The finding may be surprising, but the reason for it is not.
Want to attract new people to your organization? A popular alleged solution is to offer a general discount on admission. But does this work? That’s the subject of this week’s Know Your Own Bone – Fast Facts video.
The findings may be surprising to those who rely on discounting as a strategy to reach new audiences by default (“It’ll be a great way to get that potential first-time visitor off the fence and in the door!”) As it turns out, discounts primarily motivate visitation among those who are already off the fence.
What do we already know about behavioral economics surrounding discounting admission to cultural organizations?
Before we dive too far into the question of if discounts engage new visitors, it may be helpful to same-page the data on discounting for cultural organizations that has been published here. I’ve previously shared data on the negative impacts of discounting admission and how it may result in a short-term attendance bump, but a long-term attendance problem.
The quick hit of a short-term attendance bump can be enticing! Unfortunately, discounting results in negative long-term consequences for the organizations that deploy them. Data reveal two, big problems that undo that that discounting “quick hit” attendance bump and how its paid back with interest.
Discounting negatively impacts both aspects of the Visitor Engagement Cycle. It both decreases an organization’s perceived reputation, and decreases visitors’ onsite satisfaction. (Read more on these findings and see the data.)
Discounting decreases visitor satisfaction
The steeper the discount, the lower visitor satisfaction attendees report to museums, zoos, aquariums, and performing arts organizations. Visitors who receive complimentary admission to an organization report 8% lower satisfaction rates than those who pay the full admission price. (For context: This is a very big decrease that can rival encountering the top dissatisfier among visitors to cultural entities: Rude staff.) Not only that, those who receive complimentary admission are 48% less likely to return to an organization within one year compared to those who paid the full admission price!
Discounting decreases likelihood for endorsement
The steeper the discount, the less likely visitors are to positively endorse an organization. Third party endorsement plays a key role in motivating visitation, so this is a painful side effect of discounting. People who visit an organization with a full discount are 11% less likely to recommend visiting that same organization to a friend or family member.
It’s true: People value what they pay for… and when an organization devalues its own experience, the market devalues it right back.
But what about the role of general discounts in engendering trial, and reaching more first time visitors?
Good question! That’s a possible benefit that’s certainly worth exploration – especially considering the dire need for cultural organizations to engage more diverse audiences! Might this be a solution?
Let’s look at the math…
This data is from IMPACTS and the National Awareness, Attitudes, and Usage Study and contemplates 44 of the 224 visitor-serving organizations that IMPACTS monitors in the US. (It contemplates 44 of those entities, because that is the number of entities from which we have this particular information.) It includes various museums, performing arts organizations, zoos, aquariums, botanic gardens, and historic sites.
When there is no discount offered, the numbers are close, but there tend to be slightly more first time visitors than repeat visitors. From there, things change. Regardless of the percent savings, discounts tend to attract more repeat visitors than first time attendees.
General discounts do not attract more first time visitors.
Instead, they may provide an opportunity for the people who already visit and enjoy your experience to attend at a lower price. This can both risk earned revenues and hinder the growth of an organization’s membership base.
Why do discounts attract more repeat attendees than first-time visitors?
“Okay, okay. People value what they pay for and so it stands to reason that – when we look at actual behavior and impact – discounts decrease satisfaction and endorsements in the long-term… but what’s going on with this finding?”
Engendering trial to a cultural organization is not the same as engendering trial for, say, a sports drink that a person can pick up at the grocery store or add to an online shopping cart. In these kinds of situations, the “trialer” loses neither time nor money. The “cost” to this person is small or nonexistent. That’s not the case with “trialing” cultural organizations.
Getting someone new to visit means enticing them to risk a valuable, non-renewable resource on the trial: Their time.
As a result, it tends to be those who already know that the trip is worth their time who make the time.
This is especially relevant when we consider that, generally, time is more valuable than money to people, “schedule” is the top decision-making factor for visitation, and inactivated, likely visitors are an active bunch… and a primary target for any activity or entity outside of the house. In other words, their time may be particularly precious.
What are better options for engaging first-time visitors?
Diversity, inclusion, and reaching even likely visitors is far more complex topic than that of pricing strategies (or one-offs) alone. Simply put: Pricing is not a primary barrier to visitation to cultural organizations.
To better engage audiences, organizations benefit by working to resolve the more pressing barriers keeping people from walking in their doors. These are being perceived as unwelcoming among nontraditional visitor subsets, and not being a top choice for spending precious time among traditional audiences.
Being free (or discounted) is not the same as being welcoming.
And being free (or discounted) is not the same as being relevant.
The fixation on discounting can be a hard one for some cultural leaders to release, despite the realities of behavioral economics. Old habits die hard – even if they can be detrimental to an entity’s long-term solvency. The “quick hit” of an attendance bump can be directly attributed to a discount… but the long impact of its negative consequences that lower visitation over time? That has less direct accountability. At best, perhaps, discounting can make one department look good for a moment, and puts every other department (and its own) in a more difficult environment in the long-run. Discounts decrease visitor satisfaction, lower revenues over time, decrease likelihood for endorsement, decrease likelihood of revisitation (until there is another deal), and can cannibalize membership… and they don’t even engage new audiences.
Because there can be such an internal fixation on pricing as a primary barrier to visitation (this is a distraction), it may be helpful to address more functional, pricing-related strategies beyond making sure that an organization is charging it’s data-driven price point for admission. Depending on an organization’s goals, there are two, far more strategic, pricing-related considerations that can help an organization achieve its goals far better than offering general discounts.
Promotions celebrate a certain audience for a certain reason. They don’t conceptually cause visitors to boast, “I got in cheaply!” Instead, they conceptually get visitors to boast, “I am/ my community is valued by this organization.” Value-adds for certain audiences – such as having a special experience or receiving something “extra” at the door, for instance – can also be effective ways to increase value for audience segments.
Aiming to reach income-qualified audiences, specifically? Aiming to reach military families, specifically? Aiming to reach people who are left-handed and prefer sweet potato fries to regular fries? General discounts don’t reach these audiences, specifically. If you’d like to engage them effectively, they must be targeted on proper platforms with a message that is motivating to them. When we promote access programs to traditional audiences, traditional audiences who are able and willing to pay full price are the ones who take us up on them. Hey, who doesn’t love a deal?
If the goal of an organization’s discount strategy is to increase visitation, zoom out. This strategy is likely doing the exact opposite over the long term. That “quick hit” has a mean hangover.
If the goal of your discounting strategy is to welcome new visitors, remember that diversity and inclusion themselves are not “one off” programs. To change up how cultural organizations are perceived, entities benefit by integrating these values into their culture.
As it turns out, data reveal that discounts do not result in many of the benefits that cultural leaders might think – including reaching more first-time visitors.