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Digital Connectivity

Audience Acquisition: The Cost of Doing Business for Visitor-Serving Organizations (DATA)

Visit us v2

Here it is: the data-informed equation for how much money organizations should be spending in order to maximize opportunities for financial success.  

Data suggest that approximately 70% of visitor-serving organizations are not investing optimal funding in acquiring audiences.

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

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

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

 

The key equation for acquisition costs

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

Audience acquisition costs are the investments that an organization makes in advertising, public relations, social media, community relations…basically, anything and everything intended to engage your audiences.

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

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

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

 IMPACTS audience acquisition equation

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

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

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

 

The equation in action

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

IMPACTS - Audience Acquisition

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

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

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

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

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

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

 

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 Digital Connectivity, Financial Solvency, IMPACTS Data, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 18 Comments

The Game Has Changed: Nonprofits Now Compete with For-Profits (DATA)

Arm wrestling for profit

An organization’s nonprofit status may carry neither the perceptual weight nor the relevance that many leadership teams imagine…and nonprofits may be sabotaging their own opportunities for support because of it.

All organizations – not just nonprofits – are now in the business of promoting “social good” in order to gain support. The recent Super Bowl was an excellent example. From McDonald’s “Pay With Love” commercial, to Dove’s #LikeAGirl campaign, to all of the emotional daddy-love commercials tugging at our heartstrings, the world’s biggest advertising stage was full of attempts to demonstrate meaningful brand values. The integration of social values within business operations and communications – “corporate social responsibility” – is one of today’s most prominent business trends. And, this trend has a profound impact on nonprofit organizations because, today, the market demands transparency and authenticity to encourage support (e.g. donation, ticket purchase, etc.). The market increasingly expects organizations to articulate and demonstrate a “why” (or “so what?”) beyond “to make money.” In fact, many studies demonstate that social responsibility is no longer optional for businesses.

In other words, if your organization imagines one of its key differentiators to be its social responsibility, well, then your thinking may be at complete odds with the way the market perceives and evaluates all organizations (i.e. nonprofits and for-profits alike).

Consider this: A nonprofit organization’s “competition” for funds and market share isn’t limited to a similar organization down the street. It’s increasingly a myriad of entities within the for-profit sector. And, generally, these entities have a leg-up in allocating financial resources to help communicate and support their social missions.

Here are some considerations for organizations to remain relevant and meaningful in our age of social good for business’s sake:

 

1) Consider that people may not even know that you are nonprofit

“Wait. What?!” For many individuals working within nonprofits, this can be a big shock. However, time and time again in my work at IMPACTS, the data indicate that the majority of the same public that organizations endeavor to serve do not know that many nonprofits are actually nonprofits.

IMPACTS perception of VSOs as nonprofit

A majority of people – including visitors! – are unaware that these organizations are nonprofits. As the data indicates, the market’s lack of regard for an organization’s tax status extends to all types of visitor-serving organizations – so no one is immune to this condition. The question is: Does it matter? Well, if you consider your organization’s tax-exemption as a primary differentiator in a crowded, competitive market, then this data may be very alarming. However, if you tend to accept that the market is infinitely more interested in what you actually do as an organization than it is in the esoterica and vagaries of the US tax code, then this finding isn’t nearly so troubling.

We all know how challenging it can be to make a lasting impression. In the few precious moments when we hope to engage with our audiences, is the foremost thing that we hope to communicate about our tax status? And, if so, does the market even care? Which leads me to…

 

2) Audiences are increasingly sector-agnostic

The fact that people are confused about the nonprofit status of many organizations likely doesn’t matter.

Data suggest that 91% of global consumers will chose to associate with and support brands and organizations that provide some sort of social benefit over a product that does not. For nearly all brands right now, it’s cool to be kind.

For-profits are well aware of this and many have (or have had) campaigns that tie directly to a purpose, prominently including: Patagonia’s Common Threads Initiative, Bank of America and Khan Academy’s Better Money Habits, Coca-Cola’s Ekocenter, and Toyota’s Meals Per Hour, and LifeBuoy’s Help a Child Reach 5. That’s just the tip of the iceberg. These initiatives are focused and generally easy to communicate and understand. This may be why the Pepsi Refresh Project didn’t do very well by comparison – and that also may be why many true nonprofit organizations are struggling when it comes to communications. But I digress…

While many of these types of initiatives include a nonprofit beneficiary, the fact remains (and, indeed, becomes glaringly obvious): People don’t need to donate directly to a nonprofit to support something that they believe in. They can simply buy fast-food fried chicken.

And, with that, BAM! We’ve attached the idea of “giving” to a traditional economic utility curve. This model is arguably more sustainable because the consumer actually gets something (a product or experience) in addition to the feel-good attached to supporting a cause. Whether nonprofits like it or not, this model changes the way people think about supporting causes.

It’s great that some nonprofits are benefiting from these campaigns. They are an opportunity for securing support from a for-profit company and can be very successful partnerships! However, many organizations neglect to consider what all of this may be doing to the general market’s attitude toward nonprofits. I’m absolutely not saying that these partnerships are a bad idea. I’m saying that to move forward, it may be best to recognize (and accept) this evolution we’ve helped to create in the market’s perception and their related progression toward a more sector-agnostic world.

 

3) Having a mission is money

It’s time that nonprofits remove the emotion that may be elicited by the use of the word “mission” so close to the word “money” and tackle this one head-on. I’m talking mostly to organizations that do provide a service, product, or experience and indeed operate – at least a little bit – based upon the concept of a more traditional utility curve (i.e. visitor-serving organizations).

Visitor-serving organizations that highlight their mission financially outperform those marketing primarily as attractions. At IMPACTS, we check in on this data every quarter and the connections between how well audiences believe that an organization achieves its mission continues to correlate with financial performance.

Yes, nonprofits are arguably and increasingly competing with for-profits – but not on how well these entities can be for-profit-y. For-profits are competing with nonprofits regarding how conceptually nonprofit-y they can be!

Transparent, social-good acting, for-the-best advocating, morally-sound, socially-valuable…the same perceptions that may have been traditionally associated with successful nonprofits are among the biggest wants of for-profits in today’s world. If your marketing team is all about discounts and sweepstakes and only posting about how people should “visit us!” tell them to knock it off. That’s not good business, and it’s not the sweet spot in which these organizations need to shine.

 

4) Demonstrating impact and prioritizing transparency are more important for nonprofits than ever before

Donors increasingly make decisions based more on the values that an organization shows by way of their actions and real-time communications on social media then what an organization tells in ads and individual status updates. The web empowers potential supporters to make their own decisions about organizations based on their overall perception of the brand. Organizations that don’t walk their talk generally suffer. Extreme cases are those of McDonalds and SeaWorld.

Right now, nonprofits risk being perceived as second-rate at achieving the very positive attributes that define them (i.e. being about more than making a buck).

Sharing compelling mission-related stories and providing real impact is at the heart of many nonprofit organizations, and its how they’ve kept the lights on for decades. In fact, people care more about how they feel when they give than how organizations spend their money. The reality is that many for-profits have more resources to elicit the very emotions that nonprofits try to summon…and that “giving” could be going somewhere else.

 

Nonprofits are masters of tugging at heartstrings and making the world a better place. Now – more than ever before – it’s up to all nonprofit organizations to do more than tell. It’s time to show how well we do what we do best. Our increasingly sector-agnostic world has changed the game. Organizations need to decide if they still want to be a valuable player and, if so, update best practices accordingly.

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

 

Photo credit:  © Nikolai Sorokin | Dreamstime.com

Posted on by Colleen Dilenschneider in Financial Solvency, Fundraising, IMPACTS Data, Myth Busting, Sector Evolution, Trends 2 Comments

Three New Pricing Realities For Visitor-Serving Nonprofits in The 21st Century (DATA)

Admission tickets

Want to keep moving your mission moving forward and your doors open? It’s time to end the debate on these pricing-related topics.

As the visitor-serving industry (museums, theaters, symphonies, historic sites, etc.) broadly struggles with declining attendance trends and a potentially unsustainable reliance on kindness and not commerce, “getting your price right” is more important than ever to nonprofits who depend on the gate to support their missions. Too high of a price may serve as a barrier to visitation. Too low of a price risks leaving money on the table and all of the attendant fiscal challenges associated with failing to maximize earned revenues.

Much is happening in the world that changes/challenges the way that traditional visitor-serving nonprofits operate: social media and technology, the need for real-time transparency, and changing demographics in the United States and beyond are just a few, prominent factors influencing our industry. And, these factors are changing everything from internal operations to membership products and the role of fundraising. And, unsurprisingly, the information age requires embracing new realities related to pricing.

Let’s end the debate on these three pricing-related topics and get on with the business of running effective businesses that enable meaningful missions:

 

1) Pricing is NOT an art (Pricing is now a science)

Determining the optimal price of admission is no longer a trial and error process. In fact, it’s anything but a “guess” (however well-educated). Data is playing an increasingly important role in the way that institutions operate for good reason.

A near-decade of research including hundreds of interviews with US visitor-serving nonprofit organizations strongly suggests that many pricing models are the product of “unintentional collusion” (AKA “the blind leading the blind”). This deeply-flawed model fails to contemplate two critical factors when it comes to informing a pricing strategy: (i) the fact that a proximate (or competitive, or peer) organization has established a price does not necessarily mean that it is an optimal price; and (ii) the market tends to view organizations – however “alike” they may be – in very unique terms, and this uniqueness frequently extends to pricing.

Unintentional collusion looks something like this:

IMPACTS unintentional collusion

Thanks to readily available data and analyses, there is no reason to base pricing on anything beyond an organization’s own, unique equities. For every organization, there is a data-based “sweet spot” in which admission prices are optimal.

Let’s consider a quick example of what an optimal pricing strategy looks like when charted (Note: This particular example is from a performance-based entity, but this way of considering pricing applies to any type of admission):

 IMPACTS ticket price analysis example

In the above example, the data-informed analysis suggests that pricing less than $75 for a ticket to the performance (more specifically, to a “premium” seat at a non-matinee, live performance) would be “value advantaged” – a polite euphemism for leaving money on the table! However, anything above $75 pushes the price into the “value disadvantaged” realm – a place where the price poses a needless barrier to entry (and, generally, one where the increased per capita revenues will not offset the decline in attendance). For every category of admission, every organization has an optimal price – one that is neither value advantaged nor value disadvantaged.

Organizations guess their price (without leveraging data to inform their pricing strategy) at their own risk. Getting the price wrong can alienate potential visitors and supporters if it’s too high, and make it difficult to raise prices to an optimal value over time if price starts too low.

Looking for ways to help support a price increase? Well, data suggest that a whiz-bang new exhibit or facility expansion isn’t necessarily coupled to an increased price tolerance. Instead, efforts to improving an organization’s reputation or the overall satisfaction of visitors are much more reliable indicators of increased value for cost perceptions.

 

2) Admission pricing is NOT affordable access (Admission enables affordable access)

A thought that sometimes emerges once an organization’s optimal pricing has been quantified is strangely, “but that’s too expensive to provide affordable access!” Admission is not a substitute for affordable access. Admission and affordable access programs are completely different things…and an organization needs to establish its optimal pricing strategy in order to support effective affordable access programming.

In other words, if you subsidize price in the name of affordable access (i.e. artificially lowering the price to create a value advantaged pricing condition), you are limiting your organization’s ability to fund quality programs that DO provide true affordable access. Making your entire pricing strategy an “affordable access program” leaves money on the table as folks pay an admission price below what they (the market!) indicate they were willing to pay for your experience.

When it comes to the truest definition of affordable access, an admission price point of $15 or $20 or $25 is functionally irrelevant to many of our most under-served audiences…most any price at all may pose an insurmountable barrier to visitation.

What if you aim to provide affordable access for the community? Won’t a high admission price deter folks? The data suggest “no” – at least not the people who were able to pay in the first place – but that doesn’t mean it’s not a good idea to develop true access programming to better engage constituents for whom price is barrier while also considering strategic promotions that celebrate your community. Speaking of which…

 

3) Discounts are NOT promotions (Promotions serve a purpose beyond cheap access)

Promotions celebrate community while discounts devalue your brand. These are very real and very different things. The biggest differentiating factor is the question “So what?” If the point of providing a discount is simply admitting folks for a lower price, then the discount is a bad idea that devalues your brand. (And, as a reminder, data suggests that all discounts provided through social media are bad business for nonprofit organizations.) However, if an organization’s answer to “so what?” is “to celebrate a community” and that purpose is made clear in external communications, then the program that you are describing is a promotion. The feature of a promotion may include a special pricing opportunity – think special pricing for mothers on Mother’s Day, or differentiated pricing for local residents.

Discounts make people say, “I got in cheap.” Promotions make people say, “I feel valued.” Discounts are not only meaningless, but data suggest that they also lead to less satisfying overall experiences and even increase the time before a return visit! While this may be surprising to some folks, it’s classic pricing psychology in action.

IMPACTS intent to revist

 

 

If visitor-serving organizations aim to keep providing inspiration and education to the masses, then the first imperative is to exist – and it’s hard to exist (let alone thrive) in the long-term without a sustainable revenue strategy that optimizes pricing.

Pricing strategies – and even pricing psychologies – are not mysterious so let’s stop guessing. The data is not uncertain.

 

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, IMPACTS Data, Myth Busting, Sector Evolution 4 Comments

Signs of Trouble For The Museum Industry (DATA)

Main Hall and Stairs Mational Museum Warsaw

As the US population grows, the number of people attending visitor-serving organizations is (still) in general decline. And this is a very big problem for sustainability without a digital-age shift in our business model.  It’s not just museums. Many visitor-serving organizations – science centers, historical sites, aquariums, zoos, symphonies, etc. – are failing to keep pace with population growth.

Consider: In the five-year duration spanning 2009-2013, the US population increased by 3.5% from 305.5 million to 316.1 million. The majority of this growth occurred in major metropolitan areas – the very population dense regions where many visitor-serving organizations are located. Indeed, nearly one in seven Americans live in the metropolitan areas of the country’s three largest cities – New York, Los Angeles and Chicago.

However, during the same duration, data indicate that attendance at many nonprofit, visitor-serving organizations has declined. In fact, of the 224 visitor-serving organizations contemplated in the 2014 National Awareness, Attitudes & Usage Study of Visitor-Serving Organizations (NAAU), 186 organizations (83.0%) reported flat or declining attendance. And this is neither a regional nor curatorial content-specific finding – the study representatively contemplates visitor-serving organizations of every size, type, and area.

Many organizations are hesitant to acknowledge attendance challenges…especially when they have historically cited being the “most visited” as an indicator of their expertise and effectiveness. I sense that pressure from governing boards also plays a role – particularly as many organizations have been tasked to maximize earned revenues (often inevitably linked to visitation). Perhaps most concerning of all are attempts to blunt the challenge by proposing half-measures as remedy – you’ll no doubt recognize the “don’t worry, we’re going digital!” excuse and the related practice of sending mid-level staff to innovation conferences as attempted evidence of progress. (This last excuse may be especially worrisome as it seems that many staff members tasked to “innovate” may not actually be empowered to carryout their plans for advancement.)

But, regardless of the excuse, the numbers suggest that our industry risks becoming less relevant to future audiences. What does this mean to visitor-serving organizations? Let’s look at a few examples. (Note: To keep this from being a huge, overwhelming chart, I pulled out major metro markets and a few areas cited as “up and coming.”)

KYOB VSO attendance - IMPACTS

To illustrate, the population of the Atlanta, GA Metropolitan Statistical Area (MSA) has increased in the past five years by 9.4%. During the same duration, visitation to the Atlanta-area organizations contemplated in the NAAU study indicates an attendance decline of 4.6%. Think about that – if engagement were keeping pace with population growth, an organization with an annual attendance of 1,000,000 in year 2009 would reasonably expect to welcome 1,094,000 visitors in year 2013. Instead, on average, the studied organizations saw attendance decline from the theoretical 1,000,000 visitor level in year 2009 to 954,000 visitors in year 2013. Measured against the expectations of population growth, visitor engagement underperformed by 140,000 visitors!

The expectation would be for attendance to increase alongside population growth – otherwise, it is indicative of underperforming the opportunity.  Again, the findings are stark and concerning for organizations in the engagement business:

KYOB VSO Performance against expectations - IMPACTS

In most any other business, if you saw the market steadily increasing in size and your product’s usage in steady retreat alongside it, you’d likely think, “This business model sucks.”

Well, our business model sucks.

Confronted with this evidence, I’ve heard leaders recycle tired strategies of securing larger donations from an aging donor base, and plans to gain more grant funding from governments and foundations. Generally, they aim to “pivot” from a reliance on earned revenues to (hopefully…fingers crossed!) additional contributed revenues. Except no. The visitor-serving industry doesn’t need to pivot. It needs to reset.

Here are three behaviors we need to adapt to reset our current condition:

 

1) Stop citing poor previous efforts as evidence that something will not work

Some visitor-serving organizations will declare that they “already tried” something after investing only the most minimal of resources necessary to claim effort. This is a surefire recipe for failure …yet, it happens all of the time. Here’s a quick example: Many organizations will offer options to buy tickets online and simply invest enough to create a webpage for it. Then when nobody uses that method to buy tickets they say, “Look! We tried that and nobody bought tickets that way!” Actually, nobody bought tickets that way because your site wasn’t mobile friendly, it takes 10 different screens to buy a ticket, it requires several pages of personal information, it’s confusing and time consuming, and it costs more. Often it’s an organization’s own fault when data-informed things don’t work, but organizations frequently take a half (or maybe a one-tenth) approach to something and basically (knowingly or unknowingly) set it up for certain failure. This is just one, basic example.

“Our crummy product failed, ergo everything related to this project won’t work” justifies stagnancy by masking it with false wisdom. Organizations think that they are cutting-edge for trying something without any conviction, and that the wisdom they received from their inevitable failure justifies closing the book on really big things like digital engagement. How does this even make sense? This type of excuse-making is a shortcut to irrelevance. Just stop doing it.

 

2) Stop defending past decisions

This seems to be a particularly hard one for many leaders to embrace. After all, it may be human nature to defend one’s past decisions as “right” and “good.” And, at the time when they were made, they probably were. But times change. Today, we are witnessing incredible changes – many borne of technological advancement – accelerating progress at a revolutionary pace. By what rightful reason do we think that we’re exempted from the prevailing changes affecting the rest of the world?

Just because you spent thousands and thousands of dollars on print material doesn’t spare you from the necessity of hiring an online community manager. On a more substantial investment scale, those millions of dollars that you invested in a new entrance to facilitate faster put-through times doesn’t exempt you from developing a mobile ticketing platform that may make ticket counters increasingly obsolete. This is a lesson to learn in real-time (as opposed to retrospectively): Repairing and updating past decisions is often more time-consuming and, ultimately, more expensive in the long run than starting anew. It’s OK – heck, even encouraged – to approach the current condition untethered to the past. That was then, this is now.

 

3) Embrace the inevitable path of progress

Max Anderson, CEO of the Dallas Museum of Art, gave a short ignite talk at the most recent Museum Computer Network conference. The topic of his talk was how to “persuade your museum director to help you” (i.e. how to get him/her to invest in “innovation”). From the beginning of the video it’s easy to see one of the biggest, most glaring problems in our industry: He begins his talk by asking how many museum directors are at the conference. Very short awkward silence ensues…followed by laughter. Really?! Are even our conferences about innovation and new ideas attended primarily by middle managers?!

The reason for the lack of executive decision-makers at many conferences is not necessarily the fault of museum CEOs (as the conferences aren’t always adequately geared toward Directors). But it’s not wholly the task of middle managers to communicate and justify the imperative to remain relevant to CEOs either. There’s a messed up barrier to betterment here, and it has more to do with a flawed structure than simple lexicon within an antiquated museum hierarchy. His talk is absolutely true, probably staggeringly helpful, and thus amazingly messed up at the same time.

We’ve developed this detrimental idea that “digital” has to do with “tech” (not people), and “innovation” isn’t necessary for survival. Max Anderson’s “primer on the psychology of museum directors” underscores that the status quo (and, of course, legacy!) is what museum directors are primarily interested in…but the status quo isn’t working to bring in more people by creating crowds OR buzz. Efforts to abide the current condition fundamentally ignore the challenges imposed by a broken model. Changing lexicon is a pivot. Pivots sound pretty. Pivots sound agile. After pivoting, however, you may be facing in a different direction but you’re still standing in the same place.

Millennials – the largest generation in human history – may necessitate an update to the visitor-serving model in the information age. These “kids” will soon have kids, who will eventually have more kids, and if we continue to ignore the reality of negative substitution in our attendance, then we may soon have no museums, aquariums, or symphonies for those “kids” to go to at all. (OK – perhaps some hyperbole. We likely won’t have zero museums. Just more empty ones.)

 

The forces of change that propel the world forward are not going away. If we don’t change our model to one that is more sustainable, then we risk going away. This is a moment when our biggest barrier to engaging emerging audiences is holding dear to our increasingly irrelevant plans and practices. We need a reset. And it’s up to all of us to put our heads together and make it happen.

 

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

 

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, IMPACTS Data, Myth Busting, Nonprofit Marketing, Sector Evolution, Trends 11 Comments

The Role of Email Has Changed. Here Is How to Evolve Your Communication Strategy (DATA)

RIP email

llustration by Sam Manchester/The New York Times

The efficacy and best practices related to email as a marketing channel have changed. Data suggest that email is less effective in reaching large quantities of people than it was even a few short years ago. But, can an organization use email to reach the right quality of people? Maybe.

I recently shared updated data from a Media Consumption and Usage Study conducted by IMPACTS that demonstrated a trending decline in the overall, weighted value of email as a marketing channel.There’s been some additional buzz about the decline of email, and worries about this changing platform seem to be lingering – especially in light of the big data I recently shared at MuseumNext. “I see that there’s a decline in email,” one attendee noted. “Email is working just fine for my organization.”

Indeed, organizations shouldn’t give up on the platform – especially if it is helping their organization achieve its goals – but it’s important to recognize the changes taking place that alter your market’s perceptions and usage of email:

IMPACTS Public sources of information 2011 - 2014

 

1) The overall efficacy of email as a communication channel for reaching mass audiences has dwindled

It used to be all about email lists – buying them, swapping them, getting people on them – and then “spamming” folks with marketing messages. It was about quantity of people more than the quality of people. Not anymore. Thanks to the increasing and massive trend toward personalization in marketing messages (due, in large part, to “touch points” made possible via social media), email is now a less effective method for engaging large quantities of people. The data indicate that mass messaging holds lesser value to audiences…and we observe people “opting-out” and unsubscribing to content that is not particularly relevant to them.

And folks can afford to opt out because – unlike the earlier days of email – there are much more personalized, real-time information channels promising greater connectivity readily available to them.

 

2) Email may now be better utilized for cultivating current audiences that already have an affinity for your organization

Email’s relative stability in terms of trust and amplification potential indicate that while it may not be wise for it to be your organization’s primary engagement or audience acquisition channel, it may still offer value by adapting its application to better serve current constituencies. Email should be approached as an “opt-in” opportunity for those who are budding brand evangelists. In other words, this communication method may be better suited for moving potential stakeholders through an engagement funnel instead of as a means to engender general awareness of programs, events, etc.

 

3) Your organization should not necessarily stop sending emails

Just because a channel’s weighted value is changing doesn’t mean that it’s wise to abandon the platform – especially if it is working for you in terms of helping to meet your financial and mission-related bottom lines. What this does mean is that your email strategy should not be stagnant – when it comes to email, a sound strategy may be to “ride the wave until it crashes.”

Obviously, people still use email; however, they are using it in different ways and expect more personalization than email typically delivered in the past. Know this. Adjust. Watch the market. If something is still working, then, hey, it’s still working! That said, (and as is true with all communication channels) sending email for email’s sake without understanding how or if it is contributing to your goals remains an unwise idea.

 

4) Start exploring other channels that will help achieve your goals

While it’s not a bad idea to keep “riding the wave [that is email] until it crashes,” it would be advisable to concurrently cultivate engagement on other platforms in preparation for the inevitable crash. Heretofore, if your organization has been relying heavily on email, then it may be a good idea to consider building communities and strategies on other platforms so that you aren’t stuck with antiquated outreach tools that the market deems obsolete. Alternative channels and platforms that capitalize on real-time, ongoing, personalized communication generally involve social media or other web-based platforms…now is the time to start developing capabilities and capacities in these arenas before it’s too late.

 

5) Understand that email has changed and will keep changing.

Email has maintained its perception in regard to trust (i.e. how trustworthy it is perceived to be as a communications channel) and amplification values (i.e. how easy it is to share the message). You can see the data broken down by reach, trust and amplification here. It makes sense that amplification has not changed as it’s just as easy to hit “forward” today as it was in 2011. As other platforms evolve, how people view and use email will evolve as well. It is not used for the same purpose as it once was thanks to new information channels. The roles of organizations’ websites have also recently changed due to the presence and capabilities of social media. Know that things are changing and the relative strengths of communication channels are certain to keep changing, too.

 

An exciting aspect of leading an organization in today’s world is the incredible access provided by web-based platforms and how digital assets (and how the market perceives and interacts with them) constantly evolve. Wise organizations realize that the world is moving and it is unwise to maintain the same strategy for communication platforms year after year without considering changes in the market.

In sum, email is not dead…but it has certainly evolved. Many organizations have not caught up. If they don’t then, well, you know what Darwin had to say on such matters…

Darwin on change

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Posted on by Colleen Dilenschneider in Community Engagement, Digital Connectivity, IMPACTS Data, Myth Busting, Nonprofit Marketing, Trends Comments Off on The Role of Email Has Changed. Here Is How to Evolve Your Communication Strategy (DATA)

Personalizing the Onsite Experience Increases Satisfaction in Visitor-Serving Organizations (DATA)

volunteer harvard museums Data suggest that personal interactions between staff and visitors significantly increase overall satisfaction, improve value perceptions, and contribute to a more meaningful overall experience. Here’s how.  As many of my regular readers already know, I’m captivated by the relationship between “physical touch” (old fashion, face-to-face communication) and “digital touch” (digital communication) in visitor-serving organizations – and how these forces work together to make these organizations more relevant and financially stable.  The data regarding how these forces work together is rather compelling…and I’ve even spoken about it before. Digital touch increases reputation and aids in driving attendance – but physical touch provides the “there-there” in a way that technology has yet to supplant. We monitor both reputation and visitor satisfaction for numerous visitor-serving enterprise at IMPACTS, and we’ve found one type of “physical touch” to be extremely potent in increasing visitor satisfaction: When attendees have a personal facilitated experience (or, as we affectionately call them, a PFE) remarkable things reliably occur.

What is a personal facilitated experience?

A PFE is a one-to-one or one-to few interaction that occurs between an onsite representative of the organization and a visitor. This representative could be a docent, volunteer, or any other organization-associated individual who has a direct interaction with an individual visitor, family or couple. A traditional museum cart experience provides a PFE. A volunteer showing you your seat at the theater provides a PFE. An entryway greeter provides a PFE. So does a stationed volunteer, a wayfinder, or even a particularly attentive clerk at a museum store. Shows, talks, or tours – while certainly providing value to one’s overall experience – do not constitute a PFE, as the market considers PFEs powerful due to the personalized attention and one-on-one nature of the interaction. While we’ve found that these other types of encounters provide an efficient density of interaction, they do not always provide the kind of personalized experience often prerequisite for a steep increase in overall satisfaction.

PFEs increase metrics that are critical to overall experience

Take a look at the data below from a representative organization with which we partner at IMPACTS. The column on the left quantifies visitor perceptions of an organization based on specific evaluation metrics (e.g. admission value, education experience, entertainment experience, and employee courtesy), while the right side indicates the same values for visitors reporting at least one personal touch-point. Visitors who had similar experiences onsite – with the exception of a PFE – report very different perceptual outcomes. 

PFEs generally increase the perceived value of admission.

In other words, those who have a PFE believe that they got a better bang for their buck after paying admission to visit an organization.

 IMPACTS Admission PFE

PFEs also increase perceptions of entertainment experience, educational experience, and employee courtesy.

However, these metrics don’t all contribute to overall satisfaction equally. Here’s  the data on the breakdown.

 IMPACTS Entertainment PFE

Educational

IMAPCTS employee courtesy PFE

 

PFEs can be utilized to increase visitor satisfaction by daypart

If your organization is in the midst of a construction project or simply gets crowded during certain peak times of day, an organization may deploy PFEs as a mitigation strategy to minimize the impact of crowding perceptions on overall satisfaction.

 IMPACTS satisfaction by daypart PFE

Digital and “physical” touch work together to secure the financial futures of visitor serving organizations and keep folks coming in the door so that organizations may march steadily toward accomplishing their missions. I write about the increasingly critical importance of personalization on digital media for visitor-serving organizations, but we must remember that people online and people offline are still people – in fact, we want them to be the same person! Personalization – a trend that is getting a lot of buzz in the online space – is just as important onsite. Facebook and other social media sites are getting smarter about personalization –  ads are more intelligent, and millennials expect personalized experiences. Gone are the days of one-size-fits-all communications and “touch” points… online and offline.   Want to hear more about the data-supported relationship between digital and physical touch as they relate to satisfaction in visitor-serving organizations? Check out my WestMusings: Ten Minute Museum Talk or join me at MuseumNext in the UK where I’m thrilled to dive deeper in a keynote in June.  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 *Photo credit: Harvard Museums of Science and Culture

Posted on by Colleen Dilenschneider in Community Engagement, IMPACTS Data, Nonprofit Marketing, Sector Evolution, Trends 5 Comments

Finding: Museums That Highlight Mission Financially Outperform Museums That Market Primarily as Attractions (DATA)

seafood watch

This article kicks off a four-part series intended to help visitor-serving organizations understand and respond to emerging trends that will impact their ability to achieve their financial and mission-related goals. Learn more about the series here. 

Data suggest a “new” draw to your organization that is now key to engaging both visitation and donor support. Well, actually, it’s not “new” – it’s the reason why your organization exists: Your mission. How credibly the market perceives your organization in terms of your ability to effectively deliver on your mission has a very strong positive correlation with your organization’s financial performance.

An analysis of the recent financial performance of a large and representative number of visitor-serving organizations coupled with the public perceptions of these same organizations reveals an outcome that may not be surprising for those who keep tabs on consumer behaviors: Organizations perceived as “best-in-class” in terms of mission delivery reliably outperform organizations that rely more on their reputations as “attractions” when it comes to their financial bottom lines.  In other words, mission and business are not in conflict – being superlative at your mission is good business!

There are three overall findings relating to the “mission is good business” trend:

1) Organizations perceived as more credible actors in terms of fulfilling their mission financially outperform peer organizations whose reputational equities relate primarily to their roles as attractions

IMPACTS collects and analyzes attitudinal and awareness data for 224 visitor-serving organizations in the US (and that may even include your own). This data and analysis informs the development of key performance indicators that reveal trends and correlations affecting visitor-serving enterprise.  The charts below indicate the relationship between 35 visitor-serving organizations’ financial performance in terms of “revenue efficiency” coupled with the market’s perception of these same organizations’ “reputational equities.”  (In the interest of maintaining appropriate confidences, I’ve “anonymized” the findings)

First, a few quick definitions (with advance apologies for the analytical jargon):

Revenue Efficiency: A composite metric contemplative of onsite-related earned and contributed revenues (e.g. admission, contributions, grants, membership, programs) contemplated relative to the cost to deliver onsite services (i.e. operating expenses) and the number of persons served onsite.  Generally, a more “revenue efficient” organization exhibits more favorable financial key performance indicators (e.g. greater revenues, greater net operating surplus) and reduced financial volatility than does a less revenue efficient organization.  Data informing the IMPACTS revenue efficiency calculation are commonly available in an organization’s financial statements, annual reports, and Form 990 filings.

Reputational Equities: A composite metric contemplative of numerous visitor perceptions such as reputation, trust, authority, credibility, and satisfaction that collectively indicate the market’s opinion of an organization’s relative efficacy in delivering its mission.  As mentioned previously, IMPACTS collects perceptual data from 224 visitor-serving organizations in the US to inform its reputational equities calculation.

KYOB aquariums reputation and revenue

Aquariums are a good place to start because (a) in addition to tackling the mission of inspiring audiences, they are also increasingly engaging audiences on broader conservation issues; and (b) aquariums tend to be more reliant on earned revenues than their museum and zoo brethren who may have greater public funding and/or endowment support. In short, absent the safety net of large endowments and government appropriations, aquariums are among the most market-driven businesses in the nonprofit sector, and translating positive reputational equities has an enormous financial benefit for these organizations (and, in inverse, lessened reputational perceptions bear tremendous risk to an organization’s bottom line).

Generally, revenue efficiency follows reputational equities (so working to increase reputational equities tends to positively affect revenue efficiency). Thus, we can reasonably surmise that year 2014 may bring continued challenges for Aquariums H, I, K and L should they choose not to prioritize remedy for their lacking perceptions as credible actors when it comes to delivering on their missions.

KYOB zoos reputation and revenues

Much like aquariums, the zoos that are perceived as credible actors in regard to their mission achieve the greatest revenue efficiency. Again, in the example indicated by the assessed zoos, the relationship between reputational equities as a predictor of financial success is clear and compelling.

KYOB museums reputation and revenues

Again, when segmented by museums (in the above example, all of the assessed organizations would be rightfully classified as either “art” or “natural history” museums), the trend holds true: Those museums perceived by the market as the most esteemed in terms of fulfilling the promise of their missions achieve the greatest financial performance.

You’ll notice that out of the 35 organizations represented in this assessment, Museum H is the only organization that does not indicate the relationship between reputational equities and financial performance – and, even in this exception to the trend, the difference is very slight.

 

2) Your organization must increasingly be MORE THAN an attraction but it still must be an entertaining destination.

The reputational equity metric is contemplative of overall satisfaction and data indicate that providing an entertaining experience is an extremely important component of visitor satisfaction. To be clear: The data do not support abandoning efforts to deliver an entertaining experience in the hopes of enhancing your organization’s reputation as a credible, mission-related authority. Instead, data support efforts to underscore your social mission and demonstrate topic expertise alongside location-based content to help drive visitation and provide insight into the entertaining and inspiring experiences that you provide.

Simply put, people want to visit organizations that are more than just attractions.

 

3) The importance of underscoring reputational equities is likely to grow as millennials increasingly comprise a greater percentage of museum audiences

The analysis indicating the relationship between favorable reputational equities and financial performance for visitor-serving organizations aligns with multiple findings concerning the influence of social missions (in business-speak, think “corporate social responsibility”) on consumer purchasing behaviors. Namely, people – and especially millennials – are more likely to purchase products that support a mission.

The data has long suggested that millennials are particularly public-service motivated, and as Gen Y has become a more powerful market segment (indeed, millennials are the largest generation in human history), organizations have experienced a “market shift” in support of organizations that support “social good.”

That sounds great for educational, conservation, and cultural organizations such as museums, aquariums, and zoos, right? Well…maybe not…especially because millennials are generally sector agnostic. Millennials tend to support organizations and businesses that appeal to them regardless of whether or not there is 501(c)3 designation involved. (In other words, while the IRS may care about your tax-exempt status, the market increasingly does not!) This means that in terms of securing support, many nonprofits are “competing” directly with for-profits for the market’s time, attention, and resources.

Organizations that have marketed themselves too heavily as attractions without underscoring their mission and social impact have lost a valuable opportunity to differentiate themselves as superlative to a critical demographic. Potentially worse yet, they may have built their reputations based on motivations that millennials don’t care about. Case-in-point: Take a look at what millennials want out of a zoo, aquarium, or museum membership compared to older generations.

Organizations that the market favorably perceives as more than “just an attraction” tend to financially outperform organizations perceived primarily as attractions.  Money follows reputational equities. Zoos, aquariums, and museums that have been trying to “sell” the wrong brand attributes may find themselves struggling even more in the future as emerging audiences emphasize mission and social impact as vital attributes of the relationship that they seek with the organizations that they support.  Year 2013 was only the tip of the iceberg. Perceptions are changing and the data affirms a strong, encouraging trend:

Finally, it’s cool to be kind.  More than that, it’s plain good business.

National Aquarium cleaning debris

National Aquarium

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

New Data Reveals How Your Organization Can Improve Its Online Advertising

Marketoonist rather be earned media

Data suggest that landing your online audiences on peer review and social media content rather than the e-commerce (e.g. ticket sales) portion of your website is now one of the most effective ways to maximize online conversions.

Because how the market uses websites has changed with the widespread use of social media and other word-of-mouth inspired outlets, the way to optimally utilize websites to inspire desired behaviors has changed as well. Namely, the frequent and oft-cited “rule” that the best online ads lead only to direct conversion sites (or your own website for that matter) is now… well, irrelevant.

In the not-too-distant past, the prevailing wisdom was to “land” your online customer on the web page where they could transact business with you with the least number of clicks (i.e. land them on the “buy tickets” page).  Today, the data suggest that a more informed customer – one who has availed him/herself of the information and reviews of third-parties such as those found on many social and peer review platforms – are more likely to complete a transaction than a customer whose primary online experience with your organization was an ad.

Consider the chart below – chosen as it is generally representative of customer behaviors for many visitor-serving organizations (e.g. museums, aquariums, zoos, performing arts centers, etc.) with online ticketing capabilities –  quantifying the “abandon rate” (i.e. the percentage of persons who initiated but did not complete an online behavior) segmented by the representative organization’s landing page (i.e. the web page where the customer was routed after clicking on an ad): 

IMPACTS ad abandon rates data

 

Immediately, you notice that the abandon rate for customers who land on a “buy tickets now” type landing page is 19.6% higher than the abandon rate for customers who are first routed to a web page featuring third-party reviews.  Similarly, the abandon rate is 15.8% higher for a customer landing on a “buy now” page when compared to customers first routed to a social media channel.  In fact, the data indicate that in terms of actually translating a click to a conversion, that the absolute worst thing that an organization can do is route its online advertising to a “buy now” type of landing environment.

In today’s world of heightened connectivity and increased empowerment of potential customers to make informed decisions based upon perceptions of reputation and brand transparency, your customers expect access to product information, reviews from trusted resources, and reliable customer support.  (Is it any wonder that the most admired and successful visitor-serving organizations – and, for that matter, the most rapidly growing brands from most any sector –  invariably have the most robust reviews and social care/social CRM functionalities?)

For those who do not have many dealings in abandon rates and may be shocked that abandon rates may be high at all, here’s some background: Abandon rates for all types of e-commerce hover around 74% – in other words, on average, three out of four persons who click on an item to buy online don’t actually end up completing the transaction.  Consider more broadly: It’s often only after proceeding to the “checkout” page that a customer can learn the shipping costs, the delivery timeframes, or even if their preferred method of payment is accepted  In the case of many visitor-serving organizations, compound these factors with cumbersome website navigation and outdated e-commerce functions, and it’s no wonder that abandon rates for some organizations approach 90%.  The point is: Overcoming abandonment issues is a very real part of an organization’s online strategy, and any finding that moves the needle even slightly on this front has potentially huge implications in terms of visitor engagement and earned revenues.

At IMPACTS, we leverage “big data” and sophisticated technologies to deliver highly-customized, micro-targeting online advertising…and we have a LOT of intelligence on what works and what doesn’t. (For my regular readers thinking, “But Colleen, I thought you worked in active, digital engagement?” I do. I specialize in the Coefficient of Imitation realm of brand perception (reviews from trusted sources) while IMPACTS, more broadly, takes on the Coefficient of Innovation (paid media)). These two functions (paid advertising and earned media) serve as a relay team handing the baton (i.e. the customer) from one runner to the next – the advertising function can be a “conversation starter” that attracts the attention and interest of a wide audience; the social media and other digital communication tools are the functions that manage the relationship with the customer across the finish line (i.e. the conversion). This may be a helpful way for organizations to think about the often necessary interactions between word-of-mouth and paid media-related methods of cultivating desired affinities and behaviors.

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Posted on by Colleen Dilenschneider in Community Engagement, Digital Connectivity, IMPACTS Data, Nonprofit Marketing, Trends Comments Off on New Data Reveals How Your Organization Can Improve Its Online Advertising

What Museums Can Learn From Online Dating (Hint: Touch Really Matters) (VIDEO)

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Is social media hurting the onsite visitor experience? Data suggest that in today’s world, museums need to be masters of both offsite communication (social/earned media) and onsite, face-to-face communication in order to be successful. Increasingly, a museum’s business strategy cannot thrive without one or the other.

Here’s a handy (pun intended) concept that I recently presented for thinking about the relationship that “digital touch” and “physical touch” play in driving museum visitation and maximizing visitor satisfaction.

Westmusings

I was honored to have had the opportunity to take part in the Western Museum Association’s first-ever WestMusings: Ten Minute Museum Talks in October in Salt Lake City.  What Museums Can Learn From Online Dating briefly traces a museum visitor from the visitation decision-making process through a museum visit and demonstrates how “digital touch” and “physical touch” work together to “seal the deal” of getting folks in the door to experience sparks of informal learning.

Here are those slides about reputation up close (what motivates the visitation decision and the diffusion of messaging).

While I spoke about museums in connection to online dating, I had the opportunity to take part in the WestMusings initiative with three, fabulous museos who imparted their own wisdom regarding museums and their connection to similarly creative topics: Scott Stulen of the Walker Art Center spoke about cat videos, James Pepper Henry of the Heard Museum spoke about culture clashes, and Carrie Snow of the Church History Museum spoke about roller derby (in full roller derby attire, no less)! Intrigued? Check out their WestMusings here.

 

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

Five Characteristics That Differentiate Museum and Performance Arts Visitors From The General Market (INFOGRAPHIC)

Today I am breaking my “post every-other-week” rule to share with you a simple infographic that I’ve made with the data compiled in last week’s post on the attributes of high propensity visitors. This is the first image that I’ve tried to make with any kind of IMPACTS data, so let’s see what you all think… Please feel free to share, tweet, pin, and post this infographic if it is helpful to you!

Expect a fresh post as usual on Wednesday of next week and please enjoy this image and data in the meantime:

KYOB IMPACTS High Propensity Visitors Inforgraphic

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Posted on by Colleen Dilenschneider in Community Engagement, IMPACTS Data, Nonprofit Marketing 8 Comments