Can Groupon deliver what arts groups want most: repeat customers and revenue?
Andrew Druckenbrod, Pittsburgh Post-Gazette, 6/5/11
Groupon's deal-a-day juggernaut has built its multibillion-dollar enterprise by leveraging group discounts. A number of local nonprofit arts organizations have used it to get the word out about shows and concerts. Although the deals have brought in new patrons to many groups, reviews overall have been mixed. "Groupon has helped us get a larger audience for the first week of shows," says Cindy Opatick [of] Pittsburgh CLO [which] uses the service for its cabaret shows, not its main stage series. "The cabaret shows run for a long time and the theater only seats 250, so you don't get word of mouth. Groupon gives people a sense of urgency. It gives a better word of mouth." Yet not all performing arts organizations here are convinced Groupon will benefit them in the long term, or serve as a good marketing tool in general. "I can see how it works for really large organizations but I am not sure it will work for small companies like us," says Attack Theatre's Rebecca Himberger. "The return on investment seems to be really small." Groupon expects merchants to set their discounts at around 50%. Groupon then takes about 50% of the revenue from the reduced price. Melissa Grande [of] Pittsburgh Irish and Classical Theatre [adds,] "Groupon would not give us names and contact numbers of the people who buy the offer to try to pull them into patrons and engage them in the company. To get people to come back to the next show at full price, we can't email them about the show or send them a flier." Performing arts groups might have an advocate in [Groupon's] founder/CEO Andrew Mason. "We are about getting people off their couches and experiencing their cities," Mr. Mason said. "The arts [are] an incredible way to do that. We hear many businesses say, if I could just get them in the door once."
Do daily deals encourage repeat business?
In a June 2011 MerchantCircle survey of small businesses, the leading reason for liking daily deals was customer acquisition (58%) while at the same time ineffective customer acquisition was also listed as the top reason for not offering a daily deal again (42.4%). Giving discounts to consumers who would have patronized the establishment anyway is also a concern. According to a ForeSee Results survey, this is not unfounded. 38% of daily deal buyers -- the largest share --said they were already loyal to the business offering a deal. However, nearly a third were new customers and the same percentage had been swayed by a discount after having either visited only sporadically or had stopped patronizing the establishment altogether. [In] a survey conducted by Rice University, new customers made up more than 77% of deal buyers. On average, about 20% became repeat customers. ConsumerSearch.com and The About Group discovered that an overwhelming majority of those who had used a daily deal returned even without another discount. 53% of redeemers went on to become regular customers. Even though these statistics for return business range from roughly 20% to 70%, it is not a wholly discouraging prospect. It is worth noting that the higher figures were self-reported by consumers, while the lower number came from businesses. The reality likely lies somewhere in between.
Commentary: Without repeat ticket buyers, no loyalty, no annual donation.
Louise Stevens, Arts Market blog, 6/10/11
Without regular, repeat buyers -- and I'll take any kind of repeater, not just a subscriber, but anyone who cares enough to come back a couple of times a year - organizations can't build loyalty. Without loyalty, there is no real personal identification, involvement, and investment. And without that personal identification, there is no annual gift. Without annual gifts, there are rarely major personal gifts, and even more rarely bequests and planned gifts that have long been the foundation for endowments and special programs. So eventually, smaller and smaller audiences spell fewer and fewer donors. This is particularly critical as we move toward 2012's Federal proposed cap on itemized deductions, including those for charitable contributions, at 28% of personal income. Not only will this have a highly negative impact on larger gifts from more affluent donors, it will place the burden on more smaller gifts from more people who will be essential to the survival of nonprofit arts organizations. That means we really have to hustle to get more repeat ticket buyers that will make a greater quantity of albeit smaller gifts.
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FROM TC: Although these next two stories are not directly about the arts, they should be of interest:
A new phone app to help encourage customers to become a regular visitor
Good magazine, 7/18/11
People like to brag about where they go, and they dig the idea of competing to "check in" more: FourSquare grew 3,400% last year. A new app is betting people will want to say thanks as much as they like saying, "I'm here." We&Co launched [yesterday] after a test run in Atlanta. Creative Director Meggan Wood [said,] "We want to take the emphasis off the place and put it on the people." We&Co uses the same locations as FourSquare -- exactly the same, since they're lifted from FourSquare's API -- except you see the people who work there. If you like the service you get, or want other people to know there's a barista that makes a mean latte, you can pull up We&Co, find her profile, and hit "thanks." Sound cheesy? Well, think of it this way: What makes you become a regular at a bar, the beer or the bartender? "This is a way to engage the employees, not just the customer," says Jared Malan, co-founder of We&Co. "It allows them to have their own side of the game. What we're really looking to build is community around the place, through the community that work there." The hope is that a personal relationship with the people at a business -- not just the place or the prices -- will make you become a regular. [Note: for now, Atlanta is the only city on the app that is populated with employees at each establishment.]
Commentary: How to get return visitors to your blog
Mark Schaefer, BusinessesGrow.com, 7/17/11
"How do I drive more traffic to my blog?" In my opinion, this is the wrong question to ask. [P]eople who are return visitors to your blog....who love you and are engaging with you -- they are the good folks who will help you grow organically. Seeking "traffic" generates tourists to your blog. Focusing on content and your readers generates residents for your blog. If you concentrate on serving the people who read your blog in a way that will encourage them to come back, spend your time on:
- Unique and refreshing content no matter what the popular keywords are.
- High engagement with people who comment on your blog today.
- High connection on a personal level - including email, phone calls, and visits - with individual bloggers and commenters who would likely enjoy your blog and become regular readers.
If you adopt this slow and steady approach, at some point, you'll reach a tipping point where enough people are spreading the word, and their friends are spreading the word, that you begin to see ALL your numbers start to go up. Are you serious about building a loyal community? There are no shortcuts or silver bullets. You have to build a blog community just like you build your customer base -- one person, one connection, one relationship at a time.