Offer value — not discounts — for building loyalty and commitment

Value is a key concept for audience engagement and loyalty building. Let’s consider value — both from the perspective of the patrons and the perspective of the organization, and then draw conclusions about how to better align the value proposition. What do our patrons value? People value attending a play, a concert, an opera, or a dance performance that moves them, that they find stimulating, memorable, interesting, well-performed, informative, familiar, new, a great opportunity for socializing, an important place to be seen, and more. People value convenience: convenience in purchasing tickets, convenience in getting to the venue and parking, convenience in ticket exchanges, or other issues that may arise. People value sharing the experience with others; the social aspect is often critical to attendance. People value getting good seats. In my experience, the top-priced seats sell the best at most venues. What do subscribers value? The most important reason patrons give for subscribing is to be sure to see all or many of the shows in the season; the second most important reason is to guarantee good seats. The distant third benefit to subscribing, according to all my research, is lower pricing. Do people value discounts? Sure. Everyone likes a bargain. But, if we regularly discount from the “regular” price, do people think they are getting a bargain? Do they think the experience won’t be worth more than the discounted price? Do they think the “regular” price is artificially inflated? When we reduce prices, are we suggesting to our potential ticket buyers that the show we are promoting isn’t worth the full price we attach to the ticket? Our prices serve as indicators of the value we attach to an experience. Oftentimes, people can’t actually place a monetary value on an experience until it they have consumed it. Do arts attenders consider that seeing a certain play is worth $40 to them, but not $50 or $60? People who are financially constrained may set a limit as to what they will pay for a ticket. But most arts attenders, who are typically price insensitive, seek out discounts not because they wouldn’t buy tickets otherwise, but because they feel they’ve overpaid if they pay the full price. I fear that with all the discounts being offered (buy early and get 10% off, take advantage of this limited-time price offer and get 25% off, get 2 tickets for the price of 1, etc.) we have trained people to wait for the discounts. Furthermore, organizations typically offer subscribers – the most loyal attenders – significant discounts. In my consulting work, I typically suggest that we eliminate or significantly reduce subscriber discounts. Upon implementation of this recommendation, the number of complaints or loss of subscribers has been negligible. There are many situations where discounting is not only appropriate, but is a very effective strategy for meeting the organization’s goals. I have discussed discriminatory and dynamic pricing in depth in the pricing chapter of “Standing Room Only.” However, the pervasive use of discounting erodes price trust and devalues the product. Patrons want to be valued by the organizations they attend, but do they require discounts to value the organization and its offerings and feel they are valued in return? What do organizations value? Organizations value attracting new attenders, retaining the patrons they have, and building repeat visits over time. Organizations value patrons who are interested, passionate, curious, loyal, forgiving (when those not-so-great shows happen), patrons who bring friends and family, and patrons who support the organization emotionally and financially. Are people likely to donate when they assume the organization does not have a pressing need for the money because it is offering tickets below the stated price? Some pricing consultants say that discounting builds loyalty. Do they mean that lowering ticket prices helps to increase repeat ticket sales? Have they tried other methods for increasing sales than relying on pricing strategies? Has anyone studied donation levels among those who regularly purchase discounted tickets? Pricing too often takes the center stage away from the art itself. Often, we don’t communicate the true value: the art, the experience, the uniqueness. Says art consultant Andrew McIntyre, “Perceived value is established by persuasive communications. Arts organizations’ communications are frequently not persuasive enough. . . And reducing the ticket price until it matches the lowered perceived value seems like a lazy option to me.” Aligning values Aligning values means, of course, that the organization needs to adjust its strategies and programs to more closely meet the interests and preferences of its current and potential audience members. The organization is relatively easy to change; our patrons rarely change their behavior or attitude because we encourage them to do so; they change according to their personal values and their experiences in the larger environment. Loyalty building in arts organizations is not achieved through discounts. People value stores like Walmart for their low everyday pricing. But the products available at Walmart can be bought elsewhere at higher prices. People cannot buy the art we put on our stages anywhere else! Patrons do not value our organizations and their offerings because the tickets are less expensive than the theater or symphony down the road. And we will never be able to reduce our ticket prices enough to compete with high tech options for entertainment. Yes, people want benefits from the organizations and businesses they frequent. Let’s give them benefits that are mutually valuable to both the patrons and the organization. Let’s use a loyalty point system like the one I described in my previous blog. By giving people very low cost tickets because they earned them with repeated ticket purchases, we are giving our patrons more of the performances they value. By doing this, the organization is benefitting by getting more people back in the hall more frequently, thereby building involvement and more likelihood for making contributions. Build loyalty by giving people more of what they come to us for: great performing art experiences! What could be better or more effective?