How to Sell Opera Tickets and Subscription Costs
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1 Are Subscriptions Dying? Panel Discussion Marcia Lazer, San Francisco Opera Steve Kelley, Houston Grand Opera Katherine Castille, Minnesota Opera Moderator: Dory Vanderhoof, Genovese Vanderhoof & Associates GENOVESE,VANDERHOOF & ASSOCIATES
2 COC/GVA Fall 2013 Study Metropolitan Opera Lyric Opera of Chicago Houston Grand Opera Opera Philadelphia Florida Grand Opera Atlanta Opera Canadian Opera Company San Francisco Opera Seattle Opera Minnesota Opera GENOVESE,VANDERHOOF & ASSOCIATES
3 An Extreme Statement to Stimulate Discussion: The Opera Business is About Supply and Demand Half of what we sell, has no demand. GENOVESE,VANDERHOOF & ASSOCIATES
4 Study Points Subscriptions remain the largest source of earned income. Subscriptions remain the most efficient way to sell opera tickets with the least expensive cost of sales. Declining subscription base in 8 of 10 companies. (over last five years) Increasing or maintaining subscription base in 2 of 10 companies (over last five years) 2+ more of the 8 are increasing this year GENOVESE,VANDERHOOF & ASSOCIATES
5 Repertoire is Still Destiny There is a direct co-relation between sales and the repertoire mix of the season. Balance is crucial between popular A s to attract the new subscriber and the less frequently done works to excite the experienced opera subscriber. The audience appears split between: I never want to see another Butterfly Thank God, the Britten Cycle is over The repertoire offered to subscribers and potential new subscribers greatly affects subscription revenue and acquisition and renewal rates. To maximize potential subscription revenues companies have developed formulas dictating the popularity and timing of productions offered. GENOVESE,VANDERHOOF & ASSOCIATES
6 Repertoire is Still Destiny Most successful companies with 4-9 opera offerings: Program at least 2 popular operas (one at opening and one during the renewal period.) Add as many single ticket shows as possible for the popular operas to increase new audience reach and upsell. Balance program with artistically challenging or lesser seen works for the established audience. GENOVESE,VANDERHOOF & ASSOCIATES
7 Repertoire is Still Destiny Companies that have deviated from the balanced formula have seen decreased subscription acquisitions and are not reaching their original income projections. General Directors often blame their marketers for poor results when the fault really lies in repertoire planning. BALANCE IS THE KEY TO SUCCESS GENOVESE,VANDERHOOF & ASSOCIATES
8 Favorite Delusional Artistic/General Director Quotes: I can make a B opera an A!! would have sold out if we had better marketing! was a hit, it sold out! Last performance (92% subscribed) sold out. First five performances filled by the subscription base and a growing low level of single ticket buyers Entire run only 82% sold. GENOVESE,VANDERHOOF & ASSOCIATES
9 Casting does not move the dial on subscription acquisition. Casting does not move the dial for an appreciable increase in acquisition or renewal. Notable Exceptions Placido Domingo and Renee Fleming in some large company markets. GENOVESE,VANDERHOOF & ASSOCIATES
10 Some Director s Interpretation Can Affect Subscription Sales and Single Ticket Sales: Negatively Favorite Marketing Director Quote: There isn t a subscription base the Alden Brothers can t destroy. GENOVESE,VANDERHOOF & ASSOCIATES
11 Saving Money on Inferior Productions and Casting is Noticed (The Met HD effect) The public is becoming increasingly more discerning: Inferior quality productions and casting have a detrimental impact on subscriber retention and acquisition. Subscribers notice when productions: are repeated to save cost, sets are reconfigured as another opera productions are of inferior quality. Giggle moments walls that shake when doors close. Lesser productions and unfortunate casting create a lack of trust among new subscribers making them unwilling to return. GENOVESE,VANDERHOOF & ASSOCIATES
12 Subscription Renewal Tactics Traditional Campaign Components still most effective. Renewal mailings. Support . Follow-up phone calls. Discount buyers respond best to renewal offers mirroring original acquisition. GENOVESE,VANDERHOOF & ASSOCIATES
13 Subscription Acquisition Tactics DIRECT RESPONSE and TELEMARKETING to the organizations own attendee database remain the strongest acquisition components Increased proficiency in data-mining is essential Use of TRADITIONAL ADVERTISING is greatly diminished DIGITAL ADVERTISING and RE-TARGETING have become the third most effective acquisition component replacing Traditional Advertising GENOVESE,VANDERHOOF & ASSOCIATES
14 Price Resistance is An Issue To Some Companies In Houston and Toronto the price of opera went up more than 600% in the 25 years from 1980 to 2006, while median household income increased by less than 220%. The opening of a new opera house in Toronto sustained through scarcity the $156 average ticket price through to 2012, By 2006 HGO house capacity had been reduced to 58% paid. Market research continually identifies the public perception of opera as expensive. Houses that traditionally sold from the front and back in are now selling from the back to the front. Demonstrating price resistance. Nexus (HGO) and Value (COC) subscriptions sell extremely well in price sensitive markets. GENOVESE,VANDERHOOF & ASSOCIATES
15 Cost of Production / Household Income Canadian Opera Company Opera Income GENOVESE, VANDERHOOF & ASSOCIATES
16 Audiences have been trained to wait for the single ticket fire sale. Why buy subscriptions when you can get a single ticket the day before the performance for 25 50% off? GENOVESE,VANDERHOOF & ASSOCIATES
17 OPERA AMERICA 2014: DEAD OR ALIVE? The State of Subscriptions in the 21st Century
18 Romeo and Juliet Quit saying she s dead!
19 What Comes In: 40% of households = 65% of ticket revenue Seats Households 38% Single ticket seats Subscribed seats 62% 3,316 5,071 Single Ticket households Subscriber households Revenue 35% Single ticket revenue Subscription revenue 65%
20 What Comes In: and from whom 9% Expense by audience segment 7% 9% Revenue by audience segment 32% Single ticket buyer New subscriber Lapsed subscriber Longterm subscriber 54% 75% 10% 4%
21 What Comes In: per $1 spent on marketing >$6.75 from subscription revenue <$2.50 from single ticket revenue (except for blockbusters)
22 What Comes In: per $1 spent on marketing Subscription revenue Single ticket revenue Anna Bolena $6.04 $1.75 Silent Night $6.14 $2.56 The Dream of Valentino $7.68 $1.00 The Magic Flute $7.32 $4.49
23 What Goes Out: to make $1 $0.15 to a subscriber $0.66 to a single ticket buyer (except for blockbusters)
24 What Goes Out: per ticket Revenue per sub seat Expense per sub seat Revenue per single seat Expense per single seat Anna Bolena $64.87 $10.75 $48.68 $27.88 Silent Night $66.23 $10.79 $59.42 $23.20 Valentino $66.54 $8.67 $45.60 $45.82 Magic Flute $63.26 $8.65 $63.70 $14.19
25 Good, cheap acquisition strategies: Impulse Offers 50% subscription for first-time subscribers offered at single ticket performances Not a sub in the last 5 years Must buy before leaving the theater Offer announced as curtain speech, order form in program All but the top and bottom price levels available, any package 627 new sub households since season 248 are 1415 sub HHs Excluding this season s new acquisitions, this represents 30% overall retention of all prior offer recipients Renewal looks similar to other new subscribers Renewal rate increased from between 30%-40% to over 50% when we extended the offer the second year. 3 rd year renewal rate of each cohort 70%+ 4 th year renewal rate 83%+
26 Good, cheap acquisition strategies: Bring-a-Friend Subscribers offered a comp to give to a first-time opera-goer (not in our database) 15%-18% participate 3,261 new households since % returned Subs outnumber STBs season 567 subs, 207 STs Most buy regular or senior subs, not discount offers Cumulative $212,000 in revenue, or $65/comp HH
27 Match inventory to demand Reality: 88% capacity sold; 54% on subscription (On average, subscription performances were 63% subscribed this season) Tougher titles still harder to sell; Flute sold as many singles to it as to all other shows combined. $25k-$60k swing between Tuesday or Wednesday performances and weekend performances.
28 Match inventory to demand Course correction: Tuesday subscription series eliminated Moving the Tuesday subs into other shows means a subscribed performances will be 78% subscribed Allows greater programmatic flexibility to the subscription series Reduces inventory TOO much In 4/5 productions, Tuesdays replaced with an added single ticket Sunday matinee This puts more weight on the blockbuster Wednesday added Carmen performances replaced with weekend shows
29 Prospecting for Subscriptions OPERA America Conference 2014 Marcia Lazer San Francisco Opera
30 Subscription History While the subscription base has declined over the long-term, it remains the greater part of earned revenue. Subscriptions last year 61% of ticket revenue. SFO subscription base over the past 15 years has varied between 21K in 2001 (dot.com boom) and 2011 (Domingo/6-opera season) and 16.7K in 2003 (dot.com bust); now (post recession) at 18K.
31 Research Findings Reached out to Current and Lapsed Subscribers and Single Ticket Buyers Qualitative repertoire, pricing, event quality Quantitative repertoire, pricing, event status Two different audiences a delicate balance Subscribers need for more variety in titles Single ticket buyers want recognizable titles; greater price sensitivity; have many other options for entertainment
32 Prospecting by Mail Long-lapsed SFO buyers List exchanges (direct and through BACC, Bay Area arts organization big list ) Demographic overlay/select of BACC buyers Version of card for NY Times Sunday insert Direct mail, , telemarketing follow-up: Telemarketing works best. Targeted offers. Over 7 years: $2MM subs; $3.2MM in singles
33 Prospecting by Simulcast Simulcast much more powerful than other free events (Open House, Opera in the Park) Richer representation of the product; venue Online sign-ups the key: 56K new accounts Both subscription and single ticket buyers in first year and ongoing. 7 simulcasts: $769K subs; $1.44M in singles
34 Prospecting Newest Ticket Buyers Immediately after the performance, send a Still humming that tune with offer Telemarketing follow-up a few days after Offer is a two-up discount package to become an SFO DYO Subscriber with benefits and targeted incentives
35 Subscription Benefits Exchanges are free (except $10) Exchange opera as well as performance date Early exchanges as part of renewal and acquisition process Drop-One-Opera Option (keeping price down) Complimentary ticket upgrades Reserved parking for Full subs (plan to expand)
36 WORDS TO LIVE BY Inventory Management is Key It is a hopeless endeavor to attract people to a theatre unless they can first be brought to believe that they will never get in. Charles Dickens, Nicholas Nickelby HOUSTON GRAND OPERA
37 THE PRICING LADDER Strategies to encourage good behavior The earlier you buy, the better the deal Subscription seat: least expensive: ALWAYS Single ticket offers (added value or $ off) Single ticket pricing Demand pricing increases value, never reduces HOUSTON GRAND OPERA
38 WORDS TO LIVE BY If people don t want to come, nothing will stop them. Sol Hurok Fire sales are counter-productive HOUSTON GRAND OPERA
39 THE IMPORTANCE OF THE DEAL A top five symphony tested offers on their own database with a postcard mailing: Group 1 Group 2 Group 3 Group 4 Discounted tickets Free upgraded seating Control/List of month s concerts Were not mailed HOUSTON GRAND OPERA
40 THE IMPORTANCE OF THE DEAL Groups 1 & 2 outperformed groups 3 & 4 Discounted seats and upgraded seating both performed well Groups 3 & 4 performed exactly the same Without an offer, you d be better off to save the postage HOUSTON GRAND OPERA
41 THE IMPORTANCE OF THE DEAL Compare these two brochure covers HOUSTON GRAND OPERA
42 THE IMPORTANCE OF THE DEAL Same copy Houston Grand Opera Season Six operas for $90 Subscribe and save up to 60% Repertory listed HOUSTON GRAND OPERA
43 THE IMPORTANCE OF THE DEAL The Deal Makes the Sale While both covers performed well, the more prominent positioning of the deal(s) Mosaic outperformed the other substantially 30% higher response 34% more tickets 15% more revenue despite a much lower average order ($ v $546.12) HOUSTON GRAND OPERA
44 PARTY TRICKS Invest in the best targeting Direct mail still brings in the lion s share Your biggest asset is your own database Lapsed subs profitable 12 seasons back Multi-buyers and single ticket buyers profitable 10 seasons back Behavior-based modelled lists more than pay for themselves in efficiency and income generation Points to prospects who spend money like your buyer; not just look like them Retargeting on the web HOUSTON GRAND OPERA
45 PARTY TRICKS Subscribers are gold. Treat them that way. HGO portfolio concept Neiman s personal shoppers Invest in and empower your front line Think of the business in aggressive, retail terms Test offers and frequency in your market Honor and reward the current customer HOUSTON GRAND OPERA
46 COC Value Subscription ISSUE: Company remains virtually sold out but has missed revenue projections 4 years in a row. Why: Growth of Last Minute Discount Buys, unprecedented subscription turn-backs and base movement to Select Your Own Series 20,000+ of 118,000 Tickets Sold. Up from 2,000 in GENOVESE,VANDERHOOF & ASSOCIATES
47 Strategy: Introduce an affordable full series subscription for the seats that have been selling at fire-sale single ticket prices. 3,000 of 14,000 available subscription seats. Flip major and minor acquisition campaigns from spring to fall. Push the Deal everywhere No single ticket discounts!! The subscription price is the lowest price you will ever pay. GENOVESE,VANDERHOOF & ASSOCIATES
48 Results to date: Full Series Acquisition up from 500 to 1,700 Major acquisition campaign will run in August through October. Current Forecast is 3,400 total acquisition versus 800. Current Forecast total subscription base increase from 10,700 to 12,800 (20% increase) Select Series decreased from 1,800 to 970 Seats sold on subscription up by 6,740+ (3 full performances) Subscription Average Ticket Price Up : $ from $ GENOVESE,VANDERHOOF & ASSOCIATES
49 GENOVESE,VANDERHOOF & ASSOCIATES
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