In most US orchestras today, patrons engage in multiple transactions with separate departments. To borrow a line from Law & Order, these transactions are usually managed by two separate but equally important groups: the marketing team, responsible for tickets and subscriptions; and the development team, responsible for gifts and most special events. In most orchestras, though, there is major crossover between these two teams: they share the exact same customers. Patrons who attend and  subscribe to orchestras are arguably the majority of people who also donate money to the orchestra.

In this final post of the Project MAD series, I’m going to talk about how my proverbial new City Symphony would approach marketing and development functions that produce patron-generated income.  Patron-generated income, as I’ve stated many times throughout the series, is the only sustainable source of income for an orchestra long-term.

That statement was not my own. At the 2007 conference of the League of American Orchestras, orchestra professionals Bruce Coppock, Larry Tamburri, Douglas Kinzey, and business-strategy guru Paul Boulian led a lively and thought-provoking session for 350 attendees on a ‘Radical New Revenue Model for Orchestras.’ I was there, and thought it was one of the most valuable sessions I had ever attended. This session later led to an article by Mr. Coppock in the January/February 2008 issue of Symphony magazine, which I cite here because it summarizes that presentation very well.  I encourage readers to read that article before reading the rest of this post – just for some context.

Here is my favorite quote from that Radical Revenue Model article:

If we think of ourselves as being in the concert production business, with ticket revenue as our core revenue, we severely limit potential income. However, if we think of ourselves as being in the patron-development business and think of producing concerts as our mission, new horizons appear.

Indeed, I’ve spent the last few years researching and thinking about those “new horizons.” It was actually my efforts to examine new methods of patron engagement that planted the seed that ultimately led to this entire blog series.  My goals in looking for new ways to engage patrons were to:

• Change the way patrons think about the orchestra; not as an event-producing, commercial ticket-based performance entity, but as a cultural and educational resource focused on fostering deep, lifelong engagement in the art of music. I don’t want people to think about themselves as just ticket buyers, subscribers, and/or donors, but as patrons of music.
• Make the orchestra affordable and accessible to the broadest population possible, by lowering financial barriers to basic access.  Get ‘em in the door first, then add value over time.
• Identify all of the values that true patrons want from the orchestra, and capitalize on those values in as seamless a manner as possible.  You get what you pay for, and certain values are worth more to different patrons.

After that illuminating conference session, I also happened to have a candid conversation with a board member of a top US orchestra. I was talking with him about the challenges of moving different ‘groups’ of patrons along the path of invested engagement, such as getting single ticket buyers to subscribe, getting subscribers to make a first gift, getting established donors to increase their gift, and getting patrons to participate in fundraisers. He listened and then said,

“You know, it’s a little odd to me that we keep going back to the same customers for different things all year long.  I think it makes some of us feel like ATMs. We keep going back to the same people for more, more, more, and a lot of our patrons are doing it all because they love it, they get it: we need money, more money for this, and more money for that. But sometimes I think it’s like we are bakers just selling just the cake, then the icing, and then some coffee.  Why can’t I get everything I want all at once?  At the art museum in my town, I buy an annual membership and I get everything I want.”

A light bulb went on in my head.  His comments really got me thinking about how orchestras transact business with patrons and deliver service ’values’ in different transactions. So I started looking for studies that compared the performing arts business model to the museum membership model, and found very little. Then I started analyzing the membership model myself, looking at membership-based loyalty-type marketing programs at museums, airlines, hotels, sporting organizations, and fine dining establishments. The outcome of my study formed the basis of a new membership model for an orchestra.

So here it goes! Hold your hats, it’s gonna be a wild ride…

The Membership Model. I am eliminating the term subscription from the City Symphony business vocabulary entirely. That doesn’t mean that I’m eliminating reserved seat ticketing, a reward system for loyal and frequent attendance, or service, recognition, and access perks as values, I’m just scrapping this old terminology and replacing it with one word: membership.

To borrow the slogan from American Express, membership has its privileges. Like museum membership programs, the higher the level of membership (in total cost), the more attendance, access, perks, recognition – the more value the member receives.

In another huge departure from tradition, I am eliminating all pre-packaged concert series as they’ve historically been offered. At the City Symphony, concert packaging would become an entirely customized choice for each patron. Prime seating would be sold in descending membership level order through a tiered system of reservation deadlines.

But before I go into too much detail, let me say that in order for this new system to work, patron service is key.

To assist members in making their concert choices, obtaining their seats, and getting all benefits out of their memberships, I would institute a highly-trained Member Services department, sort of a hybrid of box office and patron services. These staff members would deliver high-quality, personalized service to patron members throughout the orchestra season, much like fine hotel concierges.  They would handle reserving seats for concerts, RSVPs for receptions and fundraising events, perhaps even offer supplemental services like dinner reservations for certain patrons at higher levels of membership.  This service could be offered by telephone and also through an account-based online reservation system. Members would log into their accounts, and their membership level would determine what options they could choose.

To give specific examples of the membership model, let me start at what might be the top end of the spectrum.  For purposes of discussion, I’m going to call the top tier of memberships ”Leadership Level”, and put all Leadership Level members at three price points: $2,500, $5,000, or $10,000 per year.

For the top $10,000 annual membership commitment, members would receive up to four prime center orchestra seats for any and all concerts that the member chooses to attend, reserved by a Leadership Level annual member reservation deadline, with additional seats available for purchase for member’s guests – the box office would hold a section of VIP Reserved seats for this purpose, and then release any unreserved VIP Reserved seats for single ticket sales on the day of each show. This member also gets free valet parking, access to the special membership lounge in the hall, and their name goes up on a lobby wall (where all Leadership Level members’ names get posted on a beautiful plaque.) Plus, these members get to ‘sponsor’ something like a soloist, with their name printed on the program page in the appropriate concert program.

These top members also get to go very deep into the life of the organization, too.  In fact, MAD Foundation board members might be expected to participate at this level. Members in Leadership Levels get a special “insider” e-newsletter from the Music Director and General Manager. This membership package also includes a table for eight guests at the annual dinner dance gala, invitations to have dinner with the music director and composers privately, lunch with musicians, guest artists and staff, a symphony chamber group will even stage a house concert in their home for invited guests, and even receive a year-long backstage rehearsal pass. These members can drop in on any rehearsal if they like, and perhaps even get invited to attend the annual meeting of the Board of the Musical Arts Development Foundation.

For a $5,000 Leadership Level membership, patrons would have the opportunity to have two prime center orchestra seats for any and all concerts that the member chooses to reserve by the Leadership Level annual reservation deadline, with additional seats for their guests available for purchase upon request in VIP Reserved sections.  They also get valet parking, access to the special membership lounge, name on the wall at the $5,000 level, and they get their name placed in recognition for underwriting of a special program, maybe an education program or chamber series.  This membership may also include four tickets to the annual gala.

Next, for a $2,500 Leadership Level membership, patrons would receive the same benefits as a $5,000 member, except only two tickets to the annual orchestra gala, and their name would only be recognized on the lobby display, not designated for a special project or program.

General Membership categories would be a second tiered system recognized below Leadership Level, with five price points: $50, $100, $250, $500, and $1,000.

For a $1,000 general membership, the City Symphony would give patrons advance reserved seats to all concerts they choose to attend (reserved by the advance member deadline), plus post-concert receptions, access to the premium member lounge, and basic membership benefits that all members receive (described below). Recognition would include the member’s name in the concert program, as is common today in the fundraising area. These members could still attend the annual gala and pay for valet parking, but they would have to choose to purchase those items separately. In the Leadership Level, they get more included in their membership.

For a $500 general membership, I would take away access to the premium member lounge, and limit admission to two seats for  four concerts of the members’ choice only, which can be booked in advance by the annual member reservation deadline. Additional single tickets could be purchased, too, for additional concerts they want to attend at the same time. But the first four concerts are included in the membership.

For a $250 annual membership, I remove access to post-concert receptions, and limit admission to only the first two concerts instead of four.  At this level, though, the reservation deadline changes. These members would be allowed to reserve best available seating immediately after the annual advance reservation deadline passes - up to the day of a concert.

For members at the $100 level, they get basic membership benefits plus two advance tickets for one concert of their choice, with rights to reserve seats and also purchase additional concerts one month in advance of each date.

I propose that the Basic Membership at the City Symphony would begin at an affordable $50 per year. For this basic membership, patrons would receive an e-newsletter subscription, perhaps a 10% discount on merchandise, concessions, and music school classes, and have the privilege to purchase reserved seat tickets to concerts one month in advance. That’s it. This entry-level membership transaction is designed to engage patrons as supporting members of the City Symphony FIRST, ticket buyers SECOND.

For people who aren’t members of the City Symphony, they don’t get to purchase advance tickets to concerts until the week of each concert.  Thus, the orchestra would have a weekly ”on-sale day” for each week of the season to sell remaining open seats not reserved by members first. I chose this strategy because consumer behavior today is very much conditioned to last-minute decision making.  It’s a fairly common fact that the majority of single tickets sold at most American orchestras are actually sold during the week leading up to a concert. Therefore, why not hold single ticket sales until the week of the show to encourage more patrons to become members? I like that idea.  I believe that the privilege to reserve tickets in advance is a value worth paying for. But once the price drops for single tickets at the late on-sale date (read on…) those patrons who might rush to save money and get cheaper single tickets on the on-sale day will realize the value of membership participation eventually.

Would the membership model prevent visitors to the orchestra’s home city the ability to reserve advance tickets to a single performance in advance? Actually, yes. The membership model completely changes the way single tickets would be marketed, period. If you look at the museum model, how many tourists or visitors reserve admissions to art museums when they decide to visit a particular city?  It’s rather uncommon.  Museum attendance is more of a casual “do drop-in” transaction, taking place in broader hours of operation.  Symphonies have to be a little more cautious because their programming only happens at specific times. Still, reserving the right to choose concerts and seating in advance is an important value that I think could help drive acceptance of the membership idea.

That’s why I’m changing that single ticket release time to week of show only.  If visitors want to purchase single tickets more than a week in advance, they must become a member first, or find a member to reserve and purchase tickets for them.

I would still offer group sales reservations in the normal fashion for conventions, tourism packages, and other groups.

The next burning question readers might ask is probably: what are the price-points for single tickets that members and non-members can purchase above and beyond their allotted concerts that are included in membership?  The answer: all ticket prices are going to be very low in my new orchestra model, by financial design.

In Part 3 of this series, on the financial strategy of the Musical Arts Development Foundation, I suggested that a high percentage (maybe as much as 70-90%) of the City Symphony’s budget would be subsidized by a “working endowment,” through diverse business investment ventures.  I suggested mixed-use development real estate as an income generator for the foundation.  The reason for that strategy was to reduce the orchestra’s dependence on ticket sales for its income, period, and lower the general cost of attendance for the mass market.  This would mean that membership and single admission income would only be responsible for maybe 10-20% of the orchestra’s annual budget.  Another 10-20% portion of the budget would likely come from the orchestra’s “venture capital” received through temporary infusions of government, foundation, and corporate grant funding. The balance from the working endowment.

Thus, if the orchestra is well capitalized with 80% from investment income, 10% from grant income, and thus dependent on membership income for only 10% of the budget, then single ticket prices could be scaled at more nominal prices:  ideally as low as $5, $10, $15, and $20. Perhaps even kids under 18 could be FREE or half price with at least one paying adult. That would be ideal to me. My belief is that the more the orchestra can get people in the door, the more inherent value is developed over time.

Certainly, my membership model is a dramatic change from the way most orchestras do business, and I realize it may sound truly crazy to a lot of arts marketers out there.  But the more I think about the possibilities of the membership model, the more it seems to align itself with my observations and studies of modern consumer behavior.

What is also important about the membership model, at least to me, is that the organization would change the way it examines patron-generated income.  Intead of monitoring metrics through three streams of income: subscriptions, single tickets, and donations, this model would focus on one major metric: membership income. It would unite the goals of marketing and development teams to look at total income per household, and truly put the orchestra in the patron-development business, not sort of separated ticket and donation businesses. Conversely, the organization would be forced to concentrate on over-delivering value. 

Certainly, the membership model would require the orchestra to determine what benefits are non-tax-deductible and disclose the appropriate information to each member for tax purposes. That’s not hard to do.

I don’t envision that development officers would lose their jobs under this model, either. The City Symphony would still need an effective development team to cultivate members to rise to higher membership levels, and I envision that major gift officers would still be valuable team members to cultivate those with higher capacity to still invest in the orchestra by underwriting special projects, commissions, recordings, tours, making traditional endowment investments, music school scholarships, capital projects, etc. The development team would also need institutional fundraisers to write grants and solicit corporate funds. The City Symphony would still require marketing talent to promote its programs, although with low admission rates, my ultimate hope is that most concerts would sell out quickly and fuel demand for more concerts.

I hope that readers look at my membership model as a theoretical change of thinking, rather than a specific set of proposals.  The levels and benefits I have talked about have all been sketched out using terminology from the traditional performing arts business model, in order for my ideas to resonate and make some sense.  However, more advanced thinking on the membership model opens up really fresh windows into how a performing arts company could generate revenue and engage its patrons.  I’m merely suggesting a new school of thought, not a ready-made system for adoption.

Conclusion. The membership model is where this innovative but experimental journey of mine comes to an end, at least for now in this blog forum. This series has been a challenging and rewarding personal and professional exercise for me, and even though I am well aware that a lot of my ideas are quite idealistic and ambitious… that’s okay. I gave myself permission to throw everything I learned in the performing arts tradition out the window and just reinvent from scratch. I’m pleased to say that since starting to write about innovation in the orchestra field, I’ve actually started to note more new innovations coming out of the field.  While I’m not taking credit for these innovations personally, I like to think that I’m preaching with a choir.  Everyone in the field knows of the need to innovate, and I hope that my writing has encouraged others to keep thinking outside the box.

I intend to return to more diverse, informal blogging on various topics in arts and culture in 2012.  I thank all readers who have taken the time to read CulturaLee Speaking, particularly this complex Project MAD series. I send a special thank you to Jeffrey Nytch for the spark that inspired the series in the first place; thank you to Ian David Moss at Createquity for the shout-outs; and a thank you to Drew McManus at Adaptistration for listening to my ideas, being a sounding board, and encouraging me to continue writing, especially his response to the membership model! I offer it all as food for thought only, and welcome comments and more new ideas.

‘Nuff said.