The Orchestra Myth
And What We Can Learn From Nordstrom
There is a big myth in the orchestra world. In the entire arts world, really. A falsehood so ingrained and so believed that seemingly everyone — staff, board members, journalists, and even the general public — spout it like gospel. The trouble is that continuing to factualize this fiction is to our own detriment.
It is a myth that we need new audiences.
Orchestras everywhere repeat this song over and over, using it to guide marketing campaigns, budget allocation, and programming. And we make major decisions each season based on this misinformation. We plan movie concerts and pops to entice the “young people,” hope the celebrity guest artists we book bring a following, make entire marketing campaigns targeting newcomers with why they just need to give the symphony a try, and we spend a hefty portion of the budget on getting those campaigns in front of those newbies in order to meet our rising single ticket revenue goals. When you believe that we need new audiences, all of that makes a lot of sense.
The real problem isn’t getting new audiences though. The data shows that we are actually quite good at that. The problem is that nationwide, somewhere around 90% of first-time attendees never come back again, a widely reported statistic in our field first made famous by the former head of marketing at the Kennedy Center Jack McAuliffe. In other words, orchestras are generally great at attracting new audiences. We are generally terrible at retaining them.
“Orchestras are generally great at attracting new audiences. We are generally terrible at retaining them.”
I’ve written before about the California Symphony’s process for first timers, including our plans to get them to come back in order to maximize their lifetime value and our Long Haul approach to developing loyal followers by not asking them for a donation until we’ve developed a relationship beyond a one-time purchase. Those shifts in strategy led to demonstrable success, namely that our annual audience has doubled over the last five seasons. And in terms of first timer retention, the rate went from 13% a few years ago (pretty much in line with that 10% nationwide stat), up to about 21% for the FY16 and FY17 seasons. Not a bad start. Over the last 12 months though (FY18 and now midway into FY19), we executed an experiment to take this retention issue to the next level, and the results are that with the change in messaging described below, we have been consistently retaining 28% of new attendees since September 2018, meaning they come back again within one year of their first purchase. That’s almost three times the national average for orchestras.
To put some dollars to that, for simplicity, let’s say the average ticket price is $50. At any given concert, we usually see about 120 first time buyer households, of which before these changes, 16 would make a return visit within in one year. Assume 1.8 tickets per order, and that’s $1,440 in revenue seen later in the year from every concert’s crop of new attendees…not enough to keep the lights on for very long, and like most other orchestras, we were having to fundraise more and more in order to make our annual revenue goals. Now, by comparison (see chart below), we are seeing more than twice the households from every concert return in a given year — which adds up to hundreds of people throughout the season and nearly $20k in additional revenue we previously were not realizing. What if this were an orchestra that performed more often, say 20 weeks a year? That would be $122,400 in revenue just from repeat buyers that season. And for a full-time orchestra, even keeping the number of FTB households the same at 120 per concert knowing that’s pretty low for those much bigger houses, this back-of-the-napkin exercise says it would amount to almost 10,000 extra tickets sold and an additional $459,000 in earned revenue every season. Raise your hand if you want an additional half million dollars in the coffers every year from changing the results of one metric, i.e. first time attendee retention rate? What if even a portion of that revenue could be realized?
Loss Aversion Not Discounting
Enter Frank Capek, who has worked with brands ranging from Marriott to L’Oréal to Michelin Tires on designing experiences and/or products that drive customer engagement and loyalty — and not to mention studied at MIT and is a musician. I first heard Frank speak at the 2016 conference for ACSO (Association of California Symphony Orchestras) where he proclaimed in his keynote address that “the future belongs to the nimble,” a revelation that inspired me not to wait to implement my ideas until I was back at a bigger organization. As a result, most of the work and projects we’ve undertaken at the California Symphony over the last few years are because Frank encouraged me not to hold back despite having fewer resources. He later saw me write about this in one of my early blog posts and then got in touch.
Over the course of subsequent conversations, I shared about our audience development plan that led to the FY15 — FY17 retention data above. Part of that plan included an aggressive discount to invite first time attendees to return, also known as a “killer offer” for those familiar with the League of American Orchestras and management consulting firm Oliver Wyman’s Churn Study. That study was 10 years ago now, and consumer marketing trends and behavior have evolved. “People today are not so much opportunity seeking as they are loss averse,” Frank said.
Nordstrom was a prime example: they give “Nordstrom Notes,” aka cash, to drive future sales. “No one wants to lose cash,” Frank suggested, “there is loss aversion to not ‘spending’ that free cash.” What if the California Symphony tried that? What if, instead of a discount of 30% off, which on a premium $72 ticket is a savings of $21.60, we offered a $20 cash voucher?
That was summer 2017, and the California Symphony team got to work on rolling out an updated first time buyer retention plan that would launch with the new season that was then just around the corner.
“People today are not so much opportunity seeking as they are loss averse.” — Frank Capek, CEO, Customer Innovations, Inc.
What We Did
Frank Capek will tell you that when designing for a desired behavior (to come back again), you need to determine how to motivate and trigger that behavior (why the customer should take that desired step and why now), and how to enable that behavior (make it as easy as humanly possible).
1. Motivators. We had already decided back in 2014 that if a reason for a return visit is because you had a good experience, the design of marketing assets should help elicit memories of said experience. That meant we already had in place design elements in first timer follow-up postcards and emails that referenced the concert the attendee just came to as opposed to an image promoting an upcoming concert or a generic image of the music director or orchestra. Also, as we learned, loss aversion is a big motivator. So we decided to stop offering a discount and start offering a $20 cash voucher, designed in a way that looks like cash, taking the page from the Nordstrom playbook.
2. Triggers. Why should someone use this cash voucher now? Because it’s going to expire. Offers of any kind to any segment should always, always, always have a deadline. Not a “before the end of the season, way in the future” type deadline; one that drives urgency. We consistently make these deadlines 2-3 weeks from the concert they just attended. Why not always a flat 3 weeks? Because sometimes it makes more sense for the deadline to be the last day of the month, or a Friday, or some other specific day. Why not less than 2 weeks? We remind this group of the trigger a total of four times and space it out a bit; more on that below.
3. Enablers. Making the desired behavior as easy as possible means it needs to be immediately doable when the behavior is top of mind. And coming back to the symphony is no more top of mind and easily visualized than when one is currently attending the symphony. In response to this, we decided we needed this cash invitation to return to be on the seats of these newcomers when they arrived so it would be the first thing they see and so they could instantly take advantage with a purchase on their phone. What would be even better, if we could, is to have the box office open through intermission and indicate that the offer could be redeemed in person that night (thus further enabling and adding a tighter trigger). We are working with (read: begging) our venue, who manages and staffs the box office, to try to be able to do this.
What We’ve Learned
- Using loss aversion instead of discounting has helped retention of new patrons.
- Changing copywriting to stop using words like “discount” and “save” and replace with words that evoke loss aversion (“here’s $20”) is more challenging than we thought it would be, and we are still working on this.
- These types of experiments take time. Data lags since we are measuring attendance within 12 months of first visit, so we’ve had to wait over a year to fully measure results.
- We wish we controlled the box office and ticketing. Making the offer immediately redeemable adds more ease for the customer, more urgency, and skips all those post-concert opportunities for friction (read: opportunities for the patron to forget how much they loved the experience…like when they are white-knuckling parking garage gridlock on their way out).
- This is work that’s worth it. Yes, sending four different communications to first time buyers after every single concert is a lot of work. But it’s not more communications than what this segment typically receives from an organization; it’s just that normally those communications are a smattering of messages (Subscribe now! Donate here! Take this survey! Get tickets for the next show!) instead of a consistent and strategic path to the desired behavior.
In conclusion, the idea that orchestras “need new audiences” is a myth we must dispel as an industry. Run the numbers in your own database if you still don’t believe this. And remember why patron retention is so important: first is ROI. Over the course of an entire season we pay a few hundred dollars for postcards and welcome letters, and the team continues to get more efficient in the time it takes to execute — for a return you’ll remember from the top of $20,000+ more annually than we used to generate from this segment. It costs way more than a few hundred dollars to acquire those households to get them to come in the first place. Time and again, across all industries, it’s proven that retention costs less than acquisition.
Second, the benefits of this work continue beyond the first time buyer segment. We know that the top prospects for new subscriptions are multi-buyers (i.e. those returning patrons), and for the California Symphony, the total increase in multi-buyer households since starting this work is twice what it used to be. So guess what? Our subscriber base has been growing as a result of this bigger and more qualified prospect pool, in turn busting another oft-sited myth that subscriptions are in decline. All of this retention work is connected, and all of it matters big time to our collective bottom lines.
In a world of alternative facts and fake news, it’s time to course correct this misnomer for our institutions. Focus on retention and be a hero at your organization when the money follows. Talk about ROI and board members will love you. And please, next time someone says we need new audiences, interject and bust that myth.
About the Author
Aubrey Bergauer, Executive Director, California Symphony
Aubrey Bergauer defies trends, and then makes her own. In a time when many arts organizations are finding it more and more difficult to meet rising ticket, subscription, and fundraising goals, Bergauer has dramatically increased earned and contributed revenue at organizations ranging from Seattle Opera to the Bumbershoot Music & Arts Festival to the California Symphony. Her focus on not just engaging — but retaining — new audiences grew Seattle Opera’s BRAVO! Club (for audience members in their 20’s and 30’s) to the largest group of its kind nationwide, led the Bumbershoot Festival to achieve an unprecedented 43% increase in revenue, and propelled the California Symphony to nearly double the size of its audience and quadruple the donor base.
A graduate of Rice University with degrees in Music Performance and Business, for the last 15 years Bergauer has used music to make the world around her better, through programs that champion social justice and equality, through marketing and audience development tactics on the forefront of trends and technology, and through proving and sharing what works in the rapidly changing landscape of funding, philanthropy, and consumer behavior. If ideas are a dime a dozen, what separates Bergauer is her experience and record of execution and impact at institutions of all sizes. Praised for her leadership which “points the way to a new style of audience outreach,” (Wall Street Journal) and which drove the California Symphony to become “the most forward-looking music organization around” (Mercury News), Bergauer’s ability to strategically and holistically examine and advance every facet of the organization, instilling and achieving common goals and vision across what are usually siloed marketing, development, and artistic departments, is creating a transformational change in the audience, in the office, on the stage, in the community, and is changing the narrative for the classical music industry.