Baker Richards
With the bad funding news far from over, there has never been a greater need for arts organisations to find ways of squaring increasingly tight budget circles. Working with Baker Richards and its US sister company The Pricing Institute, organisations are focused on realising the opportunities which still exist to increase their earned income.
Many cultural organisations have had a ‘good’ recession, offering heartening evidence that despite a gloomy environment, or perhaps because of it, people still need and want high quality artistic experiences. The organisations performing strongly are those which, despite tough economic conditions, continue to pursue an entrepreneurial approach which allows for investment to generate future returns.
Although some organisations will need to address strategic change, there are also many marginal improvements in earned income that can offset the impact of reduced income from other sources – in some cases you need to do one thing 100% better, but you can also try to do 100 things 1% better.
THE PRICE IS RIGHT
Sub-optimal pricing strategy can cost arts organisations £000s or even £000,000s in lost revenue opportunities and there are hundreds of variables that can be adjusted. Revenue management and dynamic pricing are also allowing organisations greater flexibility to exploit opportunities when they arise – an area of significant growth in North America.
Pricing decisions also play a key role in increasing frequency of attendance and customer retention. Increased customer frequency creates a foundation of ticket sales across repertoire which is not always fully realised.
JUST GIVING
Donor income is seen in some quarters as the answer to all our problems, and the US is held up as an exemplar for developing new models. However, it is not possible to simply replicate US approaches. They work for different reasons, not least the tax incentives that exist in the US, but also cultural and social norms that cannot be created overnight in the UK. Instead we need to design structured approaches to giving and to affiliation, and to the purchase of added value service, which fit the benefits sought by UK arts consumers.
In particular, we need better alignment of donor development strategies with marketing, pricing, ticket sales and ancillary income in a co-ordinated approach to earned income that leverages the best overall return for the organisation.
There are also significant marginal gains to be made from smarter approaches to ancillary income, in particular in offering added value ‘bundles’ to a market still hungry for premium experiences. This is most effective when experiences are of high value to consumers but low cost to the organisation. There are also opportunities for performing arts organisations to learn from visual arts and visitor attractions which are often more successful at leveraging membership income, as well as merchandise and other secondary spend.
ABOUT US
Baker Richards is a leading international consultancy in the arts and wider cultural sector. We also have a sister company in the USA – The Pricing Institute.
Our aim is to help organisations become more financially resilient because we believe this gives greater freedom to pursue wider artistic and social objectives. We are very proud of the value that we add for our clients – on our evaluated Pricing Reviews never less than 200% return on investment within the first year.
Our experience spans more than 250 arts organisations worldwide. Recent clients include Birmingham Hippodrome, Edinburgh International Festival, Finnish National Opera, Glyndebourne, Royal Danish Theatre, Royal Academy of Arts, London Symphony Orchestra, San Francisco Museum of Modern Art and Sydney Opera House.
We have produced this supplement to share some of the leading practice around maximising earned income – not all from our clients – in the hope they will make a useful contribution in difficult times. If you would like to discuss how your organisation might put some of these principles into practice we would be delighted to hear from you.
info@baker-richards.com
+44 (0)1223 242 100
http://www.baker-richards.com
Baker Richards is delighted to welcome Alan Brown, Principal of US-based consulting firm WolfBrown, as an Associate. Alan is a leading researcher and consultant in the arts industry and Baker Richards is delighted to be partnering him on a number of international projects, as well as bringing his research services to the UK. For more information visit http://www.baker-richards.com
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