How does a marketing manager attract a stream of customers to one of America’s great symphony orchestras? This challenge has long seemed daunting; but now it turns out that the secret to unlocking future demand for classical music depends on discarding the myth of the Average Customer and to see people in all their diversity, according to this extract from the book Demand.
One of the subtlest, and most important, challenges confronting the would-be demand creator is the Myth of the Average Customer.
Consider, for instance, the work of a marketing manager for one of America’s great symphony orchestras. His job is a tough one: to figure out how to attract a stream of customers who are willing to pay high ticket prices and make their way downtown to hear live performances of classical music — all in preference to any of the dozens of other forms of entertainment, many of them free, competing for their time and attention.
This challenge has long been a daunting one. Most music marketers have always assumed that convincing potential new subscribers to give the symphony a try is the key to growing demand. The assumption is that, once people venture into the local symphony hall to hear a concert, the sheer beauty of the music will draw them back.
There’s only one problem with this theory: it just isn’t so. Every year thousands of potential new listeners are persuaded to attend their first classical concert. The concert hall is beautiful, the performances stunning, the music ravishing. Yet most of those one-time visitors never return. They respond to follow-up solicitations with an indifferent shrug or even outright hostility.
The problem is something called ‘customer churn’ — demand that is fleeting, inconsistent, unreliable. With its relatively high-paid performers and its costly downtown concert hall to maintain, a symphony orchestra needs to generate a strong and steady level of demand in order to survive. When the churn rate is consistently high, creating demand is like racing to fill a bucket with a large hole in its bottom.
The real problem is the Myth of the Average Customer. Designing a product offer to appeal to some archetypal customer is always wasteful. It leads to overage (providing features many individuals don’t want), underage (omitting features they do want) and sheer inaccuracy (choosing features based on guesswork and approximation rather than reality).
In 2007, nine symphony orchestras joined forces, hiring a team of researchers to analyse symphonies’ marketing challenges. The results from this Audience Growth Initiative — or, as it was informally called, the ‘churn project’ — were presented in mid-2008 to a gathering in Denver of hundreds of musical professionals from orchestras around the country.
The study confirmed that churn was a major issue for the nine orchestras in the consortium. On average, 55 per cent of symphony customers changed from one year to the next — a big, costly problem. Among first-time concertgoers, the churn rate was even worse — an almost unimaginable 91 per cent. So much for the supposed magic of ‘getting them through the doors’.
But when the researchers got past the average figures and started focusing on customer variation, a possible solution began to emerge. The symphony audience, they found, was divided into several starkly contrasting groups. They included the core audience — subscribers who attend numerous concerts every year for many years; trialists — first-time concertgoers who attend a single performance; the noncommitted — people who attend a couple of concerts in a given year; special-occasion attendees — people who attend only one or two concerts a year but return consistently, year after year; snackers — people who consistently purchase small concert subscriptions for many years; and high potentials — people who attend a lot of concerts but have not yet purchased a subscription. So there were at least six different customer types — dramatically different from one another. In Boston, for example, members of the core audience were found to represent just 26 per cent of the customer base, while buying 56 per cent of the tikets sold. By contrast, trialists were 37 per cent of the customers but bought only 11 per cent of the tickets. Statistics from all nine orchestras found remarkably similar patterns.
The core group held the key to today’s demand. Though they made up just a quarter of the audience base, they provided the bulk of the revenue flow that made the very existence of live classical music in America possible. (Revenue analysis showed that, between ticket purchases and donations, a single core household yielded an orchestra some $4,896 over a typical five-year period.) So satisfying the core is essential. And fortunately, it is a skill that the best orchestras have mastered. Subscription data confirm that, once a person becomes a regular supporter of the local orchestra, he tends to renew his subscription year after year, often for decades. But what about tomorrow's demand? How could American orchestras escape the curse of customer churn and the seemingly endless marketing treadmill?
The answer lay with one variant customer set: the trialists — that relatively vast stream of customers (over a third of the ticket buyers in any given year) with their horrifying churn rate of 91 per cent. By contrast with the core families, who provided almost five thousand dollars in orchestra revenues apiece, the typical trialist family in the study had a five-year value of just $199.
So the problem wasn't generally ‘'to reduce churn’ or to ‘keep more customers’. But how to do this? To answer this question, the research team had to figure out what the trialists actually cared about, so that a product could be created that was magnetic for them, not for the mythical average audience member.
The researchers moved into phase two of their study. They set about to create variant hassle maps of the symphony experience for the different customer types — especially the all-important trialists. Identifying and eliminating the stumbling blocks that were discouraging trialists from returning could be the key to future demand.
The technique the researchers applied was factor analysis. With the help of orchestra marketers, they brainstormed an initial list of seventy-eight different attributes of the classical music experience, including everything from the architecture of the auditorium and the service at the bar to the guest conductors leading concerts and the availability of ticket information on the Internet - practically anything they could think of that might have an impact, good or bad, on the trialists’ experience.
DEMAND — CREATING WHAT PEOPLE LOVE BEFORE THEY KNOW THEY WANT IT
AUTHORS: Adrian J. Slywotzky with Karl Weber
PUBLISHER: Headline Business Plus
PRICE: Rs 299
Reprinted by permission of Headline Publishing Group. Copyright 2011. All rights reserved.
