PatronManager

[This was originally published earlier this week as Patron Technology's "end of the year" newsletter — I'm reposting it here in case you missed it.]

Each year at this time, I
take the opportunity to reflect on arts marketing on the Internet, the
work we've done here at Patron Technology, and the work we will be
doing next year. As in past years, I'd like to use this as an
opportunity to give my perspective on the direction that technology for
arts and cultural organizations is heading.

I'm
going to talk briefly about what's happened in the last year, but spend
most of the time focusing on the future. One note before I get started:
It’s hard to ignore the elephant in the room that arrived last week in
the form of a report from the NEA about how the arts audience is
shrinking. This is not news to anyone in the field, but it should spark
an active debate on the topic, and will certainly put more pressure on
those running arts organizations.

The Social Web Meets Main Street

My quick summary of what's happened this year: The “socialization” of the Web has begun to really stick.

Twitter and Facebook are not new phenomena—Facebook
started up in 2004 and Twitter celebrated its third year in 2009. This
was the year, however, that the consciousness of arts organizations
woke up to the possibilities of how these new media types could work to
their advantage. As you know, we've done several workshops as well as
12 live webinars and multiple articles on this subject. We are still
amazed that Michelle Paul’s nine Facebook webinars this year drew a
total of over 1,500 registrants!

The social Web is here to stay, and those
organizations that embrace it, innovate with it, and use it wisely will
reap benefits. This is definitely not a fad—it's a new way of communicating.

Just take a look at how eMarketer projects Twitter’s growth: 
 

Now, if you're not totally
convinced, let me present the following undisputed fact:
Notwithstanding how effective your direct mail or other marketing
efforts are, the hands-down winner for driving people to attend and/or
participate in things arts and cultural has been and continues to be word of mouth.

Word
of mouth wins by an order of magnitude. Someone telling their friend
about what you’re doing is far more effective than any statement you
can make on your own behalf. It stands to reason, then, that if social
media is nothing more than word of mouth on steroids, and if you can
harness discussions that other people are having about you, and can
both incite and participate in them, you can finally begin to use word
of mouth as a true marketing tactic.

I am always fascinated when I read stories in The New York Times
about a Broadway show that is about to close. Inevitably, the writer
will make a reference to the fact that the show “did not find its
audience.” That is merely code for the fact that despite a huge
marketing effort, people didn't talk to their friends about the show,
and the word of mouth machine never put the show into orbit where it
could become a commercial success. It's commonly accepted that good
word of mouth is the sine qua non of arts marketing.

That's the key reason why I believe the social Web is
so amazingly powerful and so incredibly important for arts
organizations to embrace and to utilize. No, there are no rules of the
road that have been tested for years. And no, there are no hard and
fast ROI calculations that anyone has been able to come up with that
make sense yet. It's just too early.

But, like
everything else online, rewards come soonest to those who take chances
and innovate. In the early years of our business, clients used to tell
us that they would let their interns and volunteers do their e-mail
marketing. After all, wouldn’t it be best to have a 25-year-old who
“understood technology”  handle it? Well, it's now commonly accepted
that e-mail marketing should not be the realm of the volunteer or intern, because it's too important a mouthpiece to the public.

We are seeing that move all over again with Facebook
and Twitter. Everyone seems to be lining up their twentysomething staff
member or intern and telling them, “You deal with Twitter. I don't
understand it, and I don’t have time for it.” In my view, they do this
at their peril. The fact is that Twitter and Facebook postings are
probably more powerful than print or direct mail because they live on
forever and spread virally through the Internet. And now that Google
and Bing are beginning to provide real-time search results, these
social media postings may soon be the freshest information out there
about your organization.

So if you're going to
“outsource” any of your marketing efforts, I wouldn't outsource social
media. This needs to be a medium that you understand and pay attention
to, in just the same way you do with your Web site or e-mail campaigns.

E-mail Still Wins

I was recently on a panel sponsored by the innovative marketing firm Situation Interactive, along with two other panelists: forward-thinking Broadway producer Ken Davenport (Altar Boyz, Oleanna, The Awesome 80s Prom)
and Larry Goldman, a sports marketing consultant most recently with the
NY Islanders. It was the most stimulating panel that I’ve been on in
recent memory, and the room was engaged with energy and interest. At
the end of the session, Erik Gensler of Capacity Interactive,
the moderator, closed with a pointed question to each of the panelists
asking us to give one idea that Broadway producers and arts managers
should use to improve their business.

My
response was the same as it has always been: The most important thing
you can do for your digital marketing efforts is to build the size of
your e-mail list. I suggested that everyone make a goal next year of
doubling the size of their list.

It's no longer in doubt that if people opt in to your mailing list, and
if you send them relevant, compelling, engaging, and useful
information, they will respond in dramatic numbers. E-mail marketing
from arts and cultural organizations is the furthest thing from spam.
You are connecting people with their passions, and if you feed them a
healthy diet of juicy content you will strengthen the relationship
between your organization and that patron. And naturally, you’ll have a
positive effect when it comes time to ask for an end-of-year donation.
Our own 2009 research studies show that 16 percent of people who are on
e-mail mailing lists for arts organizations said they would give more
money as a result of receiving regular e-mail updates from an arts
organization.

Love Your Subscribers AND Your Single-Ticket Buyers

Back in the 1960s, Danny Newman wrote a book called Subscribe Now,
often considered to be the bible for arts marketers. In it, in no
uncertain terms, he described the long-term subscriber as the gold
standard relationship that your organization should aim to develop with
a patron. His view of the single-ticket buyer was that that person was
a noncommittal slug, a creature to be despised.

It’s easy to understand the benefits of subscriptions
from the perspective of an arts organization. After all, you're getting
a lot of money up front from your patrons, which helps your own cash
flow, and you minimize unpredictability about what your season is
likely to look like. But subscriptions ultimately should not be about
you—they are about your patron. And not all patrons are created equal and not all patrons need or want subscriptions.

Fundamentally, I believe subscriptions are more about
personality than anything else. A subscription satisfies a particular
personality type of a consumer. There are people out there who will
always subscribe because it makes them feel complete and organized. But
there are others who will never be subscribers, not
because they don’t like the work you do but because their lifestyle
simply doesn't work that way, or they are unable to commit that far in
advance. And, of course, there are also those who won’t subscribe
because your own policies are so difficult that when they subscribe and
then want to exchange tickets, you don’t make it easy for them to do
so, and so the “benefits” of subscriptions don’t matter to them.

(As an aside: I'm not going to renew one of my
subscriptions for a theatre company here in New York City because I've
been unable to return or exchange my tickets twice this season. Why?
Because they require you to physically go to the box office between the
hours of 11 and 6 if you want to exchange any sooner than 48 hours
before a show. You can’t do it online—the
only way you can manage a ticket exchange is to go there in person, and
for me that's enough of a hassle that my subscription consequently
offers me no benefit at all. Now, if I were running that organization,
I would make a deal with a messenger service that could arrive at my
patrons’ office and exchange their tickets for a charge of $15. But I
digress.)

The point is that subscriptions are perfect for
people who have a plan-ahead personality, are price sensitive, and/or
for whom the benefits of a subscription matter a lot. I reject the
Danny Newman notion that somebody who buys, say, three tickets to the
symphony on a single ticket basis should be treated differently (i.e.,
less well) than the person that subscribes for three concerts in a
“make your own subscription” series.

Yet that’s exactly the approach most organizations
take, and I have a theory about it. Let’s assume that some
organizations would like to treat those single-ticket buyers better—but
they simply don’t have access to technology that can enable them to
care of those multi-single buyers in the same way that they take care
of their subscribers. Well, that’s all about to change.

The Future is CRM

Let’s
turn to the year ahead, and focus on new technology which some of you
may be familiar with, commonly known in the corporate world as CRM,
which stands for “customer relationship management.”  You'll be hearing
more about this from me in the next year because I believe it’s the
“next big thing” in the arts & cultural business. 

Large Fortune 500 companies have been using CRM for
the last decade, and those that use it effectively have transformed
their businesses. CRM systems represent the ultimate simplification in
managing your historical and current data. These systems integrate all
of your organization’s information and databases into a single,
seamless unit.

Once you have all your patron data in a single database, and that information is accessible online to everyone in your organization in real time,
your organization can make dramatic improvements in efficiency,
customer service, and marketing efforts. CRM is not simply a fancy name
for a new ticketing system—it’s
an entirely new way of managing all of the data for your customers. (I
write about this with some energy because, as some of you know, we have
been working on a CRM initiative for the past two years—you'll be hearing a lot more about it from us in the coming months.)

Why is CRM is so important now? The number of “touch points” with your customers is increasing, not decreasing. In the old days, you used to send out messages in a one-way manner—direct
mail, newspaper, and telemarketing. You had a limited number of
opportunities to connect with your patrons. But today, we can reach
people in many more ways: through social media sites such as Twitter
and Facebook, via e-mail campaigns and individual e-mails, and also on
our own Web sites. Our customers are more accessible to us than they
ever were before, and they are more easily able to reach us as
well. It’s now incumbent upon us to manage those relationships in the
most efficient and effective way. Customers expect it!

This is where CRM is going to make a huge difference.
With CRM, you can track all of our customers in the same way, and offer
preferred treatment to the best customers, no matter how or when they
buy from you. (That’s why every time I rent from Hertz, they give me an
automatic upgrade at the counter—they know I’m a frequent renter because I’m identified in their CRM system as such.)

CRM is a new paradigm for running your organization,
and in the next three to five years, a complete transformation of the
technology for back-office operations for arts and cultural
organizations will emerge.  There's a generation of CRM technology in
the offing which will be several magnitudes less expensive and several
magnitudes more powerful than anything arts managers have to work with
now.

You will see new products
and services; new competitors; alternative ways of developing
technology that will knock your socks off. In many ways I think the
golden age of running a non-profit cultural organization is just now
starting. In the foreseeable future, those competent managers who want
to run an efficient and smart operation will now have a fighting chance
of running their organizations the way they know they should be run,
but could never before afford.

Next year will be the
beginning of a new standard of technology. The era of CRM is coming and
I’m betting it’s going to be quite exciting.

Weathering the Bad Economy

In
closing, I want to comment about the economy. Last year at this time,
we all were worried about the arts & cultural industry, and a lot
of fears were justified. What is amazing to me is that a year later the
vast majority of small and medium-size organizations (which make up the
bulk of our client base) seem to have made it through by sheer grit,
smarts, and hard work.

Sure, many have cut budgets and are doing things more
efficiently than before. And they are surviving. Larger organizations
appear to have been harder hit. When corporate funding gets cut by
$250K, that’s hard money to replace.

However, when I
look at the vast majority of arts and cultural organizations across the
country, I see hard-working and committed managers weathering the storm
and persevering to continue to do what they are so very passionate
about.

To you, I tip my hat.  I know I speak on behalf of our entire staff—a
staff filled with technically savvy folks who also happen to be theatre
buffs, singers, actors, musicians, playwrights, composers, directors—arts lovers—in
saying that we’re trying our hardest to do our part to help you attain
your goals, and we are in constant admiration of what you do every
day. 

Have a wonderful and happy new year.