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

Financial Solvency

What Ultra Wealthy Donors Consider Before Supporting a Nonprofit (DATA)

Know Your Own Bone- What the Wealthiest Potential Donors Consider Before Supporting a Nonprofit (DATA)

How can nonprofit organizations engage high net worth board members and donors? To get to the bottom of this million-dollar question, we asked these individuals themselves.

There’s a good amount of talk out there about how to attract wealthy donors and board members in the philanthropy world – and much of the prevailing wisdom focuses on staff cultivating relationships with these individuals and then making an “ask.” But what are high net worth individuals, in particular,  really evaluating when they consider joining a board or making large donation?

IMPACTS, in partnership with a prominent, national nonprofit organization, recently conducted a study to learn more about the considerations that drive the philanthropic decisions of high net worth individuals.

 

The Study

The intent of the study was to better understand the considerations and motivations of Ultra High Net Worth Individuals (UHNWIs) in the United States as they relate to joining a nonprofit board or making a major gift (i.e. greater than US$1 million) to a nonprofit organization.

The study defined an UHNWI as a person with net assets greater than US$50 million.  38,000 such UHMWIs reside in the United States – the greatest number of UHNWI residents in the world.  The study includes responses from 112 UHNWIs.

For the study, UHNWIs were asked open-ended questions to identify their most important considerations when contemplating if they should accept an invitation to join a nonprofit board or make a gift to a nonprofit organization.  A lexical analysis process organized these responses by general consideration, and these same considerations were presented to the studied UHNWIs who were then asked to rank from 1-10 the considerations in terms of relative importance to their decision-making process.  The Mean Value is the average ranking that the UHNWI respondents assigned to each consideration.

Take a look at the findings.

 

IMPACTS UHNWI Board Considerations

IMPACTS UHNWI Donor Considerations

 

Key Findings

A few, critical thoughts and observations arise from this data that are worth pointing out:

 

1) WHO gives (and who does not give) matters most.

In a way, this is another take on the “with>what” concept. Look at several of the most important considerations: Who’s on the board?  Who has given?  The company that one keeps matters to this audience. Success begets success. Money follows money.  An organization hoping to land an UHNWI as a board member or donor would be well advised to have secured the participation of other similarly statured individuals. And it is increasingly important to leverage the advocacy and support of those valuable few individuals who have already made commitments to an organization.

 

2) The financial commitment of the existing board tells a story.

UHNWI who are potential donors may consider the financial commitments of current board members to be an indicator of the credibility of the organization and its fundraising objectives. Note that that these potential donors rank the relative investment of the board of directors ahead of both the impact of their gift and the mission of the organization. A less committed and under-invested board is essentially a non-starter for a potential large-scale donor. …And that makes sense.  If the people who presumably know the organization best – not to mention who are charged with ensuring the organization’s future success – choose not to prioritize investments in the organization, then why should anyone else?  Board members, take note: The days of spending “other people’s money” to fund your aspirations are over (if they ever existed in the first place).

 

3) Peer actions are more important than staff member actions.

This may be a tough pill to swallow for CEOs and development professionals, but understanding and embracing this aspect of donor cultivation seems to be critical. Securing these types of donors is a peer-to-peer opportunity. Staff are relatively unimportant to donors – donors give money to peers. (It is important that they trust the staff to manage and actualize their investments, but they don’t consider staff as critical in their donor decision-making processes.)  Consider that the “Quality of Executive Leadership” is the fifth most important factor when considering joining a board, but doesn’t show up at all when considering making a major gift. This information may significantly aid some organizations in understanding how to effectively engage these donors.

 

4) Mission impact matters.

It’s a good thing this one made it so high on the list for potential board member considerations (although it comes in behind peer giving considerations for potential donors). Mission matters…and so does demonstrating a history of success at delivering your mission.  Wealthy folks seem to see through hot air.  Remember: These same people are likely pitched daily by money managers, start-ups, entrepreneurs, and others with grand plans for their capital. They have a lot of experience separating grandiose visions from realistic opportunities. Having a hopeful story to tell is great.  Having a “proof of concept” is better.

 

5) Time is more important than money.

Particularly when it comes to serving on a board. Please adjust engagement tactics, requests, and operations accordingly.

 

6) Impact on their own legacy matters less to these donors.

I was surprised by this finding and think there may be something interesting here. For UHNWIs, the mission of the organization exceeds even impacts on their own legacies as a factor when deciding to join a board or make a major gift.  Perhaps this is because they feel that they’ve already secured their legacies in other ways or with previous gifts.  It could be interesting to contrast this relative consideration to the motivation of less wealthy board members – how many of them join a board to leverage some degree of prestige in the hopes that the reputational equities of the organization will inure to their personal benefit? It is interesting to note that naming benefits and other legacy-related considerations may generally matter less to this group than board composition, board giving, mission, and impact. I wonder if UHNWIs may have a little more (to paraphrase JFK) “Ask not what the organization can do for you, ask what you can do for the organization” in them than do other board members who might prioritize legacy and reputational benefits.

 

The first step in engaging these wealthy philanthropists is to identify their biggest considerations and find out what matters most to them. While some of these findings may not surprise CEOs and development professionals, seeing these findings aggregated and prioritized may prove helpful when crafting effective engagement strategies for potential supporters.

The greatest opportunity uncovered by this data may be the imperative of prioritizing conversations with current board members about the importance of their own investments. Another opportunity may include considering the composition of your organization’s existing board, and working with the nominating committee to underscore the need to create the hardest-hitting group of supporters possible.

Let’s update our strategies so that 2016 may be the most impactful and social-good inspiring year of giving to date.

 

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 Financial Solvency, Fundraising, IMPACTS Data, Sector Evolution Comments Off on What Ultra Wealthy Donors Consider Before Supporting a Nonprofit (DATA)

Cultural Organizations Highlighting Mission Outperform Those Marketing as Attractions (Video)

Being good at your mission matters – both to your community and to your organization’s financial health. Check out today’s “Fast Facts” video to learn more about how organizations that highlight their mission consistently outperform organizations that market themselves primarily as attractions.

This data supports several critical trends regarding cultural organizations right now including our increasing focus on being social spaces and our abilities to reach new and diverse audiences.

IMPACTS has been tracking the relationship between perceptions of mission execution and financial performance for several years, and the findings have remained consistent. We’ve found that the best way to show the data is using two, composite metrics:

Revenue efficiency contemplates revenue streams (including admission, membership contributions, and program revenues) relative to operating expenses and the number of people that an organization serves.  A more “revenue efficient” organization is generally more financially stable.

Reputational equities contemplate visitor perceptions such as reputation, trust, authority, credibility, and satisfaction. Basically, it’s the market’s opinion of how well an organization delivers its mission and experiences.

IMPACTS- Museums revenue and reputation correlation

 

We reliably observe that those organizations that the market perceives as most effectively delivering on their mission are the same organizations who achieve the greatest revenue efficiencies. Since IMPACTS commenced tracking this metric several years ago, the data continue to evidence a strong correlation between reputational equities and revenue efficiency. Though the data shown here represents museums, we observe a similar relationship among nearly all types of visitor-serving organizations – including zoos, aquariums, and performing arts centers.

In the interest of maintaining appropriate confidences, you can see that I’ve anonymized the organizations represented in this chart. Each letter represents one of 13 notable US cultural organizations – the types of organizations that most any observer would recognize. In other words, this data isn’t a “stacked deck” – it’s representative of an overall trend. In fact, of the 48 visitor-serving organizations in the US for which IMPACTS tracks these metrics, 47 of the organizations (98%) indicate this compelling correlation. We have found from our tracking of this metric over time that reputational equities tend to reliably predict revenue efficiency.

Tell everyone that the data is clear: Being good at your mission is good business.

 

Like this video? You can check out more on my YouTube channel. Here are a few Fast Fact post 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 updates and information, follow me on Twitter

Posted on by Colleen Dilenschneider in Community Engagement, Fast Facts Video, Financial Solvency, Fundraising, IMPACTS Data, Myth Busting, Sector Evolution, Trends Comments Off on Cultural Organizations Highlighting Mission Outperform Those Marketing as Attractions (Video)

Hubs for Human Connection: The Social Role of Cultural Organizations (DATA)

Hubs for Human Connection: The Social Role of Cultural Organizations

Heartbreaking tragedy has dominated the recent news. Monuments around the world shine brightly with the colors of the French flag, and conversations about the roles of cultural organizations to create common ground in diverse societies are in full swing.

Sometimes several data sets come together to highlight an overwhelming trend – like how personalization is affecting everything about the market’s experiences with cultural organizations. Another data-supported reality that resonates as all the more profound in light of the recent tragedy is this one: Successful cultural organizations today are actually all about connections to and between people.

Data suggest that at our best, cultural organizations are social and facilitate human connection. 

I’m not (only) talking about social media, or re-considering reverential silence policies in galleries or at concerts. I’m also talking about what people consider to be the best thing about a visit to a cultural organization (i.e. who they are with), and the most effective way to increase visitor satisfaction (i.e. more human connection).

Our collections, programs, and performances are important, but they are only important insofar as they inspire, educate and connect people. Here are five, data-informed reasons for cultural organizations (museums, aquariums, performing arts organizations, historic sites, botanic gardens, etc.) to take going social seriously and consider integrating it into everything that they do.

Side: I love it when data reveals positive things about human beings and human nature, so I share these types of data a lot. For those of you who are regular KYOB readers, you might consider this post a sort of “KYOB’s Greatest Hits.”

 

Human connectivity, folks…

 

1) It is the best thing about visiting a cultural organization

Data suggest that who visitors are with is often more important than what people see when they visit a cultural organization. Check out my Fast Facts video from last week for the quick run-down.

When it comes to visiting a cultural organization, with > what.

What is so compelling isn’t so much that visitors believe that spending time with friends and family is the best thing about a visit to a cultural organization. Indeed, what is so striking is the fact that who people are with is more than twice as important as what people see. That’s a whole heck of a difference. This data underscores the role of cultural organizations as facilitators of shared experience – a role that many organizations may overlook in favor of more object-centric programming that overvalue the isolated experience of a visitor. (You can read more about this data here).

IMPACTS- With over what data

 

2) It is how we want to experience cultural programming

I was with the IMPACTS team in a meeting with Stanford University discussing the engagement of students and community members alike in classical music. The group began discussing opportunities around “shaking up” the way that audiences experience classical music, and the merits of making the concert-going experience more “social.” One of the University’s leaders suddenly exclaimed, “It’s getting back to performing Handel in the same, social way that the music was experienced in Handel’s time!”

We all stopped in our tracks. We thought being social in this environment was more of a new idea. Lifting the demand for silence at certain programs? Serving food (chewing while listening)? World-class musicians performing important, inspiring, and moving pieces while mingling with listeners? Many might consider that sacrilegious! One can well imagine avowed classicists muttering under their breaths, “These uncultured young people are destroying classical music!”

In reality, the concept of orchestrating isolated cultural experiences in shared spaces is the relatively new idea. In Handel’s time, music was enjoyed socially – audiences ate, drank, and generally partook in all sorts of merriment while musicians filled the concert hall with beautiful melodies. Why is being social in shared spaces considered “new” when it is the very way that many types of art were intended to be enjoyed, discussed, and explored?

Perhaps it’s a classic case of “the more things change, the more that they stay the same.” Why would the idea of going social (at least in some contexts) be perceived as an attack on the arts?

After all (and for example), dedicated listening to classical music only accounts for 20.9% of all classical music listening activity – and the behavior doesn’t vary as dramatically between students (i.e. “young people”) and non-students as some might suspect. Some organizations may choose to focus their programmatic offerings to try to fit into that 20.9% of their audiences’ dedicated listening time…but why not create programs to include the other 79.1%?

The data below represents the classical music listening behaviors of 915 undergraduate students, and 2,115 non-student adults living in the San Francisco Designated Market Area. The commonality of behavior is particularly interesting as students and non-students spend 79.1% and 82.8% of their time (respectively) listening to classical music while also doing something else.

IMPACTS- classical music listening behaviors

These data are particularly interesting because they indicate self-selected cultural behaviors – classical music listeners (arguably among the most “traditional” of contemporary cultural participants) report that only about 1/3 of their time spent engaging with content is experienced in a state of solitude (e.g. dedicated listening or while reading). The balance of their engagement invites connection and a public context – while traveling, while dining, while cooking, while exercising. For the vast majority of time for its listeners, classical music accompanies another activity or supports a social context…it is not a dedicated activity.

Yet, too many organizations that present classical music create environments focused solely on dedicated listening, and, indeed, actively dissuade a social context. And these organizations are not alone – there seems to exist a false dogma in some organizations that dedicated, solitary experiences are the preferred way to engage with a cultural experience. The data suggest otherwise. Perhaps the audiences of Handel’s time had it right – culture may be a component of a greater, social experience.

 

3) It is the most effective way to increase satisfaction

This data is a KYOB classic and I have made a Fast Facts video on the related findings that you may find of interest. Don’t have two minutes and thirty-five seconds? Here’s a brief summary:

Supporting interactions between a staff and a visitors significantly increases visitor satisfaction. These interactions (we call them personal facilitated experiences (PFEs)) also increase perceived admission value, employee courtesy, entertainment value, and education value.

A PFE is a one-to-one or one-to-few experience and a prime example of personalization. It is a staff member or volunteer essentially saying, “I see you. I would like to share my knowledge and passion with you.”

PFEs are so successful at increasing visitor satisfaction because they involve humans connecting with other humans. Check out the first chart in this article about the best thing about a visit to a cultural organization. Interacting with staff is just behind seeing/interacting with exhibits or performances. This further underscores the incredible importance of with>what.

Personal facilitated experiences are so effective at increasing visitor satisfaction that they can be used to increase visitor satisfaction by daypart. (Again, for more on this data, click here.) Human connection is where it’s at, folks.

PFE satisfaction by daypart

 

4) It is how we determine reputation and make visitation decisions

This is probably the tidbit of information that I go through or reference most in my work at IMPACTS. I find myself referring to it several times a week in meetings and it’s the driving reason behind the need for many organizations to evolve. See my Fast Facts video – How Social Media Drives Reputation – for more information.

Reputation is absolutely critical for driving visitation. Reputation is the second most important decision making utility when it comes to driving high-propensity visitors to cultural organizations. In today’s world, reputation creation and management (and sometimes demise) is overwhelmingly a social function.

What people say to one another about your organization is 12.85 times more important in driving your organization’s reputation than things that your organization says about itself. In our connected world, reputations are determined by what you put out and what folks say about you on social media, earned media, peer review sites like Yelp and TripAdvisor, and what people say to their friends and family.

“Social” (and not just social media) represents how we make visitation decisions.

Diffusion of messaging- IMPACTS

 

5) Is a reliable indicator of successful organizations

Here’s another set of data that I’ve presented and written about recently – and that IMPACTS continues to monitor over time. (Stay tuned! I have a video summary of this data hitting my YouTube channel next week.)

Being good at your social mission is good business. Organizations that highlight their mission consistently outperform organizations that market themselves primarily as attractions. The best way to show this data is using two, composite metrics:

Revenue efficiency contemplates revenue streams (including admission, membership contributions, and program revenues) relative to operating expenses and the number of people that an organization serves.  A more “revenue efficient” organization is generally more financially stable.

Reputational equities contemplate visitor perceptions such as reputation, trust, authority, credibility, and satisfaction. Basically, it is the market’s opinion of how well an organization delivers its mission and experiences. In the interest of maintaining appropriate confidences, I’ve anonymized the organizations represented. You’ll still get a good sense of the trend. Each letter represents one of 13 notable US museums.

We reliably observe that those organizations that the market perceives as most effectively delivering on their mission are the same organizations that achieve the greatest revenue efficiencies. Since IMPACTS commenced tracking this metric several years ago, the data continue to evidence a strong correlation between reputational equities and revenue efficiency.

IMPACTS- Museums revenue and reputation correlation

 

“Going social” isn’t new. It’s one of the oldest natural behaviors that we know as human beings. Especially during this difficult time, let’s be places where people can come to connect to one another – and to the past and the future.

Yes, it’s a smart business move. I have put all of these “greatest hits” together so that folks interested in putting social connectivity at the heart of their organizations have the data that they need to support the important conversations taking place right now. The math is there. Let’s get our hearts on board.

We are connected. We long to be connected. And we reward places that connect us.

 

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 1 Comment

Free Admission Days Do Not Actually Attract Underserved Visitors to Cultural Organizations (DATA)

Free Days Do Not Reach Underserved Audiences

In reality, free days often do the very opposite of mission work. Here’s the data.

This post is going to make people angry. And that’s a good thing. Get angry. Being challenged helps us think critically and evolve our strategies to more effectively serve our missions and audiences.

I made some folks angry when I shared data and pointed out the compelling economic research behind why free admission is not a cure-all for getting folks to visit cultural organizations. How much does free admission really affect attendance? Turns out, not all that much. I’ve also pointed out that admission pricing is a science (not an art), and how admission pricing is such an emotional topic for cultural organizations is because we confuse admission with affordable access programming. As a sector, we cultural organizations often really mess that up.

Today I’d like to share another data-based finding that should turn our traditional business strategies upside down: Free admission days do not usually engage affordable access audiences. In fact, data suggest that free days often accomplish the very opposite of their intended purpose for many cultural organizations.

Here are four, data-informed realities regarding free days for cultural organizations. (This includes museums, aquariums, zoos, theaters, symphonies, historic sites, etc.) It’s time to face some realities and put on our collective thinking caps…

 

1) Admission price is not usually the primary barrier to visitation

When contemplating a free program or event, many organizations mistakenly believe that, “If we build it, they will come.” It is a line from a great movie, but it’s an ineffective business practice. Admission price usually isn’t the primary barrier to engagement for non-visiting audiences. It just happens to be our most convenient excuse.

True primary barriers for non-visiting audiences usually revolve around other factors than simply cost. These often include things like reputation (i.e. they just aren’t interested in the content and programs), transportation and parking (“How are we going to get everyone together and get there?”), or schedule (“That’s awesome that you have a free day on Tuesday. I have to work on Tuesday.”) When the primary barrier to visitation is anything other than admission price, then having a free day becomes relatively irrelevant. An admission fee is straightforward, but for many potential visitors, other barriers are the most challenging part of the visitation equation.

When we think that making something free means that everyone will come, then we are assuming that visiting us is the most important thing in every potential visitor’s life after cost savings. We all know that’s not true… and, somehow, we still resist thinking critically about primary barriers to entry. We aren’t taking the time to do the necessary market research that enables us to be more responsive to audience needs. Sometimes admission really is a big barrier to entry. Yes – money is precious. Many organizations seem to know this. But time is precious, too. Too many organizations seem to forget this.

 

2) Free days attract higher earning and higher educated audiences than paid attendance days

This is a hard pill to swallow: For most organizations, data suggest that people who visit on free days actually have higher household incomes and educational attainment than people who visit on non-free days. For many organizations, free days are reaching a relatively small number of true affordable access audiences – and a whole heck of a lot of people who could pay to support your organization through regular admission or membership instead.

Check out this data from IMPACTS that is collected from 48 cultural organizations that offer regular, scheduled free days in an effort to reach affordable access audiences. The sample represents museums, performing arts organizations, and other visitor-serving organizations.

Annual household income on free days- IMPACTS

Educational attainment on free days- IMPACTS

The common, defensive response to this data is to make an excuse and say that this data does not apply to your organization’s free days. After all, you may have attended your organization’s free day and you saw a lot of folks who seemed like they might be affordable access audiences. Indeed, you probably did – but you probably didn’t truly see as many affordable access audience members as you would see on a paid admission day when you weren’t looking for affordable access audiences. This topic may be our industry’s best example of confirmation bias.  Free days engaging higher earning households instead of affordable access audiences is the rule – not the exception. At IMPACTS, we are asked to supply this kind of information to many grant-making entities. So please, instead of making excuses, do your organization a favor and actually look into this situation. Increasingly, smart grant-making entities are catching onto these things and are aching to see programs that actually engage the targeted audience segments.

 

3) Free days engender less trial from new audiences than paid admission days

Why do folks visiting on free days have higher household income levels? One of the reasons is because data suggest that the folks actually attending free days are more likely to be repeat visitors than on paid attendance days- and repeat visitors often profile as higher-income high propensity visitors. The people who attend free days for cultural organizations have usually visited the organization before, and the free day is simply accelerating their pace of re-visitation.

Repeat visitors on free days- IMPACTS

“Great!” you may say. “We are getting folks to come back!” But now think about this: These people are coming back for free and they are higher earners who could have been converted into members. “Free” actually provides an incentive for your most likely and loyal audiences to visit you again. These are the very same people who – with proper cultivation – likely profile as potential members. Free days directly cannibalize membership opportunities and do not engender increased trial from underserved audiences. 

You may notice a few audience members that you believe to represent your organization’s underserved audiences roaming your halls on a free day. But keep in mind, you’re likely looking for these types of people on these days. (There likely are some affordable access audience members- just fewer than there are on paid admission days.) Instead of offering proof of the efficacy of your initiative, these sightings are more likely a classic case of confirmation bias (i.e. the tendency to search for data that confirms one’s hopes or preconceptions). When considered in the relative context of total attendance, many free days don’t engage a higher percentage of first-time visitors than do non-free days.

 

4) Cultural organizations do not generally target affordable access audiences for free days

This fact is basic, overlooked, and often a driving reason for the last two conditions: A majority of organizations don’t even reach out to affordable access audiences regarding their free days. Instead, we tend to target high-propensity visitors- the people we know how to target. Here’s an entire article on the data behind why cultural organizations have such a hard time attracting low-income visitors on free and reduced admission days. 

In a nutshell: Underserved audiences are not in your database. These audience members are not likely on your email list (they are underserved!), in direct mailings (you don’t know their names!), or following you on social media (they don’t visit you!). Many of them also may not be subscribers to the local newspaper (depending on the demographic subscribed to that newspaper). When we use our traditional communication channels to spread messages about free days, we are often primarily connecting with high-propensity visitors instead of underserved audiences.

But we don’t make affordable access promotions available primarily to upper middle-class, educated people because we’re stupid. We often use these channels because we don’t want to lose even more money. Reaching real affordable access audiences is a true investment. It often involves buying advertising that specifically targets those audiences who do not generally engage with your earned and social media programming. It occasionally requires creating programs that do not interest traditional audiences. It means spending money so that audiences who are not likely to provide any significant financial support can engage with your organization and not contribute admission revenue on top of it.

Many organizations may be relatively comfortable with the notion of needing to spend money to make money. But affordable access programs often require spending money to better achieve our missions… and lots more money than a loss of a day of revenue.

 

In a way, many organizations unknowingly do free days to feel better about themselves and their missions – not because they work.

This doesn’t mean that free days are always a bad idea. Sometimes the situation is complicated and that’s when having a free day could logically be on the table as a smart move. For instance, a government entity may request access for locals in order to provide significant support.

We will only create effective programs that reach underserved audiences when we realize that many past practices have been largely inadequate at achieving the very outcomes that they are created to achieve. The fact that underserved audiences exist at all means that, well, we haven’t been effectively engaging all of our potential audiences – even when we’re free.

 

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 ). 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 21 Comments

Why Discounting Hurts Your Cultural Organization And What To Do Instead (Fast Fact Video)

Discounts don’t do what organizations think that they do…

Check out this week’s KYOB Fast Facts video to get the two-minute low-down on discounts verse promotions (Hint: promotions are a much better idea – and, yes, they are extremely different). 

Discounting Is Bad Business For Cultural Organizations

It’s true: “Getting discounts” is often cited as the top reason why many people engage with an organization’s social media channels. So it seems logical that if you want to bump your number of fans and followers, offering discounts is a surefire way to go. And it works – if your sole measure of success is chasing these types of meaningless metrics. But, before you go crazy with discount offers on social networks just to get your “likes” up, here’s another thing that’s true: Offering discounts – especially via public social media channels – cultivates a “market addiction” that often has long-term, negative consequences on the health of your organization. In many ways, offering discounts creates a vicious cycle whereby a visitor-serving organization realizes and ever-diminishing return on the value visitation.

A discount is when an organization offers free or reduced admission to broad, undefined audiences for no clearly identifiable reason. Offering discounts devalues your brand and often makes it look like your organization’s admission isn’t priced correctly in the first place. This is generally true for discounts delivered via all channels, but discounts breed a special type of pervasive problem when they are offered on the digital platforms. When an organization provides discounts, it often results in five not-so-awesome outcomes:

 

1) You verify that your communication channels are sources for discounts and, thus, encourage your community to expect these discounts

Posting a discount to attract more followers on a social media channel (or to get people to engage with a social media competition, etc.) will very likely result in a bump in likes and engagement. But know that in doing this, you are verifying that your social media channel is a source for discounts.

Discounting attracts low-level engagers who are more likely to be following your channels for a discount than they are for any reason related to your mission. It is far better for your brand and bottom line to have 100 fans who share and interact with your content to create meaningful relationships than it is to have 1,000 fans who simply like you for a discount.

I can hear the rumbling now: Some of you are thinking, “But we’ve used discounts to attract more likes and it worked” (i.e. it generated more likes on social media). That’s not surprising at all. Over time, however, these low-level engagers may stop following you or simply disengage if you do not continue to offer discounts. That is, after all, the reason why they followed you in the first place…and you have shown them that, yes, indeed, you will post discounts on social media.

Generally, these people are not actual evangelists – and cultivating real evangelists to build a strong online community is the whole point of social media. You want folks who actually care about what you’re doing.

 

2) Your community will wait for discounts before deciding to visit, thereby altering visitation cycles

Data indicate that offering coupons on social media channels – even once – causes people to postpone their visits or wait until you offer another discount before visiting you again. Worse yet, the new discount generally needs to be perceived as a “better” offer (i.e. an even greater discount) to motivate a new visit. This observation is consistent with many aspects of discount pricing psychology, whereby a stable discount is perceptually worth “less” over time. In other words, the same 20% discount that motivated your market to visit last month will likely have a diminishing impact when re-deployed. Next time, to achieve the same outcome, your organization may have to offer a 35% discount…and then a 50% discount, etc. You see where I’m going with this…

 

3) You are not necessarily capturing new visitation with discounts

In fact, data from IMPACTS suggests that many of the folks using your discount were likely to visit anyway…and pay full price! This is a classic example of an ill-advised discounting strategy “leaving money on the table.”

“But visitation increased when we offered a discount!” you say. But did it really? The average person in the United States visits a cultural center once every 19 months. When an organization offers a discount, it is rarely actually attracting larger volume of visitation to the organization. Instead, the organization is often simply accelerating its audience’s re-visitation cycle on a one-time basis. This sounds great…until the organization realizes the significant downside to this happening: Your audience just visited your organization without paying the full price that they were actually willing to pay and  likely won’t visit your organization again for (on average) another 19 months. 

Think of it this way: A visitor coming to your organization in May may be (on average) likely visit to again the following December (i.e. in 19 months). Let’s say that you offer them a discount that motivates them to visit in October instead of December. Now, you’ve linked their intentions to visit to a discount offer and decoupled it from what should be their primary motivation – your content and mission! And, by doing so, you’ve created an environment where content as a motivator has become secondary to “the deal.” In other words, you will have moved your market from their regular visitation cycle to a visitation cycle dependent on an ever-increasing discount. Can your organization afford to keep motivating visitation in this way?

A note: Different organizations generally have different visitation cycles. 19 months is a US average. Regardless of how many months make up your organization’s visitation cycle, discounting disrupts that cycle and partners it with a perceived “deal.”

 

4) Discounts actually decrease the likelihood of re-vistation

What of the idea that discounts get people to try your organization and become regular attendees? It’s largely a myth. In fact, the steeper discount, the less likely folks are to re-visit within one year. This is classic pricing psychology at play: People value what they pay for. If your organization’s admission price is set at an optimal point, then your organization has largely removed price as a barrier to engagement, and discounting actually does the exact opposite of what many organizations think that it’s doing. That “discounted trial” that some organizations believe that they are offering falls flat because the folks who profile as being likely attendees are able and willing to pay the full price. Your organization is demonstrating that it devalues its brand and, in turn, audiences devalue your brand.

Hey. You started it.

IMPACTS-Revisitation and discounts

 

5) Your organization becomes addicted to discounting

Organizations sometimes confuse the response (i.e. a visit) to the stimuli (i.e. a discount) with efficacy. Once a discount has been offered to motivate a visit, we regularly witness the market “holding out” for another discount before visiting again. And what are organizations doing while the market waits for this new discount? Often times the answer is that they are panicking.

If you run an organization that offers discounts, you’ve probably spent some time in this uncomfortable space – we observe the market’s behavior (or, in this case, their lack of behavior), and begin to get anxious because attendance numbers are down. What’s a quick fix to ease the pain of low visitation? Another discount! So we offer this discount…and, in the process, reward the market for holding out for the discount to begin with. That is the insidious thing about many discounting strategies: They actually train your audience to withhold their regular engagement, and then reward them for their constraint. We feed their addiction and, in turn, we become addicted ourselves to the short-term remedy that is “an offer they can’t refuse.”

Like most addictive – but ultimately deleterious – activities, there is no denying that discounts “work” – provided that your sole measure of the effectiveness of a discount is its ability to generate a short-term spike in visitation or increase low-level social media “likes.” But, once the intoxicating high of a crowded gallery or filled theater has passed, very often all that we’re left with is a nasty hangover.

 

Promotions are a better strategy

“But aren’t promotions pretty much the same thing as discounts?” No. They aren’t. Many organizations fail to stop and consider the differences between discounts and promotions and, specifically, the different effects that each has on the perceptions of the cultural organization offering the opportunity. If your organization confuses the two, then you’ll likely end up paying the price. Literally.

Promotions offer a targeted benefit for certain audiences for an identifiable reason. The biggest difference between promotions and discounts may be how they are each perceived. As previously mentioned, discounts offer free or reduced admission to a broad, undefined audience for no apparent reason. Promotions celebrate your community. Examples of promotions may include reduced admission for mothers on Mother’s Day, a pricing special to celebrate a new program, or a reduced admission day for local audiences. Promotions demonstrate why an organization is offering free or reduced pricing in the communication of the promotion. That reason is usually something that celebrates an organization’s mission or an organization’s audience, and it is made clear that it is something special.

While some may learn the differentiation between these two approaches and consider it to be a framing of communication, it’s actually a reflection of an organization’s culture. Whether an organization’s go-to strategy includes either promotions or discounts demonstrates a great deal about the organization and the thoughtfulness of its engagement approach, as well as the value that it places on its reputation. In the end, one approach is more about your organization’s flailing attempts to hit specific attendance numbers at the expense of its brand and mission, and the other is more about your organization’s relationship with target audiences and communities.

Promotions make people say, “Wow, I feel valued by this organization!” Discounts make people say, “Hey, I got in cheap.” The approach that respects both the organization and its community beats out the short-sighted discount strategy when it comes to increasing long-term visitation.

 

Want to see more Fast Fact videos? Subscribe to my YouTube channel, or check them out here:

 

 Please subscribe over on the right hand column to get KYOB posts delivered right into your email inbox. Interested in getting 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, Myth Busting, Nonprofit Marketing Comments Off on Why Discounting Hurts Your Cultural Organization And What To Do Instead (Fast Fact Video)

How to Engage New and Diverse Audiences in Cultural Organizations (DATA)

How to engage new audiences in cultural institutions

Cultural organizations need to reach new audiences or they risk their long-term survival. Here’s the data-informed cheat sheet on how to do it.

I am excited to have had the opportunity to recently speak at MuseumNext at its first stateside conference. My talk was called Inclusion or Irrelevance: The Data Behind The Urgent Need to Reach New Audiences. (Here’s a link to a video of the talk.) And, indeed, that need is desperately urgent. Here’s a strategic framework for how to do it.

 

Why cultural organizations need to reach new audiences

At IMPACTS, I work on projects that help keep visitor-serving organizations solvent. My experience is that non-executives hate “solvency” talk. It seems almost evil and at-odds with mission to some (it’s not). It also demands accountability. However, smart executives understand its necessity – an organization cannot invest in its mission or people if it has nothing to invest.

While “inclusion” may immediately strike many as “mission work,” it’s increasingly a business requirement. Here’s why:

A) The US population is increasing, but visitation is on the decline.

Not only that: High-propensity visitors are increasing and attendance remains in decline. 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.

High-propensity visitors are potential visitors that are actually likely to come to a cultural organization. As you can see, we are in an even more target-rich environment than we were 5 years ago and attendance has still declined in that same duration. It’s a big problem.

IMPACTS VSO US attendance vs HPVs

Below is the same data contemplated in another way. This is what this data looks like when we consider how these markets are performing when compared to expectation over the last 5 years. Considering the growth of high-propensity visitors, here’s how much cultural organizations are underperforming the opportunity:

IMPACTS VSO attendance performance vs expectation

B) This is in large part due to the negative substitution of the historic visitor.

First of all, a “historic visitor” is different than a high-propensity visitor. High-propensity visitors have potential to visit; historic visitors are people who actually do visit. All historic visitors are high-propensity visitors, but not all high-propensity visitors fit the profile of our average historic visitor.

Today, for every one historic visitor that leaves the market, they are being replaced with less than one visitor. Or, for every thousand people leaving the market, only 948 similar historic visitors are replacing them.

IMPACTS negative substitution

Let’s say that we keep doing exactly what most organizations are doing today (i.e. having a few one-off inclusion programs here and there and not making a more sustained investment in engaging these audiences). If we keep on our current path, an organization in the United States that has one million onsite visitors today would only stand to engage 808,000 historic visitors five years from now. In other words, negative substitution would suggest an onsite audience decline of 192,000 visitors for this hypothetical organization in the next five years.

For many organizations, this situation can all be generalized in one, honest sentence: America is producing fewer and fewer rich, educated, white people – the broad cohort that has been the historic visitor, member, and donor for many organizations.

This is the current glide path. To remedy this condition, we must change the profile of our historic visitor. We need to convert potential visitors in emerging audience groups to ACTUAL visitors. This means making them not our special visitors, but our regular, paying (if you have admission) visitors, supportive members, and donors.

This is a big deal. As far as we know, cultural organizations in America have never, ever changed the general profile of their historic visitor. Those rich white folks have largely provided the support that keeps these types of organizations going.

 

C) Organizations must cultivate new visitors from three emerging audience groups.

We need to pull new audiences from these three audiences in order to achieve long-term solvency:

  1. Millennials
  2. “Minority majorities” (generally, people of ethnic and racial backgrounds that differ from historic visitors)
  3.  Affordable access audiences

All three of these audiences are important. However, millennials and minority majorities represent the key demographics wherein high-propensity visitors are increasing, but these same folks aren’t converting to actual visitation in representative numbers. So the first two groups represent more immediate opportunity and payoff.

The good news is that organizations will experience positive substitution in the future as emerging audiences acculturate – so long as organizations begin engaging them today. However, the realistic news is this: Cultivating new visitors is going to take time and it needs to start now.

 

Taking a MAPS approach to integrating new audiences helps cultivate regular attendees and supporters 

So how do we convert emerging audiences into regular audiences? We use MAPS. MAPS is a data-informed framework for tackling the challenge of engaging emerging audiences. This framework is equally applicable to all organizations regardless of size, city, and operating budget. It focuses on four elements: Highlighting your mission, understanding access barriers and opportunities, providing personalized programs, and facilitating shared experiences.

MAPS a framework for engaging emerging audiences

1) (Underscore your) MISSION

Being good at your mission matters. Organizations that highlight their mission consistently outperform organizations that market themselves primarily as attractions. The best way to show this data is using two, composite metrics:

Revenue efficiency contemplates revenue streams (including admission, membership contributions, and program revenues) relative to operating expenses and the number of people that an organization serves.  A more “revenue efficient” organization is generally more financially stable.

Reputational equities contemplate visitor perceptions such as reputation, trust, authority, credibility, and satisfaction. Basically, it’s the market’s opinion of how well an organization delivers its mission and experiences.

In the interest of maintaining appropriate confidences, I’ve anonymized the organizations represented. You’ll still get a good sense of the trend. Each letter represents one of 13 notable US museums.

IMPACTS- Museums revenue and reputation correlation

We reliably observe that those organizations who the market perceives as most effectively delivering on their mission are the same organizations who achieve the greatest revenue efficiencies. Since commenced tracking this metric several years ago, the data continue to evidence a strong correlation between reputational equities and revenue efficiency. Though the data shown here represents museums in particular, we observe a similar relationship among nearly all types of visitor-serving organizations – including zoos and aquariumsBeing good at your mission is good business.

 

2) (Understand your) ACCESS OPPORTUNITIES/BARRIERS

Identifying access opportunities means finding out why emerging audiences aren’t coming and removing those barriers. You can only figure this out by asking the people who aren’t coming why they aren’t coming.

On the whole, visitor-serving organizations pride themselves on their understanding of the need to do audience research. Indeed, many organizations have in-house capacities for audience research. Organizations need to shift their focus from audience research to market research.

Often, true barriers are completely different than what an organization believes to be its barriers to engagement. True barriers may be reputation (specifically, affinity attitudes – or audiences believing that an organization is “not for people like me”). Reputation plays a very important role in visitation. Other barriers to engagement may include the timing of programs, hours of operation, or transportation barriers.

A word to the wise: Be careful about jumping to price as a primary barrier – it usually isn’t the sole barrier. Remember, we are trying to cultivate emerging audiences as regular visitors – not affordable access visitors – so do your organizations a favor and don’t jump to this “barrier” first. This is difficult, because price is usually where lazy organizations start the conversation. In other words, many organizations believe simply that if they build something, people will come…and if people don’t come, then it must be because of the price.

Making matters worse, “expensive” is also how lazy visitors fill out survey questions. When asked why they don’t attend a new program, many folks will simply report, “It’s too expensive.” Be wary of this response. Certainly, sometimes program fees ARE too expensive, but we can find our true barriers this by figuring out the end of this sentence: “It’s too expensive for….”.

“It’s too expensive for….” what? It may be “Too expensive for doing something that I think is boring.” It may be “Too expensive for missing dinner with my family.” It may be, “Too expensive for the time that I spend stuck in traffic to get there” or “Too expensive for the distance that I need to travel.” Uncovering the end of this sentence can help organizations pinpoint primary barriers.

In sum: It’s critical to know why people ARE NOT coming to your organization before you can even try to engage emerging audiences. Without this information, other programmatic investments may be a waste of resources.

 

3) (Create) PERSONALIZED PROGRAMS

Once your organization knows its true barriers, it can create programs that help to remove them.

Increasingly, we don’t live in a one-size-fits-all world. Programs to reach emerging audiences are not one-off initiatives, but should be integrated into everything that an organization does. And personalization is affecting everything.

For example, personalization trends are affecting how people measure the satisfaction of their onsite experiences. Personalization affects how different audiences prefer to experience cultural organizations. It affects expectations for communication on social media and other online platforms. It also demands that communications and content are more targeted and connective. Perhaps most importantly, the preferences of different audience members demands full integration into day-to-day operations and support structures.

 

4) (Facilitate) SHARED EXPERIENCES

Shared experiences close the circle. This means allowing for sharing both onsite and digitally. HPVs profile as being “super-connected,” or, connected to the web at home, at work, and on mobile devices. Word of mouth endorsement is absolutely critical to this audience. Digital connectivity helps organizations tap into this cycle and allows successfully engaged audiences to communicate with their friends (who may also be emerging audience members).

Perhaps most importantly, the numbers are growing in regard to shared experiences being the best part of a visit for all audiences. Who people are with is more than twice as important than what people see when they visit a cultural organization.

IMPACTS with over what

That means that being places for creating connections – not just to collections, but to other people – is incredibly important. We must understand that our organizations themselves are facilitators of shared experiences. It is one of our greatest assets. It’s where that market believes that we shine.

 

Take this MAPS strategic framework. Use it as a road map. Fill it up with your own data-informed inputs.

We all need to work together to change up the profile of our “historic” visitor to better engage emerging audiences as our regular attendees and supporters. Let’s be places where everyone wants to visit and where everyone feels welcome. Only then can we achieve our missions while ensuring our long-term solvency.

 

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

 

Please subscribe over on the right hand column to get KYOB posts delivered right into your email inbox. Interested in getting 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, Fundraising, IMPACTS Data, Millennials, Sector Evolution, Trends 6 Comments

Why It Is Okay If Your Nonprofit Hates Data (And Why You Need It Anyway)

Why it is okay if your nonprofit hates data and why you need it anyway

It’s true: If it doesn’t challenge you, it doesn’t change you.

On one hand, I absolutely love it when nonprofiteers call Know Your Own Bone and the data and analysis provided here “controversial.” It means that I – and IMPACTS – are making people think and sparking conversations.

On the other hand, I think calling data “controversial” shows how far nonprofits have to go before they understand the need to evolve in order to be both relevant and sustainable. Data is data. Facts are facts. These ones are not biased. They are not “set up.” Their purpose is to show a true picture of the world we live in – not to make executive leaders unduly angry or defensive. But the fact that sometimes data manages to achieve this outcome is perhaps telling.

I’m the messenger. Please don’t shoot. 

The truth is that it’s good to hate data. It’s good to find data challenging, threatening, and deeply inconvenient. If you do, then you’re realizing a need to evolve. You’re thinking. You’re helping your organization move forward. Here are three reasons why it’s totally okay if your organization hates market data – and why paying attention to it is fiercely important anyway.

 

1) If data doesn’t challenge you then it doesn’t change you

“If it doesn’t challenge you, it doesn’t change you” has become a popular motivational saying (I see it making its rounds nearly every week on Pinterest.) The thing is, it’s true. It’s especially true in the case of trend data.

It seems that the more threatening we find certain data sets, the more indicative it may be of how much an organization needs to evolve to stay relevant. It’s been my experience that the organizations that pout and cross their arms are the very ones that are most behind the times. The best, most actionable, most prescient data often challenges groupthink and our notions regarding the “reality” of the world in which we live.

Which data is more likely to light a fire under you? This (peaceful, reaffirming, and rather obvious) data showing that the more satisfied a visitor is to a cultural organization, then the more likely they are to come back within two years…

IMPACTS- Intent to visit based on satisfaction

Or this data demonstrating that millennials consider art and culture to be such a relatively unimportant cause priority in today’s world that not only are they not “aging into” caring about arts and culture, but they are carrying their lack of caring along with them as they mature into more senior age cohorts?

IMPACTS millennial cause priority- arts and culture

This second graph should make you scared. It makes me scared. But it also means that we’ve uncovered an opportunity! It’s easier to tackle a beast and devise a plan when you know that it’s approaching. This data lights the path for further opportunities for exploration: Why aren’t arts and culture a cause priority for younger audiences? What’s the best gateway for getting them to care? If you hate this data, you’ll probably hate the data that arises from the follow-up questions, too. And that’s a good thing.

If you don’t hate data, then perhaps it’s not uncovering a need to grow and helping you to understand how to do that. If data’s not helping you grow, then why are you collecting it in the first place?

 

2) If data doesn’t change you then your organization (and the industry) suffers

Your organization suffers when it ignores data. If your organization doesn’t rise to the challenge of tackling current and emerging issues, then it may increasingly get swallowed by them.

Once, I was asked to give a presentation at the Association of Zoos and Aquariums on millennial attitudes toward dolphin shows and the captivity of certain species. Despite being present at all of the other presentations, the organizations that had recently invested tens of millions of dollars in dolphin shows and count these types of shows as their bread and butter somehow “didn’t make it” to my talk. Today, a look at their finances reveals that they are already paying a steep price for “avoiding” hard conversations…and the market has dictated their narrative on their behalf. It’s no secret that this narrative – not to mention their impugned reputational equities – aren’t exactly thrilling these organizations who practiced data avoidance and denial as standard operating procedure.

If data doesn’t challenge us, then it doesn’t change us. If data doesn’t change us, then we face difficulties in both securing revenue and executing our missions. If we want change, we need to do more than wish for it – we need to embrace it and carry it out.

That’s another good reason to hate data: It makes us realize that we have a lot of hard work to do. (But that’s kind of a good thing, too.)

Comic- Who wants change?

 

3) Data resets your organization’s warped notion of time

Data doesn’t show the future (unless it is modeled out using advanced, predictive technologies). Data shows the past because that data has already been collected. When you think about it this way, then it seems really messed up that we consider data-informed trends to be representative of the future and we use that as an argument to put off important conversations.

Think about that for a second. It’s really messed up.

If there’s data on it, then it has already happened! That doesn’t mean that data cannot be indicative of a trend’s growth or decline over time – but the data that you see…that’s already happened. People already feel that way, think that way, or do that thing!

When organizations justify putting off conversations about data and market trends because they consider trend talk to be synonymous with “the luxury of prospecting about the future,” they are, essentially, standing in a bullring hoping that they won’t be attacked while they cover their eyes and sing “Mary Had a Little Lamb.” (Bad metaphors, folks. I love them.)

When exploring and discussing trend data becomes part of an organization’s culture, it becomes difficult to maintain this warped sense of time. These conversations help create agile, forward-thinking, empowered organizations. We need to know what is happening in order to capitalize on opportunities to maximize financial solvency and mission execution.

 

Trend data helps organizations reframe their thinking…and reframing old-age thinking is tough stuff. It’s hard, but it’s important. There’s a lot of data that we uncover at IMPACTS that makes even me sigh and say inside, “This really, really stinks.” Some of that data is here and here. But, much like getting sick and going to the doctor, when we know what’s happening, we are empowered to more effectively and efficiently treat it before permanent damage is done.

It’s okay (and even good) to hate data sometimes. If you’re collecting any data worth collecting, then it challenges you, threatens you, and makes you think. If it doesn’t do that, then it doesn’t fulfill its purpose. Data worth collecting is easy to dislike, and that’s exactly why it makes us better.

 

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

 

 Please subscribe over on the right hand column to get KYOB posts delivered right into your email inbox. Interested in getting 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

 

*Comic credit goes to justintarte.com

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, Sector Evolution, Trends 1 Comment

Admission Pricing is Not An Affordable Access Program (Fast Fact Video)

Admission pricing and affordable access are two completely different things that are frequently – and inappropriately – conflated in many conversations. Let’s untangle them and move forward.

Check out today’s new video on the true relationship between admission pricing and affordable access programming.

I’ve recently written about the data-informed evidence that free admission is not a cure-all for engagement. What matters when it comes to engaging audiences are the programs and experiences that an organization offers – not free admission. “Free” does not necessarily mean “worthy of one’s time.”

One of the biggest reasons why the topic of free admission is so sensitive is due to a deeply-rooted (and unhealthy) confusion: The idea that admission pricing and affordable access programs are even close to the same thing. The only thing that admission prices and affordable access programs have in common is that they determine how (and how much) someone “pays” to attend an organization. When organizations jumble up admission and affordable access, they commit one of today’s biggest engagement blunders: They “welcome all” instead of “welcoming each.” Our world, our audiences, and our economics are simply too advanced for this old, “welcome all” approach.

A deeper look at the data:

In reality, optimal admission pricing enables affordable access programming. Within the realm of “affordability,” things can be relatively affordable – that is to say, less expensive is naturally more affordable.  However, once prices cross a certain threshold, being “unaffordable” is binary: A price is either affordable, or it isn’t. Effective affordable access programs that actually reach underserved audiences cost money and require investment. If an organization charges less than its data-informed, optimal admission price, then it may not generate sufficient revenues to support effective affordable access programming.

IMPACTS has consolidated data from different types of cultural organizations and there’s an important lesson here: When organizations deny their optimal, data-driven price point and instead charge “a little bit less,” their admission prices still aren’t affordable for underserved audiences. Moreover, they are too low for a vast majority of the people who actually attend these organizations.

IMPACTS Affordability is binary

As you can see in the consolidated data, a $15 ticket is no more practically affordable for a household earning less than $35,000 per year than is a $20 ticket, so when an organization decides not to charge its optimal price point, the organization both leaves money on the table AND is still unable to reach underserved audiences.

Keep in mind: These prices are compilations from several types of visitor-serving organizations and they illustrate that there’s a certain point in which affordability is binary. So please don’t go rushing off and charging $9…that has absolutely nothing to do with what your high-propensity visitors (the people who actually visit and like going to cultural organizations) are willing to pay. A better way to use this data is to note the difference between what folks earning less than $35,000 per year consider affordable and what the balance of your audiences are willing to pay.

Different household incomes have different capabilities when it comes to paying admission. Here’s another look at the composite data that underscores the point. Trying to find a “middle ground” admission price-point both leaves money on the table from audiences able to pay the optimal rate and also still excludes affordable access audiences.

IMPACTS- General admission pricing analysis

Again, this is consolidated data among different types of cultural centers and nonprofit visitor-serving organizations. It demonstrates why and how affordable access and admission pricing are two, separate strategies and are not intended to stand in for any specific organization’s due diligence in determining its optimal pricing strategy.

As a reminder: Value advantaged means that your organization is leaving money on the table. Value disadvantaged means that you may be starting to jeopardize attendance.

In sum, admission and affordable access are separate strategies. Organizations need a strategic price point for high-propensity visitors, and another completely different strategy to reach, celebrate, and welcome underserved audiences. It’s time that we remove the emotion and start recognizing the necessity of “welcoming each” via unique avenues of access.

 

Want to see more Fast Fact videos? Subscribe to my YouTube channel, or check them out here:

 

 Please subscribe over on the right hand column to get KYOB posts delivered right into your email inbox. Interested in getting 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

Three New Realities for Cultivating Big Donors in the 21st Century (DATA)

Three New Fundraising Realities for Nonprofits in the 21st Century- Know Your Own Bone

Our world has evolved and so has fundraising. It’s time for organizations to embrace these three, new realities for cultivating bigger donors.

Our rapidly evolving, super-connected world has introduced new realities for visitor-serving organizations – particularly with regard to admission and affordable access opportunities. Similarly, the information age has created new opportunities for organizations to more successfully approach fundraising. Maximizing these opportunities requires that organizations embrace many of the challenges currently affecting how nonprofits operate. Fundraising is no exception to this need for evolution.

When organizations consider the evolved role of fundraising, they often seem to think of crowdfunding campaigns aimed to raise money from (often small) donations from a large number of people. No doubt, crowdfunding campaigns can be powerful! (And cultural organizations are benefiting from them, too!) But what about cultivating bigger donors and more directly building long-term affinity for the organization as opposed to a specific project? Well, those realities have shifted a bit as well.  Here are three fundraising realities- contemplative of the fast-paced, connected world in which we now live- that organizations should consider if they want to reach bigger donors:

 

1) Donor targeting can be done more intelligently than ever before (but this is not done often enough by nonprofits)

I’m big on the fact that optimal admission pricing for cultural organizations is a product of data sciences. While not exactly the same, donor targeting is becoming more of a science, too. There’s reason to consider that soon the days of casting the general “Make a donation today!” net to all audiences may be long gone.

Much like certain people profile as likely visitors to cultural organizations more than others, some folks profile as more likely donors than others. Increasingly, organizations can research current and potential donors (or members!) in order to identify the demographic, psychographic, and behavioral attributes that indicate a likely donor. And, while the nuance of this profiling effort will vary by specific organization, extant data reveals terrific insight into the type of people who are currently engaging with cultural organizations as donors. The table below indicates a High-Propensity Donor profile based on member/donors annually contributing at least $500 to a nonprofit, cultural organization (e.g. zoo, aquarium, museum, science center, botanical garden, symphony, theater, etc.) If you’re a cultural organization, your $500+ donors will fit this profile, but the specifics of your organization may lend additional attributes to the mix.

IMPACTS HPV donor profile

Once an organization has an idea of what kind of people are most likely to be their respective high-propensity donors, then the organization can focus on identifying and targeting specific individuals who possess those same attributes and may have an affinity for the organization. And organizations can deploy the same targeting methods for potential donors as cultural organizations do for potential visitors. (Side note: Why don’t more organizations do this beyond the few at the top? From what I can tell, a contributing factor may be the fact that marketing and fundraising are often separate, siloed divisions that tend to consider their own expertise as singular and sacred. How can we do that “we’re better together” thing more often within the same institution?)

Data, analytics, and technologies allow organizations to identify, target, and deliver highly-customized messaging to high-propensity visitors and donors alike. Many smart organizations are already doing this to engage onsite audiences – it’s a natural extension of the same best practices to leverage these resources to support contributed revenue categories. It’s time to invest in fundraising data and intelligence… and then consider this information in the formation, targeting, and deployment of fundraising strategies. Data-informed audience identification and targeting are every bit as useful to development departments as they are for marketing teams.

 

2) Cultivating donors is a time-investment strategy with a new twist

Today, the speed of information sharing and the ease of connectivity allow for potential donors to hear about the work of organizations long before those organizations reach out to potential donors. It also becomes easier to form an opinion about an organization before an organization is aware of it. This means that fundraising departments are less able to “curate” a donor’s pathway of engagement with clear certainty than in a pre-digital era. In the past, a fundraising department could be relatively certain of a donor’s interactions with an organization. Today, a donor may check out an organization on Facebook, share a post, or even “hide” posts from an organization that is not of interest to them. Donor opinions of organizations can be formed earlier than they were in the past because of our increased connectivity.

This is important to note because a major gift (such as one that is seven figures or above) may require decades of careful donor cultivation. Fundraising big bucks is not like an annual advertising campaign – it requires a substantial investment of time. For more robust fundraising success, organizations benefit by investing for a sustained period of time and actively building a relationship on the potential donor’s desired platforms. (As you can see in the chart, high-propensity donors are “super-connected” via the web, so know what you’re doing with donors on social media.)

Many organizations measure giving amounts in years, not decades. It makes sense that we measure progress on an annual basis, but when we don’t look at fundraising over longer periods of time, we tend to promote a culture wherein we focus on this year’s giving and fail to prioritize long-term potential donors. If it takes ten years to cultivate a ten million dollar donor and fundraisers are primarily focused on the current year, then an organization may never receive that ten million dollar donation. Though the instant gratification of today’s society may be making us perpetually impatient, we must remember that fundraising and building meaningful relationships (still) cannot often be rushed. 

 

3) Competition for donor engagement has gone global

Competition for donors can now be more global and intense. Potential donors need not be more involved with or committed to organizations in their backyards. We live in a world where a donor in New York can be cultivated by an organization in Los Angeles. Being “local” matters less- or at least, it doesn’t necessarily make an organization a shoe-in for a potential donor’s support. In the past, it was more difficult to connect with organizations that did not reside in a donor’s community. There may be a bit of a lag in this development for cultural organizations, as many donors appreciate having the ability to attend these institutions. However, as cultural organizations necessarily focus more on their social missions instead of their existence as straightforward attractions, they may see the same fate as other types of nonprofit organizations when it comes to global competition for donors. Being a local organization can still be important to a donor , but in our world of increased connectivity, it isn’t necessary and may matter less than the efficacy of mission execution.

The fact that donor competition has “gone global” means that it’s even more critical for organizations to realize that if a donor is giving in a big way to one organization, he/she often cannot give big in the same way to another. This is true across organizations and causes. Big donations are often zero-sum games. A donor who makes a major gift to one organization has that much less giving wherewithal to donate to another organization. Is it possible that this same donor may reach further into their well of largesse to support your organization with a similar, significant, bit-time gift immediately after giving to another organization? Yes. Is this a good strategy to bank on? No.

Think about your own giving! You probably have a kind of overall, annual giving quota based on what you feel comfortable with and what you can afford. Once you max out, you max out. Again, that’s not true for everyone, but it’s probably not a good idea to build a strategy around an exception. Know that there’s competition, and be contemplative of the donors gifts to other organizations and causes as well. As much as we romanticize big givers, most are not – actually- bottomless pits of never-ending cash.

 

The digital era has changed more on the fundraising front than simply bringing us crowdfunding campaigns and social media communication. It’s increased opportunities for effective donor targeting, altered traditional donor engagement pathways, and increased global competition for big donors.  It’s time to get serious about evolving to more informed methods of fundraising – because if you’re not doing it, then another organization likely is. Let’s take these new realities into account and move forward with the important work of finding and connecting with those who have a passion-match with our mission.

Let’s update our thinking about finding and communicating with people who can help us make the world a better place.

 

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

 

 Please subscribe over on the right hand column to get KYOB posts delivered right into your email inbox. Interested in getting 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, Fundraising, IMPACTS Data, Sector Evolution, Trends Comments Off on Three New Realities for Cultivating Big Donors in the 21st Century (DATA)

How Free Admission Really Affects Museum Attendance (DATA)

Free Admission is not a Driver of Museum Attendance or Engaging New Audiences (DATA)

Spoiler alert: It doesn’t much…and misunderstanding this engagement tactic may jeopardize industry sustainability.

The debate about whether museums should be free is a big one right now. It’s the source of a lot of discussion in the popular press and nonprofit boardrooms alike. What seems to be lost in this discussion are due consideration of two very important factors: First, does eliminating the cost of admission actually help engage underserved audiences? And, second, in a time marked by increasing austerity measures that threaten traditional cultural funding, is eliminating a key earned revenue source sustainable as a long-term business model? The truth is that free admission comes with a cost. Free admission is far from the engagement cure-all that some of its supporters believe it to be.

Am I suggesting that free admission to museums and other cultural organizations is an altogether bad idea? Of course not. For those organizations whose financial models depend less on earned revenues (i.e. those with mega endowments or significant public funding), free admission may prove viable. However, for those organizations whose mission delivery depends on their business viability, then the issue of free admission is a far more complex topic.

Certainly, varying perspectives and important considerations inform this broader conversation, but I’m going to stick to the facts regarding only one aspect of this big issue. For the sake of facilitating intelligent, data-informed conversation about an emotional topic, let’s acknowledge some established facts regarding admission pricing and attendance: 

 

1) Not everyone is interested in visiting museums- and admission price is NOT the primary barrier to engagement

This is a fact that data folks know well, but it’s one that we often overlook as an industry. At IMPACTS, we gather a lot of information on the general public, but we focus particularly on high-propensity visitors (those people who demonstrate the demographic, psychographic and behavioral attributes that indicate an increased likelihood of visiting a cultural organization). These are the people who actually go to museums and cultural organizations. They are the people who say, “Yeah! I’d like to do that!” when the suggestion of visiting a museum emerges. Not everyone is a high-propensity visitor – not by a long shot. In spite of all of our best engagement and marketing efforts, some people simply aren’t going to visit our organizations for several different reasons. As it turns out, admission fees are generally not a major factor in their lack of inclination to visit a museum.

Volker Kirchberg’s landmark analysis, “Entrance Fees as a Subjective Barrier to Visiting Museums,” published in the Journal of Cultural Economics, found that admission cost is a secondary factor when considering a museum visit. A lack of time (i.e. schedule considerations) or a simple lack of interest (i.e. relevance) were far more important factors in one’s decision not to visit a museum than were admission fees. In other words, a decision not to visit a museum is often more a function of lifestyle than finances.

When we consider the population subset of high-propensity visitors (HPVs) – our most likely audiences – cost absolutely pales in comparison to schedule and reputation when it comes to factors influencing their discretionary leisure activities. A big contributor to this often-overlooked fact is that, for both the general public and high-propensity visitors in particular, their time is more important than their money. This data from IMPACTS shows this well:

IMPACTS HPV time verses money

Need even more supporting analysis? According to national survey of museum visitors in New Zealand (Ministry for Culture and Heritage, New Zealand, A Measure of Culture: Cultural experiences and cultural spending in New Zealand), convenience and time are more important factors than cost when it comes to considering a cultural experience. The study further revealed that for those persons who visit museums but are unable to visit more often, the main barriers are lack of time (54%), travel distance (30%), and a lack of transportation (15%). For those who had not visited at all, the main barriers were lack of time (49%), travel distance (29%), and a lack of transport (18%). In fact, for both visitors and non-visitors, cost was only cited as a factor 11% of the time – again, this finding doesn’t diminish cost as a factor…but it does lend perspective to its relative importance in the public’s decision-making process.

Similar results were found in the Visitors to Museums and Galleries Study published in the UK by The Council for Museums, Libraries, and Archives. 32% cited a lack of time as a primary barrier, 22% a lack of interest, 19% a lack of anything they want to see, and 11% noted difficulties simply getting to the site of the organization. Only 8% of those sampled cited admission charges as a negative factor.

In sum: Admission fees are generally not a primary visitation barrier.

 

2) Free admission does not significantly affect long-term attendance.

Admission price doesn’t significantly change intentions to visit for first-time visitors – further reaffirming that if an audience isn’t interested or doesn’t have the time, then “free” won’t get them in the door. There seems to be a sort of thought that free admission means that attendance numbers will go through the roof…and, if an organization does experience a short-term “novelty” spike, then this increase will be sustained. Again, data suggest the contrary. Check out this data from the National Awareness, Attitudes and Usage Study of Visitor-Serving Organizations (which is updated annually and has tracked the opinions, perceptions, and behaviors of a sample population totaling 98,000 US adults):

IMPACTS intent to visit by admission price

The data indicate that intentions to visit within any duration do not significantly increase as the price of admission decreases or is even eliminated. In fact, in most instances, audiences indicate greater intentions to visit organizations that charge more than $20 for an adult admission than those that are free.

It doesn’t stop there. The definitive work on the (negligible) impact of admission price on sustained museum visitation was published by noted economists William Luksetich and Mark Partridge in Applied Economics in their analysis, “Demand Functions for Museums Services.” Their study suggests that the adverse effects of admission charges on attendance are small and ”relatively easy to alleviate.”

That, “If it’s not free, people won’t go” argument? The data has spoken. It’s not a thing.

 

3) Free admission accelerates re-visitation- but for audiences who are already visiting

Free admission does accelerate the re-visitation process – but mostly from existing audience members. This finding is from a study by the UK’s Department of Culture, Media, and Sport (DCMS) – whose members instituted free admission in year 2001. The DCMS study found that attendance increases frequently attributed to removing admission fees were often due to the same audiences visiting more frequently – NOT necessarily from engaging new audiences.

Basically, to the degree that organizations consider an attendance increase as a successful outcome of eliminating admission pricing, the key visitor count to examine isn’t total visitation – it’s unique visitation. For example: Let’s say that a museum with an admission fee receives 400,000 annual visits from 300,000 unique visitors (1.33 visits per unique visitor).  Then, the same museum decides to “go free” and annual attendance increases by 15% to 460,000 visitors – but from the same 300,000 unique visitors (1.53 visitors per unique visitors). In this hypothetical example, annual attendance went up…but unique visitation remained the same.

Again, data from the National Awareness, Attitudes and Usage Study of Visitor-Serving Organizations reaffirms this finding:

IMPACTS intent to revisit by admission price

Whereas free admission does not impact intentions to visit for first-time visitors, it does increase intentions to re-visit for existing audiences. The implication? It may not be wholly accurate for an organization to declare success by citing raw attendance numbers as proof of the efficacy of a free admission policy. There isn’t evidence that free admission generally cultivates increased visitation from new audiences. 

 

4) We need to engage emerging audiences- and free admission is not a cure-all for greater industry challenges

Data suggest that cultural organizations need to be reaching new audiences right now if we want these types of organizations to be around in the future. Offering free admission in an attempt to appeal to emerging audiences isn’t a complete solution to a more complex problem. We need to reevaluate our strategy for engaging new audiences because the “free admission” fix may not prove sustainable. Moreover, focusing on free general admission may be distracting organizations from cultivating more effective engagement strategies and programs for reaching new audiences.

Consider that Smithsonian Institute museums – without admission fees – saw total attendance decline by nearly 7% from 30 million visitors in years 2012 and 2013 to 28 million visitors in year 2014. In the same duration, the US population increased from 314 million (2012) to 319 million (2014). Also, in the same duration, overseas visits to the US increased from 29.8 million in 2012 to 34.4 million in 2014. Visitation to many museums – even world-famous, free museums – is not keeping pace with population growth.

Our industry is rife with examples of how even organizations with free admission are unable to cultivate increased (or, in many cases, even stable) attendance levels – particularly when considered in the prevailing context of overall population growth and travel to the United States. Free admission does not serve as engagement panacea. For example, In 1997, attendance at the Baltimore Museum of Art – then with an admission basis – approximated 320,000 annually. In 2006, the Baltimore Museum of Art eliminated admission charges. Today, onsite annual attendance is down 44% to 180,000. The organization attributes this decrease in attendance to the BMA’s recent renovation project. There are many factors that affect attendance and admission pricing is hardly the cure-all that many imagine it to be.

 

This data simply scratches the surface of this controversial debate. There are other, incredibly important factors to consider: individual business models, the impacts of increased reliance on contributed revenues and government funding, opportunities to develop more agile operations so as to allow museums to be more audience-focused, and even the reputational equities attendant to being a “free” organization versus one with an admission fee.

One thing is for sure: Critical conversations are taking place and organizations are realizing that it’s time to evolve both their engagement models and their financial plans. We have too much to lose not to move forward in the most fully-informed manner possible. If we want to keep museums alive, we need to think about engagement, audience motivations and barriers, and actual economics.

 

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 ). 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, Trends 27 Comments