twitter will become the "breaking news" source for the Olympics.

NBC won't be able to stop it, and in the end my guess is that people will be frustrated with the delayed television coverage. I'm guessing that this is the last gasp for the old analog Olympics - where media is controlled by one source. 

I'm waiting for what seems inevitable - live streaming in real time of each and every Olympic event. Is there any reason why we shouldn't have that?  That way the folks that are addicted to a secondary sport such as curling can be as happy as those who want to follow figure skating. 

And, for all you arts fans out there, I'm sure you see where I'm going with this. As I wrote in a post back in September, it's not going to be long before live streaming of cultural events becomes the norm as well.

Now, THIS is a survey!

I just read Ken Davenport's blog post about "D & D" which stands for "Devoted and Disgruntled" - an event which in essence is a live survey of the city's most devoted theater-lovers. Kudos to the Public for bringing this to New York.

Read about the event here.

You want to bet how much amazing information is going to come out of this? How come this doesn't happen in every arts community every year? Shouldn't it?

Survey Me -- or Else

We had an interesting experience yesterday in the office, which is prompting me to write a short post about surveys.

I'm always amazed at how little many organizations know about their audiences, when finding out is so very easy. Given that the technology is inexpensive (we offer an unlimited SurveyMonkey account for $100/year), I think the main reason managers don't survey more often is that they somehow feel that audience will be annoyed at being asked a bunch of questions.

Nothing could be further from the truth. In fact, people LOVE to give their opinions. This was proved in spades today when, after sending out a survey to our clients, one of them responded as follows:

Sort of a waste of my time that you sent a message asking for my input. I
had to type in my contact info and then when you found out that I didn't use
an automated ticketing system, you terminated the survey. I'll be much less
likely to "help you out" next time.

The subject line of the survey was clear: "We want to learn more about your ticketing needs." Of course, for those that don't have ticketing needs at all, the survey itself was very short! But that data point itself (whether or not an organization uses a ticketing system) is still valuable information for us.

When this colorful response came in, a few staff members were taken aback. Why was this guy so upset?

After thinking about it for a while, it hit me that the reason this guy got pissed off is that we didn't give him enough of a chance to give his opinion!  He was dying to do the survey - he looked forward to it, and when the survey ended too quickly for him, he was frustrated.

Doesn't that amaze you? It did me.

Next time you wonder if your audience wants to give you feedback, don't think twice. They do - and they will.

So start surveying. You'll be amazed at what you will learn.

2009 Year End Wrap-Up: Social Media, E-mail, and CRM

[This was originally published earlier this week as Patron Technology's "end of the year" newsletter -- I'm reposting it here in case you missed it.]

Each year at this time, I take the opportunity to reflect on arts marketing on the Internet, the work we've done here at Patron Technology, and the work we will be doing next year. As in past years, I'd like to use this as an opportunity to give my perspective on the direction that technology for arts and cultural organizations is heading.

I'm going to talk briefly about what's happened in the last year, but spend most of the time focusing on the future. One note before I get started: It’s hard to ignore the elephant in the room that arrived last week in the form of a report from the NEA about how the arts audience is shrinking. This is not news to anyone in the field, but it should spark an active debate on the topic, and will certainly put more pressure on those running arts organizations.

The Social Web Meets Main Street

My quick summary of what's happened this year: The “socialization” of the Web has begun to really stick.

Twitter and Facebook are not new phenomena—Facebook started up in 2004 and Twitter celebrated its third year in 2009. This was the year, however, that the consciousness of arts organizations woke up to the possibilities of how these new media types could work to their advantage. As you know, we've done several workshops as well as 12 live webinars and multiple articles on this subject. We are still amazed that Michelle Paul’s nine Facebook webinars this year drew a total of over 1,500 registrants!

The social Web is here to stay, and those organizations that embrace it, innovate with it, and use it wisely will reap benefits. This is definitely not a fad—it's a new way of communicating.

Just take a look at how eMarketer projects Twitter’s growth: 
 

Now, if you're not totally convinced, let me present the following undisputed fact: Notwithstanding how effective your direct mail or other marketing efforts are, the hands-down winner for driving people to attend and/or participate in things arts and cultural has been and continues to be word of mouth.

Word of mouth wins by an order of magnitude. Someone telling their friend about what you’re doing is far more effective than any statement you can make on your own behalf. It stands to reason, then, that if social media is nothing more than word of mouth on steroids, and if you can harness discussions that other people are having about you, and can both incite and participate in them, you can finally begin to use word of mouth as a true marketing tactic.

I am always fascinated when I read stories in The New York Times about a Broadway show that is about to close. Inevitably, the writer will make a reference to the fact that the show “did not find its audience.” That is merely code for the fact that despite a huge marketing effort, people didn't talk to their friends about the show, and the word of mouth machine never put the show into orbit where it could become a commercial success. It's commonly accepted that good word of mouth is the sine qua non of arts marketing.

That's the key reason why I believe the social Web is so amazingly powerful and so incredibly important for arts organizations to embrace and to utilize. No, there are no rules of the road that have been tested for years. And no, there are no hard and fast ROI calculations that anyone has been able to come up with that make sense yet. It's just too early.

But, like everything else online, rewards come soonest to those who take chances and innovate. In the early years of our business, clients used to tell us that they would let their interns and volunteers do their e-mail marketing. After all, wouldn’t it be best to have a 25-year-old who “understood technology”  handle it? Well, it's now commonly accepted that e-mail marketing should not be the realm of the volunteer or intern, because it's too important a mouthpiece to the public.

We are seeing that move all over again with Facebook and Twitter. Everyone seems to be lining up their twentysomething staff member or intern and telling them, “You deal with Twitter. I don't understand it, and I don’t have time for it.” In my view, they do this at their peril. The fact is that Twitter and Facebook postings are probably more powerful than print or direct mail because they live on forever and spread virally through the Internet. And now that Google and Bing are beginning to provide real-time search results, these social media postings may soon be the freshest information out there about your organization.

So if you're going to “outsource” any of your marketing efforts, I wouldn't outsource social media. This needs to be a medium that you understand and pay attention to, in just the same way you do with your Web site or e-mail campaigns.

E-mail Still Wins

I was recently on a panel sponsored by the innovative marketing firm Situation Interactive, along with two other panelists: forward-thinking Broadway producer Ken Davenport (Altar Boyz, Oleanna, The Awesome 80s Prom) and Larry Goldman, a sports marketing consultant most recently with the NY Islanders. It was the most stimulating panel that I’ve been on in recent memory, and the room was engaged with energy and interest. At the end of the session, Erik Gensler of Capacity Interactive, the moderator, closed with a pointed question to each of the panelists asking us to give one idea that Broadway producers and arts managers should use to improve their business.

My response was the same as it has always been: The most important thing you can do for your digital marketing efforts is to build the size of your e-mail list. I suggested that everyone make a goal next year of doubling the size of their list.

It's no longer in doubt that if people opt in to your mailing list, and if you send them relevant, compelling, engaging, and useful information, they will respond in dramatic numbers. E-mail marketing from arts and cultural organizations is the furthest thing from spam. You are connecting people with their passions, and if you feed them a healthy diet of juicy content you will strengthen the relationship between your organization and that patron. And naturally, you’ll have a positive effect when it comes time to ask for an end-of-year donation. Our own 2009 research studies show that 16 percent of people who are on e-mail mailing lists for arts organizations said they would give more money as a result of receiving regular e-mail updates from an arts organization.

Love Your Subscribers AND Your Single-Ticket Buyers

Back in the 1960s, Danny Newman wrote a book called Subscribe Now, often considered to be the bible for arts marketers. In it, in no uncertain terms, he described the long-term subscriber as the gold standard relationship that your organization should aim to develop with a patron. His view of the single-ticket buyer was that that person was a noncommittal slug, a creature to be despised.

It’s easy to understand the benefits of subscriptions from the perspective of an arts organization. After all, you're getting a lot of money up front from your patrons, which helps your own cash flow, and you minimize unpredictability about what your season is likely to look like. But subscriptions ultimately should not be about you—they are about your patron. And not all patrons are created equal and not all patrons need or want subscriptions.

Fundamentally, I believe subscriptions are more about personality than anything else. A subscription satisfies a particular personality type of a consumer. There are people out there who will always subscribe because it makes them feel complete and organized. But there are others who will never be subscribers, not because they don’t like the work you do but because their lifestyle simply doesn't work that way, or they are unable to commit that far in advance. And, of course, there are also those who won’t subscribe because your own policies are so difficult that when they subscribe and then want to exchange tickets, you don’t make it easy for them to do so, and so the “benefits” of subscriptions don’t matter to them.

(As an aside: I'm not going to renew one of my subscriptions for a theatre company here in New York City because I've been unable to return or exchange my tickets twice this season. Why? Because they require you to physically go to the box office between the hours of 11 and 6 if you want to exchange any sooner than 48 hours before a show. You can’t do it online—the only way you can manage a ticket exchange is to go there in person, and for me that's enough of a hassle that my subscription consequently offers me no benefit at all. Now, if I were running that organization, I would make a deal with a messenger service that could arrive at my patrons’ office and exchange their tickets for a charge of $15. But I digress.)

The point is that subscriptions are perfect for people who have a plan-ahead personality, are price sensitive, and/or for whom the benefits of a subscription matter a lot. I reject the Danny Newman notion that somebody who buys, say, three tickets to the symphony on a single ticket basis should be treated differently (i.e., less well) than the person that subscribes for three concerts in a “make your own subscription” series.

Yet that’s exactly the approach most organizations take, and I have a theory about it. Let’s assume that some organizations would like to treat those single-ticket buyers better—but they simply don’t have access to technology that can enable them to care of those multi-single buyers in the same way that they take care of their subscribers. Well, that’s all about to change.

The Future is CRM

Let’s turn to the year ahead, and focus on new technology which some of you may be familiar with, commonly known in the corporate world as CRM, which stands for “customer relationship management.”  You'll be hearing more about this from me in the next year because I believe it’s the “next big thing” in the arts & cultural business. 

Large Fortune 500 companies have been using CRM for the last decade, and those that use it effectively have transformed their businesses. CRM systems represent the ultimate simplification in managing your historical and current data. These systems integrate all of your organization’s information and databases into a single, seamless unit.

Once you have all your patron data in a single database, and that information is accessible online to everyone in your organization in real time, your organization can make dramatic improvements in efficiency, customer service, and marketing efforts. CRM is not simply a fancy name for a new ticketing system—it’s an entirely new way of managing all of the data for your customers. (I write about this with some energy because, as some of you know, we have been working on a CRM initiative for the past two years—you'll be hearing a lot more about it from us in the coming months.)

Why is CRM is so important now? The number of “touch points” with your customers is increasing, not decreasing. In the old days, you used to send out messages in a one-way manner—direct mail, newspaper, and telemarketing. You had a limited number of opportunities to connect with your patrons. But today, we can reach people in many more ways: through social media sites such as Twitter and Facebook, via e-mail campaigns and individual e-mails, and also on our own Web sites. Our customers are more accessible to us than they ever were before, and they are more easily able to reach us as well. It’s now incumbent upon us to manage those relationships in the most efficient and effective way. Customers expect it!

This is where CRM is going to make a huge difference. With CRM, you can track all of our customers in the same way, and offer preferred treatment to the best customers, no matter how or when they buy from you. (That’s why every time I rent from Hertz, they give me an automatic upgrade at the counter—they know I’m a frequent renter because I’m identified in their CRM system as such.)

CRM is a new paradigm for running your organization, and in the next three to five years, a complete transformation of the technology for back-office operations for arts and cultural organizations will emerge.  There's a generation of CRM technology in the offing which will be several magnitudes less expensive and several magnitudes more powerful than anything arts managers have to work with now.

You will see new products and services; new competitors; alternative ways of developing technology that will knock your socks off. In many ways I think the golden age of running a non-profit cultural organization is just now starting. In the foreseeable future, those competent managers who want to run an efficient and smart operation will now have a fighting chance of running their organizations the way they know they should be run, but could never before afford.

Next year will be the beginning of a new standard of technology. The era of CRM is coming and I’m betting it’s going to be quite exciting.

Weathering the Bad Economy

In closing, I want to comment about the economy. Last year at this time, we all were worried about the arts & cultural industry, and a lot of fears were justified. What is amazing to me is that a year later the vast majority of small and medium-size organizations (which make up the bulk of our client base) seem to have made it through by sheer grit, smarts, and hard work.

Sure, many have cut budgets and are doing things more efficiently than before. And they are surviving. Larger organizations appear to have been harder hit. When corporate funding gets cut by $250K, that’s hard money to replace.

However, when I look at the vast majority of arts and cultural organizations across the country, I see hard-working and committed managers weathering the storm and persevering to continue to do what they are so very passionate about.

To you, I tip my hat.  I know I speak on behalf of our entire staff—a staff filled with technically savvy folks who also happen to be theatre buffs, singers, actors, musicians, playwrights, composers, directors—arts lovers—in saying that we’re trying our hardest to do our part to help you attain your goals, and we are in constant admiration of what you do every day. 

Have a wonderful and happy new year.