This blog post was originally posted on the PatronManager Blog on December 19.2017. Many thanks to Gene Carr, CEO PatronManager for the invitation to contribute.
Few people are talking about the arts industry’s biggest threat. The problem barely shows up in conference sessions, industry publications or workshops. It is not cuts to arts funding. It’s not greying audiences or Millennials. It’s not a lack of data. Though these issues deserve attention, the problem is patron retention—and its extent is staggering.
The Deep Retention Problem
I’m going to give you the news, but first some context: TRG Arts studied 16,963,146 transactions (not surveys) from 130 arts organizations across the United States over five years (2012-2016) to understand the gravity of the retention problem. The full slide deck can be found here, but a key finding is this:
When looking at the combined dataset, 59% of all arts donors, subscribers and single ticket buyers disappeared in the last two years. They did not show up again in 2015 or 2016. Take a look at your own database—chances are, you’ve only kept 4 out of 10 patrons you had in 2014. The figure is even more alarming when we looked at new patrons: 75% of new single ticket buyers came once and never returned.
In what other industry would these figures be acceptable? What would become of Apple if it was content for you to stop after your first iPhone? How would Major League Baseball fare if it was satisfied with you only seeing one game in your lifetime? What if Spotify were happy for you to try it for one month and move on?
Why is this so hard?
From a financial perspective, we all know that new patrons are expensive to acquire. The harder, more nuanced truth is this: getting new patrons to return is also expensive. It requires strategic, relentless and targeted invitations across multiple channels. If you do get them back, converting them to subscribers can be more expensive still—sometimes more than acquiring brand new patrons.
If loyalty is so expensive, why do it? The answer is also driven by math: once you’ve really got them, the cost-of-sale plummets. Eventually, you will cultivate patrons who trust your artistic vision and build you into their routine as a valued part of their lives. But you can’t get there unless you’re willing to invest in the expensive, hard work of loyalty. Absent an unflinching loyalty strategy, your core audiences will disappear, leaving you in an expensive circle of churn.
The Implications for Inclusion Strategies
The arts are in a crisis of relevance, and retention is the canary in the coal mine. In the datasets TRG Arts studies, we know that arts audiences at the largest cultural institutions are majority white, upper-middle class people. Conference sessions and industry blogs reflect an important wrestling with how we deliver art that is relevant to a broader demographic—and it is critical to do so.
This challenge becomes even more serious when you consider that the large cultural institutions are not even keeping new patrons who fit the same demographic profile as their historical base. When you do succeed in reaching new audiences who differ demographically from your historical audience, how will you define retention success for those groups when 75% of all new patrons (regardless of demographics) come once and never return?
Data doesn’t solve it. People do.
Why is it that the last decade has brought profound growth in the sophistication of CRM systems, and yet patron retention trends have not changed? Gene Carr recently said to me, “I’m frustrated by the fact that we still have a retention problem in our field.” He’s right. The tools (such as PatronManager) are now here, but how are your marketing and development teams using them? Are you so caught up in the revenue chase that you don’t see loyalty cultivation as the best way to buy yourself some breathing room?
You can plug the leaky bucket. It will require a refocus of your time, a commitment to learning how to build loyalty segments in your CRM, and a rigorous attention to customized, targeted campaigns. I challenge you to make loyalty The Priority for your team. Keep the new patrons you’ve worked so hard to bring in and build a community of people who come again and again.