Welcome to the May issue of the ArtsMarket newsletter. This monthly service is devoted to topics in building audiences, the cultural economy, trends in arts in education, and building community through the arts and culture. If you are new, please feel free to check out past issues posted to our website at www.artsmarket.com. Let us know about topics you would like us to explore in future issues, and feel free to forward this to friends and colleagues. As always you can unsubscribe at any time by clicking on unsubscribe button below.

-Louise K. Stevens, President

lstevens@artsmarket.com

As marketers roar back with plans to rebuild subscriptions and memberships lost over the past couple of years, some wisdom from a decade ago points to the importance of building a marketing system that lasts. Build the systems along with the new audience!

The last time the market for the arts was as tough as 2002 was in 1992. We had the chance to study the 1992 phenomena in California in depth a while back, for a team of The James Irvine Foundation, the Walter & Elise Haas Fund, and the William and Flora Hewlett Foundation, through scores of interviews, case studies, and data analysis. (An executive summary can be found at www.artsmarket.com/ca.html). Remember than 1992 was not only a bad recession year, but in California it was also the year of earthquakes and damaged/closed cultural facilities, broken Bay bridges, Los Angeles riots, and tremendous out- migration of high earning workers. It was a nightmare.

As we saw, it changed consumer behavior. People disrupted their patterns of subscription, of membership, of belonging. They stayed closer to home, often out of fear, and out of financial stress. Arts organizations in California lost thousands of subscribers and members.

So what did smart arts organizations do to pull out? The lessons are ever so applicable for today.

1. Smart and successful organizations rebuilt their marketing infrastructure, not just their ad budgets. They invested in the capacity to drive revenue. They did behind the scenes work, work that didn't have an immediate payback but was essential to rebuilding. They did everything from building new database systems to investing in customer service training.
2. Smart organizations prospected wisely, targeting the type of lost audiences they needed to win back, and adding thousands of new prospects to their mailings. They were massively aggressive.
3. They worked at rebuilding an emotional bond and connection, by retraining lost audience segments - that life wasn't complete without going back to the arts. They rebuilt brand identity, emotional connection, and the desire to belong.
4. The smart organizations were consistently visible, reinforcing the message of affiliation and involvement.
5. They used the moment of market transformation to find and build connections with new audience segments - younger, more diverse, and more urbanly- oriented. This, at the same time as they reached back to the empty nesters who had halted their cultural participation.
6. They made marketing a commitment, customer service a priority, often rearranging staff teams to make audience development a core belief and an inter-departmental responsibility.

Ironically, in an age of vanishing docents and audiotour impersonality, we're seeing that visitors long for the personal touch, the guide who can explain an exhibit or offer an anecdote. We recently had the opportunity to conduct some roundtables with exhibition floor staff and hosts for the Rubin H. Fleet Science Center in San Diego as a part of a market and audience development analysis. We were struck by one staffers' comment, especially when we saw parallel comments in visitor exit surveys. The staffer told us of visitors who came back because of the chance to talk and learn from a real person. He told of repeat visitors seeking him out for conversation and explanation. They've come to know him, trust his insight, and like the personal touch. His story proves an important point: the personal connection matters.

Most institutions are struggling mightily with finding the solution to this. Volunteers are not the likely or only solution these days, as volunteer ranks thin. Instead, a combination of guard and guide, trained and viewed as a part of the combined visitor services and education team, are the answer for the future. There may be fewer of them per gallery - with the "guard" task increasingly done electronically - but their involvement is central to the visitor experience. They are the front line for membership and loyalty development. They make the destination great. An investment in them is an investment in the visitor experience, and has its economic payback directly in repeat visitation and membership increases.

Destinations that build brand loyalty don't ever underestimate the value of those front lines of floor staff. They equip them with the training they need to be institutional ambassadors. Take the Ritz Carlton Hotel. The chain spends $5,000 a person to train every new front line employee. Their credo: it is all about service; never lose a guest; offer warm and sincere greetings; use the guest's name whenever possible; go out of your way to help at all times; be formal and polite rather than chatty and familiar; and more.

We have often wondered what your average performing arts event would be if the ushers were trained this way. What if they welcomed, knew, acknowledged, and treated subscribers as special? What if the staff were an essential part of building an emotional connection with the organization, the building, the event? What if the valet team who whisked your car away knew your name, the doorman who swung open the door welcomed you back, and the usher leading the way to your seat made sure you were comfortable and asked if you needed assistance.

And what if museum floor personnel were just as warm and gracious as the doorman at the Ritz? What if they too carried one of those laminated cards that all Ritz Carlton employees carry with the 20 basics of values and service, always there to reinforce going out of their way for the visitor? What if service, visitor satisfaction and comfort, and a consistent excellent visitor experience were their priorities?

We'd have a very popular cultural world. Visitors would feel honored and respected, special and cared for. They'd want to come back, certainly because the art was great, but also because it feels great. They'd want to go out of their way to become members and donors. They'd become the word-of- mouth ambassadors and advocates every cultural organization needs.

Is it worth it? In our book, visitor service may be the second most important marketing investment - after great data analysis systems and capacity - that you could make.

Feasibility studies are most often equated with building designs and capital campaigns. Neither of those two types of studies can be done well, however, until two fundamental sets of analysis are done: 1. market testing; and 2. business planning, often encompassing economic analysis to determine return on investment. Nothing can be feasible until you know the size and sustainability of the market, and the cost-revenue models for long-term operations and sustainability. Yet, all too often, people first dive into deciding the color of the green room and the size of the stage before they figure out the cost of operations and the size of the annual potential audience!

Start instead with the business model: you may be in for some surprises when you do. For example, we recently did a museum study that found the total square footage had to increase pretty dramatically from what the architects and board had previously decided upon because it wasn't big enough to sustain the visitation and tourist traffic they needed to make the financial equation work in their city.

Here are some of the questions to be answered before you get into choosing architects or fundraisers:

• What are the needs of your organization or group of organizations?
• What are the operating realities, audiences, budgets, and growth capacity of the same, and what are they likely to be projected out five years from now?
• What is the market that exists to support, or the market you need to build to support your plans?
• What are the implications on operating models, budgets, and financial cycles?
• What is the potential ramp up and long term operating model and revenue sources? What are its implications for your venture?
• What is the potential return on investment (direct and indirect) from your proposed venture?
• What are the governance, leadership and staffing requirements for ramp up and sustainability?
• How does all of the above compare to your baseline, and what does this say about the timeline and capacity development necessary before a formal initiation of your venture?

Considering research in the coming months? Nationwide and across all sectors, the hunger for research this year as compared to last appears to be huge, and not just related to election year politics. The demand for new consumer info after a recession is extensive. And at the same time there are significant changes in the research industry, many brought on by the national do-not-call list, cell phones eliminating landlines, and the availability of email addresses growing by the week.

Phone - only research is rapidly being balanced by other methods, as concerns grow about reduced cooperation and completion rates, representativeness of samples, and disgruntled respondents. Offsetting it is the wave of popularity for Internet data collection - increasing, it seems, by the week. Nine out of 10 research industry firms are doing Internet based research this year. Mail and intercept surveys are also replacing phone, but at very much lower rates. Overall, declining response rates are a major concern cross all segments of the research industry. On the other hand, more and more data sets are now available as a foundation for secondary research, so once again, new methods can overcome losses.

We will have more on this subject in future issues of the newsletter.