Loyalty’s the Thing, and CRM Is the Medium
One way audience loyalty is measured in our field is in repeat donations, memberships, and subscriptions. When I’m talking with executive directors, the first thing I generally ask is what are their goals this year for subscriptions or memberships, and what is their goal for individual giving. This is really code for, “Tell me how much the people who like your organization really like your organization.”
Can you rattle off these data points in your sleep? Are they on your wall? If not, consider making these the most important numbers you live with. Let me try to convince you why.
Let’s start with Sunjay Nath, a professional motivational speaker. (Full disclosure: I love motivational speakers, and anytime I can go hear one, I do.) Sunjay is the author of The 10-80-10 Principle and was the keynote speaker at the recent INTIX conference in Denver.
His philosophy for how groups can have more success, summed up in the title of his book, is that any set of people you are working with — whether that’s your staff, your family, a baseball team, or the PTA — can be divided into three buckets: the top 10%, the bottom 10%, and the middle 80%. He argues (pretty convincingly) that we all fall into a common trap, which is that we are determined to “fix” the bottom 10% and we devote a lot of energy to it because we figure the middle 80% are just humming along and the top 10% don’t need our help at all.
This framework can probably be applied to your staff. Do you feel like you spend a lot of time helping the people who are struggling, trying to get them to a better place in the hopes that the whole organization will improve? If you care about people, of course that’s what you do. But Sunjay’s argument is that neglecting the top 10% is a huge mistake because these people are already your superstars, and if you can motivate them even more, they will be role models for the middle 80%. He stipulates that the quality of your organization will improve more by focusing on the top 10% rather than the bottom 10%.
Now, how in the world does this relate to our industry? A lot! Here’s one data point that should jump off the page: The 2014 Patron Loyalty Study produced by the Greater Philadelphia Cultural Alliance and TRG Arts found that in the Philadelphia arts community, less than 3% of patrons generated more than 62% of total patron revenue. And this number had declined from the year before by 12% — so the majority of dollars came from an even smaller group of donors than in the year before. Think about that: Just 3% of the people at the top of the funnel (the top donors, members, and subscribers) generated two-thirds of the revenue. If that’s not a wake-up call to focus on the top 10% I don’t know what is.
Isn’t it true that we focus a ton of our time, energy, and attention on our bottom 10% — trying to hold onto people who may lapse or not renew? But how much do we focus on the top 10%? Yes, we thank them, but is that enough?
When I say “focus on,” I mean making them feel like you really know them and that you always treat them specially. What you do at your organization should represent your values and your culture. Some organizations send birthday greetings; others invite these people to private dinners or receptions. Early in my career when I was running the American Symphony Orchestra, our board used to host backstage receptions for musicians and key donors and subscribers. For these people, being invited backstage at Carnegie Hall to mingle with musicians was something special, something no other organization did for them.
All this comes down to something fundamental; it’s at the heart of what I’ve been writing about for years, and it’s at the core of our book Breaking the Fifth Wall. Building a relationship with your customers, nurturing them by knowing who they are and sending them appropriate and timely messages, is the key to building loyalty. If you don’t know who your patrons are — if you can’t distinguish the major donor who bought tickets this week from your first-time ticket buyers — you can’t focus your energy on the top 10%.
The business tool that helps you do this is a CRM system. When it is combined with your ticketing, marketing, and fundraising, you get complete patron information in real time. Without having all your data and transactions in a single database, and without having a 360-degree view of each customer, none of this is possible. The financial and organizational health of your organization is wrapped up in precisely this, and the evidence is out there to prove it. If this intrigues you, I hope you’ll watch this short clip of Danny Feldman, executive director of New York’s Labyrinth Theater Company, describe how his revenue and donations increased by a third as soon as he had a CRM system that helped him know his audience in just this way.
Our industry must be all about loyalty. It’s Sunjay’s top 10% that should be on your mind all the time. In an era of intense competition for people’s time and attention, our No. 1 job should be to shore up our relationship with those who love what we do.