The Surprising Reason Why Organizations Underestimate Attendance Loss During Closures (DATA)

Know Your Own Bone - Underestimate Attendance During Closures for Cultural Organizations

When cultural organizations experience unforeseen facility closures, they lose more visitors than simply those who were planning to visit that day. Here’s why.

While the following data may be particularly timely after Winter Storm Jonas, cultural organizations (museums, zoos, historic sites, performing arts organizations, etc.) are consistently way off when adjusting annual attendance projections due to closures. This includes closures due to weather, irregular operations, storm damage, fire, utility failure, criminal activity, or anything else.

No matter the reason for the closure, we dramatically underestimate the overall impact on annual attendance. It’s generally a huge bummer when we have to close for unforeseen circumstances and take the attendance (and, for many organizations, revenue) hit. But knowing why we are so frequently wrong in quantifying the total impact of these closures may help us better understand visitors and develop more realistic contingency plans for lost revenue and attendance.

We are often wrong about the impacts of an unforeseen closure for two, big reasons that are important to understand beyond the framework of attendance and revenue projections. When an organization is closed at a time that it might otherwise be open, visitation generally is NOT displaced to other times of the year. And, to top it off, we lose more people than simply those who had planned to attend the organization that day. The reasons for this happening are important for organizations to understand.

Take a look at the math and see just how much we underestimate the lost annual attendance due to unplanned, short-term facility closings. This chart illustrates data from 13 organizations over a three-year analysis and includes a range of cultural, visitor-serving organizations – each represented by letter.

IMPACTS- Immitative value applied analysis

The “Expected Decline” value indicates the number of visitors as a percentage of annual market potential that were expected to be lost by an unforeseen facility closure. If an organization’s market potential analysis suggested attendance of 1,000 visitors on a given Tuesday, and the organization was instead closed that day, then the expected decline in annual market potential would be 1,000. Pretty logical, right?

The “Actual Decline” value indicates the actual, observed percentage decline relative to an organization’s annual market potential.

Every organization quantified in the study indicated an actual decline greater than the expected decline. There are two, important reasons why expected and actual decline do not align in commensurate measure.

 

1) Lost attendance is not usually displaced to another date

“They’ll come back later,” some staff say. Well, most likely they won’t. Not this year, at least. Data suggests that it is incorrect to assume that lost attendance due to an unforeseen closure is somehow magically reallocated to other periods during the calendar year.

IMPACTS- Discretionary decision making utility model

Extant data indicates that schedule has the single greatest influence on a would-be visitor’s decision-making process. This analysis reaffirms that if a scheduled visit is interrupted by an unforeseen closure, then these affected visitors are unlikely to visit the organization in a proximate chronology. In other words, if a snowstorm in February forces a closure that results in a loss of attendance, then these would-be February visitors are unlikely to visit come April or July.

It is a miscalculation for an organization to simply distribute attendance lost due to a closure to the remainder of the year. Those 4,000 visitors who stayed home these past few days while the snowflakes fell during Winter Storm Jonas? They’re likely gone…and annual budgets should be adjusted accordingly.

That’s a bummer, but it makes sense. It accounts for lost annual attendance that at least matches the expected decline. But why do organizations lose more visitors than those who were planning to visit on the date of the closure during the remaining course of the year? It’s a good question with a very important answer.

 

2) Recommendations and social sharing from those who would have visited are lost (and that is a much bigger deal than we realize)

This lost visitation has a sort of “double-whammy” effect for many cultural organizations as they are reliant on word of mouth and other testimonial factors to help engage audience and motivate attendance. (This is particularly true for organizations in those regions where visiting friends and family is a primary driver of tourism and travel. If your plan was to take a visiting friend or family member to a local museum, but a water main break forced the cancellation of that visit, well, that museum lost out on both the organizing party’s visit and also the guest.) When we close for any reason, we don’t just lose the people who were going to visit. We lose the recommendations, social media posts, and shared stories of all of the people who were going to visit that day.

And many organizations do not factor this into their adjustments. Fortunately, thanks to data, today we can. For every one visit lost due to an unplanned closure, the net annual impact on market potential averages a decline of 1.25 visitors. Thus, if a sustained interruption to your operation results in 20,000 fewer visits, then the annual impact of this business disruption is likely to be lost attendance of 25,000 when compared to your organization’s market potential.

Wait! We lose real people because of lost word of mouth endorsement? Yes. It’s not just hot air: Word of mouth endorsements are a BIG factor driving the attendance numbers for cultural organizations – and every year, the attendance to cultural organizations with unforeseen closures prove it. Consider the analysis: Of the 13 organizations quantified in the study, the average attendance decline due to unplanned closures was -4.45% compared to market potential. However, the actual decline in annual market potential was observed to be -5.56%. Again, due to word of mouth and other “imitative behaviors,” the loss of every one visitor equates to a total annual decline of 1.25 visitors. 

It’s important to remember that recommendations and social media posts that would have resulted had the organization not closed that day are no more impactful than recommendations based on experiences that take place on any other day. Word of mouth recommendations and social sharing are always playing a role in a cultural organization’s actual, onsite visitation numbers. This fact right here, folks, is a dang good reason to go hug your social media community manager who facilitates the sharing of experiences and word of mouth endorsements. This is also a good time to remember that millennials – who are most likely to recommend a visit to friends – are largely underserved by cultural organizations.

 

Unforseen closures stink. We’re never excited to learn that our organizations have lost the financial support that would have been gained from onsite visitation. We rely on that support to carry out our missions. And, considered in that light, this data really kicks us when we’re down. (It stinks when data does that.) But this information stands to make us much smarter. Embracing these realities allows us to more properly adjust attendance and revenue numbers so we aren’t down in the dumps later due to unrealistic expectations.

Perhaps most importantly, these findings underscore the importance – and the numbers of real, flesh-and-blood visitors – affected by the important role that word of mouth endorsements and shared stories have in helping us to share our experiences with more people. And in the end, that’s kind of cool, right?

When we educate and inspire people, it really does bring in more people to educate and inspire.

 

Like this post? Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

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Posted on by Colleen Dilenschneider in Community Engagement, Digital Connectivity, Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution, Trends 2 Comments

About the author

Colleen Dilenschneider

MPA. Chief Market Engagement Officer at IMPACTS Research & Development. Nonprofit marketer, Generation Y museum, zoo & aquarium writer/speaker, web engagement geek, data nerd, marathoner, nomad, herbivore

2 Responses to The Surprising Reason Why Organizations Underestimate Attendance Loss During Closures (DATA)

  1. Eric Morse

    Hi Colleen, Another valuable post. I’m curious: does this information translate to planned closures? Our museum is currently open 359 days in the year. We have considered in the past if we should be closed one day a week. Could we expect the same type of loss described in this post or do scheduled closings have a different impact?

     
    • Colleen Dilenschneider

      Hi Eric! The analysis specifically contemplated unplanned closures (e.g. those due to weather, utility outages, civil unrest, etc.) Unfortunately, we don’t have a similar means of quantifying the impact of scheduled closings (e.g. being closed on Monday or on a holiday) as the market potential analysis for an organization typically already contemplates these closings. In other words, if an organization has been closed on Mondays, then the market potential analysis includes this schedule limitation. In the example that you mention, there would likely be a near-term impact of shifting from a nearly always open organization to one that closes one day per week. The impact would be felt from both previous visitors who have an expectation that the organization is always open – and, thus, risk being dissatisfied when they arrive onsite to find it closed – and from new visitors who are simply unaware of the schedule. In either event, there would likely be some “multiplier” effect as these would-be visitors would not be able to offer consequent endorsements or recommendations based on their visit. The data also tend to suggest that the notion of visitors re-scheduling their activities to accommodate an organization’s operations is largely a myth as schedule is the leading factor influencing visitation decisions. If a prospective visitor has a free day on Monday, but the organization is closed on Monday, then they are unlikely to rearrange their personal calendars to visit on Tuesday. Thanks for reading and I hope that this helps!

       

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