How can cultural organizations get people to like them more? A popular answer is to offer free or discounted admission. But does this work?
We have the answer – and it might surprise you.
In fact, it is the topic of our first Know Your Own Bone Fast Facts video of the new decade.
Before we dive into how and if discounting impacts key satisfaction and reputational metrics, let’s appreciate a popular reason why cultural entities such as museums, zoos, aquariums, and theaters often offer discounts in the first place: To reach new audiences. For cultural entities, engaging new and different people is a business imperative as the United States grows increasingly diverse and attendance to cultural entities does not keep pace with population growth.
For cultural entities, general discounting increases repeat visitation, not new visitors. The reason for this is simple. We’ve written about it here several times before, but the reasons are worthy of a quick review. First and foremost, cultural entities must prove themselves worthy of someone’s time, and the kind of people who visit cultural organizations are the kind of people who visit cultural organizations. Thus, it’s often the people who already know that the experience is worthy of their time who take up a general discount. Also, general discounts – even if they are intended to pique the interest of income-qualified audiences – are often promoted using the same channels as every other outbound message, resulting in more awareness of access programs amongst people with household incomes greater than $250,000/year than individuals with household incomes of less than $25,000/year. (Here’s more on this topic.)
But what happens when we accept that general discounting does the very opposite of our hopes from a new-visitation perspective, and simply ask this question:
“Does discounting make people like us more?”
That in itself would have value, wouldn’t it?
At IMPACTS, we measured how thirty-one cultural organizations were perceived by people who visited them for free, with a discount of any amount, or at full admission price. We wanted to know if admission basis impacts visitor satisfaction, the likelihood to endorse an organization, and how well an institution is perceived in carrying out its mission. All thirty-one of these organizations have a regular paid admission basis. We are comparing visitors to the same organizations in the same time frame, and data is cut simply by the admission basis of the visitor and whether they attended for free, with a discount, or at full price.
We’ll compare the perceptions of always-free organizations and paid admission entities in an upcoming article. This article is about perceptions when a paid admission organization offers a discount or free admission.
These charts exclude members, so these individuals are not contemplated in the findings. Interestingly, members have the highest visitor satisfaction of all.
Visitor satisfaction by admission basis
Let’s start with visitor satisfaction. It’s an important metric. Research shows the more satisfied somebody is with their experience, the more likely they are to come back, to tell others, and to have higher value-for-cost perceptions. The more satisfied somebody is with their visit, the more they believe that they got a better “bang for their buck” by paying to attend.
On average, satisfaction for people who visited for free landed at 66 in scalar variables ranging from one to one hundred. What about for people who visited at any discount?
You might expect their satisfaction scores to be lower because they had to pay something to get in, but they were higher.
At 69, this is a significant difference. This may surprise some. (“How can people who get discounts be more satisfied than people who paid no money at all to attend!? They got in for free, for goodness sake!”) What may surprise folks even more is that average satisfaction is notably highest of all among people who paid full admission prices for their experience.
Milton Friedman, the Nobel Prize-winning economist, was on to something when he wrote, “People value what they pay for.”
Likelihood to endorse by admission basis
Endorsements are critical for cultural entities in today’s connected world. What other people say about your organization contributes significantly more to your reputation than the things that you pay to say about yourself. Those selfies people are posting while onsite, for instance? They matter in getting more and new people to come through your doors.
Now let’s look at the likelihood to endorse an organization by admission basis. Those who scored a discount should be more likely to say good things, right?
That’s not the case. General admission visitors were significantly more likely to endorse an organization than those who got a discount or attended for free.
As it turns out, when organizations provide a general discount, visitors generally discount them right back.
Mission execution perception by admission basis
Cultural entities often have social missions at their core – they aim to educate and inspire people. They may also aim to conserve, preserve, research, connect, empower, and strengthen communities. These missions are arguably their heart. Their soul. Their raison d’être.
When an organization discounts its onsite experience through free or reduced admission, it impacts how visitors perceive the organization’s mission, too. What happens onsite doesn’t just stay onsite
That’s why this finding may be the most important of all in this article.
People who paid full admission price believed much more strongly that these entities were effective in executing their missions. The difference is dramatic.When an entity discounts its admission price, it changes how the public perceives its mission and what it stands for.
Cultural entities have valuable superpowers. They are trustworthy entities (even among non-visitors). They provide an academic and “intellectual edge” to visitors and children, and they are the makers of meaningful memories.
Considering this, it’s no wonder discounting may fuzzy up value propositions for people. It may be that free or discounted admission visitors cannot mentally afford to believe that an organization is effective in carrying out its mission. After all, they know they skirted the full admission price! To believe that a museum, for instance, effectively fulfills its mission when we just entered with a discount may be at odds with how we want to view ourselves.
Buying a ticket is perceived to be the third-best way to support an organization’s mission (after becoming a member and donating). Are we really doing our best to support an organization’s mission if we’re not paying the full admission price? And is the mission really that important and worthy of support if an organization is discounting it in the first place?
The implications of discounting for a mission-driven institution fuzzy up value propositions beyond admission cost. The last thing cultural organizations want is to discount their mission – or worse, distance themselves from being perceived as good at it.
Targeted access programs for income-qualified audiences can be important mission work. But discounts to cultural organizations generally are not this thoughtfully and strategically targeted on the whole. Being targeted means having separate marketing strategies – and often larger budgets to support those separate strategies. It often means having partnerships with community leaders who really do reach these specific audiences.
General discounts are not usually a good idea. They hinder membership, can cultivate an unsustainable cycle of requiring steeper and steeper discounts in order to engage the same volume of visitors, and they do not reach new visitors. The attendance boost during a discount is often simply the result of manipulating existing visitation cycles. We do not currently see evidence that they generally shorten these cycles. Simply, general discounts change the timeframe of when target audiences attend by moving it to a date in which they can get in “for cheap.”
Pricing psychology is an important and well-studied science. And it’s one that cultural entities benefit by keeping in mind when they strategize about engagement opportunities, how they want to be perceived, and if they may more effectively motivate desired behaviors.
Cultural organizations may benefit by leaning into pricing psychology and working with it instead of against it.
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