The loyalty program at Piccolo Teatro di Milano

In my experience, one of the finest theaters working today is Piccolo Teatro in Milan, Italy. Piccolo Teatro does superb, interesting, varied work artistically, and this artistic product is most capably supported by a strong, forward-thinking managerial and marketing staff. Those of you who have read my new edition of “Standing Room Only: Marketing Insights for Engaging Performing Arts Audiences,” know well from the brief Piccolo Teatro case studies I included, how much I respect the creative and highly effective marketing work being done there.

I am most grateful that Lanfranco Li Cauli, head of marketing, and his colleague Gianni Pisano, offered a very detailed description of their new loyalty program to be published on my blog. This loyalty program applies to both short and long term attenders, to both subscribers and to single ticket buyers. This program is an adaptation and improvement over the theater’s former point-based loyalty program: the Piccolo Card.

According to Lanfranco and Gianni, the plan to upgrade the Piccolo Card provided the opportunity to rethink loyalty in a new way, maintaining the idea of a “special relationship” without requiring any particular or binding upfront commitment, cost, or annual fee. Rather it guarantees a new form of on-the-go recognition and reward system. The Piccolo Card is by no means intended to be a replacement of traditional subscriptions and the loyalty they generate; rather it is designed to stimulate the curiosity of new audiences and open new “loyalty paths.”

One feature I find refreshingly unusual is that the Card’s benefits do not expire; they can be used in future seasons, unlike most offers with which we are all familiar. We marketers ask our patrons to be with us for the long term, so our offers should reflect the long term as well.

The description of Piccolo’s loyalty program below is quite lengthy, but I thought it best to include it unabridged so those of you interested in the approach can read about how it evolved and the policies developed for its implementation. The central element of this plan is described in the section entitled “One card; three levels.”

If you have any questions or comments about Piccolo’s loyalty program, please comment on this blog site, email me (joanne@artsmarketinginsights.com), or feel free to email Lanfranco directly at: LicauliL@piccoloteatromilano.it

The New Loyalty Program at Piccolo Teatro

Lanfranco Li Cauli and  Gianni  Pisano

Introduction

The marketing strategy of Piccolo Teatro di Milano has always strived to guarantee and continuously improve accessibility, rendering it as wide-ranging and as complete as possible for both current and potential audiences.

In order to meet the many and varied requirements of constantly changing audiences, Piccolo Teatro has drawn up a multilevel marketing mix which includes a combination of traditional, ever-necessary communication activities (such as billpostings, local and national printed press advertising, radio commercials etc.) and the most up-to-date cutting-edge digital marketing tools available (analytics, social media advertising, mobile apps etc.). Through these instruments, Piccolo Teatro is able to promote and broadcast the varied nuances of the Piccolo brand identity via an ever-growing set of channels. Piccolo Teatro’s subscriptions haven growing steadily, from approximately 20,000 subscribers in the 2006-2007 to more than 23,000 subscribers in the 2014-2015 season. This is the best possible confirmation of the theater’s deep-rooted bond with the city and the territory of Milan.

Among the newer instruments aimed at building and maintaining audience loyalty, last season Piccolo Teatro launched a new version of its classic point-based loyalty program: the Piccolo Card.

Piccolo Card

In 2008 Piccolo Teatro released the first version of its point-based loyalty program, the Piccolo Card, named after the theater’s original e-commerce site (www.piccolocard.it), which was created with three main objectives in mind: 1) to redirect traffic and audiences from the traditional box office to the homonymous website, in order to 2) increase online sales and 3) award customers with benefits beyond simple and somewhat expected discounts.

The original loyalty system had a relatively simple mechanism. Personal cards were given to customers free of charge with their first season purchase. Each card, linked to the customer’s email address, collected points which could be exchanged for specially discounted tickets online. For each single ticket purchased, customers were awarded 1 point, and they received 4 points for the first season subscription. Ten points entitled the cardholder to a €5 promotional ticket available online for all available performances. The system allowed the users to choose when and how to spend their points, including the possibility to use them for subsequent season shows. As they were used, the ten points were subtracted from the patron’s card. The cards also entitled the holder to a 10 percent discount at the venue’s coffee shops. This system ran for six seasons until it was closed in September 2014. It was upgraded to a new version called, accordingly, “Nuova Piccolo Card” (the New Piccolo Card). The new loyalty program was almost one year in the making, between planning, testing and launch stages.

Preliminary analysis and considerations

Taking into consideration the weaknesses (e.g. a static system) and the strengths (e.g. e-commerce orientation) of the previous Piccolo Card experience, the objective of the new concept was to construct a more articulated mechanism and create an engaging online environment. In the winter of 2013 a benchmark analysis began for the purpose of examining the most important theaters internationally and their fidelity and membership programs. The results were merged with findings and results obtained from the analysis of other loyalty strategies carried out by Italian companies in many other fields (e.g. transportation, communication and energy) in order to have a broad as possible a picture of the public’s expectations of an updated point-system for 2014.

The first brainstorming sessions produced two basic ideas. The first is quantitative: rewarding customers with points according to the category of the show/performance purchased; the second is qualitative: developing a loyalty path with more than one level of fidelity and progressive benefits designed to lead spectators to develop new form of rapport with Piccolo Teatro.

At this time, Piccolo Teatro was the only Italian performing arts organization running an articulated fidelity program capable of responding to such requirements as to be considered a true benchmark. Therefore the relative analysis focused primarily on US and UK theatres and cultural centers, although it was soon clear that a one-to-one comparison with American and British performing arts scenarios was not really possible. The Anglo-Saxon systems were more focused on membership and patronage and did not easily correspond to the Italian scenario, historically based on subscriptions.

Regular and loyal theater attendance in Italy has in fact been traditionally bound to the idea of subscription: a season ticket paid in advance which provides a set of passes, or tickets, which are individually discounted according to the type of subscription. Over the years, subscriptions have attracted a well-defined traditional or loyal audience, happy to commit to the theater beyond individual attendances. This type of audience has always been of extreme importance to Piccolo Teatro, so much so that subscriptions generate over one third of total ticket sales. (Subscriptions come with a number of benefits principally focused on the performances themselves [such as priority booking, privileged seating, dedicated email support, 20% discounts in the book and coffee shops] rather than on collateral activities or special acknowledgements such as memberships and patron-based recognition.)

The upgrading of the Piccolo Card therefore provided the opportunity to rethink loyalty in a new way, maintaining the idea of a “special relationship” without requiring any particular or binding upfront commitment, cost or annual fee, by guaranteeing a new form of on-the-go recognition and reward system. The Piccolo Card is by no means intended to be a replacement of traditional subscriptions and the loyalty they generate; rather it is designed to stimulate the curiosity of new audiences and open new “loyalty paths.”

A new point system

The New Piccolo Card is now 100% virtual; physical cards are no longer automatically provided. (Cards are produced at the box office at specific times on request only).

Each “card” is associated with the customer’s email address and nothing has changed in terms of usability for customers used to purchasing online via the Piccolo website (www.piccoloteatro.org). As patrons log in, in order to complete the first purchase, the system automatically “creates their Piccolo Card (which is now essentially a code). From that moment onwards, it is possible to start earning points.

The connection between online and offline sales has also been improved. Spectators can in fact now give their email address when purchasing in person at the box office or by phone: subsequent access or registration to the Piccolo website with the same email address will allow the allocation of the relative points. Points can still only be used online in order to obtain €5 promotional tickets. However, as will be demonstrated in the following section, a significant change has been made in terms of point allocation and particularly in how points can now be used.

 Single tickets

In order to make the Piccolo Card mechanism more exciting and dynamic, it was initially decided to provide a different amount of points per individual purchase. The idea of a direct relationship between ticket cost and points awarded was immediately discarded as this would have created more confusion than involvement (Piccolo Teatro has more than 20 different ticket tariffs). An indirect but much more effective solution was to use the names of the Piccolo’s performance categories: Festival, Produzione, and Ospitalità. International shows, hosted every season by Piccolo in the Festival category, represent around 20% of the total season programming and are available at the highest tariff (€40 for the stalls, €32 for the balcony), therefore all Festival tickets earn the highest number of points (3). Piccolo Teatro Productions (Produzione) represent approximately another 20% circa, and Italian guest shows (Ospitalità) the remaining 60%. The price of tickets is the same for both categories (€33 -€26), but a necessary distinction was made between the two categories in terms of points, awarding the first with 2 points and keeping the second at 1 point.

Subscriptions

As previously mentioned, points linked to subscriptions were also significantly increased. The amount previously awarded (4 points regardless of the type) was maintained for the simpler and least expensive form only (Quartetto, 4 tickets with a limited choice of shows). With the New Piccolo Card, the higher the level of subscription (in terms of cost and number of tickets included), the more points are awarded, up to a maximum of 10 (i.e. Passport Oro, 16 tickets, unlimited access). Moreover, the previous rule that prevented customers from earning points on other subscription purchases during the same season has been removed. Even small or gift subscriptions (2 tickets, limited access according to type) can now earn points as well (from 1 to 3) in line with the marketing strategy and objectives.

Piccolo Card special point-promotion

A brand new feature is represented by the promotion of specific performances using associated point rewards as leverage. The Piccolo website has always run an online dynamic pricing system which can raise or lower prices for each individual performance, according to sales trends and expected attendance. Since the 2014/2015 season began, the Piccolo Card allows the promotion of specific performances by increasing the number of points earned on purchase, in addition to traditional dynamic pricing strategies.

Online promotional ticket

To balance the increased rate of points earned, the €5 online promotional threshold was adjusted from 10 to 15 points. Simulations demonstrated that this would be an effective ratio, keeping the system similar to the previous version while justifying the higher point “cost” of the ticket with the higher average speed in earning points.

This new point system has been optimized to last for three seasons (until June 2018).

One card, three levels

The most important change in the Piccolo Card philosophy is in the way that points are considered and in the adoption of a multi-level loyalty structure, which aims to better reward ticket buyers over the long-term.

The previous system did not sufficiently take into account how many times the user purchased tickets and attended performances at Piccolo, thus it did not consider how many points each user has accumulated in total over time, since the first login and registration. As a consequence, after a few seasons, the system proved to be ineffective in responding to relevant loyalty issues, given that, for example, two users with perhaps very different stories, behavior and relationships with the theater were fundamentally treated in the same way and were awarded with the same benefits.

Let us imagine that user A managed to reach the promotional threshold of 10 points after three seasons by purchasing his/her tenth ticket (The previous system awarded one point per ticket). In the same period, user B could have passed that threshold three or four times, having purchased a total of 30 or 40 tickets. Both users would have been entitled to the same benefit (one €5 ticket) which would have been unfair for user “B”, whose more frequent attendance and higher loyalty went unrecognized.

In order to correct this situation, Piccolo Card points now have two specific classifications: “active points” and “loyalty points.” Active and loyalty points are easily viewed as two totals that users can consult by accessing their account on the Piccolo website.

With the new system, as users purchase tickets, the number of points relative to the performances purchased is added to both the “active and “loyalty totals. However, while the active total works as before, increasing and decreasing as users earn points, reach the promotional threshold, and spend points, the loyalty total continues to increase. Points used for promotional tickets are not deducted from the loyalty total. Loyalty points relate to two dedicated loyalty thresholds, designed to enable the system to finally take account of frequent and long-term users.

These new thresholds mark the 3 new loyalty levels, named after well-known and easily recognizable areas of the theatre: Foyer, Platea (stalls) and Palcoscenico (stage). These names have been chosen to express the idea of a loyalty progression through common theatrical vocabulary.

The first level, Foyer, represents the entry level Piccolo Card assigned automatically with the first purchase, while the second and third levels are reached as the “loyalty points total reaches the two dedicated thresholds previously mentioned, set at 35 and 70 loyalty points respectively. As users buy tickets, both totals (active and loyalty) increase at the same rate until such a time as the promotional threshold is reached and the points earned are used to buy a €5 ticket online. At that moment, the active points are reset, while the loyalty point total remains the same, and continues to increase with subsequent purchases.

Once the loyalty point total reaches 35, each subsequent ticket purchased is awarded an extra point in addition to the standard points relative to the specific performance. Therefore Festival shows earn 4 points, Productions 3 points, and Guest shows 2 points. Similarly, Palcoscenico cardholders, having reached the loyalty point threshold of 70 points, receive two extra points in addition to the standard points (Festival 5 points, Productions 4 points, and Guest shows 3 points).

Thus if we now compare user A and user B from our previous example, thanks to the new Piccolo Card system, user B (having earned more than 35 points) would be awarded with a new loyalty level, consequently earning a permanent benefit on future purchases, a recognition of his/her status as a more loyal spectator, in addition to the standard promotional ticket. (Via their accounts users can easily see which Piccolo Card level they have reached and how much they need to earn to pass to the next level. They can also exchange their physical card at the box office for a new card which reflects the new level and status reached.)

Expectations

In just six months (up to February 2015), the Piccolo Card attracted more than 13,000 cardholders, consisting of both single ticket buyers and season subscribers. This already represents almost half of the total Piccolo Card holders from the previous system up to the date of deactivation and reset at the end of the six-season period.

Over the next three seasons, before the end of the new Piccolo Card Program, an increase of 7% in ticket sales is expected through the point system/Piccolo Card as a result of a fine-tuned online rapport with our users, encouraging them to return and log in to Piccolo Teatro virtual venues.