One of the primary challenges for nonprofits, specifically arts organizations, is the successful management and retention of patron relationships.
Patrons provide both financial support (through donations and ticket sales) and brand support through their personal and professional networks.
With the downturn in the economy, many organizations have experienced reduced revenue and believe their constituents simply don’t have the financial capability to continue their support.
But there is more to it than just that simple fact.
Brand research in the arts has identified the concept of “churn” – customers moving in and out of business relationships – as one of the key barriers to rebuilding their markets.
This concept is well known in the telecommunications industry, where billions of marketing dollars are spent annually to retain customers and attract brand defectors.
Recent reports depict an interesting trend.
Oliver Wyman, a consulting firm, reviewed ticket-sales data for the top 10 symphony orchestras in the U.S. and found that the number of new ticket buyers within a given year (57 percent) were roughly equivalent to the amount who did not return the next year (55 percent). Those people “churned out” of their audience.
The Greater Philadelphia Cultural Alliance recently published a benchmark study that says 68 percent of new attendees – across a broad array of arts organizations in the Delaware Valley – did not return the following year, representing a 5% decrease in total patronage over a three-year period.
Both of these studies reflect a loss of interest and an inability to keep new patrons in the fold, rather than an artifact of the current economy.
Reducing the effect of churn, in combination with attracting new patrons, will be one of the key business initiatives for nonprofits for the foreseeable future.
Here are some general thoughts about reducing churn:
* Artistic vision vs. popular interest. A fine line between the two, but new audiences tend to be interested in more accessible works. Don’t make them work too hard, at least until they are clearly in the fold.
* Information. New audiences like (and need) context about what they are seeing or hearing. Any input that can help initiate them before and during their experience will help build relevance and a longer relationship.
* Social relationships. Blending an artistic and social experience will make a difference. For example, art museums and orchestras have begun creating events that involve specific patron groups (young singles), pre-performance cocktail hours and the like. In many cases, these groups were built from their own databases and promoted on Facebook group and fan pages – exploiting social media to connect prospects to each other and to the arts organization.
* Discount offers. Many arts organizations have provided lower-cost “bounceback” opportunities to first time patrons to build additional frequency and long-term commitment. This takes a chapter from the retail marketer’s handbook, where a new customer is given an incentive – quickly after the first purchase – to “bounce back” for another purchase/relationship.
John Klein is president of Trilithon Partners, a marketing consulting agency based in Cary, N.C.