Learning from the Past, Looking toward the Future

A little more than a week ago, I announced that I would be leaving Arena Stage to lead the marketing and membership efforts at the Smithsonian Associates at the end of March. I've been overwhelmed by the kind words and best wishes sent my way. For that, I am very grateful.

Some have also asked if I plan to continue blogging. As you may have noticed over the years, my blog covers topics that I am passionate about, often times motivated by current trends and experiences. As I move from a performing arts organization to a museum and research institution, undoubtedly my perspective will evolve over time. However, I hope to continue to contribute to online dialogue and debate.

My four-and-a-half years at Arena Stage have been the most rewarding and exhausting of my career. When one decides to pursue a career in a field they love, like many theater artists I know, these two adjectives are not mutually exclusive; in fact, many would argue that you can't have one without the other. When joining Arena Stage, I knew there were very few precedents for what we needed to accomplish, and with the opening of the Mead Center and a 2.5 year transition ahead of us, a clear path wasn't always available. It was an opportunity that intimidated me, but I knew that I would get an education of a lifetime.

In looking back, I've learned quite a bit along the way...

• Always give an "exclusive" to your best and most loyal customers. Trust me, if they read something important in the daily paper before they hear it from you, they won't feel like part of the family.
  
• Customer service can be a significant competitive advantage. When the whole world has come to expect awful customer service, it creates an easy opportunity to shine.
  
• When hiring, if you have to pick between the two, a "fire in the belly" always trumps experience. One can teach skills, but one cannot be taught to take pride in their work.
  
• Resources are an investment--monitor and expect returns. Marketing directors have two primary resources: human and financial capital. Where and when to invest each is a critical decision. When budgets are tight, monitor cost of sale and make data driven investments rather than emotionally driven ones.
  
• Decisiveness is critical. Leap or die. Would you rather sip champagne and listen to the violins on the Titanic, or slap on a life vest and jump into the unknown? The unknown may be scary, but the known isn't an option. A delay in decision-making will almost always be costly, as it is rare for circumstances to change, but options will diminish. The non-profit theater landscape in the United States is changing rapidly, and adjustments must be made.
  
• Maximize successes to mitigate risks. Unless you present nothing but bankable commercial successes, risks are inherent in the theater. When you catch a break, ride it for all that it's worth in order to mitigate the risk that is right around the corner.
  
• Looking for improvements? Track results. By tracking, you send a signal to the company that something is important. Important enough to monitor. By not tracking, you send an equally powerful signal that something isn't worth the effort. Know your vital statistics, and track them aggressively.
  
• Marketers are masters of perception, not reality. Unless you are talking about financials, marketers should keep their attention on perception. Perception, as we know, is reality for most.
  
• Subscriptions aren't dying, theaters are killing them. If patrons can get great seats at a significant discount at the last minute, the value proposition of a subscription doesn't exist. Best seats at the best prices = more subscriptions (as long as the product is good).
  
• Develop a strong team, and hire to your weaknesses. Major accomplishments are always a team effort. Honestly assess yourself, recognize your weaknesses, and hire people that are better than you in areas where you need improvement.
  
• Comp tickets are disrespectful. There are a few good reasons to give a comp here or there, but nothing devalues the work of an organization or artists more than giving away free tickets. Why do we expect society to value the arts if we don't?
  
• Make decisions for tomorrow instead of today. Often times we are faced with decisions that could result in a short term gain, but a long term loss. Unless you are in desperate times, always set yourself up for a better tomorrow, even if it makes a more difficult today.
  
• Take a Pavlovian approach to discounting. Use discounting as a means to encourage desired behavior. Want people to purchase early? Avoid late discounts whenever possible.
  
• Marketing and Development are two sides of the same coin. Look at revenue generation as a team with the goal of raising the most revenue at the least cost. Consolidate resources, eliminate redundancies, invest in campaigns that perform the best across the departmental divide, and look at your customers holistically with an eye toward building loyalty and lifetime value.
  

I will always remember my time at Arena Stage fondly, and am thankful for the education I received.

Looking forward to catching a performance in the near future--this time though as an audience member (and yes, I will buy my tickets).

Art or Audience; Chicken or Egg?

Doug McLennan, Editor of ArtsJournal, invited me to participate in an online debate on leadership in the arts. To kick things off, a panel of bloggers were asked to respond to the following prompt:

"Increasingly, audiences have more visibility for their opinions about the culture they consume. Cultural institutions know more and more about their audiences and their wants. Some suggest this new transparency argues for a different relationship between artists and audience. So the question: In this age of self expression and information overload, do our artists and arts organizations need to lead more or learn to follow their communities more?"

There has been vigorous debate on this issue, and to check out all the arguments, please visit the "Lead or Follow" online discussion here.

As for me, below is my response to the aforementioned prompt:

This week we examine the nature of leadership in the context of developing the most fruitful relationships with our audiences. Good relationships often strike a healthy balance between competing interests, and frequently this balance is forged over the course of many years. Arts organizations have relationships with their patrons, donors and communities, and those relationships are constantly evolving. As such, I find the framework of this debate limiting, as I would argue that great arts organizations lead and follow, and that we shouldn’t be asking if we should do more of one than the other, but instead ask if we are doing the leading or the following at the appropriate times.

There are moments when arts organizations must lead, and that leadership becomes a catalyst of great change. In 1948, the National Theater in Washington, DC closed its doors rather than integrate, and a twenty-four year old Zelda Fichandler decided it was time for the city to have a producing theater of its own. She was an early proponent of the idea that communities should reclaim ownership of their theaters, and now sixty-one years later, there are more than 1,900 non-profit regional theaters in cities across the nation. It took a leader.

There are also times when we follow. As of 2008, minorities accounted for 48% of all births in the United States. The U.S. Census Bureau projects that by 2050, the Asian and Hispanic population will double, African-Americans will increase and the white population will decline by 9%. In addition, the percentage of the population that is elderly will almost double. Look at your board of directors, staff, donors and audiences—do they reflect your community? Is the physical structure of your building suitable for a growing number of elderly patrons? As a field, we are behind the curve, and we have much to learn from following as our communities are changing faster than we are.

In terms of audience development, it is important for arts organizations to play both roles well. Our principal challenge as arts marketers is presenting art as a viable option for leisure activity. We have many barriers—ticket prices, transportation and parking, lack of arts education in our schools, inaccessible and aging infrastructure, etc. Not to mention, the abundance of free and easily accessible alternatives from our competition. A 2008 Survey of Public Participation in the Arts published by the National Endowment for the Arts (NEA) found that American arts audiences are getting older, and their numbers are declining at significant rates. In 2011, NEA Chairman Rocco Landesman delivered his now famous “supply and demand” speech from Arena Stage, indicating that demand for the arts is currently outpaced by supply, and suggesting that we consider pruning our numbers. We have a problem in this country. And if we have to produce more populist work in order to overcome potential barriers for first time patrons, I am fine with that. In fact, I am more than fine—it is what we should be doing.

Populist work is often, for lack of a better term, a gateway drug. Lure them in with a musical, roll out a comedy, put in a Broadway touring production. Do what it takes. Once they have an exceptional first time artistic experience, art becomes an option and then we work to get them addicted. From the perspective of an arts marketer, once a new patron walks through our doors via a “gateway” play, my job is to get them back. Once they have had a few experiences, my responsibilities shift. I now focus my attention on broadening their experiences and pushing their boundaries. And they will be ready. But forcing them to run before they crawl will end up in a disappointing experience for all.

Each patron has an individual relationship to an arts organization. We have a responsibility to offer up a balanced diet that feeds each artistic soul. For those with a developed palate, we lead, push, challenge and sometimes offend. And for those new to us, it is perfectly appropriate to offer up a piece of cake in order to get them to sample the exotic quiche.

Currently at Arena Stage, we have a tremendous production of John Logan’s Red directed by Robert Falls. In the script, painter Mark Rothko’s assistant Ken delivers a powerful speech, in which he says:

“You know, not everything has to be so goddamn important all the time! Not every painting has to rip your guts out and expose your soul! Not everyone wants art that actually hurts. Sometimes you just want a fucking still life or landscape or soup can or comic book.”

Remarkable arts organizations are more than just temples of art. We are relationship builders. Today we lead, tomorrow we may follow, but we take our cues from our communities, for whom we were built to serve.

Partners or Competitors? My Favorite Frenemies

A little more than a week ago, the Washington Post in an extraordinary effort by a daily newspaper, published a series of articles on the state of theater in Washington, DC. As part of that series, Nelson Pressley, a frequent contributor for the Post, wrote an interesting piece on the financial status of the community. In it, he notes that in terms of capacity, the Washington theater community has grown tremendously over the past decade, while government funding has decreased significantly and according to theaterWashington, the annual theater attendance has remained the same since 1988. Mr. Pressley also cites that each theater that has expanded reports significantly increased audiences, and several have recently set all-time sales records.

In the Twittersphere, this article raised the same question that NEA Chairman Landesman asked in his now famous "supply and demand" speech given at Arena Stage in January 2011. Is there enough demand to support the increase in supply? This isn't a new question. It is something I questioned in this blog in 2008, and it is something that arts administrators discuss at every conference I have ever attended.

Setting aside for the moment the data from theaterWashington, on a positive note, I've seen some extraordinary things in the DC theater community in the past few years. I'd heard that the city can only support one or two major hits at any given time, however in the late fall of 2010, several theaters reported exceptionally strong attendance numbers for multiple shows running at the same time, including Oklahoma! and every tongue confess at Arena Stage, Candide at Shakespeare Theatre Company, Sunset Boulevard at Signature Theatre, and A Christmas Carol at Ford's Theatre. Well, there went that long held belief. When Arena Stage was considering a 13 week summer remount of Oklahoma!, I was told that the city could not support a long sit down production of a major musical in the summer as August was completely dead in these parts, and we couldn't succeed with Congress out of session and everyone heading to the beach. Surprise, surprise when not only Arena Stage experienced sold out houses at the height of the summer doldrums, but Woolly Mammoth Theatre Company did as well with their remount of Clybourne Park. As a community, I don't think there is anything we like better than being told we can't do something, and then proving that we can.

But to Nelson's point, we have a significant challenge ahead of us. In discussing his article on Twitter, playwright Stephen Spotswood asked me "how much do DC theater companies feel like they are in competition with each other?" Soon thereafter, Peter Marks, theater critic of the Washington Post, asked me to answer the question on the record. And this is my attempt...

Are DC theater companies in competition with each other?
Yes. In my opinion, to think otherwise would be naive. People have limited disposable income, especially during tough economic times. However, we are very lucky. Washington, DC is weathering the economic downturn better than any other city in the nation. Although we have had our challenges, we have a leg up on everywhere else, and perhaps this is why we have been able to expand during turbulent times. But in terms of how people are going to spend their leisure time, theaters are in competition with each other as much as they're in competition with movies, sports, other performing arts, museums, television, YouTube, video games, etc. To say that we aren't is simply untrue.

That being said, if I am in competition for discretionary spending dollars, I want it to be with another theater. Why? I can't get patrons to come to my theater if they don't see theater as an option in the first place. My primary responsibility as a theater marketer is to get people interested in the theater. To increase the stability of our community, we have to grow the base of theater patrons in our city. We don't have any other option, and to do that, we have to view ourselves as partners first and competitors second. If we focus on cannibalizing each other's audiences, it will be a losing battle. One theater may win one year, but inevitably it will lose the next. The only way everyone wins, including the city, is if we cultivate a growing audience for all of our theaters.

In responding to Stephen's question, I would also say that I tend to think that competition in the marketplace is good. When competition is stiff, it pushes everyone to do their best. To produce work of the highest quality. To provide the best customer service. To nurture the best local talent, and to present preeminent artists from around the globe. Please forgive the personal anecdote, but I know I have a more rewarding workout when there is a strong runner on the treadmill next to me. If there is no one by my side pushing the pace, I won't exert as much energy. I want to keep up. I want to compete. And because of our competitive spirit, DC audiences will get to experience the best efforts of all.

As I look into the new year, I resolve to elevate my gaze whenever possible from being exclusively on the theater where I work to the community as a whole. I hope that competition will improve us individually, and that working together will improve us as a whole.

Who are your best customers (and why many don't know)?

Some time ago, I was at the box office when a major donor who lives out of town came up to the window. I instantly recognized her even though she hadn't visited us in quite some time. After warmly welcoming her back, I stepped away briefly to attend to another matter, and when I returned to continue our conversation, I was startled to see that she was being charged an exchange fee to transfer into another performance. When I inquired, the box office associate rightly told me that she wasn't a subscriber, and that waiving exchange fees was a subscriber benefit. In this case, the patron wasn't a subscriber because she lived thousands of miles away, however she was an incredibly generous donor, giving both to our annual fund and our campaign. Her giving over the years easily made her one of our most valuable customers, but because she wasn't a subscriber, the box office didn't grant her one of our entry level benefits.

This wasn't a human error, but a systemic one. At the time, we were operating a ticketing software that didn't reflect giving history, so there was no way the box office associate could have known the patron's lifetime value. And even if the ticketing system notified the box office associate of the patron's giving history, the associate would have had to override the benefits structure we had in place as complimentary ticket exchanges were a subscriber benefit, not a donor benefit.

We had a problem. Fundamentally, how we defined our best customers changed depending upon which department was asked, and the company as a whole had yet to identify our best customers in a holistic manner.

Two years ago, we took the first steps to address this issue. First, we replaced our antiquated ticketing software with an integrated database that housed all transactional data across our various departments allowing users to see an overall picture of each patron. Once in place, we had to develop a system for defining our best customers from the perspective of the entire company. We hired Target Resource Group to develop an algorithm that incorporated all transactional possibilities with our company, and then apply that algorithm to our database to develop a Patron Loyalty Index score for patrons in our system based upon transactions over the previous five fiscal years. The index scores allowed us to separate our database into four major categories, and today, certain overriding benefits are assigned to the higher level categories.

If the aforementioned major donor were to come to our box office today and request an exchange for a single ticket purchase, an associate would enter her information into our database, and the database screen would immediately turn red--our signal that we are interacting with someone with a very high Patron Loyalty Index rating. The associate would then know that an exception to the exchange rule would be in order as a result of the major donor's lifetime value to the organization.

The way the communications and development departments do business at Arena Stage has fundamentally changed over the course of the past two years. We view ourselves as full partners in building patron lifetime value. We work together to increase loyalty, reduce attrition and grow revenue. Subscriber renewal rates are at an all-time high, patron churn has decreased by 7%, the number of full season subscribers has increased 18%, and our membership program is pacing well ahead of last year.

Knowing who our best customers are has made all the difference.

Customer Service as a Competitive Advantage

I’ve just returned from the National Arts Marketing Project Conference, the annual gathering of arts marketers convened by Americans for the Arts. I’ve gone to the conference for the past seven years to reconnect with colleagues, learn from case studies and catch up on new trends. As I return home this year, I am mindful that some arts marketers have limited control or influence over mission critical decisions, many of which affect audiences, revenue streams and branding. As marketers position themselves as growing agents of influence in their various organizations, I can’t help but think that perhaps our energies should be spent concentrating on the underperforming areas in which we can be the most impactful.

In this new environment of reduced resources, the ability for an organization to identify its competitive advantages is vital. Some of which, marketers have no responsibilities for. Others, we lead. In listening to Scott Stratten's opening keynote address at the conference, I was reminded that the general woeful state of customer service provides a prime opportunity for arts organizations to distinguish themselves. In short, Scott reminded us that we should always look for "opportunities to be awesome."

Some thoughts on how we can achieve awesomeness…

Awesomeness comes from humanness. We have our rules. Our policies and procedures. It is easy and efficient to train automatons. But the greatest value of human interaction from a transactional perspective is our unique ability to empathize, reason and trouble shoot. We have to encourage front line brand ambassadors to use their judgment. Empower them to solve problems. Reward them for breaking the rules when required because by design, rules are created for routine situations, not exceptional ones. Why hire smart and caring people if those attributes don’t influence operations? I left the conference thinking that if we all treated our customers like we would our mothers, our spouses, our best friends, that we might have lifelong relationships with them as well.

Awesomeness is unexpected. In the spirit of a random act of kindness, what if we asked our brand ambassadors to perform one act of unexpected awesomeness each day? It doesn't have to be a splashy show, as even an understated, thoughtful gesture can make someone's day. Imagine a scenario where a man calls the box office to get tickets to a performance for his wife to celebrate their anniversary, and the box office associate makes a note and leaves a few chocolates and an anniversary card waiting in their seats when they arrive. Wouldn't that be awesome? and don't you think they would remember that gesture for years to come?

Awesomeness doesn't wait for approval. Many times awesomeness is a derivative of authenticity. If corporate policy dictates that brand ambassadors need to get approval to provide extraordinary customer service, then the window of opportunity to be awesome disappears. Great customer service comes from authentic responses. If we hire caring and helpful brand ambassadors, managers need to step out of the way and let them do what they do best. Don't lose an opportunity to be awesome because you have to send it up the ladder for approval.

Awesomeness often results from a mistake. We all make mistakes, even the best of us. Even when we have the best intentions. What really matters is how we respond to our mistakes. Mistakes must be viewed as opportunities to provide great customer service. An extraordinary response to a mistake can provide for a lifelong memorable experience for a customer. In 2008, Arena Stage had to cancel a performance due to a substantial snowstorm, and although we contacted all the patrons we had contact information for, we didn’t get through to everyone. Prior to leaving their house in Philadelphia, one particularly adventurous couple called the sales office, and were informed the performance in question was still scheduled to perform. When they arrived, and discovered the show was canceled and the weather had deteriorated, not only were they disappointed, but they were stranded as well. We should have canceled earlier to give our patrons more notice. But before us was an opportunity to be awesome. Without being asked, our sales office worked with a partner hotel to arrange a room for them free of charge that evening using some trade rooms available to us from a previous cross-promotion. We reseated them into the following day’s performance, and the couple headed back to Philadelphia with a fond memory of their visit to Arena Stage. The moment immediately following a significant mistake is crucial. Don't hesitate. Own the mistake, and resolve it above and beyond a customer's expectations.

Arts organizations are charged with building communities. Communities are centered around relationships. We are in the relationship-building business. As such, we should approach each patron interaction from a position of "yes" rather than "no." Policies and procedures should be built with a focus on deepening our relationships within our communities. And each day as we go into work, we should look for opportunities to be awesome.

Rebranding the Traditional Box Office

In a previous post entitled Subscriptions Dead? Maybe Not, I discussed various strategies Arena Stage employed in order to significantly increase its subscriber base. One of the most important was systematically identifying the best subscriber leads in our database, and then developing and implementing strategies to increase the number of similar leads.

Like many others, we traded lists with other performing arts organizations during the acquisition portion of our subscription campaign. However, in doing so, we experienced an incredibly high cost-of-sale for each new subscriber. Even when factoring in the value of each new subscriber over multiple years, returns from mailings to traded lists didn't justify the cost. Our strategy was flawed, and it was time for a change.

Data showed that our best leads were in our own database, with the best of the best being single ticket buyers who purchased tickets to multiple productions during the previous fiscal year. Instead of trying to attract new subscribers with no prior transactional history with us by sending direct mail campaigns to traded lists, we shifted strategy by focusing on building multi-buyers during the 2008-09 season. The new strategy was simple--if multi-buyers were the best prospects for subscriber acquisition campaigns, then the more multi-buyers we had, the better off we were for the following year's subscription campaign.

Instead of trading lists for subscription mailings, we traded lists for our most popular productions. Transactional data showed that by luring in new patrons via our most popular programming, we had a much better shot of cross-selling them into other productions soon after they had their first great experience at our theater. If new patrons purchased tickets to just one additional production during the season, they were exponentially more likely to subscribe than a lead with no prior transactional history with us.

Our focus was now clear--in order to grow our subscriber base, we must first focus on building the number of multi-buyers throughout the year. And the most critical component of that strategy was refocusing our ticket sales operations by shifting our box office to a sales office.

The prevailing feeling at the time was that our box office associates were "order takers." They were expected to pick up the phone and process each order in a courteous and timely fashion. They were evaluated on efficiency instead of effectiveness. With the beginning of the 2008-09 season, we rebranded our box office (now referred to as a sales office), and made it clear that associates were expected to function as sales consultants. They were now responsible for up-selling, cross-selling and proactively soliciting annual fund donations. To prepare the office, I promoted an exceptionally entrepreneurial minded manager to lead the division, and she in turn, brought in several experts to train our staff. We adopted a mantra of sales through service, and in doing so, viewed each opportunity to cross-sell as a moment to provide excellent customer service.

Three years later, I am very pleased with our results:

From FY08 to FY11, new-to-file households (those that had no previous transactional history with Arena Stage) increased by 90%, but even more importantly, multi-buyer households increased by 44%, giving us a much larger "best prospects" pool for new subscribers. In this fiscal year alone, that pool was converted into more than 5,100 new subscribers. Despite what some viewed as aggressive sales techniques, our 2011 customer satisfaction survey revealed that satisfaction levels were at an all-time high, and our attrition rate decreased 6% over the last two years.

Today, our sales associates up-sell seat locations, cross-sell buyers into similar programming, solicit various levels of annual fund donations, offer to make reservations at our cafe, suggest pre-paid parking, and will even arrange for a car service with a preferred provider. In addition, during slower sales cycles, our associates also provide support to our group sales office, and participate in outbound calling. By doing so, we maximize revenue, while growing the number of multi-buyer households and providing premium concierge service to all patrons.

Subscriptions Dead? Maybe Not.

When I joined Arena Stage in 2007, I came to my new job with a couple of preconceived notions about subscriptions. Perhaps it was in part a reflection that I am on the Generation X/Millennial cusp, but I was certain that the subscription model was outdated and ineffective. Many mature organizations that had developed their business models on subscriptions were seeing significant declines in subscriber numbers, and were literally caught between a rock and a hard place -- should they dump their subscription model and leap into the unknown, or keep putting band aids on a failing and timeworn strategy? Reports from major performing arts organizations at the time seemed to indicate a trend of declining returns, forcing a feeling that immediate change to a staple in our business model could be warranted.

In early 2008, Arena Stage along with a few other LORT theaters, began to test subscription alternatives in focus groups. In doing so, I was absolutely certain that the results would show at least one, if not several, attractive alternatives to subscriptions. I was wrong. Our work indicated that each option we put forth was less attractive to target single ticket buyers, multi-buyers and current subscribers than what we currently had. I was so surprised that we conducted a second series of focus groups with similar results. Amazed and confused, after a few months, I concluded our market research indicated that the subscription model wasn't outdated, but that our execution was flawed.

With the help of Target Resource Group, we conducted a thorough audit of all subscription related practices, and started making significant changes in mid-2008. Since our 2008-09 season, Arena Stage has experienced substantial growth in subscriptions, increasing our subscriber base by 57% and revenue by 73% in three fiscal years, beginning 1.5 years before the opening of the Mead Center for American Theater at the height of the global economic crisis and during a time when we were performing in transitional spaces throughout the metropolitan area. Even more surprising, during the same time period, our subscription related marketing expenses decreased, which along with increased revenue, effectively doubled our return on investment (ROI).

Below is a brief summary of major tactical changes:

Simplified Pricing. Our previous subscription pricing strategies were incredibly complicated. I remember spending hours poring over pricing strategy, and at the end thinking that one would have to be a CPA to understand how our pricing model worked. We decided that in order to create an effective value proposition, subscription pricing would have to be clear and easy to understand. We worked for weeks to develop a simple pricing structure that could be messaged easily, such as "buy 6 plays, get 2 plays free." The new pricing structure allowed us to easily communicate a value proposition and to eliminate complicated order sheets, replacing them with order forms that could be filled out easily. Clear, concise and transparent pricing was pivotal to effectively communicating the value of a subscription.

Introduction of Dynamic Pricing for Single Tickets. In 2009, Arena Stage introduced dynamic pricing for single tickets, and we immediately started to see an unanticipated outcome. Due to our new subscription pricing structure and the introduction of dynamic pricing for single tickets, we were able to guarantee subscribers "the best seats in the house at the best prices." Dynamic pricing eliminated last minute discounting on premium tickets, and rewarded single ticket buyers with a lower price for better seats if they were willing to purchase earlier. In turn, our patrons soon started to understand that the earlier they purchased, the better "the deal" they received, with the ultimate deal being given to subscribers. As we religiously track all customer service issues, we can say with full confidence two years later that dynamic pricing has not caused distress with our ticket buyers or donors, and in fact, from the moment we introduced dynamic pricing to current day, we have increased the number of single ticket buyer households by 84%.

Focus on Retention and Customer Service. We were allocating too much resource on subscription acquisition, and not enough on subscription retention. We developed a "say yes to the customer" approach with our subscribers, thereby earning us "industry leader" marks on our most recent customer satisfaction survey conducted by Shugoll Research. Year to year benchmarks for customer service have increased steadily as we focused on providing our subscribers the best experience possible. Given today's sad state of customer service at most establishments, we were determined that our customer service would be a competitive advantage. In addition, we allotted resources for special subscriber recognition efforts throughout the year, including a sneak preview of the upcoming season, complimentary artisan chocolates at specific performances and subscriber-only events. During the 2010-11 season, we introduced a concierge program for all new subscribers. Each new subscriber was assigned a personal concierge on staff, who was expected to make themselves available to answer questions, field requests or be helpful in any way. Concierges were reactive to inbound inquiries, but were also expected to be proactive throughout the year, offering new subscribers recommendations on local restaurants, parking, interesting tidbits about upcoming productions, and the like. By concentrating on customer service and retention, we were able to increase our overall subscription renewal rate by 13% over three fiscal years.

Eliminated Advertising, but Increased Direct Mail and Telemarketing. Prior to 2008, 25% of our subscription budget was allocated to advertising. After exhaustive efforts, we could not trace a single subscription purchase back to our advertising campaigns. Therefore, we cut all subscription advertising, and refocused those resources on direct mail and telemarketing. In doing so, we completely revamped our direct mail and telemarketing campaigns. In terms of direct mail, we would previously print hundreds of thousands of season brochures, and then mail them out in a few rounds of massive mailings. Our brochures were 28 to 32 pages in length, and functioned more as a branding tool than a sales piece. Today, we send out 30+ direct mail pieces during each subscription campaign that specifically tailor the offer to the target. We have eliminated our subscription brochure, cut our design costs by 60%, and have directed all of our resources to testing message and offer. For more information on our new approach to direct mail, please read "The Future of the Season Brochure." While retooling direct mail, we also invested heavily in telemarketing. If executed properly, many patrons actually view telemarketing as a service, as it allows them the opportunity to discuss the plays with a seasoned caller and to ask any questions they may have. As the economy worsened, we found that many potential subscribers needed personal interaction with a friendly and knowledgeable sales agent in order to make a commitment.

Delayed the Introduction of Smaller Packages and Concentrated on Upgrade Strategies. In 2009, we started to experiment with delaying the on-sale date of partial season packages in order to focus our efforts on upgrading subscribers to the full season. There was a fear at the time that our partial subscribers would become frustrated, and leave the company all together, but I was confident that our programming was strong enough that a delay would encourage subscribers to upgrade. The value proposition was clear -- the only way to guarantee the absolute best seats in the house for our most popular productions was to purchase a full season subscription. By focusing on full season subscriptions and postponing the introduction of partial subscriptions, we were able to increase the percentage of full season subscribers by 14% from FY09 to FY12. Expanding upon previous successes, in 2011 we launched a completely separate upgrade campaign alongside our renewal and acquisition campaigns. In addition to crafting and executing strategies that focus on renewals and acquisitions, we now also focus on upgrading subscribers throughout the year. These strategies have proven to be quite effective, and as of publication, we have upgraded more than 1,800 subscribers from smaller packages to larger packages in the current fiscal year.

Relentless Dedication to Monitoring ROI. In FY12, we will spend almost 20% less on subscription expenses than we did in FY08 despite the fact that the number of new subscribers has increased by 166% during the same time. I've always been taught that acquisition campaigns are expensive; that you have to "spend money to make money." In most cases, I agree, however if you aggressively monitor ROI on each campaign, in many cases, you will find efficiencies that will allow you to actually decrease your expenses in the middle of an aggressive acquisition cycle. Many marketers think that given limited staff resources, tracking ROI is too time consuming, however a relentless dedication to monitoring ROI will reveal where you should invest in the future, and more importantly, where you should cut.

In addition to the above, it should also be said that the most important ingredient to any subscription campaign is programming. A subscription campaign is both a referendum on the previous season and an indicator on the amount of excitement in the marketplace for the upcoming season. In my time at Arena Stage, I have been extraordinarily lucky that our artistic team has consistently produced and presented exceptionally high quality work, without which, the aforementioned tactics would have only resulted in minor successes at best.