The truth is, what gets measured gets managed.
When you decide to track a metric and make decisions in your organization to move that number up or down, you’re giving that metric power.
That means your organization sets its priorities by what you collectively decide to measure and mark as the way forward.
So, what are you measuring? With today’s robust CRM systems, there are endless metrics that your arts organization could track on your patrons and their buying and donating behavior, so where do you begin?
To help you get started, the TRG Arts team has compiled 6 metrics that your arts and cultural organization should be tracking in order to assess your current situation, stabilize your business model, and start generating working capital.
Metric #1: Patron-generated revenue
Traditional revenue tracking metrics used by arts leaders are usually split into the broad categories of earned revenue and contributed revenue. At TRG, we believe that patrons are at the center of organizational success, so why not put them at the center of what we measure? To calculate patron generated revenue (PGR) use the following equation:
When we consider development revenue (contributed/donations) and marketing revenue (earned/sales) as different things, it creates siloes within organizations. Thinking about your income streams in simple terms of whether they are patron generated or not will immediately clarify how reliant you are on your patrons and unify your previously siloed departments around serving them. The importance of patron focus is further underscored when we consider that most, if not all, individual donors at one time were just a single ticket buyer.
The next step once you have your PGR figure in hand is to compare it to revenue generated by any other sources. This comparison may inform your arts organization far more than the standard way of measuring development and marketing initiatives. To see the percentage of your patron reliant income, use the following equation:
This percentage can be used to show how much of your revenue is reliant on your people, as compared to government grants and institutional giving etc. We believe that these simple equations will help you as arts leaders to put your focus on where the lion’s share of your revenue generation comes from, your patrons. In this video, TRG Arts will help you forget all about earned and contributed revenue and encourage you instead to measure patron generated revenue to manage your income.
Metric #2: Active patron participation
Active patrons are the patrons your arts and cultural organization serves today. Whether or not they will be there tomorrow depends on how YOU cultivate them. Before we can get our cultivation on, we must measure. We start with an equation to help us see how our organizations are currently doing with active patron participation. Here is the formula for you to try:
This figure will help you see what percentage of your total household database has engaged with your organization over the most recent two years and are therefore active. This data can then be extrapolated further into buyer types, such as single-ticket buyers, subscribers, or donors and looked at across time on a yearly basis. Your chart will help you see visually how healthy your organization is, but don’t get caught thinking growth and health are the same thing. We all would like to see our charts always going up and to the right, but uncontrolled growth can be unhealthy, and sometimes healthy organizations don’t reflect year over year growth but rather just a high percentage of retention of active patrons.
Now that you have some data together on your active patrons, let’s look at how to cultivate them. For your first-time visitor or single-ticket buyer, the next step is to have them join you again and purchase another ticket. When a patron is buying multiple tickets a season, the direction forward is a membership or subscription. For the patrons already subscribed or are members, the upgrade for them to join you for events, and to consider becoming a donor. This type of patron development will make for a healthy organization, but first you must measure to find out who are your active patrons in your database, and what is their next step.
This video covers how and why to measure active patron participation in further detail at performing arts organizations and museums, and explores how this metric empowers you to manage the next step for every patron to grow their loyalty.
Metric #3: Data capture rate
If we hope to cultivate our arts patrons, we’ve got to know their history with our organization first. That starts by collecting their contact information. Are you noticing a theme here yet? Metrics are crucial to making informed decisions for your organizations. How is your date capture rate? Let’s find out by looking at the total of your new patrons and what percentage of those patrons you have full contact information for. Full contact information would be a street address, a phone number, and an email address. To calculate your data capture rate as a percentage, try this:
If you find that you are not pleased with your percentage here, it’s time to consider ways to drive up the date capture rate. What ways can your organization incentivize patrons to give you their basic information so you can communicate with them in the future? If it seems daunting, relax, because in this video, TRG Arts has helpful tips for collecting contact information at the point of sale, made especially easy when we drive ticket sales online. We’ll also review what contact information you need and show how improving your data capture rate can mean serious revenue gain— or lost opportunity. This metric is all about keeping you connected with your audience, once you identify that as a priority and start measuring it, you will find all sorts for ways to improve your data capture and keep your seats and exhibits filled.
Metric #4: New audience churn rate
What if the resources and time your marketing team is spending on getting new audiences is just filling up a leaky bucket? Churn. Attrition. Turnover. Call it what you will; the fact is, you’re losing new patrons. With few exceptions, arts organizations over-prospect for new audiences and underretain them. It doesn’t have to be this way! Once again, we will need to get some data and use metrics to find the way out of this vicious cycle of churn.
As we have noted, stewarding and growing your patrons is crucial. Single ticket buyers become multi ticket buyers, who become subscribers, who become doners, and each graduated step along the way nets higher revenues for you. On this basis, retention is even more important than new audiences once you have an audience to steward. So, let’s see how we are doing with the following formula:
To be clear, this is just using new patrons from two years ago, not total number of patrons. This allows us to zero in on the recent retention of our newest engaged audience members specifically. TRG Arts data has shown evidence that without applying resources to make it otherwise, attrition rates are very high, like 4/5 people who attend one of your events will never return kind of high.
To help you address this, our video will help you get that “second date” with your new patrons by explaining why retention matters, how to measure your risk, and offering a simple 4-step process for retention that you can implement at your own organization.
Metric #5: % of subscriber-donors
Question for you, how are you measuring patron loyalty? That’s a stat we would all like to power up, but what can we measure besides the number of subscribers who renew their subscriptions from one season to the next? While renewal rate shows how many subscribers or members arts organizations are retaining, it doesn’t indicate if patrons are growing in their loyalty. Meaning it would be possible to have an eye-popping renewal rate of 90% or higher, but not have gained a single subscriber, which would reflect stagnation and instability in the mid to long term.
Deep rooted subscribers who renew every year are what we are trying to eventually cultivate our new patrons into, but to get a better read on your loyalty metrics, we need to slice the data a little differently. The following equation will show you if your subscribers are being cultivated to the next level, subscriber-donors:
The step between subscribers and subscriber-doners is also where the gap lies between your marketing and development teams potentially. Looking at this metric can help tell you if your departments are working together in seamless fashion or if subscribers are being left to rot on the vine and adjustments should be made to your strategy. In this video, TRG Arts offers cases studies to share with you that show why renewal rate can be deceptive, and the metric arts organizations should consider tracking alongside it to manage their subscriber development.
Metric #6: Per capita revenue
Is your arts organization generating the most revenue it can for each event? There’s a way to measure that! Traditionally organizations have looked to percentage of capacity, but there is a better metric that can help you maximize revenue and remove some guess work on pricing and timing from the equation.
We end with the simplest equation of the six we have given, but it is perhaps the most potent metric we have shared as well. It’s easy to feel like we are maximizing revenue when the capacity is full and the shows are sold out, but this tells us nothing about whether we are reaching our revenue potential. The simple fact is that sometimes organizations must make educated guesses on pricing based on the past performances or events, and what they can glean from the market around them. Educated guesses are still guesses, and in our consultant work at TRG Arts, we have found that its more effective to harness the laws of supply and demand using what we call dynamic pricing.
When tickets are flying out of the box office, per capita revenue should increase, not decrease. Think about your own experience, does the price of the hottest new toy around Christmas time go up or down as the supply diminishes? The same is true of your tickets because you are selling something that is in demand. As ticket costs rises and supply becomes scarcer, you have less guess work to do because the market is telling you what it values your tickets at, and it should value it increasingly more as the show nears and the seats are in shorter supply.
When you combine this ticketing strategy with other concepts like scaling your house with success perception in mind, you can know that you are maximizing the returns on your efforts. This video explains how to work out if your pricing strategy is causing you to lose money, and common causes of lost revenue due to pricing strategy.
There you have it, 6 Metrics your Arts and Cultural Organization can start measuring today, and plenty of tips on how to chart a course forward using your findings. We hope that we have impressed upon you the power in data, and the clarity that measuring the right things can offer. If you need tools or resources that can help you efficiently parse out your databases along these metrics and empower you to lead by using informed data, TRG Arts is here to help. We would love to hear from you about which of these metrics you have tried and what decisions they have empowered you to make in your organizations.