Ashley Smith-Hammond

When it comes to success in business, there’s an almost primal tension between long and short-term gains. For arts and culture organisations, the question is even more relevant.

Over time, patrons can transform into supporters, offering their time and money to play a role in ensuring more people have the opportunity to enjoy the experiences they did – but only if you support them to become advocates.

In this article, we’ll delve into some of the theory behind cultivating a long-term supporter base and some of the practical approaches to help you get there.

Moving beyond seasonal targets

For many culture organisations, it’s tempting to plan around annual and seasonal targets. This makes sense because cultural programmes are traditionally refreshed annually. Maybe you’ve already caught yourself setting targets around questions like: ‘How did this year’s summer gala do compared to last year?’ or ‘how did we do in Q4?’

Understandable though this approach is, it comes with a risk. You could actually alienate your best supporters by making too many asks of them in a short period. As American audience analyst Colleen Dilenschneider points out, pegging targets to the quarters of the financial year ignores your patrons’ real life visiting cycle and other life pressures.

Calculating lifetime value (and getting out of the short term mindset)

To find out which strategy works best for your customers, you need to know some key facts about them. When looking at the short term, you will most likely look at ‘cost per acquisition’; how much it costs in advertising/marketing/incentives to ‘acquire’ a new audience member, customer or patron.

To get out of the short-term mindset, you need to understand on average how much income a new customer will contribute to your organisation over their whole lifetime (often referred to as: Customer Lifetime Value, or CLV). Tellingly, a 2014 report from Econsultancy revealed that although the vast majority of companies agreed CLV was important, only a minority were able to measure it.

This infographic from Kissmetrics is a great introduction to calculating CLV. For CLV to be useful, you’ll need to differentiate between your ‘good’ customers who really love what you do and contribute a lot, and everyone else.

Build a long term strategy to keep and develop your best supporters

Once you know your cost per acquisition and CLV for various types of customer, the final part of the picture is ‘churn’ or ‘attrition’ rate. This is the rate at which your hard-won customers and supporters go inactive and head into the dreaded category labelled ‘lapsed’ in your CRM, and need to be replaced by new audiences. This is the classic leaky bucket as identified by Katy Raines in 2015!

This is important, because it can reveal long term problems, especially where you might be losing your most valuable supporters too early. It can also uncover where you’re investing too much on acquiring low value customers for short term gains.

For example, if your audiences are lapsing after only a couple of years, you could plot a chart that shows how much income you’re losing out on. That might mean that you divert investment from short term seasonal promotions to keeping people on board. Make sure too, when you do the maths you’re including donations in your calculations, not just purchases.

When you know where you really stand with your customer and supporter base, you can start putting in place plans to encourage ever increasing lifetime value and engagement.

 

Main image credit: luczniczka statue bydgoszcz by wikimediaimages (CC0 1.0)