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reaching audiences

Audience Access: The Reality For Cultural Organizations To Embrace for Solvency

Audience Access - what cultural organizations must embrace - Know Your Own Bone

The first step in the evolution toward more sustainable cultural organizations is embracing the reality of “access” and reviewing the basics.  

We talk a lot about “access” within cultural organizations. For the sake of discussion on this topic, let’s strip this to its bare bones: Access is a means of approaching or entering a place. When cultural organizations talk about access, they often refer simply to something like affordable access. This narrow concept of “access” sets these types of organizations back, and prevents us from having more informed discussions about visitation, engagement, and financial solvency.

Every single person that makes their way through our doors has an access point and is part of “access” strategy discussions. “Access” in cultural organizations is not a conversation about minority majorities, or millennials, or folks making less than $25,000/year, or people with purple hair, or folks in wheelchairs, or people who like French fries, or pet owners with a dog named Rufus. Even high-propensity visitors must be considered in access discussions because access is a thing for every single person who sets foot in our institution. Access is not a topic about “underserved audiences” and it’s strange that we immediately assume this is so. Visitors, non-visitors, members, and donors all achieve access somehow. Why don’t we consider the entire, baseline topic of access for a change? And, if we do, can we learn something to strengthen BOTH mission execution and financial sustainability for cultural organizations? You bet.

This overview is oversimplified – and there are countless avenues for discussion embedded within this topic, but for the sake of improving the future of visitor-serving organizations, I’d like to provide a data-informed concept for a BETTER discussion about the hot topic of “access.” It’s only by considering how all avenues of access work together that we can optimize any part of the system – and cultivate healthier institutions.

The points below may seem very simple when you read them, but I haven’t encountered many organizations that regularly consider how these points of access work together and feed off of one another. Often, organizations tinker around with these different access points. When we meld these access audiences together – which we so often do – we get all of those bad business practices that hold us back. For instance, when we meld admission and affordable access programs, we get devalued brands, local visitor dissatisfaction, and we “leave money on the table” that we need in order to both survive and also to carry out our missions. When we meld admission with membership, we get transaction-based members that don’t much care about our missions and are less likely to renew, and we risk losing our most important supporters when we treat them like simple visitors.  Again, this framework is simplified, but my hope is that it brings about food for thought. If I’m lucky, it might even make you uncomfortable – and the best (good) data makes leaders uncomfortable enough to create change.

KYOB access drawing

For a broad overview, let’s dive into these three, primary access audiences one-by-one. (You know that I mean back-to-basics business when I add a doodle.) While you may skim these access audiences thinking that they are painfully obvious (they are), consider all the ways that we confuse them, conflate them, and ultimately threaten our own organizations. It’s simple (hence the doodle), but perhaps that’s why it is all the more important that we return to the basics and get this right.

 

Access visitor

1) LIKELY VISITORS:

Pay your data-informed optimal admission price

Likely visitors are called high-propensity visitors in my data world, and they are the people who have the demographic, psychographic, and behavioral attributes that indicate an increased likelihood of visiting a cultural organization. These are the people who are most likely to respond, “Sure!” when someone asks “Do you want to visit a cultural organization today?” They are, essentially, where our bread is buttered. They are the people who choose to pay to visit cultural organizations – and they are also the people who go to free organizations and understand their value. At IMPACTS, we have a lot of data about these folks, and they are critical audiences to engage in order to stay alive. In short, they are your visitors. (Keep in mind: High-propensity visitors are not exactly the same as historic visitors. High-propensity visitors are LIKELY visitors and not necessarily past visitors. They are our potential!) Bottom line: a very vast majority of the people who go to museums, zoos, aquariums, symphonies, theaters, botanic gardens (and the like…) are obviously LIKELY VISITORS… because they are visiting… and thus actively choosing to visit.

Admission pricing is a science, not an art. When an organization’s admission price is too low, it “leaves money on the table” and is not securing optimal funds to aid in sustaining itself. When it’s too high, it means that your organization will need to invest even more in access programing to fill the gap (which is much more costly than we think because most organizations are doing “access programming” wrong – more on that in a moment).

Admission pricing is NOT to be confused with affordable access programming. Interestingly, bad things happen to good organizations when they deny their optimal admission price in favor of “being more affordable.” Likely visitors should be admitted based upon an optimal, data-driven price point. This money is required in order to fulfill our missions of being open and of reaching unlikely visitors (see below).

 

Access unlikely visitor

2) UNLIKELY VISITORS:

Visit through targeted programs that actually reach them

IMPACTS has a lot of depressing data about the cultural organization industry. (BUT we have great leaders with the will to evolve, and we’ve totally got this! Cultural leading people are the best people. That’s why I write and that’s why you’re here.) Large-scale data about how much we stink at creating access programs for unlikely visitors that actually work is among the hardest to swallow. In reality, free days attract visitors with higher household incomes and education levels than paid-admission days (Here’s that data). Generally, our entire industry’s affordable access programming is not reaching low-income audiences (And there’s that data).

We mess things up when we conflate affordable access programming with admission pricing, thinking that we’re doing everyone a favor (Here’s the data on that). Another problem that we willfully ignore is the reality that we don’t actually know who our underserved audiences are or what they want. And we sabotage the success of our access programs because we inadvertently market the programs to rich people. (This is a huge, overlooked problem.) In many cases, we simply aren’t investing enough (or intelligently enough) for access programs to be effective.

It doesn’t help that many organizations mistakenly believe that price is a primary barrier to engagement. It’s not. Admission cost is not a key barrier to engagement and it’s certainly NOT a cure-all. This is mostly true for high-propensity visitors, but it’s also naive to believe that all folks will flock to something simply because it is free. In order to create effective access programs for any underserved audience (low-income or otherwise), organizations need to get a better grip on why that audience truly isn’t coming.

Unless we have a data-informed, optimal price point, it’s difficult to get the funds to create access programs in the first place. And if we don’t have those funds, we cannot create access programs that effectively reach new audiences OR low-income audiences. (Both fall under “unlikely visitors,” but they aren’t the same. For instance, minority majority audiences are underserved, but they aren’t necessarily low-income. Both need types of access/engagement programs in order to become regular visitors – but sometimes for different reasons.) When we charge our optimal price-point, it makes effective programming for underserved audiences more important – and also possible in the first place.

 

Access member

3) SUPPORTERS:

Become your members and donors

Your supporters become your members and donors – and they are an important part of the “access” conversation as well. In fact, they may be the most important. These are the folks who care about why you exist. They promulgate your “so what?” They provide ongoing support by being your next level of likely visitors. That said, this is another area of “access” that confuses many visitor-serving organizations. Membership programs need to evolve, and many organizations –in reality – have at least two types of members: mission-based members and transaction-based members. Transaction-based members are often the result of organizations conflating “likely visitor” and “evangelist” audiences, but mission-based members are where it’s at. Transaction-based members think of membership more like an annual pass and less like being a part of a mission-driven community. Mission-based members are more satisfied with their memberships and they are more likely to pay more for their memberships in order to support the organization. (Here’s the data on this.)

Another way in which organizations regularly fail this important audience- thanks to a broader misunderstanding of different avenues of access and institutional priorities – is by simply failing to manage the relationship or treating these awesome supporters in not-great ways. Lack of relationship management is a key reason why many donors discontinue their support. Arguably, a reason why organizations may be not-the-best at membership communication may be because we treat all of our audiences the same way. Namely, we confuse them with regular visitors.

 

Organizations have at least three types of audiences and these three audiences have different access points. When we confuse these three audiences and their avenues of access, we threaten the sustainability of our organizations. They must be managed in different ways in order to be activated to choose behaviors that are in the best interests of our organizations and our missions. It’s arguably because we misunderstand this that we commit several crimes against our own futures.

We live in an increasingly personalized world. In order to thrive, organizations may benefit by realizing that these three spheres are distinct and separate, but that it’s important to have a plan to carry constituents from an unlikely/likely visitor into the evangelist category. We need to change our business model. This is very, very different than conflating these categories. Thinking harder about access in regard to our business strategies may be the first step in creating more sustainable futures.

 

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

 

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

Posted on by Colleen Dilenschneider in Community Engagement, Financial Solvency, Fundraising, Myth Busting, Sector Evolution, Trends Comments Off on Audience Access: The Reality For Cultural Organizations To Embrace for Solvency

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

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

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

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

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

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

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

 

Determining audience acquisition investment

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

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

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

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

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

IMPACTS audience acquisition equation

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

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

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

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

 

The equation in action

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

IMPACTS - Audience Acquisition

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

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

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

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

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

 

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

 

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

 

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

 

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

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