Annual operating budget up 32% in 5 seasons

How loyalty strategies build capacity

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The scenario:

Photo: Joseph Mills

After a poor year for earned revenue in 2012*, Lyric Theatre of Oklahoma (LTO) had rebounded and was experiencing a growth spurt. In 2013, Director of Marketing Danyel Siler had turned her attention to single tickets. Her hard work had paid off, but season tickets were still a challenge.

“Season tickets were steadily declining,” she said. “The season ticket campaign had been done the same way for years, maybe even decades. And we blamed the fall on the trend that subs were declining everywhere. Our executive director, artistic director, and I all knew something needed to change, but we didn’t know what.”

Lyric Theatre of Oklahoma hired TRG in March of 2014 for a Best Practices Consultancy which began with an analysis of income trends, data stewardship, and current marketing practices. Danyel describes the outcome of the first meeting:

The first thing TRG’s work got us thinking about was how compartmentalized we were in our thinking. We weren’t having a lot of conversations together. When we first looked over the findings with TRG, we found that we all had different ideas about what we needed in order to grow:

• Subscriptions were on everyone’s mind, and that was the main focus of our artistic director, Michael Baron.
• Our Managing Director Paula Stover was really interested in dynamic pricing.
• I was interested in just learning best practices across the board.
• Our box office manager was interested in getting our database cleaned up.

All of these things were related, but we hadn’t connected the dots on just how related they were. For all of us, looking at the data brought that home. Of course, we’d always looked at things like renewal rate and other data points. Until then, we’d made decisions based on feelings, what we told ourselves, and what we’d heard anecdotally from the box office, rather than on data.

Lyric Theatre of Oklahoma was open and ready to change. TRG began work right before their summer festival of blockbuster programming in 2014 and prepared to optimize single ticket sales throughout 2014 and re-imagine the subscription campaign for the 2015 season. With a full-time staff of fewer than 20 people, an operating budget of $3.6 million, and a marketing budget of $240,000, there wasn’t a lot of spare time or money to make that change, however.

*Note: LTO runs on a calendar-year season, January through December.

Results:

After working with TRG for two years, LTO has continued to grow.

Impact: Ticket sales (subscriptions, single tickets, and group sales) made up 42% of their annual budget in 2012. Today, it makes up 58%. Since 2012, LTO has increased their annual operating budget by 32%.

Subscriptions: Since 2014, subscription units are up 17% and subscription revenue is up 22%.

Single tickets: Single tickets have continued to grow. Building on Danyel’s good work in 2013, the partnership had grown single ticket revenue by 41% and units by 21% by the end of 2015.

They’ve been able to re-invest that increase in the onstage product, as well as marketing and other areas of the business.

How they did it:

The relatively small size and leanness of this organization allowed them to be nimble to implement changes quickly. Their size also meant there was risk associated with change and little spare capacity. Yet, Danyel, the leadership team, and the staff had no fear of whole-cloth change, and approached the transformation with discipline, commitment, and a near-fanatical belief in data.

Derrick Cobey and Alex John Enterline in Lyric's 2013 production of Big River. Photo by KO Rinearson.

What pulled us together around these initiatives was following the data and trusting what it told us, rather than relying on our feelings. That was the most imperative work that TRG did. It took a while to trust that. Once we were able to trust that, a lot of the emotions went out of the decision-making process. In some cases, there weren’t decisions to make once you looked at the data.

We had this attitude of “We’re going to succeed. We’re going to make it happen.” And we made big changes in each of the areas that our staff had targeted.

Dynamic pricing

We had talked about doing dynamic pricing for about a year and a half. We were petrified we’d change the prices and people would notice and complain. That was the scariest. We were concerned we were taking advantage of our customers. Once we went through our pricing sprint, we realized that we’re not penalizing people; we’re providing incentives for people to behave in a way that helps our business. We’re doing a big favor to the people that are most loyal, because they’re getting a discount. That made it so much easier.

Photo: Joseph Mills

Subscription

Basically everything you can change about a subscription campaign, we changed. We traditionally did 2-3 rounds of mailings to all the current subscribers. That was the whole lifecycle—invoice, reminder, and then the acquisition brochure. Everyone was treated the same--we didn’t think of long-time renewals as being separate from first-time renewals or even different from acquisitions.

On the acquisition side, we were seeking some people who just weren’t likely to buy. We used trade lists for subscriptions, so telemarketing would be trying to sell a subscription to someone who’d never even been to the theatre.

Now it’s completely different. The messaging is segmented out, both for new and renewals. Now the campaign has so many more touchpoints with those people, and not just postal mail. Between the postal mail, email, and telemarketing, renewals are getting around 12 contacts. And in 2015 our telemarketing campaign’s performance tripled over the previous year. Having them call the right people at the right time in step with the mailings has made a huge difference.

Budget re-allocation fuels earned income growth

Our organization had a history of cutting marketing expenses if we couldn’t make budget or didn’t get a grant. Our budget was the same no matter how many shows were in the season. So, we weren’t looking at things on a per-cost basis—or even evaluating ROI.

Now, we’ve shifted to a mind-set of “this is what we should be spending to make this much,” driven by data. That is what helped us increase our operating budget. There’s not been a question of cutting the budget when we have a setback, because the data tells us what the impact will be. It’s an investment to be able to grow, and as we’ve seen success, the investments have increased.

Database and integrated departments

Prior to TRG, we weren't using data to make marketing decisions. At the time, the box office and marketing were separate. The box office was handling subscriptions and marketing was handling single tickets. The marketing department didn't have access to how ticket sales were going, therefore could not adjust the campaigns accordingly and make real-time decisions. The box office had a culture of not changing operations even though the organization had grown and changed. It became apparent to our leadership this change had to happen once we engaged with TRG. Because of that realization, marketing and the box office were consolidated under one department.

Cast of The Odd Couple. Photo by KO Rinearson.

The orientation around data really drives most of our organizational decisions now. It is a shift for our whole organization. That culture has extended to other staff members, not just the ones who have been involved in the training or the meetings with TRG. For example, in our revenue pacing meetings, we usually talk about single ticket and subscription sales, but we’ve expanded it to include our Academy and special events. We talk about enrollments and event results alongside those other earned revenue categories.

I love to think back now on how much things have really changed. For me, it’s been the most exciting journey.

About Lyric Theatre of Oklahoma

For over 50 years, Lyric has produced classic and contemporary musicals and plays featuring both nationally known Broadway stars and local favorites. Lyric produces four large-scale, fully orchestrated musicals at the Civic Center Music Hall each summer, as well as four smaller works at the Plaza Theatre during the spring, fall and winter.

Lyric is proud to be Oklahoma’s leading professional theatre and continually strives to produce Broadway-caliber productions for Oklahoma audiences.

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