Tuesday, February 7, 2012

Giving Away Scarcity: Free Tickets Aren't Cheap

I am presently engaged in a little experiment with a theatre company I help manage.
The nature of this group is such that our screwy demographic has a hard time finding us: to whit, many of the major social organizations that people participate in have actively rebuffed our attempts at advertising based on secondary considerations.

We exist entirely on a shoestring budget from year to year based on what little we gain from our performances and what we can scrape together as donations among the board members. With our ties to certain major organizations in the community, we are forbidden to directly fund raise to the public, though we may accept donations (and as we have just learned, money for advertising). As a result, we have little in the way of actual advertising within our community. As Marketing Director, I am doing my damnedest to change that, but with finances as a major issue, it's an uphill battle.

While we have a diverse core audience, it isn't large enough to leverage the strongest weapon we have in getting people to attend our shows and pay for our performances: word of mouth. The majority of our attendees come because they know someone on the board, cast, or crew who has actively encouraged them to attend.
Now, there have been significant exceptions: my first performance with them was the Merchant of Venice, and, being Shakespeare, it picked up a sizable crowd. Enough that we were able to hold on for another season even though our other shows didn't make money. We've been considering advertising restaurants and the like in our actual programs as a means of raising some funds, but the overall benefit may be minimal.

So the problem has always been obscurity: even after living in the community 4 years and being active in the theatre for 2.5, people still give me blank stares when I mention my company to them.

A while back, a local earthquake left me sitting in a car for an hour and half with another employee from my work. After chatting with him about what I do for a hobby, he suggested that I contact his wife, who runs a social network for families suffering from various lifelong and terminal illnesses. Other people quickly suggested other social welfare networks. Soon I had a list of possible organizations to talk to regarding our shows.

While our previous experience with non-profits had consisted of offering bulk discounts, it occurred to me that these groups were in much the same boat as we are - subsisting on handouts and goodwill. Additionally, most of their members wouldn't or couldn't voluntarily pay for our shows: their monetary priorities were better allocated elsewhere. So the only real opportunity to get them on board was to give away tickets wholly to these groups. This was the hardest pill for the rest of the board to swallow. As an experiment, we are dividing a large block of tickets between the various orgs to be distributed as they see fit.

On further analysis (I'm an economist by training), this may in fact be an incredibly beneficial situation. With our large but relatively empty auditorium, adding extra seats into a performance could potentially have minimal impact on the overall environment of the experience. Donating tickets creates a sense of connection, goodwill, and mindshare that NO REBATE can buy. Our shows would automatically be broadcast among their members when they look for families interested in participating, so we get free advertising as well. Additionally, even those who didn't get the tickets might mention it to their extended family, who might buy tickets for their ill relatives. Increased exposure also raises the value of the advertising space we may have.

Another possible future development is the creation of "sponsored shows." Each of our productions cost a certain amount in costumes, advertising, licensing, set, rentals, etc. Amortized between the total performances, we can estimate what it costs per show to run our company. The next step is to allow business to "purchase" a night of production for either these local non-profits to bring their entire group (major word of mouth advertising and goodwill) or for the public as a whole (even broader advertising base directly to customers). This way, the involved business has a direct stake in our production: the more people attend, the more advertising they get.

What we lose:
  1. Seats in a theatre - it may get a little crowded, but we can add more chairs. This might decrease the overall  experience though.
  2. Paying customers - for the non-profits, few if any would attend of their own volition, so this is minimal impact. There may be some people who "resell" the free tickets to others, but we aren't giving away enough to  make that an issue, and besides, that just means people want to see us.
What we gain:
  1. More people watching our shows -This was the hardest hurdle to clear with members of our board - that giving away free tickets wasn't going to hurt our overall sales for the production. As Techdirt is keen on pointing out, obscurity is a bigger problem then piracy or, in this case, "free riders and scalpers."
  2. More word of mouth advertising - the more people see what we do, the more known we become in our community, and the more interested people become in us.
  3. Ancillary sales - people who hear about the free tickets/show and can't make cut may still want to attend, or may encourage others in their network to.
  4. Goodwill - I cannot emphasize how important this is for a small company to build up goodwill among it's customer base. It is the major driving factor behind all the above. The more positively the customer/audience feels about the people they support, the more likely they will be to share their appreciation in the future and spread it to others in their social network. I may be in the theatre business, but customer service is the first, last, and most important job we can engage in.
So I'm embarking on a grand experiment with our intrepid theatre company. I'll update this post with feedback and results as I get them, but I would love to receive advice from anyone reading on how to broaden our offerings and really push this idea as far as we can.

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