Loyalty point system: It’s well worth the effort!

Given that subscriptions have been eroding in the performing arts industry for a decade or more, there is a strong incentive for arts organizations to identify a new marketing tool to help encourage repeat visits, trial of unfamiliar programs, and eventually donations.

We are all familiar with the so-called loyalty point systems that are pervasive in so many industries. My favorite local pizza spot offers one free pizza after 10 are purchased; the nearby nail salon offers one free service after 10 visits. The airlines often make it so difficult to redeem miles earned and thereby create bad feelings with their customers, so I prefer not to include the airlines’ plans as a good example in this discussion.

Consider this loyalty plan for arts organizations. All current patrons – subscribers and single ticket buyers alike — should be automatically included in the plan, and new ticket buyers should be signed up concurrent with their first ticket purchase. This plan is for everyone. Each organization should set its own parameters regarding the number of points earned for various purchases and the number of points required for greatly reduced price tickets. As an example, offer $10 tickets to any performance, given availability, with 50 points; $5 tickets for specific dates, times, or less popular productions with 40 points; $10 tickets to bring guests for a determined number of points, and so on. I do not recommend giving free tickets, since that will create a problem of no shows; people value what they pay for, even it is a token amount. Benefits other than those that are price-related can also be offered, such as special events with performers in attendance, an invitation to the “green room” during intermission or after a show, and so on. Be creative! Most importantly, find out what your patrons would value.

The quantity of points earned can vary according to several factors. The first factor is the price paid, so that people who purchase higher priced tickets can earn more points. Secondly, the number of points given should be increased as people make repeat purchases over time, so that subscribers and, for example, people who purchase tickets to six shows over three years benefit from long-term loyalty points, or cumulative points. These repeat visits can serve to increase the number of points earned for subsequent ticket sales, so that, say, someone who has earned 25 cumulative points will now earn bonus redeemable points with each additional purchase. Cumulative points will continue to build over time, while redeemable points earned, based on price or other incentives, will be used up as they are redeemed.

With a point system in place, arts organizations can offer bonus points rather than discounts to stimulate sales. Instead of “training” people to wait for discounts to buy tickets, as many arts organizations presently do inadvertently, we can “train” them to earn extra points, which will eventually translate into special offers as a reward. This will keep people coming back for more, and will encourage them to buy directly from the organization’s website or box office since points cannot be earned through third party ticket providers (read: discounters).

One of the biggest problems in the performing industry is that a huge percentage of people who come once do not buy tickets again. Shall we offer a significant number of bonus points to first-time ticket buyers as a strong incentive to come back?

The only possible downside to such a program is the cost of administering it, because the plan cannot be as simple as the punch card or coupon at the local pizza parlor. Accurate, timely records must be kept and all patrons should be able to access their account online to track their redeemable and cumulative points.

According to Gene Carr, CEO of Patron Technology, the financial requirements for arts organizations to manage a point system are minimal. Says Gene, a point system is “not expensive — just complex because you have to manage the points, and the rewards, and market the rewards… so it’s just work.” Of course, we have to pay people to administer all the details. But if we are reducing our discounts significantly, so that we are earning more per ticket sold, and we are building loyalty, thereby selling more tickets over time and possibly garnering more donations, these costs in time are likely to be a very worthwhile and minimal investment for the organization.

Can you think of a reason why this should not be the next wave of loyalty building for arts organizations?

NOTE:             In a recent blog, I included an extensive article written by marketing staff members at Piccolo Teatro di Milano, one of the top theaters in Europe, about their loyalty plan, from which I heavily borrowed in this blog. Please refer to my previous blog entry.

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6 thoughts on “Loyalty point system: It’s well worth the effort!

  1. This is such a great informative post.
    I also loved your book – nothing similar exists in French, and I really hope it will get translated into French as a lot of cultural institutions could benefit from it. Not many actually put the customer in the center around here.

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  2. I completely agree with you, Amelia, and emphatically restate that subscriptions must be maintained and continue to be developed as they are critical to most performing arts organizations.

    I also firmly believe that membership plans should not replace subscriptions, but should be added to current marketing offerings, when appropriate, according to each organization’s needs and opportunities. In all my experience, subscribers never defect to membership plans when the opportunity arises, even though the membership price is lower.

    My extensive research clearly indicates that what subscribers value most is 1) ascertaining that they see all or many of the shows at an organization they value and want to support, and 2) guarantee “their” seats. Price advantage is always a much lower third factor in the decision to subscribe or resubscribe. In fact, at several of the organizations where I have consulted, I had completely eliminated subscriber discounts and have not lost one subscriber. At the organizations where patrons clearly want some price advantage, I have reduced the discount to a token amount and this has proved to be completely satisfactory. As I wrote in my book “Standing Room Only,” “What really matters most to the patron is not price, but value“.

    To answer your question, Amelia, about whether a loyalty point system would decrease someone’s likelihood to subscribe, loyalty points systems are designed to increase loyalty both among subscribers and single ticket buyers. In fact, if points are well allocated and benefits are designed according to what the patrons value, this point system can help a great deal in building subscriptions, retaining subscribers, and importantly, increasing donations.

    Such a system can do much more: it can develop loyalty among single ticket buyers, whose ranks continue to grow and who far exceed the number of subscribers at most organizations. We in the industry know well how difficult and costly it is to attract new single ticket buyers and to bring them back for future performances. A point system that never expires and offers both redeemable and cumulative points can develop patron involvement in ways never before approached in the arts.

    Arts managers: I sincerely hope that your arts organizations will adopt a loyalty point system, and that you will keep me informed about how it is doing! Please feel free to contact me for help in designing the system and selecting its benefits.

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  3. Building loyalty is certainly one of the most important things that an org can invest in today. I love that you’re thinking about ways to innovate in this space! And, I especially appreciate that you’ve proposed including loyalty programs like subscription into the points system.

    My hesitation is when I see people propose that systems like this or memberships replace subscription–this is not what you’ve proposed, but something I see often. While the administration of a system like this may not cost more, the cost to market performances should not be discounted. For a loyalty system like subscription, you market the season and steward your subscribers, and you’re pretty much done until renewal time. In a membership/points-only model, you’re spending as much of your marketing budget on your loyalists as you would single ticket buyers, because once they are in the system, you’ve still got to sell them tickets to the performances or renewal rates crash. The ROI side of the loyalty equation increases. Marketers should be careful of replacing a model like subscription with a membership/points-only without a serious and realistic look at what it will cost.

    Do you think a program like this would decrease someone’s likelihood to subscribe, or could points be allocated in a way that truly strengthens subscription’s value proposition given the expense savings subscribers represent to the org? I see that you’re proposing giving subscribers more points, but are they really and truly incentivized to subscribe in this system? Perhaps it’s a question that only data from a pilot project or possibly Piccolo Teatro di Milano could answer.

    Great post.

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  4. with the right software it becomes near a no-brainer. For an example of this in action check out that many phone apps for different eateries.

    Dunkin Donuts has an app that does the marketing, the tracking, and the redeeming all in one.

    Connect with a local college and see if it’s possible to have a senior student needing a graduation project to do all the research and set up (that should be free!)

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