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February 21, 2011

Arts discount-ticketing strategies: what to avoid and why — part 1

Pricing and marketing arts event tickets isn’t easy. When faced with the need to “put butts in seats” it can be tempting to do whatever it takes. In this article, I hope to give you some explanations on why some discounting strategies would be a better choice than others, and help you avoid some short-term successes that could lead to long-term problems. Picture this. You’re a big supporter of a large cultural music venue, so when you receive an email from the institution that tickets have gone on sale for an upcoming concert, you pick up the phone and buy your tickets (or better yet, buy online). You get your confirmation that you paid the listed price, and since the concert isn’t until a month from now, you go about your business. Three weeks later, you get an email from the same organization, offering two-for-one tickets for everyone who buys a ticket going forward. But only for people who haven’t bought yet. Wait a minute. You bought your tickets early, and now you can’t get the deal. You call the organization, and they tell you this offer is only for people who haven’t bought tickets yet. You’re angry, and understandably so. You think to yourself, “I could really make a scene here and demand that I be given the same offer,” but you probably don’t act on that idea. Instead, you smolder about it and swear to yourself that you’ll never be caught in THAT situation again. Next time, you’ll wait until you get the offer before buying anything.Sound familiar? I see arts organizations do this all the time. And I see the fallout that conditions the patron’s mind right along with it. The scenario I just led you through results in a changed patron, and not for the better. It trains patrons to wait until there is a special offer before they commit to buying a ticket. The next show, more patrons will wait, which means fewer tickets sold far in advance, and more perceived need for a “fire sale” of a huge discount near opening in order to sell the seats. It’s a vicious circle, and as a marketing manager, it’s something you should be keeping your eye on. And sadly, it generally creates really bad feelings in your early buyers. It’s the golden rule — as a patron, would you want this to happen to you? A simple way to get around this? Either discount for people who buy early on (called “the airline model”) or make the discount available to everybody (even people who have already purchased the tickets — always a good idea).

The airline model of arts ticketing

People seem to generally understand that booking your airline ticket early (3 weeks or more before your fly date) results in getting the lowest fare. The highest fares come if you walk into the airport and say “I want to get on the next flight to JFK.” Not only are you fighting the fact that most of the seats may be already taken, but the airlines know that you’ve waited until the last minute to make your purchase, which is a convenience they think you should pay for via a higher ticket price. If you wait to buy your ticket, you pay more. Pretty simple. But consider the following YouTube commercial from Hotels.com, that actively promotes waiting: Wow. Training consumers to wait is a really good strategy for hotels.com, as they base their business on last-minute shoppers. Not so good for the hotels if you think about it. For centuries, many arts organizations have followed a similar model, they’ve just called it something different, and priced multiple tickets together: the subscription. In recent years, most arts organizations have seen a reduction in the number of subscriptions, because people seem less likely to want to commit to being in the theater at a specific time/date far in advance. They want the convenience of making the decision to go at the last minute, just like the guy who wants to fly to JFK TODAY. So why do so many arts groups allow patrons to get on-board today’s flight at a discount? One reason is the idea that an empty seat is an empty seat, and if nothing has worked up until the day of the performance to fill that seat, do whatever you can to fill that seat. On the surface, it makes sense. But in the long run, I believe it just creates more empty seats. The right thing to do here is create a marketing strategy that offers the most discount to people who give up the most convenience. Those that buy early get the benefit, and those that wait risk a higher price or a chance the show won’t have any seats left to sell. If you get to the performance date and you still have seats you’re tempted to discount, don’t. It’s better that your regular patrons do not have access to them at a discount at this point. Either let them go unfilled (and realize that you need to work on your early-sales strategy) or give them as comps to middle school kids, as special rewards to donors to bring a friend, or anything else you can think of to get a body in that seat. But don’t reward the people who choose to wait and buy late.

Discounted arts tickets: friend or foe?

I’ll be up front; I generally don’t like discount tickets, unless they are for students/seniors or used as an incentive to try out a new arts genre a patron has no experience with. You’ve worked hard to price your tickets at a level where they are perceived as being a passport to a quality experience — less expensive tickets, handled the wrong way, can really alter the perception of the quality of your event in the mind of the patron. Not to mention discounting the ticket means less money in your account at the end of the day. Many of you may have heard of the ticket pricing strategy that Ringling Bros. and Barnum & Bailey circus uses — I’ve heard statistics that up to 80% of their tickets are discounted down from some much-higher price, so that people feel that they are getting a really good deal. And I think that is an excellent strategy for the circus. Going to the circus isn’t a high-risk concept — you don’t need to prepare in advance and be knowledgeable about Irish playwrights or the history of the War of the Roses. You just go with your family and watch acrobats and elephants, and you’re entertained. But most of your regular arts events are significantly different. The patron doesn’t know how it’s going to be, and they’re not sure if they want to spend $25 for a ticket if the show is at risk of not being good. At this point in the buying process, consumers “on the fence” are searching for any kind of assurance that their money will be well spent, and that they will have a good experience. They are looking for a quality indicator. And when you discount the price, you are likely lowering the perceived value of the experience. Researches have investigated the relationship between price and quality and showed that “consumers use price to infer quality when it it the only available cue” and that “price is used as a quality cue to a greater degree when brands are unfamiliar.” (Lambert 1972). While you have to purchase most of these studies online to read them, I found a great PDF of some sample research online by DPS Verma and Soma Sen Gupta called “Does Higher Price Signal Better Quality.” Break out the coffee on these research reports — they take some concentration. I much prefer the idea of adding value vs. reducing price. Especially value that doesn’t cost you anything. Perhaps there is a new restaurant that has recently opened near your venue? Odds are they would love the visibility of offering your patrons a discount to dinner before your show. Work something out with them, and you can offer that discount as an added value to people who purchase by a certain date, or purchase a number of tickets as a group, etc. All without reducing either the perceived value of the ticket, or the amount of money you get to take home at the end of the day. But make it available to everybody. The people who bought early should always get the best deal, and should never be left behind. If you find these sorts of questions on pricing and ticket discount interesting, I also recommend you check into the work of my colleagues at The Pricing Institute. They’re using some brilliant tools and scientific know-how to figure out the best ways of pricing tickets and venues. In the next post, I’ll talk about some real-life examples, discuss half-price ticketing strategies, and explore how ticketing systems can help you to make some of these options a little easier. Go on to read part 2 of this article Like this post? Please share it with others who you think might benefit from it, via the links below, and subscribe via email or RSS to receive future updates. Ron Evans is a researcher in consumer psychology and behavior, and an arts marketing consultant with Groupofminds.com in Sunnyvale, CA. He helps arts audiences increase their understanding, appreciation, and  frequency of attendance, through technology. Have an opinion about the content of this post? Start or join the conversation on our Facebook page.

About Ron Evans

I am an arts marketing and consumer psychology researcher, and principal consultant at Group of Minds. I advise leaders on behavioral psychology, marketing & technology to nudge audience behavior. Get in touch via email, on Twitter, or Google+: +Ron Evans