Broadway Discounts Gone Wild
So, who actually pays full price for Broadway tickets anymore? I asked our friends at Telecharge some pretty straight forward questions about the use of discount codes on their ticketing system. The information we received may surprise you.
First, I asked them “for tickets sold to musicals in 2010, how many of those that used a discount code to purchase a Broadway ticket were ‘new Broadway ticket buyers’ versus those that have purchased tickets in the past?
- 43% of “new to file” (which I would call “new to Broadway”) NY metro area musical buyers used a discount marketing code to purchase tickets.
- 29% of “new to file” out of town musical buyers used a discount marketing code to purchase tickets.
Remember this doesn’t include TKTS, groups, rush or any other “non coded” discount outlets.
Now, that’s musicals – how about plays?
- 40% of “new to file” metro area play goers used a discount marketing code to purchase tickets.
- 29% of “new to file” out of town play goers used a discount marketing code to purchase tickets.
You can draw your own interpretation of this data but, to me, this data underscores the need for a discussion on a few key questions.
Question #1: Should we be using a price promotion as the primary driver in reaching out to new audiences for Broadway? Even though we think we are putting discount offers in front of those that are “in the know” through targeted discount emails, this data clearly highlights that they end up going to a much wider audience well beyond your control. Simply Google a show name and you’ll see what I mean – there are a range of discount offers being presented to those that are probably more than willing to pay full price if the discount wasn’t available. Aside from the revenue lost on that particular transaction, I have a bigger concern – if you’re new to Broadway and are presented with a discount code, you are then officially trained on how to NOT buy a full price ticket. With no direct association with price to value and with 50% discounts in the market, why would we ever expect behavior NOT to repeat itself with these buyers who have been introduced to Broadway through a price incentive?
Question #2: Should our pricing promotion be the same for those that attend Broadway regularly versus someone who is new to Broadway? Again, with upwards of 43% of those “new to file” using a discount code, we are not truly distinguishing price to value between the two audiences. What does that say for the way we value customer loyalty as a category as someone who attends regularly may well be paying more for the same ticket if a newbie has a better grip on how to use Google to find a better promotional code? “But, hey, it’s how the airlines do it?” – this is one of the most common points I here and I have a major issue on this analogy on many fronts. First, airlines don’t publish the rack rate – we do, right on the front of the theatre and on our website. Second, they invest heavily in their infrastructure to maintain a variable pricing model which we currently are not structured for. And, third, do we really want to aspire to be like the airlines?
Question #3: How much higher can our top ticket price go in order to subsidize the expansion of deepening discount offers? You can now get a better discount online than waiting in line at the TKTS booth. That’s a radical shift from where we were five years ago. So, with all data pointing to more and more tourists accessing discounts codes, who will be the “full price” buyer?
Question #4: Are the “new to file” customers truly building blocks for the future? In other words, are we inviting new audiences to Broadway through these price promotions that really need a discount offer in order for them to actually make it to Broadway (i.e., college students, young professionals, etc.)?
The answers to these questions are not simple to address. I do know that many of our clients are trying to get ahead of the curve with how they are rolling out pricing promotions, setting price points and defining buying parameters and I’ve seen some great examples that have had a solid impact on their bottom line.
What really concerns me in the short-term is the overarching spirit of the economic climate that is fueling fear at all levels and it’s having an impact on all industries – not just Broadway. Just look at the news – unemployment, entitlement reform, rising consumer prices and international uncertainty. It’s scary to be on either side right now – consumer or entrepreneur (a producer). This is at the very root of why price driven promotional outlets (i.e., groupon, living social, retailmenot, etc.) have blossomed during these past few years tapping into a universal fear that is often massaged by attribution shown through promotional offers (i.e., “Look, 50 tickets were sold with this special offer.”). But, we all know (and history has shown it) – competing on price isn’t a winning long-term strategy.
Here’s to 2011 – the year, where whether we like it or not, we finally address ticket pricing strategies for a digital age. I look forward to the rounds of discussions we will ultimately have on the topic. Thanks to the folks at Shubert Ticketing for helping pull this data.