Special Exhibits vs. Permanent Collections (DATA)

Special exhibits don’t do what many cultural organizations think that they do. If fact, they often do the opposite. Read more

Eight Realities To Help You Become A Data-Informed Cultural Organization

Is your organization integrating market research into strategic decision-making processes yet? Here are eight important things to keep in Read more

A Quarter of Likely Visitors to Cultural Organizations Are In One Age Bracket (DATA)

Nearly 25% of potential attendees to visitor-serving organizations fall into one, ten-year age bracket. Which generation has the greatest Read more

People Trust Museums More Than Newspapers. Here Is Why That Matters Right Now (DATA)

Actually, it always matters. But data lend particular insight into an important role that audiences want museums to play Read more

The Top Seven Macro Trends Impacting Cultural Organizations

These seven macro trends are driving the market for visitor-serving organizations. Big data helps spot market trends. The data that Read more

The Three Most Overlooked Marketing Realities For Cultural Organizations

These three marketing realities for cultural organizations may be the most urgent – and also the most overlooked. This Read more

Community Engagement

Why Donors Stop Giving Money to Cultural Organizations (DATA)

Why Donors Stop Giving to Cultural Organizations

Why do some people make a donation (or a few) to a cultural organization and then simply stop giving? The top three reasons stem from the same issue.

Cultural organizations exist to carry out their missions (which often relate to educating and inspiring visitors) – but they cannot achieve these missions if they are unable keep their doors open and their lights on. Simply put, we need our visitors and donors in order to thrive.

It would be wonderful to think of annual donors as fish that we can keep as trophies and mount on our walls. (As in, we catch them and then they are forever ours!) But donors are actually like fish that we catch and then throw back into the sea – hoping that we can use evolving tactics to catch that same fish year after after. This is especially the case if the fish is a $250-$2,500 donor. (That’s a fancy fish!)

While it’s great when we can “catch” and cultivate a $250-$2,500 donor, we all have observed that not every donor renews their gift on an annual basis. So, what gives? Why do some donors fail to renew their contributions?

Take a look at this chart, provided by IMPACTS Research and informed by the 98,000 person sample that comprises the National Attitudes, Awareness, and Usage Study. This chart represents the responses of previous $250-$2,500 annual donors who did not make another gift to the same visitor-serving organization within the past 24 months.

IMPACTS - Why donors stop making contributions

The reason that we segment by the $250-$2,500 range is because we noticed that the repeat giving rate was much, much, much higher for annual donors at the >$2,500 level.  We posit that this because (a) larger donors don’t have the same financial constraints in terms of affordability factors; (b) they are likely very committed to the organization/cause (as evidenced by their higher level of giving); and (c) higher level donors often receive a higher level of attention from an organization. In other words, they are less likely to slip through the development “cracks.” Of course, this still happens all too often…

Notice anything interesting about the top three responses? 

 

1) The top three reasons why donors drop out of giving are due to relationship management issues

Not being thanked for a previous gift, not being asked to donate again, and lack of communication about the impact of one’s donation all represent massive communication fails. Advances in relationship management technologies are supposed to make communication fails increasingly rare – but, the data suggest that many of us remain our own worst enemies when it comes to retaining donors.

CRM stands for “customer relationship management.” CRM is an organization’s approach to managing interactions with current and future customers (or – in the case of cultural organizations – constituents, visitors, and supporters). It’s a bit of a jargon term for “How your organization connects with people and manages relationships.” And it’s important – especially because giving money can feel very personal and, today, audiences want to support something meaningful. If your organization fails to reassure supporters of the impact of their gift – heck, if your organization fails to thank folks for their gift – than there’s definitely an opportunity to re-evaulate your organization’s CRM strategies and tactics.

The fact that not being thanked for previous gift holds the spot as the leading reason why folks stop giving to an organization feels a bit incongruous with the values of the types of organizations that we are supposed to be. We are doing good. And we want people to do good with us. Do we have an excuse for not even acknowledging precious folks who do exactly what we want them to do? I’m not sure that, “I’m too busy to write every $250 donor or member an email” counts in today’s world…

 

2) Expectations of personalization today are unforgiving toward forgetful organizations

This is a good segue to the next point: Personalization trends are affecting everything. We now live in a 24-hour world of constant connection. Most folks expect responses within one hour on social media, and all of our ads and even our newsfeeds are tailored specifically according to our interests. Personalization trends are altering long-held CRM and even programmatic beliefs within cultural organizations. Indeed, change can come slowly for nonprofits, and if there were only a single urgent (and perhaps obvious) need to adapt personalization into cultural organizations, thanking and communicating with donors may just be it.

Also, keep in mind that “not being asked to donate again” isn’t about collateral and messaging so much as it’s about personalized communication. Reaching out to folks to ask them to give again is an opportunity for connection and personalized interactions. If an organization sees “not asked to donate again” in this data and thinks, “Let’s send that form letter out 10 more times,” then that organization is missing the point.

A donor online is a donor off-line  – and lack of a personal touch just doesn’t cut it anymore.

 

3) Connectivity is king (and losing donors for CRM failures indicates lack of awareness of this reality)

Essentially, the top three reasons why people discontinue giving are because organizations are forgetting that today, connectivity is king. Content is no longer king for many reasons – but one of them is because many staff members “not my job” the word “content.” Similarly, CRM sounds like marketing jargon (because it is), but other departments – and especially fundraising and membership – “not my job” customer and community management today at their own expense. In fact, community and customer management may be just as – if not even more – important for development and membership teams as it is for marketing teams because big donors lead to big donors and word of mouth from customers drives all other avenues of engagement and revenue – including the gate.

 

The good news about these top three responses is that organizations can change them. These challenges to sustained giving may only be issues because they represent “growing pains” as organizations evolve to meet the needs of our super-connected audiences. But realizing the need to evolve and update our outdated systems is critical for change.

While this data may be a tad embarrassing, it’s something that we can control – and that’s great news! Let’s fix our development and membership communication issues and remove the top three barriers to our $250-$2,500 donors continued giving. After all, our donors want the same thing as we do: To make the world a better place.

Our donors are supporting us. Let’s support them back.

 

Like this post? Please check out my YouTube channel for video fast facts! Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter.

Posted on by Colleen Dilenschneider in Community Engagement, Digital Connectivity, Financial Solvency, Fundraising, IMPACTS Data, Myth Busting, Sector Evolution, Trends 6 Comments

Schedule Drives Visitation to Cultural Organizations And Nobody Is Talking About It (DATA)

Examining Schedule- the top influencer for visitation

 Organizations often overlook the single biggest factor influencing attendance. Here’s the data that nobody’s talking about. 

The schedule of a potential visitor plays a leading role in a visitor’s decision to attend a cultural organization, but many organizations don’t think twice about schedule (focusing instead on items such as cost of admission, special events, or the content of a program or exhibit). These items are not unimportant, but the data on the importance of considering audience schedule is unassailable. Want more people to visit? It’s time to understand the leading roles that schedule and hours of operation play in the decision-making process.  

Let’s use data to bust some popular myths about visitor motivations, and take a look at four misunderstood bits of information regarding the role of “schedule” in the visitation decision-making process:

 

1) Schedule is the single biggest factor contributing to visitation (not cost or specific content)

It makes perfect sense: If a visitor-serving organization is not operating when people can or want to visit, then those people aren’t going to visit. In Western Europe, folks are more willing to schedule their work and personal lives around visiting a cultural organization that has a good reputation. (Of course, a shorter work week and more generous vacation time allowances in Western Europe help create more schedule flexibility!) In the United States, that’s just not happening.

IMPACTS- Discretionary decision making utility model A high-propensity visitor is a person who demonstrates the demographic, psychographic, and behavioral attributes that indicate an increased likelihood of visiting a cultural organization. These are the people who are most likely to visit our organizations, and they are “where our bread is buttered” in terms of visitation. People in the United States – including high-propensity visitors – do not generally reorganize their lives in significant ways in order to visit cultural organizations if their operating hours are inconvenient or conflict with work (or school) commitments.

Notice also that schedule is a significantly more important factor in the decision-making process than is cost for high-propensity visitors. Keep in mind that many “minority majorities” and (especially) millennials qualify as high-propensity visitors – and that high-propensity visitors are not necessarily the same as historic visitors. (There seems to be this weird idea that millennials and “minority majorities” are the same as affordable access audiences and are unwilling or unable to support cultural organizations…but there’s abundant data demonstrating that this is not the case – though we do desperately need to get better at attracting these emerging audiences.) The key to meaningful engagement for people who are interested in your content may not be cutting admission by $5 (which data suggest doesn’t work), but, instead, may be establishing hours of operation that better conform to our audience’s preferences.

 

2) Take a close look at when you are open and when audiences are easily available to visit (because they often are not the same)

Take a look at this data from the National Attitudes, Awareness and Usage Study of 98,000 adults and counting. You’ll notice from the last four bars that folks generally do want to visit cultural organizations! You’ll also notice from the first two bars that although folks indicate an interest in visiting, fewer actually do visit. What gives?

IMPACTS - Visitor Attitudes

We dug in a little bit deeper as to why people who report interest in visiting cultural organizations may not actually visit: For people who would like to visit a cultural organization but haven’t visited, schedule conflicts (including ill-suited hours of operation) are the primary barrier. Take a look at how these schedule conflicts stack up:

 IMPACTS - Visitation Barriers

Work schedule conflicts make perfect sense as the leading barrier to visitation for folks who may be otherwise interested in attending an organization. Think about it: Most of the time, cultural organizations with operating hours are generally only operating when people are at work! And some potential visitors have professions that keep them busy working during the weekends as well.

Weekend activities are precious. For potential visitors who do not work on the weekends, there’s steep leisure activity competition – including simply staying home and binge watching Netflix. And when folks can take a holiday (as seen in the data above), there are often other commitments to tend to that take precedent – such as visiting family. Moreover, students tend to be in classes during traditional weekday hours of operation.

When we add all of these things up, it begs the question: How do cultural organizations determine their hours of operation? Do we have these hours because that’s how we’ve always done it? And, knowing what we know about today’s connected, real-time world, would we still choose to be the most inaccessible in the early mornings before folks head to work and in the evening when they have their most discretionary leisure time?

Of course, this issue may require an industry evolution (revolution?) to resolve. We’ve spent years training audiences to visit us during holidays and weekends (a tacit acknowledgment that 9a-6p schedules may suit no one but our staff). Retraining audiences is hard to do…but changing the public perceptions of cultural organizations and better serving our missions may necessitate a good, hard look at how we approach our hours of operation.

 

3) Organizations are unlikely to move visitation to a shoulder season without risking overall attendance

Perhaps the biggest industry misconception about schedule as a motivator for visitation may be that many organizations think that they can change it. This is a difficult – if not impossible task – and more often than not, results in a very poor reallocation of resources.

Take a look at this 10-year analysis of attendance by month to 78 US visitor-serving cultural organizations. The analysis indicates clear “peak” and “off-peak” seasons. This data indicates the time periods when people want to visit cultural organizations (given the current schedules that cultural organizations keep) – clearly illustrated by the fact that these are the times when people are, in fact, actually visiting.

IMPACTS -Monthly attendance to VSOs

The chart below organizes the monthly attendance data by season. The summer season accounts for nearly 37% of total attendance. Also, the spring season, driven by the traditional spring break holiday from school, accounts for approximately 27% of an organization’s total annual attendance.

IMPACTS Seasonal attendance to VSOs

Now that we’ve established that the market obviously has clear seasonal visitation preferences, let’s bust some backward thinking. It is a myth to believe that efforts during off-peak seasons can easily “make up” for poor performance during the peak spring and summer months. Think of it this way: If your organization welcomes 200,000 visitors per year, and 14% of them are visiting in July, an emphasis on increasing attendance during the month of October (when only 6% of visitors historically attend) is not going to produce the total visitation impact as would maximizing peak season attendance. This is especially true in our world of finite resources. Increasing an investment in an off-peak season often means reallocating investments from peak seasons. This alternative use of funds is very unlikely to produce a net benefit for the organization.

Q: What if an organization reallocates some of its resources from peak season to off-peak season? A: It’s not usually a wise financial move. Here’s a case study from my work at IMPACTS that clearly demonstrates the point. Consider the recent example of a large visitor-serving organization (annual attendance >1,000,000) that developed a strategy to increase year-end visitation during the holiday season by reallocating some audience acquisition investments that had been traditionally deployed during the peak season. As a heads-up, this was a relatively modest reallocation of investments and the organization was still investing at a considerable level during the peak season…just not as much as it had in the past. Let’s call this reallocation of resources in an attempt to alter visitation the organization’s “shoulder strategy.”

IMPACTS Shoulder season investment case study

Attendance during the holiday season did improve by 1.17% – but at the expense of attendance during the peak season (which declined by 4.00%). More importantly, a 1.17% increase in attendance during the holiday season only equated to an additional 3,306 visitors…while the 4.00% decrease in peak season performance cost the organization 108,840 visitors. In other words, it proved impossible for the organization to “make up” peak season attendance during an off-peak period by reallocating peak-season resources to the off-peak period. Here’s a look at this information another way.

IMPACTS Shoulder season strategy outcome chart 

There are few meaningful ways to fully compensate for underperformance during a peak season by emphasizing the off-peak season, nor is it likely that a significant investment in the off-peak season will return significant attendance benefits to the organization when compared to the potential of that same investment deployed during a peak season. Schedule is simply too important of a factor to our audiences for them to alter their behaviors to suit our preferences – after all, we don’t define our peak seasons, our audiences do!

Certainly, there are things that an organization can do to try and encourage attendance during less popular months – but don’t rob from peak seasons to pay for an off-peak opportunity. Your organization needs to make its hay when the sun is shining.

When trying to encourage greater visitation during off-peak seasons (hopefully through additional investment rather than taking from peak season resources), remember that discounts artificially increase visitation and change visitation cycles. In fact, discounts do a whole host of not-awesome things for your long-term bottom line. When you discount, you are simply displacing visitation from another season, decreasing visitor satisfaction, devaluing your brand and – perhaps most importantly – decreasing the likelihood of any return visitation at all.

 

4) Attendance loss from unexpected closures is greater than most organizations realize (and it is not generally replaced)

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. I wrote a separate post about this earlier this year when snow was hitting the East coast, and it’s worth revisiting here.

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

IMPACTS- Immitative value applied analysis

 

 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.

First, organizations underestimate attendance loss during these days because they do not understand the role that schedule plays in visitation. When people plan to visit an organization, but those plans fall through, visitors are not likely to simply “come back next month.” Those visits are generally lost.

Second, when we close for any reason, we don’t merely 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 the impact of the loss of earned media can be huge. In fact, 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. Again, you can read more about this here.

To be clear, I’m not suggesting that organizations never have unexpected closures! Things happen for which we cannot always plan – and sometimes situations arise which simply make it unsafe for staff or visitors to make it to our institutions. What I am saying is that we consistently underestimate the “now or not-anytime-soon” nature of schedule as a primary influencer of visitation decisions.

 

Considering the critical role that schedule plays in audience motivations, one would think that we’d talk about our hours of operation at least as often as we discuss our reputations, our special exhibits/programs, and our admission cost. But we don’t. As cultural organizations, we talk a lot about accessibility. However, many of us seem to overlook the most basic foundations of this concept – our schedule and open hours. It’s time to take a hard look at the primary barrier to visitation so that we may more effectively carry out our collective missions of making the world a more educated and inspired place.

 

Like this post? Please check out my YouTube channel for some video fast facts! Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter.

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, IMPACTS Data, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 4 Comments

Three Tips To Help Nonprofits Increase Success When Pursuing For-Profit Partnerships

Tips for for-profit partnership

Let’s stop telling companies that it’s their privilege to work with us for free – and, instead, show them why we are great partners.

I like to consider myself a double-agent. I work for a for-profit company, but I work with nonprofit visitor-serving organizations. I’m trained in nonprofit management – and I am kind of like this dog that was raised by cats and thus thinks he’s a cat. As I hang out on top of this fence, I can see both yards – and there seem to be a few nonprofit assumptions that don’t quite fit with things on the business side.

I get to see the “partnership pitch” from all angles. I work with nonprofits that make these pitches, and IMPACTS works with for-profit companies that get these pitches. Not a week goes by when IMPACTS itself isn’t approached with opportunities for partnership with amazing organizations. But the proposed partnerships in all of these situations often fall short because there isn’t much consideration of how these theoretical partnerships would work from the not-nonprofit side. In order to increase chances of success, nonprofits must consider the perspective of the person at the other end of the phone or email account to whom they are “pitching” the partnership.

Perhaps you’re looking for a for-profit partner to provide food, consulting services, or even to make a donation. Here are three things for nonprofit organizations to keep in mind that will help increase the chances of success when approaching a potential for-profit partner:

 

1) Consider what is in it for the potential partnering company

This sound obvious, but it very rarely happens. Usually, when a nonprofit organization is asking a company to “partner,” it is code for “I’d like you to do something for free or at a very reduced cost.” There are very few companies with the mission to make a nonprofit successful, so creating a true partnership relies on the nonprofit communicating why this relationship is beneficial to the company. It means speaking their language and articulating how this partnership is not only going to support your mission (this part is usually obvious), but how it is going to help the company succeed.

It is helpful to articulate how the partnership may enhance a company’s profitability – but be careful about what you think benefits of your partnership may be. As a heads up: Successful companies probably aren’t relying on you to market them. Thus, “We’ll market for you!” can be a nice bonus, but it’s a total misread as a driving benefit worthy of partnership on its own merits. Nonprofits often struggle to prioritize marketing investments – but smart for-profit organizations (like the one with which you’re probably seeking to pursue a partnership) generally do not. For what organizations ask a company to invest in the way of sponsorship, a company could likely otherwise achieve a much more effective marketing outcome. The primary benefit of a partnership to the company must be articulated, and indeed, it usually involves connecting the brands. But the primary benefit usually isn’t about the organization doing marketing, it’s about what that partnership means. That meaning is worth directly articulating.

One reliable benefit of a partnership is that it may lend credibility to a company in a specific space or contribute to a corporate social responsibility platform. If there’s mutual benefit, then it’s a partnership. Otherwise, it’s pure philanthropy or the company is a vendor and you should pay them. Organizations may benefit by taking a moment to think through their proposed benefits so that they may speak the same language as the company when pitching a partnership and more directly articulate some of the great benefits that they can bring to the table.

 

2) What is in it for the company is usually not your mission alone

It’s not enough to simply have a social mission – all companies and organizations seem to have social missions today. And the market is generally sector-agnostic – meaning that they don’t care much whether an organization is for-profit or nonprofit as long as it demonstrates impact.

Moreover, nonprofits are not super good and for-profit companies are not super evil – so approaching outbound communications with this mindset isn’t very helpful. In fact, in my experience, the thought that companies are innately morally inferior to nonprofits resides much more in the nonprofit world than from the for-profit world – and that may be a product of today’s more transparent, social-good centric society.

Not every nonprofit is a good partner, and those that are good partners aren’t necessarily good fits for partnership. Like organizations, companies choose which partnerships they want to form – and having a social mission doesn’t make any organization an automatic fit. For example, if a company wants to support informal learning and that’s what you do, then an organization must be prepared to communicate impacts and demonstrate why that investment is best made in your organization. The company may be your dream partner – but is your organization similarly a dream partner for this company? Even if a company believes in your mission, they may still choose to support an organization that serves the same mission, but may be a better fit for partnership.

“Partner with us because it’s the right thing to do,” is not usually a persuasive primary reason for partnership. Again, that’s philanthropy. Similarly, I’ve seen many emails wherein organizations write something that seems to be saying, “We are X organization! It’s really in your best interest to work with us. Everyone knows we are great!” But it often doesn’t occur to this organization that sometimes your brand isn’t enough, and there’s benefit in being tied to your impact. Impact can be a huge differentiator. 

 

3) Decide to REALLY be a good partner

Especially for cultural organizations, the problem starts here: Many are still elitist organizations. Many museums and cultural centers were founded by wealthy benefactors and seem to operate a bit like elitist social clubs. There are millions of dollars of art hung on the walls of some of these institutions and it’s not unusual for even frontline staff at some cultural organizations to have master’s degrees. We work in important, symbolic buildings, and we work for the good of the people – even though data suggest that we still have real trouble engaging diverse audiences and some popular programs intended to reach these people actually make the issue worse. (I just got real there, but I’m trying to make a point.) Nonprofits often approach companies as if it is a privilege to partner with the organization. The reality is that some of us have a view of ourselves that doesn’t conform to today’s economies or the current social condition – and this view seems to often come out when approaching a potential partner in order to obtain goods or services.

Nonprofits do amazing things – but when we call a not-partnership a partnership (even politely), we look kind of out-of-touch. Instead of going into the conversation assuming that we are worthy of any partnership because of “who we are,” organizations may have more success by pausing to realize that we are approaching this for-profit company because of who they are, too. Partners are equals.

 

Nonprofits and for-profits love the word “partnership.” (And why shouldn’t we? It’s an important word and concept.) However, many organizations don’t practice what they preach. If we considered that word, we wouldn’t say some of the things we say. We wouldn’t shamelessly ask for services and act like the business on the other end should give us what we want for free or reduced price just because we say we care about something. We wouldn’t say the word so much because we’d realize that sometimes we’re not asking for a partnership at all. We’re asking for a handout.

Nonprofits can be excellent partners that bring credibility and respect to for-profit companies. However, a precedent to partnership must be a willingness to consider the mutual benefits of the relationship and a critical analysis of our own capabilities. Most of all, our actions need to trump our words – instead of telling companies how awesome we are, let’s show them.

 

Like this post? Don’t forget to check out Fast Fact videos on my YouTube channel. Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter.

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, Myth Busting, Sector Evolution, Trends Comments Off on Three Tips To Help Nonprofits Increase Success When Pursuing For-Profit Partnerships

Which Is More Important for Cultural Organizations: Being Educational or Being Entertaining? (DATA)

From a visitor’s perspective, which is more important for cultural organizations: Being entertaining or being educational? Here’s what the data says.

This week’s Fast Facts video briefly outlines a data-informed aspect of the “Entertainment vs. Education” debate.

There seems to be an ongoing tension within organizations regarding the relationship between providing an entertaining experience and an educational experience for visitors. All too often, we seem to act as though the two forces are at-odds with one another.

Sometimes, the entertainment value of a visit to a cultural organization gets an internal bad rap. After all, cultural organizations are mission-driven and one of their goals is often to educate. “Entertaining” occasionally seems to be a sort of dirty word – much like considering visitors as “customers” and the idea of “selling” admission. They are concepts/words that might make some staffers uncomfortable. In the best interests of the organizations that we love, however, we need to at least embrace these ideas or risk less solvent futures.

The truth is that providing education and entertainment are both important to our visitors – and knowing exactly how these elements contribute to the visitor experience may help inform future strategies and conversations. So, let’s take a look at some data from a visitor perspective and get to the bottom of this relationship.

 

1) Entertainment drives visitor satisfaction and re-visitation

To tackle the question regarding the importance of entertainment versus education, let’s start by considering the data that goes into developing a visitor satisfaction metric.

Individual evaluation criteria – such as entertainment and education values – aren’t weighted equally because the market is not influenced by them equally. Many organizations aiming to achieve higher overall satisfaction measures mistakenly believe that every aspect of a visitor’s experience is equally important – and that’s just not true. To visitors, some criteria (such as employee courtesy) have more weight than others (such as the quality of the gift shop). With that in mind, here’s a look at some of the weighted attributes that influence overall satisfaction – informed by the market and IMPACTS Research. (These data derive from the National Awareness, Attitudes & Usage Study of more than 98,000 US adults concerning visitor-serving organizations.)

IMPACTS Overall satisfaction weight

Yes, folks. This is indeed a data-informed chart of exactly how much each aspect of the visitor experience contributes to overall satisfaction when visiting a cultural organization such as a museum, zoo, aquarium, historic site, performing arts event, etc.

Entertainment experience is the single greatest contributor to overall satisfaction. Education value influences only about 5% of overall satisfaction, whereas entertainment value influences more than 20% of overall satisfaction. Favorability is the visitor’s perception of how “likeable” the organization and its experiences are – and the entertainment quotient of the experience contributes even more to overall satisfaction than does favorability. That’s saying something.

The fact that entertainment value drives visitor satisfaction is cut-and-dry and non-negotiable. And any company or organization telling you otherwise is likely paid by an entity that really, really doesn’t want to evolve. Providing an entertaining experience is absolutely critical for visitor satisfaction, and, thus, return visitation. In short, cultural organizations need to be at least somewhat entertaining in order to stay alive.

 

2) Education justifies visitation

It’s clear that providing an entertaining experience is more important for satisfying visitors – but education isn’t chopped liver. Data suggest that being educational plays a critical role in justifying a visit to a cultural organization after the visit is over.

Take a look at this data from IMPACTS (again, from the National Awareness, Attitudes & Usage Study):

IMPACTS Primary visit purpose

Learning something new and different, seeing something new and different, and wanting a child to learn something new and different are the top three stated responses regarding the primary purpose of a visit after that visit is over. This is a big deal, because it means that while the educational aspect of an organization’s mission may not necessarily bear extraordinary influence on how satisfied a visitor is during their onsite visit, it is thereafter recalled as a primary factor motivating the visit – and this is good news! It helps to reinforce the purpose of cultural organizations externally, underscoring our drive for social good. (And this has financial benefits, too. Organizations that highlight their mission financially outperform those marketing primarily as attractions!)

 

In sum, entertainment value makes a visit satisfying but education value helps justifies a visit. Successful organizations aim to make education entertaining. It’s not a battle, but a balancing act wherein fun and learning work hand-in-hand to make both visitors and the organization better.

I could have guessed that,” many of you may be saying. Well, that’s good. Now when we enter conversations from either the mission or revenue angle, we can be a bit more informed by visitor-driven, industry-wide data. There may be some hard facts to face here, but they are important: We need to prioritize being both educating and educational – and quit thinking of “entertainment” as a dirty word.

 

Like this post? Please check out my YouTube channel for more fast facts! Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter.

Posted on by Colleen Dilenschneider in Community Engagement, Fast Facts Video, Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution, Trends 3 Comments

The Expensive Misconceptions Surrounding Membership Fraud for Cultural Organizations (DATA)

The Expensive Misconceptions Surrounding Membership Fraud for Cultural Organizations

Setting up ID checkpoints to spot “fake members” at your organization? Data suggest that you may be doing more harm than good.

Many cultural organizations treat “member fraud” as an urgent concern of the utmost importance. I’m talking about organizations that set up ID checkpoints at the entrance or membership deck and believe that their job is to find people getting in on their friend’s membership, and then do this. Data suggest that organizations that think this way may be doing themselves a grave disservice.

How big of a problem is membership fraud and guest pass fraud? How much is it costing organizations? We uncovered a data-informed line of reasoning that should make cultural organizations think twice before deploying the member fraud police (at least in the way that many have in the past).

 

1) Checking IDs is a top dissatisfier for members

This is a good – and obvious – place to start: What are the most dissatisfying elements of the member experience? IMPACTS surveyed premium members (defined as persons who have purchased an annual membership to a cultural organization costing $250 or more within the past 12 months) to better understand the nature and hierarchy of member “dissatisfiers.”

The data comes from the ongoing National Awareness, Attitudes & Usage Study of US Visitor-Serving Organizations, and contemplates the perceptions and behaviors of more than 98,000 visitors to 224 visitor-serving organizations of various types and sizes. For this component of the analysis, 1,096 “premium” members to these organizations responded to open-ended questions to identify the most dissatisfying aspect of their member experience. A consequent lexical analysis process organized these responses by general consideration, and these same considerations were presented to the studied members who were then asked to rank from 1-10 the considerations in terms of relative dissatisfaction (with 1 being the most dissatisfying aspect and 10 being the least dissatisfying aspect). The Mean Value is the average ranking that the member respondents assigned to each consideration.

IMPACTS- Premium member dissatisfiers

It makes sense that “proving identity” is among the most dissatisfying aspects of the member experience: “You know my name when you call me at home to ask for money. But you forget my name AND imply that I am trying to deceive you when I visit – a benefit for which I paid several times more than regular admission!” Exaggerated? Maybe (or maybe not), but let’s be honest: A premium member making this hypothetical statement would have an excellent point!

A reasonable person may consider showing a membership card and being asked to produce an ID to be excessive. And consider this: You’re openly asking for an ID in addition to the membership card because you believe that your members – the backbone of your organization – are conspiring to perpetrate a fraud against your organization. One need not be a philanthropy pro to realize that this is a pretty lousy way to treat current and potential donors. You know what they say in fundraising and membership development: “The best way to say ‘Thank you’ is to question a donor’s integrity!” Wait…people don’t say that?! Then why do so many organizations actually do it?

 

2) It is often more costly to AVOID membership fraud

“But if we stop checking IDs, won’t we suffer from member fraud and risk letting legions of non-members in for free?!” That’s a very sensible and intelligent question. Let’s look into it. The data below is from a 2014 IMPACTS membership study of 11 visitor-serving cultural organizations – seven of which have (or then had) ID check policies for members, four of which did not verify the IDs of members.

Market potential is a data-driven analysis that quantifies the number of people expected to annually visit an organization (and often at what price). Market potential analyses are the result of a modeling process, and enabled by the data typically acquired via the conduct of an awareness, attitudes, and usage study. The 2014 IMPACTS membership study further segmented the market potential by visitation type (e.g. admission paying visitors, members, etc.).

IMPACT - Membership ID validation market potential

Organizations checking IDs achieved 98.9% of their annual market potential (or 98,900 actual member visits per every 100,000 expected member visits). Organizations NOT checking IDs achieved 100.8% of their annual market potential (or, 100,800 actual member visits per every 100,000 expected member visits). Even if we attribute the entire member visit variance to member fraud (which is not a justified assumption), the maximum member fraud incident rate is 1.9% (or 1,900 fraudulent member visits per 100,000 expected member visits).

And, common sense suggests that attributing the entire variance to member fraud is, at best, a dubious practice. Why? Because at least two other, important factors may play important roles in explaining the delta: 1) It is extremely possible (if not likely) that some ID-checking organizations lose member visitation precisely because they check IDs and, as the data indicate, are dissatisfying their members. It is not hard to imagine a member being annoyed, offended, or inconvenienced by the ID check (or having a friend to whom they lent the membership card being turned away), and then not returning with the expected frequency to the organization. 2) Correspondingly, organizations that don’t check IDs may better satisfy their members with the relative ease of the entry process when compared to the ID police experience at other organizations. It is unlikely that the entire observed market potential variance has to do with member fraud when we know that checking IDs is such a strong dissatisfier, but let’s assume that the member fraud incident rate is 1.9% to be super safe. This begs the question:

Is a member fraud rate of 1.9% worth irritating your most closely held constituencies?

To find out how much money this amounts to for your organization, all that you need to do is plug in some numbers. As an (easy math) example, let’s assume that an organization receives 100,000 annual member visits and that the admission revenue per capita is $20. This would mean that member “fraud” poses a $38,000 annual risk to the organization (100,000 annual member visits x $20 admission per capita x 1.9% member fraud incident rate = $38,000 annual member fraud expectation).

(For easy math purposes, I chose a relatively large-sized organization for this hypothetical example. Extant data suggests that a visitor-serving cultural organization in the US with 100,000 member visits likely has a total annual attendance in the 400-500,000 range. The annual operating budget of this hypothetical organization is likely in the tens of millions of dollars – which may change the way you perceive that $38,000 if your organization is much smaller.)

Based on your own unique member fraud expectation, ask yourself: Is it worth this much money to risk alienating high-level donors and members? Or, here’s a better question: If you could invest that same amount to eliminate a major dissatisfier for members and donors, would you? The answer is probably a resounding “yes.”

 Also, when organizations use the word “fraud” they are making the assumption that everyone who is sneaking in using someone else’s ID would have otherwise opted to visit and pay full admission. These are flawed assumptions.  Sure – perhaps some of these “gate crashers” would have otherwise visited…but surely not all of them would choose to do so.  Some may argue that what we internally call “fraud” is, in fact, a bit like a trial program based on the most valuable kind of word of mouth – the recommendation of someone who is already an important constituent (i.e. the member who shared their ID with the “fraudulent” user).

Even if we assume that every single fraudulent visitor would have absolutely visited anyway and paid full price (which are both silly and dangerous assumptions…but let’s roll with them), checking IDs is still a bad financial practice. Organizations should consider the ill will that ID checks engender with their members (and what this means come renewal time), the onsite spending of “fraudulent” visitors at the gift shop and café, and the future value of these same visitors as potential endorsers! It may be reasonably safe to say that someone turned away at the door by the ID police may not offer a ringing endorsement for your organization. On the other hand, a person who visits at the express recommendation of a member who has shared one of their member benefits with this person may well thereafter visit on their own accord…and maybe even buy their own membership!

 

3) Guest pass fraud has been pre-paid and may be beneficial

But what about guest pass fraud? Many organizations report observing guest passes being offered for sale on Craigslist or offered as a perk for Airbnb rentals. Just how big of a problem is this?

The analysis below contemplates five nonprofit visitor-serving organizations in the US that offer transferable guest cards, tickets, or passes (i.e. the member need not be present for the guest pass to be redeemed) as a benefit of select membership categories. The purpose of the study was to assess if fraud was a major issue with this membership benefit. Here are some of the findings uncovered by IMPACTS:

  • People purchasing membership that included guest passes as a benefit spent on average $48 more than they would have for a similar membership category that did not include guest passes. The average premium paid by members of the five contemplated organizations to receive the guest pass benefit was $48.17.

 

  • Roughly four out of ten members who paid a premium to receive the guest cards didn’t redeem the benefit. 61.35% of eligible members who received the guest benefit actually redeemed the benefit.

 

  • People visiting using guest passes were worth 48.77% more to the organization then they would have been if they had bought a ticket. Explanation: Members who redeemed the guest pass benefit (i.e. shared passes for their guests to use), accounted for an average of 2.32 guest visits to the organization. In other words, of the 61.35% of eligible members who redeemed the benefit, the average usage rate per member was 2.32x. That means that overall, for every membership that included a guest pass as a benefit, actual usage of the guest pass accounted for 1.42 guest visits (61.35% redemption rate x 2.32 usage rate = 1.42 guest visits per eligible membership). At a price premium of $48.17, this equates to equivalent revenues of $33.92 per guest visit ($48.17 price premium / 1.42 guest visits per eligible membership = $33.92 per guest visit). The average per capita admission revenue for the five contemplated organizations was $22.80 – meaning that guest visitors were worth 48.77% more to the organization then they would have been if they had bought a ticket!

 

That said, guest pass visitors are likely worth even more than that. This math artificially demeans the value of guest pass programs as it includes the same, flawed assumptions that seem to plague many member fraud-related concerns: 1) The assumption that every person visiting the organization via the guest pass program would have otherwise visited the organization; and 2) The assumption that every person visiting the organization via the guest pass program would have not only visited but additionally done so on a paid basis. There are two critical factors to consider in assessing the value of a guest pass benefit for memberships:

  1. The people who choose to pay a premium to receive a guest pass benefit are likely among an organization’s best endorsers – they want to share the experience with other people and are willing to pay for it!
  1. If the guest pass program does nothing more than engender trial among new visitors, then this, alone, may be a benefit to the organization – organizations usually invest to engender trial. In the example of guest passes, a member is paying the organization to promote trial (and, these “trialers” likely contribute revenues to the organizations in terms of food and beverage sales, retail sales, parking (if you own that structure), and even potential additional admissions sold to accompanying visitors.)

Do guest cards contribute to fraud? It depends what you mean by “fraud.” Yes, there are likely folks visiting the organization that you didn’t intend to have a guest pass – but that’s not necessarily a bad thing. In fact, when you think about it from a trial perspective (i.e. reaching new audiences), it may be a good thing.

 

I was recently visiting a large museum in Chicago with my colleagues. The woman in front of us at the entrance had several children with her and, before entering the organization, the ticket-taker asked to see her identification. We overheard the woman explain that she was the nanny and that she was given the membership card to take the children and their cousin to the museum. The ticket-taker turned the nanny and three children away with a look of pride and accomplishment on her face as she explained condescendingly that only the membership holder could visit the organization with the children. The nanny looked extremely embarrassed. Is this what we consider a “win” in the visitor-serving industry?

“That’s extreme,” you may be thinking. Perhaps. But, remember: The person whom you’re turning away is the member’s mother, father, neighbor, nanny, grandparent, sister, brother, coworker, etc. (Believe it or not, folks trying to “sneak in” aren’t likely to be culturally erudite pickpockets and wallet thieves. Seriously. Is that who we think that they are?!) When you annoy members (or embarrass their friends), you’re probably more likely to lose them altogether than upgrade them to a membership that allows for more member entrances or guest passes. In a way, members (and especially premium members) have paid for the right to “defraud” us.

If you’re wondering what your “ID police” should do now, here is an idea: Train them to interact with visitors – which data suggest is the single most reliable way to increase satisfaction.

The member fraud crisis? It’s kind of a (mild) thing – but we’re hurting ourselves both in terms of our mission and financial future thinking it’s a bigger issue than it actually is. The sooner that we stop choosing to dissatisfy our members, the sooner that we can improve our member and donor relations to gain the critical support that we need to both fund our financial futures and execute our missions.

 

Like this post? Don’t forget to check out my Fast Fact videos on my YouTube channel. Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter.

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution 1 Comment

The Hidden Value of Millennial Visitors to Cultural Organizations (DATA)

Data suggest that millennial visitors possess three behavioral characteristics that make them cultural organizations’ most valuable audiences.

Okay, okay. You’re sick of talking about the importance of reaching millennial audiences…even though industry data suggest that cultural organizations are not attracting these audiences at the rate that we should be AND millennials are not “growing into” caring about arts and culture. But let’s put all that aside for a moment…

This week’s KYOB Fast Facts video covers three behavioral characteristics that data suggest make millennials particularly important audiences. I’ve written about them before with the data cut a bit differently.

Take a look at these findings from IMPACTS that compares three behavioral characteristics of Baby Boomers (born 1946-1964), Generation X (born 1965- 1979) and millennials (born 1980-2000) who profile as high-propensity visitors to cultural organizations (i.e. museums, performing arts organizations, aquariums, historic sites, etc.). That is, they demonstrate the demographic, psychographic, and behavioral characteristics that indicate an increased likelihood of visiting a cultural organization. Like much of the data that I am able to share here on KYOB, it comes from the ongoing National Attitudes, Awareness, and Usage Study.

High Propensity Visitor Indicators -Millennials

Let’s briefly go over these findings one-by-one:

1) Millennial visitors are most likely to come back within the year

Millennials are revisiting more often than other generations. In fact, millennials make up the majority of visits to cultural organizations because they are revisiting these types of organizations. And this is awesome! It means that attracting millennial audiences gives us bang for our audience acquisition buck. In fact, with index values under 100 for both Baby Boomers and members of Generation X, non-millennials are actually unlikely to revisit a cultural organization within one year.

Coming back is important because it helps these audiences grow potentially longer-lasting relationships with these institutions. Why focus on attracting cultural center-loving individuals who are likely to pay a single visit to a cultural organization when there’s a whole host of cultural center-loving millennials that are likely to visit more than once?

 

2) Millennial visitors are most likely to recommend a visit to a friend

Sometimes our reputation for having big mouths pay off! Millennial visitors are more likely than Baby Boomers or members of Generation X to recommend a visit to a friend when they have a good experience. This means that not only are millennial audiences most likely to revisit a cultural organization within a one-year duration, but they are also most likely to tell others to do the same. Talk about payoff!

 

3) Millennial visitors are the most connected visitors

This is important: All high-propensity visitors to cultural organizations profile as being “super-connected.” That is, they have access to the web at home, at work, and on mobile devices. Though the web plays a big role in the connectivity of millennials, it is undeniably critical for Baby Boomers and members of Generation X as well (as evidenced by index values coming in at over 100 for all three groups). If you work for a cultural organization and you are trying to get people in the door, data suggest that the web is insanely important in order to effectively attract any demographic. Got it? Good. I’ll move on…

It’s great that millennials are most likely to come back and also to tell their friends to pay a cultural organization a visit…but they are also the most connected audiences among the three generational cohorts – by a long shot. The constant connectivity of millennials means that this audience shares messages with their friends and family (likely also high-propensity visitors) with a reach that’s a bit like traditional media on steroids.

 

When you put all of this together, the case for prioritizing millennial engagement is rather compelling. While a Baby Boomer may visit once per year and not necessarily recommend their experience to a friend, millennial visitors are more likely to come back and tell LOTS of their friends to do the same. Millennials may be the best connectors to other millennials – and perhaps simply to other people in general.

When data are considered, the task of reaching millennials may even seem less like a burden and more like an opportunity. (Too much? Okay. I won’t push you. I’ll just encourage you to scroll back up to the chart and let the data do the talking.)

 

Like this post? You can check out more Fast Fact videos on my YouTube channel. Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter.

Posted on by Colleen Dilenschneider in Community Engagement, Digital Connectivity, Fast Facts Video, Financial Solvency, IMPACTS Data, Millennials, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends Comments Off on The Hidden Value of Millennial Visitors to Cultural Organizations (DATA)

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:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Community Engagement, Digital Connectivity, Financial Solvency, IMPACTS Data, Myth Busting, Sector Evolution, Trends 3 Comments

Nonprofit Recognition: What Matters More To Visitors Than Your Tax Status (DATA)

Do visitors know that museums  and other cultural organizations are nonprofits? Data says: Nope. Here’s what really matters to audiences about your organization.

This week’s Fast Facts video covers a big misconception that folks working within cultural organizations (often unknowingly) promulgate: That being a nonprofit is a key differentiating factor to their audiences. As it turns out, data suggest that your organization’s tax status is relatively unknown among visitors and non-visitors alike.

This video explores the data. Not a video person? (That’s cool. You do you.) Here’s what you need to know:

 

1) The majority of people in the US do NOT think cultural organizations are nonprofits

Check out this data from IMPACTS that uncovers the percentage of the US adult population that believes that cultural organizations such as museums (e.g. art, science, history), zoos, performing arts centers, botanic gardens, and aquariums are nonprofit organizations. Like much of the non-proprietary data that I am able to share on Know Your Own Bone, the findings informing this analysis come from the ongoing National Awareness, Attitudes, and Usage Study of 98,000 adults (and counting).

KYOB- Nonprofit recognition data

The findings may be a tad alarming to some. I’ve personally heard the “but we’re a nonprofit” excuse for not keeping up with financial realities (among other things) more times that I can count. This data flips the popular excuse for lack of evolution on its head. Not only are most non-visitors to these institutions not aware that cultural organizations are nonprofit organizations, but over half of the people who do visit these types of organizations are unaware that they are nonprofit organizations.

Take a look at history museums, for instance. Only 47.2% of visitors to history museums know that they are nonprofit organizations. The other 52.8% of visitors (over half) are unaware that they are reliant on philanthropic support: They believe that the organizations are for-profit entities, or government-funded operations that are otherwise provided for by their taxes.

Regardless of the reason for the misperceptions, more than half of visitors to ALL cultural organizations do not believe that they play any role in keeping these organizations healthy or alive after walking in the door. Beyond paying admission (to what they consider a business) or paying their taxes (to an organization with free admission because their taxes fund a government-operated entity), the majority of visitors risk believing that there is no further need for their support.

 

2) The market is sector agnostic

The misconception that these types of cultural organizations do not need support as nonprofit organizations is a problem – but how big of a problem? We’ve created a situation wherein people think admission to cultural organizations is largely either a pre-paid entitlement (thanks to taxes), or a fee paid to a for-profit company. Admission to most cultural organizations are neither of these things.

Tied to the misconceptions regarding the need to support cultural organizations is another market-based truth: Today’s audiences are generally sector agnostic. This means that they don’t much care about an organization’s tax status. They care about how well your company or organization does what it claims to be expert at doing. Loyal Know Your Own Bone readers (you guys rock) know that I’ve shared this nonprofit recognition data before in a post about how, today, for-profit and nonprofit organizations compete against one another. At IMPACTS, we continue to find evidence supporting this fact nearly every day.

Let’s be honest: Market confusion makes sense in the case of many nonprofit, visitor-serving organizations. We’re nonprofit, but our operations often follow a traditional economic utility curve. In other words, unlike giving to a charity that supports the homeless, people are “paying” for the personal experience of visiting our organizations. But unlike SeaWorld (for instance), those revenues cycle exclusively back into our social missions to educate and inspire…because that’s what 501(c)3 organizations do. And that brings up another potential point of confusion: Disney World, SeaWorld, and Universal Studios are for-profit companies – and SeaWorld hits the “we’re mission-driven” button hard (or rather, it tries to). It makes sense that the market might give up on differentiating visitor-serving nonprofits from for-profits! And until recently, most nonprofit, visitor-serving organizations were marketing themselves primarily as attractions – NOT mission driven organizations. Some laggard nonprofit visitor-serving organizations still do…

 

3) The tax status of cultural organizations is not their differentiating factor

So far this is looking bad. Our audiences largely don’t know that we rely on their support in order to stay alive and they are sector agnostic so they, in a sense, don’t even care that we are nonprofit. So what do our audiences care about? How well we carry out our missions.

But nonprofits don’t “own” social good, and that’s a big reason for evidence of the market’s sector agnosticism. Corporate social responsibility is a necessity for companies today. There are countless articles on the importance of for-profit companies “doing good.” It is a key tactic for gaining more customers. And that’s interesting because there are still some cultural organizations that do this weird, outdated thing where they try to overlook their social advantage and exclusively promulgate “visit us today!” messages (and even offer discounts that devalue their brand and cause even more sector confusion for cultural organizations). It’s like some of them are trying to be like Disney World…

Being good at your mission is good business. Data demonstrate that organizations highlighting their missions outperform organizations marketing primarily as attractions. Perhaps, in all of our “But we are a nonprofit” excuse making, we missed the true differentiator that has provided us that tax status in the first place: Our bottom line of making a difference.

Our key differentiator is not our tax status, but that our dedication to making a difference is embedded in the very structure of how we operate. There’s a thought that we need to run “more like for-profit companies” (and in some ways we do, but the blanket directive is an ignorant miss). But look around. For-profit companies are actually trying to be more like us in the sense that they want audiences to know that they stand for something that makes the world a better place.

 

4) Communicating nonprofit status is critical in order to make the case for support (but it is a secondary communications goal)

When people don’t know that we are nonprofit organizations, it is a lot more difficult to secure members and donors. For that reason, we do need to better communicate our need for support. But perhaps before we ask for support, we need to do a better job showing the world what supporting us means. In other words, the lack of knowledge about our need for support may be indicative of a long-term communication and programmatic failure.

We educate. We inspire. We connect. We conserve. We teach. We change the world, one mind at a time. But perhaps the misconception about the need for support stems from our own communications focused not around how we change the world, but how we don’t change the world: “Visit!” “Discount!” “New exhibit!” Those messages are important, but are they most important? After all, can we blame the market for not knowing that we are nonprofit organizations if we bury the missions and ideals that are the foundation for our existence in more commercial messages and programs?

 

Fewer than half of U.S. audiences are aware of the nonprofit status of cultural organizations. That’s a big deal, because it makes it harder to secure support. But it’s also a good reminder that audiences are increasingly sector-agnostic, and our competitive advantage may not be our tax status, but what our tax status means: That we are here to change the world.

 

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

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page. Or for more regular sharing of nonprofit marketing information, follow me on Twitter.

Posted on by Colleen Dilenschneider in Community Engagement, Fast Facts Video, Financial Solvency, Fundraising, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 1 Comment

Real Talk: Why Cultural Organizations Must Better Engage Millennials (DATA)

Why Cultural Organizations Must Better Engage Millennials (Know Your Own Bone)

Millennials are cultural organizations’ most frequent and loyal visitors…but this audience remains underserved.  Here’s why that’s a big problem for the future well-being of the industry.

“We need to be better at engaging millennials!” You’ve heard this before. Likely, you’ve heard it more times than you can count. Even if you are a millennial working within a cultural institution, you’re still probably sick of the sentiment. You’re probably sick of it even if you know that data suggest that millennial audiences are cultural centers’ best audiences.

The need for cultural organizations (e.g. museums, zoos, aquariums, symphonies, theaters, botanic gardens, orchestras, etc.) to reach millennial audiences is deeper and more complicated than we may realize.

I’d like to ask you a favor.

Indeed, I’m going to land here at the end of this post: “We need to be better at engaging millennials.” Instead of closing this tab before you dig in and saying, “yeah, yeah, yeah…” I hope that you’ll stop and consider why we need to reach millennial audiences…why it’s a big deal, what it means for our solvency, and why its so hard for some of our executive leaders to do.

Here are four things that all cultural organizations should know about millennial visitors and our efforts to engage them:

 

1) Millennials are the most frequent attendees to cultural organizations

 

Bet some of you didn’t see that coming! Check out this data from the National Awareness, Attitudes, and Usage Study that represents a sample population of more than 98,000 respondents. These particular data compare millennial and Baby Boomer visitors in terms of the composition of attendance to the 224 visitor-serving cultural organizations contemplated in the study during the past five years

IMPACTS- Millennial vs Boomer visitation 

Millennials make up the largest share of visitors to cultural organizations and the observed trend indicates growing percentages year over year. Millennials aren’t coming. Millennials are here and they are already the largest realized audience visiting cultural organizations. This means that the “We need to cultivate millennials while satisfying our current, baby boomer audience” sentence is baseless. And you want it to be baseless. If baby boomers still actually make up the majority of your visitors, then you’re behind. 

This means that programs and initiatives that engage millennials should be in full force right now and integrated into operations. Programs that engage millennials should be recognized as your new way of life. And, please, don’t worry too much about engaging, interactive, authentic, trustworthy, dynamic, participatory, expert, real-time programs alienating members of Generation X and some Baby Boomers. The market at large increasingly has these things ingrained into how they evaluate brands and organizations as well.

Don’t forget that the “white space” here isn’t simply Generation X. It also includes Traditionalists (the generation before the Baby Boomers) and Generation Z (the generation after Generation X). And thank goodness that millennials are the most frequent visitors to cultural organizations! Millennials represent the largest generation in human history, so if they weren’t attending organizations more than their other, large-generation (Baby Boomer) buddies, it would be a huge problem. Cultural organizations as a whole engaging anything smaller than the data-informed expectation for audience engagement relative to their cohort size is very bad news…

 

2) But millennials remain underserved as organizations underperform the business opportunity 

 

…See, but that’s the problem: Millennials ARE NOT attending at the minimum expected levels. To evaluate this, we need to step back and look at visitation to our organizations in the context of the US population. In 2015, there were 322 million people in the United States. Adult baby boomers made up 23.6% of the U.S. population and adult millennials made up 27.1% of the U.S. population.

IMPACTS- Millennials are underserved

According to the National Awareness, Attitudes, and Usage Study, only 21.9% of adult millennials visited a cultural organization in 2015. To be merely representative, 27.1% of visitation should be adult millennials. The simple fact of the matter is that cultural organizations are underserving millennials when compared to the U.S. population. (“Underserved” means that participation – be it attendance, enrollment, etc. is less than the representative population.) In other words, cultural organizations are underserving millennial audiences by a factor of nearly 24%.

To those of you thinking, “Yeah! But at least we’re getting them!” …I like you, because you are a glass-is-half-full person…but maybe it’s time to strap on your thinking cap a little tighter. Serving representative audiences is one of the top grantmaking considerations for many audience engagement initiatives that are seeking support. Not only that, underperforming the opportunity by 24% with this particular audience puts us in a doubly bad place because of this generation’s attributes and its word-of-mouth-informed visitation cycles.

 

3) Millennials are the most loyal audiences with the highest lifetime value

 

According to the National Awareness, Attitudes, and Usage Study, 23.8% of boomers said they visited a cultural organization (any cultural organization) in 2015. But Boomers only comprise 22.5% of cultural attendance. Meanwhile, only 21.9% of adult millennials visited a cultural organization, but they comprise 30.9% of total US cultural visitation. What does this mean? Millenials are far more likely to revisit within the year than other generations. They are the most loyal. It proves that millennial “intent to visit” is manifesting itself as actual visits.

IMPACTS- Millennial visitation loyalty

Combine this good news data with the bad news data on how much we are underserving millennial audiences, though, and the picture isn’t a pretty one: For every one millennial that we fail to engage as a sector, we miss out on 1.411 visits to cultural organizations.

If 30% of cultural visitors are millennials, are 30% of organizations’ resources allocated to engaging them? Probably not. We should be representatively engaging this audience because, well, that makes cut-and-dry business sense. Our missions may depend on it.

This is a big deal! Any organization that continues to underserve its best, most frequent, and most loyal customers – that also make up the majority of the country’s population – in the way that cultural organizations are doing risks going out of business. 

 

4) Why this change may be understandably hard for Baby Boomers in cultural organizations

 

Boomers know better than anyone that not all audiences are created equal. They know that because they’ve been by far the most valuable audience for a very long time.

Why is it so hard for Baby Boomers to grasp the necessity of engaging millennials and do more than talk about this audience in conference rooms? Why do they say, “We need to engage millennials,” only to move forward with frozen mindsets?

I’m no psychologist here and I may be going out on a limb, but I work predominantly with Baby Boomers that I have the honor of seeing in action every day, so I’ll give this an outsider shot: Baby Boomers may still think of themselves as primary target audiences (despite data indicating otherwise) because they were trained to think of themselves that way. They’ve have been the apple of every marketer’s eye for decades. For at least 25 years, the Baby Boomers that succeeded most were the ones who were best at marketing and creating programs for themselves. They were trained to successfully engage themselves and they were rewarded for successfully engaging themselves. Most boomers were appropriately predisposed and actively incentivized to reaffirm their generation’s own importance. Thus, it would make sense that there would be a want for boomers to keep doing what they do best: creating programs for themselves. That’s where they’re expert- and being expert at targeting Baby Boomers is why they are successful.

Basically, this same issue is likely to arise with us millennials if a large generation steps up to the plate in our own future. (And when it does, will one of you kindly forward this post to me from your 4D interactive teleportation wrist watch thingy to remind me that I knew it would be equally difficult for us to pass the baton?)

And things get even more difficult yet for Boomers. They may have imagined that they’d pass the baton in more conventional, chronologically successive terms to Generation X. Instead, they need to make a symbolically bigger leap and pass it (largely) to Millennials. It’s got to be hard to (kind of) skip a generation. Certainly, there’d be a conceptual belief that Traditionalists might pass an equal amount of influence to Boomers, who might pass an equal amount of influence to Generation X, who might pass an equal amount of influence to Generation Y…but data doesn’t demonstrate that that’s a smart move.

(Generation X, the always-impossibly-cool-in-my-mind, autonomous, and unlucky generation sandwiched between large and needy millennials and baby boomers, is roughly half the size of Generation Y. So if Generation X and Generation Y combined to form Generation XY, millennials would compose nearly 2/3 of that generation. This is also makes Generation X an often untapped resource to help bridge the generation gap because they seem to see all the crazy that’s above them and that’s below them with clarity in some cases. But I digress…)

 

 

All organizations have finite resources. In today’s world of hyper-targeting, every dollar we spend chasing one demographic is a dollar that we cannot spend chasing another demographic. The data is clear that cultural organizations are underserving millennial audiences. On top of that, millennials are our audiences with the greatest likelihood of re-visitation. Now, I don’t know if we’re the best audiences for post-it notes or patio furniture or tea pots – but millennials (which obviously include the 44.2% of us that are from “minority race” backgrounds) are definitely the most critical audience for cultural organizations to engage right now.

This does NOT mean that Baby Boomers and Generation X are not important targets. But it does mean that the percentage of energy, effort, and investment should be allocated representatively to the percentage of each age cohort’s market potential. Three factors should influence how your organization prioritizes its investments and dedicates its energy: 1) the size of the cohort; 2) the buying power of cohort; and 3) the cohort’s propensities to participate. Millennials represent the largest opportunity on all three fronts and, thus, create a compelling case for where to allocate representatively significant investments of resources.

I’ll end where I promised, but I hope that the sentence carries more meaning and understanding than it did at your last staff meeting: We need to get better at engaging millennials.

 

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, Financial Solvency, IMPACTS Data, Millennials, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 2 Comments

How Much Money Should Your Cultural Nonprofit Invest in Getting People in The Door? (DATA)

Here’s how much money museums and cultural organizations should be spending to get people in the door – according to data.  

My post on optimal audience acquisition costs made its way onto the list of the top-ten most popular Know Your Own Bone posts of 2015. And I’m glad it did. It’s an important one. So to really hit it home, I’ve summarized the findings in a KYOB Fast Facts video here.

Let’s revisit the data in order to share some additional information on this audience acquisition equation:

Marketing budgets seem to be an unnecessarily emotional topic for many nonprofit organizations. Optimizing marketing investments – like determining admission price– is increasingly a product of math and science (read: decidedly not “intuition” or “trial and error”). They need not be based on fuzzy-feelings and inappropriate loyalties to failing business models that ignore the realities of the outside world.

We live in a pay-to-play world where organizations have to spend money to make money. When it comes to budgeting for audience acquisition costs, many organizations seem to have fallen into that familiar trap of “last year plus 5%” that lazily assumes the continued efficacy of the same old platforms and strategies. Of course, such a strategy completely ignores shifting advertising cost factors, evolving platforms and channels, and technological innovation. Say it aloud: Nonprofits do not operate in a vacuum and cannot afford to ignore the changed economies and technologies of the world around them.

Several organizations that have made this realization have asked IMPACTS if there is an equation to inform their audience acquisition costs so as to maximize their opportunities for financial success. And, the findings of a three-year study suggest: Yes, there most certainly is!

 

Determining audience acquisition investment

Let’s first establish a few definitions and “same page” this conversation:

Audience acquisition costs are the investments that an organization makes in advertising, public relations, social media, community relations…basically, anything and everything intended to engage your audiences. (It does not include staff costs unless an organization has internalized the media planning and PR functions that would ordinarily be accounted for within the agency fees line item.)

Market potential is a data-based, modeled outcome that indicates an organization’s potential engagement with its audiences. For most organizations, “market potential” primarily concerns onsite visitation. In other words, it answers the question, “If everything goes well, how many people can we reasonably expect to visit us this year? (NOTE: Market potential may not match an organization’s historic attendance – organizations underperform their market potential all the time…for reasons that we’ll soon explore.)

Earned revenues are the product of admissions, memberships, merchandising, food and beverage, facility rentals…basically, all revenues attendant to the onsite experience that are supported by audience acquisition investments. These revenues exclude annual fund, grants, endowment distributions and other sorts of philanthropy.

Here’s the equation to maximize your market potential as suggested by the recently completed three-year study:

IMPACTS audience acquisition equation

Expressed another way: Optimal Audience Acquisition Costs = 12.5% of Earned Revenues. For example, if your organization generates annual earned revenues of $20 million, then this would suggest an annual audience acquisition investment of $2.5 million.

Further, additional analysis would suggest that 75% of the audience acquisition costs should be earmarked to support paid media (i.e. advertising). So, of the $2.5 million suggested above for audience acquisition, nearly $1.9 million should support paid media.  The remaining 25% (or, in this example, approximately $600,000) would support agency fees, public relations expenses, social media, community engagement – all of the programs and initiatives that round out an integrated marketing strategy. Forget to invest that 25% at your own peril. Earned media is critical for success and many social media channels are also becoming pay-to-play.

Why such a large percentage allocated to paid media? Again, ours is an increasingly pay-to-play world. Rising above the noise to engage our audiences frequently means investing to identify and target audience members with the propensity to act in our interest (e.g. visit our organizations, become members, etc.). There is tremendous competition for these same audience members  from the nonprofit and for-profit communities alike.  Think of the most admired and successful campaigns in the world – do Nike and Apple rely on 3am cable TV “bonus” spots that they get for a reduced rate and that don’t hit target audiences? Nope. While earned media plays a major role in driving reputation, paid media plays an important role in a cohesive strategy – and doing it right costs money.

This equation determines how much your marketing budget should be and how to allocate that optimal budget. If you have a marketing budget that is arbitrarily determined or based on “how we’ve always done it,” then you may be working with a budget that doesn’t allow you to maximize any investment.

 

The equation in action

How does the study suggest this equation? Check out the chart below. It indicates the relationship between performance relative to market potential (i.e. how well the organization actually performed when compared to its market potential) and the audience acquisition investments made by 42 visitor-serving organizations (including aquariums, museums, performing arts organizations, and zoos) over a three-year period:

IMPACTS - Audience Acquisition

The data strongly suggests that there is a correlation between an optimized audience acquisition investment and achieving market potential. It also indicates the perils of “underspending the opportunity” – a modest investment intended to achieve cost-savings may forfend exponential revenues. (Though the data never has – and likely never will – support it, many organizations seem to foolishly hold dear to the notion that they might somehow “save their way to prosperity.”)

Additional analysis indicates that the studied organizations invested an average of 7.9% of earned revenues toward audience acquisition…but only achieved 76.0% of their market potential. However, the organizations achieving ≥95.0% of their respective market potentials invested an average of 12.7% of their earned revenues toward audience acquisition.

In no instance did an organization investing less than 5.0% of earned revenues on audience acquisition achieve greater than 60.0% of its market potential.

Overall, the data suggests that the “sweet spot” for audience acquisition investment is in the 10.0-15.0% of earned revenue range. Splitting the difference (and further supported by the findings of organizations achieving ≥95.0% of their market potential in the study) gives us our 12.5%.

NOTE: Before we start parsing the nuances of media planning and creative approaches to advertising, let’s baseline the conversation by acknowledging that each of the studied organizations were led by competent persons operating with the best of intentions. Yes – “great creative” matters – but it doesn’t offset an inadequate marketing investment. Sure, a viral social campaign helps…but it doesn’t negate the importance of other media channels. In other words, there aren’t exemptions from the need to invest in audience acquisition for visitor-serving organizations that rely on earned revenues.

 

If your organization is struggling to meet its market potential, it may have less to do with all of the usual suspects such as parking, staff courtesy, special exhibits, pricing, etc. and more to do with an antiquated view of the necessity of meaningful marketing investments. Can your organization overspend? You bet. However, that doesn’t seem to be the problem confronting most visitor-serving nonprofit organizations. If your organization is struggling to meet its market potential, then it may be that in today’s pay-to-play world, you simply aren’t paying enough to play in the first place.

 

If you have questions, please check out the original posting of this information. Several folks have weighed in with great questions and I have provided answers there. Don’t see what you’re looking for? Please comment below or on the original post!

 

Like this video? You can check out more on my YouTube channel. Here are a few related posts from Know Your Own Bone that you might also enjoy:

 

Interested in getting blog posts, tips, and some silly social media geekery periodically delivered in your Facebook newsfeed? Like my Facebook page Or for more regular sharing of nonprofit marketing information, follow me on Twitter

Posted on by Colleen Dilenschneider in Community Engagement, Fast Facts Video, Financial Solvency, IMPACTS Data, Myth Busting, Nonprofit Marketing 1 Comment