COVID-19 is likely to exacerbate these three potential weak spots for cultural organizations. Here’s intel to identify and tackle them as soon as possible.
You don’t need to spend much time on a news website to spot an article about how the coronavirus pandemic is exposing cracks in everything from healthcare systems, to our food supply chains, to manufacturing, to philanthropy, to the broader economy, and seemingly everything in between.
On a recent call with executives from two major cultural organizations in Philadelphia, one leader used the “cracks in the foundation” metaphor to succinctly communicate his most pressing concerns. He expressed that small cracks in business operations risk growing into fractures that cannot be easily repaired during this challenging time period. It was well said. It was also the first time that we’d paused to consider how this metaphor applied to the cultural sector. More commonly, this concern had been coming up in the form of a frequently-asked question among other cultural executives with which we’ve spoken:
“What should we make sure we’re doing right so that we can recover when our organization reopens?”
Let’s acknowledge this:
2020 is going to be a very bad year for cultural organizations. (Just call me “COVID Captain Obvious” for that bold statement.) For most entities, it’s going to be a bad year from an overall business standpoint and likely from a mission impact perspective as well. For many, it may even be a challenging year from a survival standpoint. Some of the areas in which cultural organizations were slow to adapt may affect how well an organization is able to recover – if at all.
With that in mind, this may be a sensible goal:
Get to 2021 and set it up for the best possible success. It’s going to take a great deal of strategic thinking in 2020 in order to just not mess up 2021. Conditions are evolving quickly. There will be some trial and error as states reopen and learn critical lessons in engaging audiences during a global pandemic. Some mistakes are inevitable, and the difference between success and failure may come down to using the grace of this period of pause to help strengthen our weaknesses.
That’s what today’s article is about.
Upon reopening, cultural organizations are likely to be tasked with re-engaging audiences with two challenging conditions imposed upon them:
- Finite resources. Many cultural entities had limited resources even before the pandemic. And many lost significant resources during closures (financial, staff, volunteers, etc.). Upon reopening, entities may be charged with re-engaging audiences with even fewer resources at their disposal – monetary or otherwise.
- Capacity constraints. It’s becoming clear that capacity restraints will be placed upon many organizations. Entities may either choose to limit capacity in the building as their own safety precaution, or a limit may be imposed by the government for periods of time. This means that revenue recovery may be significantly slowed, and it increases the pressure to make sure that every investment counts.
The following three areas represent common weaknesses in the business model of cultural entities prior to COVID-19. Consideration to these areas may prove crucial for organizational survival in some cases – and they need not represent weakness at all! In fact, in this time of closure, some entities may develop strategies to not only patch these cracks, but to lay solid foundation upon reopening.
Strategizing around these three audience engagement areas may transform common weaknesses into organizational strengths upon reopening.
1) Knowing the importance of digital engagement
Make no mistake: The need to engage and interact with audiences online in order to motivate attendance is far from new. (It may be especially important right now, but it’s not new.) Those institutions that put in the time and energy to establish their online tone and foundational content creation strategies prior to COVID-19 may be in a better position to succeed than those just now coming to the keyboard.
The data below quantifies the share of media consumption for nearly 3,800 US adults as measured at the end of the year 2019, March 15, 2020 (only two days after the US declared a national emergency), and May 1, 2020.
For those unfamiliar with media consumption studies, it helps to think of these categories as physical devices. “Digital” includes time spent on a computer or mobile device, and “TV” includes time spent watching a television. If Netflix is watched on a TV, it’s in the TV category. If it’s watched on a computer, it’s in the “digital” category. Social media, web, and mobile web all fall into that “digital” category. Additionally, these types of studies recognize that people often do two things at once – for example, someone may scroll through their phone while watching television. In these instances, both of these activities count equally in terms of the analysis. In other words, media engagement is often non-exclusive.
During the stay-at-home time period, people in the United States are spending nearly eight hours each day online. That is a big increase from the 6.45 hours people spent online prior to the pandemic. But consider that perhaps 6.45 hours online is a lot of time online as well! It’s no wonder that digital engagement is so important right now – and also that it was so important prior to the pandemic.
The importance of digital engagement amongst likely visitors to cultural organizations has been increasing over the last few years – long before the arrival of the coronavirus. The web, mobile web, and social media are primary sources of information for likely visitors. Not only that, inactive visitors – people with interest in attending cultural entities who do not attend – are even more connected to the web than current visitors.
Perhaps unsurprisingly, given the increased amount of time that people are spending online, digital platforms have become even more important sources of information for likely visitors to cultural organizations. The data below is from the National Awareness, Attitudes, and Usage Study, which is now over 142,000 respondents strong. It is shown in index values, which quantify proportionality around a mean value of 100 in order to aid in understanding comparisons. For example, social media is a 17x greater go-to source of information than a printed newspaper right now. (If it’s the newspaper online on a computer, it’s in the “web” category. If it’s the newspaper on a mobile device, it’s in the “mobile web” category.) Social media is also a staggering 324x more important source of information for likely visitors (both active and inactive) than direct mail. “WOM” stands for “word of mouth,” and you can read more about this metric and the information sources here.
As a note, this is not intended to provide a direct map for the allocation of engagement resources. The point here is that digital engagement was important before COVID-19, and it’s even more important now.
Digital engagement is important. Period. While we know that it played an important role in motivating attendance before the pandemic, we’ll also be collecting information and will share more as we are able to assess how digital expectations may have changed (and if their impact on attendance has increased) as entities reopen.
2) Understanding core constituents
Thank goodness that topics related to market research, audience research, and evaluation were having a moment at conferences in recent years! Understanding and motivating your cultural organization’s active visitors may be more important than ever before upon reopening. If your entity put in the work to understand your audiences prior to COVID-19, it’s likely to make re-engagement more effective and efficient.
In IMPACTS data terms, “active visitors” (also called “historic visitors”) are the people who actively visit cultural organizations. They are the people who actually come in the door, and – thankfully, at the moment – they are the audiences cultural entities tend to know the most about. These audiences differ from inactive visitors (who have interest but don’t attend), unlikely visitors (not interested, but will attend if required), and non-visitors (not interested, unlikely to attend).
Active visitors are the people who like you. They’re also the people who miss you most right now, as attending your organization was regular behavior for them. While an active visitor is anyone who has visited you within the last two years, this audience also includes members and subscribers, as well as other evangelists for your institution.
If your organization will have limited capacity, it may be important to make sure each person in the door counts as much as possible from a revenue and/or endorsement perspective. Active visitors – and members and subscribers in particular – may be your lowest hanging fruit in 2020, and your most efficient pathway to recovery. After all, they are the people who like you, are more likely to return, and are more likely to endorse your organization which motivates additional attendance.
Active visitors also cost the least to engage. One of my colleagues at IMPACTS describes the kind of data shown below as “quantifying common sense.” While many may suspect that people with a higher propensity to visit cost less to engage, here’s the math. Indeed, in this time of uncertainty, even “common sense” deserves to be quantified.
The data below indicates the year 2019 average costs to engage active, inactive, unlikely, and non-visitor profile cohorts to eleven cultural organizations in the United States with a $20 or greater adult general admission cost. For the purpose of this analysis, only organizations with an admission basis were included in the study. While each organization’s specific adult admission price did vary, and so did the respective audience acquisition budgets of the contemplated organizations, the findings were consistent: In terms of audience acquisition costs, active visitors are significantly more efficient target audiences than non-visitors.
It is more than 4.5x more expensive to engage someone who profiles as a non-visitor than someone who profiles as an active visitor. This is a huge difference! And remember that unlikely and non-visitors are identified by their lack of interest in attending in the first place. People who profile as non-visitors, in particular, are also more likely to have a negative onsite experience, which may lead to negative word of mouth that could further risk market potential.
On the whole, being a white, non-Hispanic individual is currently (and problematically) the most-shared attribute of a visitor to a cultural institution. Inactive visitors (who have interest but do not visit yet) are generally more diverse from an age and ethnicity perspective. Prior to COVID-19, an important goal for cultural institutions was to activate inactive visitors to change up the “type of person” who attends. (This is still true! For some entities, however, surviving may be the most important goal of all at the moment, precisely so that an entity may more quickly return to serving the masses and investing in new audiences.)
Maybe your organization was successful in engaging more diverse audiences prior to the pandemic and they are already included in your active visitor audience, which is the most efficient to engage now. Or, maybe not. The point is: Knowing your most active and likely audiences is important. They are not only the most likely to visit when you reopen and the most efficient in terms of who to target, but they are also likely to provide positive endorsements so others will follow their lead.
3) Discounting thoughtless discounting
If your organization relied on discount strategies as a lever to generate attendance volume prior to COVID-19, recovery is likely to be more difficult. And it may be worse if you keep at it. If your organization has limited capacity and resources are finite, making every dollar count matters.
We understand the emotions feeding the popular cognitive bias that offering a discount is the same as being welcoming. But being free or discounted is not the same as being welcoming.
Offering discounts to cultural experiences has always run counter to behavioral economics. Discounts to cultural experiences do not attract new audiences, and people who enter cultural organizations on discount often indicate worse experiences than people who pay full price. Perhaps most importantly, the people who redeem untargeted discounts or attend free days tend to have higher household incomes than those who attend on regular full-admission days. (Spoiler alert: The cultural industry’s biggest barrier is being perceived as worthy of someone’s time, not money. When a discount is offered, it’s most often the people who already know the experience is worthy of their time who take advantage of the deal. This tends to be the people who would otherwise be willing to pay full price for the experience.)
Consistent discounting can also lead to an unsustainable cycle wherein people wait for steeper and steeper discounts before visiting again. Having “trained” audiences to await discounts is a particular barrier to engagement for some organizations. Also consider that the average person visits a cultural institution once every 27 months. You can see the range for your organization type here. The attendance bump upon discounting is often the result of accelerating a visit… but then it takes 27 months – or another, steeper discount – to get them to return. In other words, that attendance bump often is not new people visiting. It’s simply an organization artificially moving many people to the same visitor engagement cycle timeline.
Moreover, people who attend cultural organizations are still reporting that cultural entities provide consistent value for cost, even during the pandemic time period. The data below contemplates an average of 1,843 adult visitors to cultural organizations for each indicated time period. Value for cost is a measure of how much value one perceives based on an admission price. (Don’t be fooled. Higher admission prices do not generally correlate with lower value for cost scores. And even free organizations can have low value for cost, implying that people did not think the experience was valuable relative to the time and effort to attend.) Instead, this is a measure of if something is broadly perceived as being worth paying for.
To clarify, those surveyed during the months of March 2020 and April 2020 had not necessarily just visited a cultural institution. Cultural institutions were generally closed across the United States for most of these months. Instead, they were responding based on their perceptions of the value for cost, based either on their most recent visit or their knowledge of the price. Negative or declining value for cost perceptions are an indicator of a “value disadvantaged” condition – the price represents a significant barrier to entry.
Instead, we are generally observing relatively stable value-for-cost perceptions. This is encouraging – particularly as we confront a likely capacity-constrained future where there may be a need to maximize the value of every onsite visitor in order to survive and invest in access programs.
There can be valid, compelling reasons to support a special and targeted promotional pricing strategy – generally these types of promotions seek to attract new or emerging audiences. But a special price may not prove necessary for active constituents. In the end, an organization’s pricing strategy should be responsive to its engagement strategy – one size generally doesn’t fit all.
This article will hit organizations differently. Some leaders may be nodding along, grateful that they saw the writing on the wall in terms of understanding audiences, glad to have made prior investments in a strong foundation for social media and digital engagement, and having deployed thoughtful pricing strategies over the years. But some may have the opposite reaction. They may be concerned because digital engagement was an afterthought prior to the pandemic, engagement strategies were generally untargeted, and discounts were considered an automatic “cure-all” for engagement. Right now, while many entities are still closed and strategizing about the future, cultural organizations have an opportunity to address these areas – identifying where the foundations are strong but also where they may need to be shored up.
It’s a time for moving forward thoughtfully. Thankfully, it’s also a time of data, of learning, and of coming together.
To that end, we’ll see you back here on Monday with updated data on intentions to visit.
Here are the COVID-19 data insights for cultural entities that we’ve published thus far. Don’t want to miss an update? Subscribe here to get the most recent data and analysis in your inbox.
