TDWI Upside - Where Data Means Business

Q&A: Filling Theater Seats by Applying Analytics

The founder of Arts & Analytics discusses how predictive analytics can help theater companies of all sizes do a much better job of reaching out to patrons and filling seats.

Arts & Analytics, founded in 2012, offers software that applies predictive analytics to help performing arts organizations such as theaters use data more effectively to sell subscriptions and single tickets. The SaaS platform is used by large theater companies on Broadway and in Las Vegas as well as small theaters across the nation; the company says that one of its goals is helping not-for-profit theater companies become savvy in the world of big data.

For this interview, we spoke with cofounder and CEO Lee Gallagher about applying analytics to the arts. Gallagher previously worked on analytics and big data at IBM and is the author of Precision Marketing: Maximizing Revenue Through Relevance and a contributing author to the book Advice From The Top.

Upside: How does Arts & Analytics use big data to help performing arts organizations?

Lee Gallagher: Our proprietary data platform is called PatronLink. It's an enterprisewide solution for high-volume marketing analytics. It's a cloud-based platform that can run various analytics against our 250-million-line consumer database. That database consists of over 40 million emails; it includes over 400 different behavioral and attitudinal categories and over 100 models.

PatronLink provides users with an intuitive user interface that visualizes transactional analytics, demographics, social trending, predictive analytical models, and scoring.

What are the sources for that data -- for example, where do customers get social trending data to run analytics on?

We use a combination of data that includes surveyed, census, transactional (meaning credit card purchases), and modeled data. Many clients use Google Analytics for tracking digital communications. Traditionally, companies in the arts manually track social information or use reputation management software.

What sorts and sizes of organizations do you work with?

The Arts & Analytics client base includes both very large venues, such as the Blumenthal Performing Arts Center in Charlotte, North Carolina, which manages more than 12 theaters, and smaller theaters such as the John W. Engeman Theater on Long Island, which might seat up to 1,000 patrons a night.

How can analytics tools such as PatronLink be applied to ticket sales and audience marketing?

The average American receives over 5,000 marketing messages a day. Regardless of sector, marketers are under a mandate to deepen their knowledge of the consumer. They can no longer rely on the old-style "spray and pray," in which often-irrelevant email messages and paper-based direct mail are sent without much targeting.

In order to cut through this messaging overload, the message has to be relevant, with a specific goal of improving sales revenue. PatronLink has a simple interface that enables the user to upload data including recent audiences, names of subscribers, and single ticket buyers. Within seconds, they then receive back two sets of data.

-- The first set contains the aggregated information. Patronlink displays pie charts and bar graphs that reflect relevant demographics about the uploaded list, including age, income, and marital status.

-- The second set of data contains a CSV file that lists customer demographics on an individual level rather than aggregated. The insight at the individual level is helpful in creating personalized communications.

PatronLink can also twin or clone data. Once the first set of data comes back, the user can request additional names that have a similar profile, based on the first group's demographics. For example, maybe the first list provides insight that a majority of the ticket buyers make over $200,000 a year and enjoy theater. The user can ask PatronLink to scour our database to find additional prospects with similar interests and wealth.

How common is analytics in the performing arts market? How and why is that changing?

Historically, analytics weren't commonly used in the performing arts market. Many centers have very small IT departments and this type of service used to cost tens of thousands of dollars. Affordable technology has now leveled the playing field, enabling small entertainment marketers to compete for wallet share along with the larger organizations.

With the exception of Broadway blockbusters like "Hamilton," many show producers, performing art centers, and theatrical marketing agencies must find their audiences quickly to avoid an early close or empty seats. Data provides a new route to revenue.

What are some of the challenges in collecting data and performing analytics for small nonprofit theater companies?

Time is probably the biggest challenge. The small staffs that are common for many theaters mean that individuals must wear multiple hats. Gathering data is one more hat, so the lack of time hinders the ability of theater companies to analyze their own campaigns.

Can your product also be used after a campaign is complete to analyze what worked and what didn't?

Yes. As we discussed, PatronLink can help estimate the potential audience for a show through cloning. Frequently after a campaign, theaters want to compare who they thought would buy versus who actually purchased tickets. We upload the list of ticket buyers and compare it to the list of clone prospects that the PatronLink model selected.

It seems that member-supported organizations such as theaters, especially smaller ones, need a good understanding of their customers yet seldom have that. What are some of the issues that smaller theater companies in particular struggle with around customer data?

Dirty data is always an issue. Whether the theater company is big or small, the most prevalent issue is data quality. Theaters use transactional ticketing databases, either a purchased system that they own or a third-party service such as TicketMaster. These systems connect online sales, box office sales, and group sales to create a platform for ticket purchases. However, these portals often lack the additional software that automatically corrects addresses, including email addresses, during the input process. Without address correction software, incorrect data eventually contributes to data quality problems.

PatronLink has scripts that automatically cleanse the data during the upload process and return data in a standardized format.

Duplication is also a common problem. For example, when theater patrons forget their log-on information, they often simply create another account using a different email, name, and address.

What challenges are there in working with the data?

We encounter inconsistent formatting, foreign addresses, carriage returns, Cyrillic scripts, false addresses, house accounts, unknown codes, and missing data. To deal with all of this, our team has created multiple "hygiene scripts" to solve these problems.

What sorts of increases in ticket sales or other metrics have clients seen while using your product? Can you share an example or two?

Typically, customers see a campaign return on investment (ROI) in the triple digits. A large campaign might achieve a ROI of 500 percent, meaning that for every campaign dollar spent, they received $5 back. Additionally, we see dramatic increases in email open rates and significant decreases in email unsubscribe rates.

The Denver Center for the Performing Arts has published case studies that show it has seen significant increases in ticket sales by leveraging data, using regression models, and using RFM models. RFM stands for "Recency, Frequency, Monetary." RFM analysis is a marketing technique used to determine quantitatively which customers are the best ones by examining how recently a customer has purchased (recency), how often they purchase (frequency), and how much the customer spends (monetary).

Lyric Opera of Chicago, under the direction of trained statistician Lisa Middleton, uses information gleaned from analysis to guide the development of strategic directions for database segmentation, pricing analysis, and model building -- all with an eye to maximizing revenue and increasing patron engagement.

Blumenthal Performing Arts Center, headed by Tom Gabbard, leverages data-driven strategies to grow subscription campaigns, increase fund-raising activities, and curate events based on the buying behaviors of patrons.

The way in which you worked early on with the Denver Center for the Performing Arts is a good story. Can you tell us about that and the successes DCPA has had using your product?

Before we built PatronLink, we tested our methodologies, models, and scripts in over nine cities. DCPA was our first client; they wanted to launch a "Welcome Back" campaign to target lapsed ticket buyers that had not had a transaction with the center in two years. Our team analyzed 21 million transactions and 366,000 patron buying behaviors. The campaign had a test group of 36,000 patrons and a control group of 4,000 patrons. The campaign yielded a 506 percent ROI; the complete case study is available as a PDF.

What is the best way to communicate with theatergoers, and has it changed recently? Is that something Arts & Analytics has been able to help with?

Channels for consuming content continue to grow. The challenge for theaters is to select the right messaging and marketing channel for reaching each audience type. For example, theatergoers in baby boomer and Gen X age groups respond better to relevant emails and direct mail campaigns. These groups also engage in social media to share experiences and opinions. Millennials, on the other hand, don't respond well to email but tend to engage using text, Snapchat, YouTube, and Pandora-type channels.

Based on the target segment, our professional services team cannot only assist with the data hygiene and modeling, but also help choose the best channel to communicate the marketing message to the prospect. These channels typically include email, direct mail, SMS, and social media. Arts & Analytics can also design, print, and deliver the campaigns for our clients.

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