An ArtsProfessional feature in partnership with Baker Richards

Baker Richards helped the Royal Opera House kick-start a revolution in evidence-based marketing that increased revenues by £400,000 in six months. Tim Baker talked to Lucy Sinclair about the value of using data to drive decision-making.

Photo of dancer in swirly pink dress
Royal Ballet dancer Beatriz Stix-Brunell
Photo: 

Giles Revell (Art Direction by Atomic London)

Like the whole of the cultural sector, the Royal Opera House (ROH) needs to respond to pressure on public funding (its Arts Council England funding was cut by 3% in 2018) by increasing earned income, while at the same time becoming more approachable to a wider audience. This is a key aim of its ‘Open Up’ initiative. Ticket pricing is a particularly sensitive issue: as Lucy Sinclair, Director of Media and Audiences, puts it, the ROH is “dancing on the pinhead of pricing”.

“This is an incredibly delicate balance, where we need to increase price just enough to reduce frequency of attendance”

In many ways, pricing is at the heart of any debate about achieving the sometimes contradictory objectives of increasing both audience income and accessibility. Lucy decided to use a data-led, evidence-based approach to ensure ROH made the best possible decisions for all audiences. Working with Baker Richards initially, and subsequently with her new in-house team led by Zahra Mawani, allowed her to address this challenge head-on. ROH confidently reduced some prices while increasing others, and raising the overall financial capacity of the venue.

Initial results are encouraging, with income increases significantly ahead of inflation within the first season of implementation.

Using rich data

When Lucy joined ROH two years ago, a key part of her brief was to build the organisation's capacity to make the most of the rich data it collects in the process of interacting with audiences. This has meant a lot of changes, including new team members whose focus is on using data at the centre of their marketing, communications and digital efforts. Lucy describes the overall revenue strategy as twofold: “Using pricing to increase financial capacity and then data-driven marketing, and communications to realise the value of that increased capacity.”

An extensive programme of analysis, begun by Baker Richards and now taken on by these new team members, identified that the ROH was relying on a small core of extremely frequent customers (though not always very high value in terms of ticket yield or donations) to sell the majority of tickets.

The ongoing challenge is to realise the full lifetime value of that core market while also ‘opening up’. As Lucy describes, this presents challenging decisions as they seek to spread risk by growing the core audience and generating new audiences: “We need to accept the difficult reality that making more tickets available to new audiences sometimes means that the frequency of attendance of regular customers might need to reduce.

“This is an incredibly delicate balance, where we need to increase price just enough to reduce frequency of attendance without reducing income or being exploitative. We can only embark on such a strategy with a really sophisticated understanding of the behaviour of our customers.”

Digital marketing

The last year has seen big changes to the ROH’s overall marketing approach, again driven by data. This has meant a radical reduction in spend on paid-for media (press, radio, outdoor, printed brochures), where results can’t be tracked, and instead focussing virtually all investment on digital marketing, where return on investment can be closely monitored. 

The new strategy leveraged previously under-utilised channels such as PPC (pay per click), retargeted display and paid social on Facebook and Instagram. The team has also launched a big change in its digital content strategy, focusing on video over the written word, and has embarked on rebuilding the website.

Lucy says: “Previously, social media was delivering great reach and PR but not converting to sales.” They are now using sophisticated analysis to track posts and put money behind content that gets a good reaction, then automatically ‘throwing good money after good’ – the opposite to what often happens in arts marketing, where spend is usually focused on difficult-to-sell inventory.

The paid Facebook activity alone is now regularly achieving over 1000% return on investment (ROI). For every pound they spend, they sell £1,000 of tickets, and as a result have been able to substantially reduce the budget dedicated to paid media, while increasing income.

In tandem, the Digital Marketing and CRM team, led by Kieran Chapman, has also simplified the CRM strategy, focusing on audience engagement and response rates, with constant A/B testing of messaging focused on maximising revenue. Email marketing now contributes over 25% of ROH’s box office revenue, up from 16% two years ago when the changes began.

Tim Baker is Director of Baker Richards.
www.baker-richards.com

This article, sponsored and contributed by Baker Richards, is in a series sharing insights into how organisations in the arts and cultural sector can achieve their commercial potential. The company celebrated its 15th birthday this month.

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Photo of Tim Baker

Comments

"sponsored and contributed by Baker Richards" Yesterday, as I was spending a frustrating time as an ROH "Friend" attempting to book Winter and Spring ballet seats, as there were so few seats available which afforded either a fairly reasonable view or not sitting on one of the disgracefully bum-murdering benches or dining chairs, or in seats with totally obscured views, I decided that after all these years it is clear it is a waste of money being a Friend. Royal Ballet management clearly is not interested in its hardcore audience other than those with the top-tier Friend package. I spend a lot of money at ROH each year but actually i can see that those advising ROH really don't value my custom or that of my fellow members of the ballet audience. What you forget is that in London, I can spend my unwanted money on excellent international touring overseas companies at the Coliseum and other venues, there is Saddlers Wells, Peacock, the Ballet Rambert, and the very lively English National Ballet. My Friend membership runs out next Summer. I shan't renew it. I question why the Arts Council Grant hasn't been reduced further because a lot of money has been spent on an overblown cafe space which at the moment is mostly visited by ROH staff for break out meetings. I really regret the several hundred pounds I have spent in the last quarter; I should have committed it to a ballet company who value an informed and loyal audience.

I sympathise with Noelle. Baker Richards isn't interested in patron loyalty, which is seen as belonging to the dying breed of subscribers. Nor is there any reference in the article to the most important factor in driving ticket sales: the quality of what the RO presents on stage. The digital marketers have engineered their own niche in the arts business: before they came along, it was the quality of the product which sold tickets - and I speak as one who regularly queued on Floral Street for returns. 'Open up' by all means. But unless what you supply is of a consistent high quality, these one-off audiences will prove fickle and quickly go elsewhere. There are only so many one-off attendees out there, especially at RO prices. The figures may look good now, but we're talking arts here not groceries.There are a lot of people out there like Noelle - ignore them at your peril.

"The paid Facebook activity alone is now regularly achieving over 1000% return on investment (ROI). For every pound they spend, they sell £1,000 of tickets" This makes no sense. 1000% of £1 is £10. Still a return, but hardly as spectacular.

The Royal Opera House could not stage the world-class performances we present without the generous and valued support of our Friends and patrons for which we are continuously grateful. However, the rising cost of staging opera and ballet also means we must change the way we approach pricing, and address how we communicate our core activities. In tandem with this, and in order for our beloved art forms to survive long into the future, we must also reach newer audiences – making sure that whatever decisions we make lead to the best outcomes for everyone who steps through our doors.

Our top priority is to meet the unique needs of each of our clients by helping them achieve their specific objectives. It’s really not as simple as whether anyone is ‘interested in patron loyalty' or not. As many of the most successful cultural institutions we work with around the world would attest, patron loyalty can be a double-edged sword: if your theatre is full of subscribers for every performance then how are you ever gong to nurture a new audience? As Lucy’s comments in this piece make clear, ROH’s objectives are really quite nuanced in this regard and require a carefully considered strategy, informed by a sophisticated understanding of customer behaviour and demand. I’m afraid I also beg to differ with Velouria. Return On Investment (or ROI) is calculated by subtracting the marketing cost from the income realised, divided by total cost. So the illustrative point that “For every pound they spend, they sell £1,000 of tickets” would be £1,000 - £1 / £1 (in fact an ROI of 999%) – although the point in the paragraph was that the facebook activity is regularly achieving returns above that.

I don't think you know what you're saying. Following your logic if I make 2 pounds out of my 1 pound investment, my return on investment is 1% not 100%. You just don't know what a percentage is. FYI https://en.m.wikipedia.org/wiki/Percentage

This is not an "article" in any traditional sense, but a piece of paid "advertorial", aka PR (or as we civilians like to call such things, "lies"). This may indeed provide an insight into a difficult and evolving area but we would be foolish to rely on any supportive evidence provided by Baker Richards - eg the supposed "increased revenues by £400,000 in six months". This is likely to be, at best, a highly massaged and carefully selected figure, or, at worst, given that the ad is not subject to any regulatory control or external auditing, it could be nothing more than some optimistic number made up by Baker Richards to promote their company's services.

I think the quote that stand out to me the most is ‘[...] the ROH was relying on a small core of extremely frequent customers (though not always very high value in terms of ticket yield or donations)’. Emphasis on the bracketed section. This to me implies that frequent customers are only welcome when they’re able to spend a lot of money; those frequent customers who sit in those cheaper seats are clearly not as important or welcome (& should be reduced, to use a word from the article). It’s nice to feel appreciated. As someone in their mid twenties who has been frequently attending, & seeing multiple casts of the same performance, for several years now, I’m finding this increase in seat prices disheartening. I don’t earn a great deal & so sit in the cheaper seats in the house. With those seat prices increasing, something I’ve been acutely aware of since earlier this year, I see three possibilities: to downgrade my seats to cheaper ones with worse views, to attend less but spend no more money than I currently do due to increased seat prices, or to not attend at all & spend my money elsewhere. The article states some seats have actually decreased in price... I’ve yet to see evidence of this. So far I’ve been downgrading my view to offset the increase in cost. With this article, not only are those loyal customers who’ve attended for years (& at some stage were the desired newcomers) being alienated; so are those younger visitors who don’t have deep pockets.

https://www.theguardian.com/global/2017/nov/20/dynamic-personalised-pricing “Consumers are more empowered and informed than ever before, and any pricing strategy that seeks to fool or mislead them is unlikely to be successful for long” Personally, I'm strongly against the idea. At the very least seats should be legally required to clearly disclose that they're using dynamic pricing on the purchase screen. Transparency is the key here as its public money that is keeping these arts organisations open.

The article makes for interesting reading but is eclipsed by the honesty and reality of the subsequent comments. What come across clearly is the ROH's complete contempt for its regular audiences, whether Members or not. These are audiences that have been slowly nurtured over years, have become enthusiasts for what the ROH offers but are now being pushed aside to make way for a new generation who may or probably may not return after the novelty of an initial excitement. It's like throwing out the grandparents to move the kids into their room. In the past I have brought my theatre-going group to the ROH regularly. Discounts have been generous and appreciated. Our money, paid well in advance, has filled 50+ seats that may otherwise have been a difficult sell. Our patrons have become fans of the ROH and have been prepared to expand their interests, keen to see new works. For many that now has to stop. A recent group booking for ballet has not sold well - already regulars are dropping out; the ROH's new pricing policy has become a disappointment, a deterrent. Mutterings of elitism are in the air, an accusation which cannot be denied. The young Facebook crowd are moving in, splashing out for that special treat in much the same way that 'one-off event patrons' buy premium seats at West End theatres. Their money will soon be wanted for more basic needs as real life encroaches on their High Life expenditure. After the initial flush of success ("Hoorah, we are attracting New Audiences") the ROH will find it difficult to find these new audiences year after year. Regular attendance is being discouraged and yet a regular audience is, I maintain, the backbone of the Theatre. If the new pricing structure had been introduced more slowly, more tactfully, with more concern for real people and less of an obsession with statistics, percentages, and social media, the ROH may have overcome this huge resentment, not to be under-estimated, which has taken the place of well established enthusiasm. Do you ever look away from your computer screens, stop analysing spreadsheets, forget about your degree-loaded accountants, and actually speak to your regular audiences? We are real people with real loves, the ROH being one of them, and we like to be appreciated. We may even have been able to offer advice.

As a regular opera goer since 1970 I have increasingly felt under appreciated as a core audience member. In the end one sees some terrific performances but oh the hassle. I have been a Friend for several years but the membership increases regularly and the addition of yet another layer of subscribers above basic Friends (ie Friends +) ensures even fewer seats are available - and although the website now works well, I suspect that if I didn't log on at exactly, say, 9.00am I would lose out. With the "big" evenings now at the top price of £140 in the Amphitheatre (for very cramped and uncomfortable seats) regular attendance is now impossible. (Though I am lucky to be attracted to the less glitzy evenings as well). I am lucky that at least my knowledge of the standard operatic repertoire is now under my belt, but for many others this groundwork must be nigh-on impossible.

While the increase in pricing may be serving the ROH a purpose in terms of reducing the frequency of its regulars while singlehandedly alienating them with this article, the increase in pricing certainly doesn't add up in terms of driving an engaged audience who will repeatedly visit. Many see the ROH as an infrequent (once per year at Christmas?) indulgence and rising prices may further dissuade these customers. Having seen a publicly available document showing that 70% of the ROH audience are single-timers, I'd like to understand how the new strategies encourage users to e.g. make one more visit per year, which is surely how you are best placed to expand audiences but also secure audiences for the future. I'd also question who the 'new audiences' are with inflated prices which require deeper pockets. The issue with the ROH theatre is that many of the cheaper seats have pretty poor visibility of the stage and raising the price of some of the affordable seats means that you're now paying more for a semi-bad view or the same amount as before for a worse view. It does seem to give the appearance that money talks and the ROH is a hotbed of elitism. Hefty price increases will impact on younger users - both time and cash poor - especially as they move from the student or under 30s benefits to paying full whack for seats. How will price increases bridge this and avoid huge churn? I tend to buy a balance of seat prices, from 1st price stalls to a seat with a slightly restricted view. For Swan Lake in summer, prices increased by about 1/3 for both areas. This encouraged me to downgrade my stalls seat by one band and to take the restricted view for a rare second visit to the production. I paid a significant premium of, from memory, between £30 and £50 per ticket. This isn't a slow creep in pricing or a nudge, it's a truly hefty amount which I imagine will reinforce the belief that the ROH is an indulgence and not a regular enjoyment. Or some people might call it elitist. Yes the cost of productions is rising, but so is the cost of living, which is only going to lead to your audiences, old and new, having less disposable income for the new pricing strategy. The ROH is fortunate to be full right now, but how will this pricing structure get you through the difficult times to come, or will it strangle your feed of regulars who can currently afford the prices but may struggle come Brexit? There's also something to object to in terms of the charitable funding you receive from legacies, charitable trusts, and of course the Arts Council. You need this investment to maintain your current level of programming and the cost of staging productions and they do this on the basis that the opportunity to see will be available to all. The people most likely to leave a legacy are your committed regulars, yet you snub them in your words above. There's also something a bit grubby about requesting legacies and donations and then announcing boldly and publicly about how much profit you are turning as a result. Driving instant ROI may be a good short term achievement, but as a broader thought, turning a profit isn't going to drive your audiences long term. You need to think about where you want to be in 5 years, 10 years, 20 years and allow those audiences to grow with you. Why are there few 'bums on seats' opportunities for young audiences to get to understand what it's like to sit in a theatre and to enjoy a performance? Looking at the programmes for families and other newer, younger audiences who could be nurtured for the future, I wonder why the ROH's investment rests mostly in participatory events while the likes of ENB and BRB are creating lighter, family friendly formats of the classics to bring the magic of ballet to parents and children, which generate memories and hopefully a life long passion. While Family Sundays and Month of Sundays will no doubt sell out and engage many, they aren't encouraging the next generation to come and sit in a theatre and watch a performance. I wonder if the ROH is taking note of the ballet companies and the likes of the Barbican/BBC Symphony Orchestra/South Bank Centre in terms of their outreach and engagement events. Or look at Sadlers Wells' Sampled events which allow for a more informal taster of what's on offer. Without bringing performance to these audiences early, where is the longevity? There's so much potential to bring children's programmes to the Linbury, unless it's a case that children need to sit quietly and still for 2-3 hours if they are to access a performance.