Case Study

Indiana University Auditorium: Marketing Research and a New Subscription Program

Summary Indiana University utilized market research to turnaround lagging attendance and ticket sales. They discovered that customers wanted higher quality performances, surprisingly expected and supported higher ticket prices, and preferred the flexibility of a pick-your-own subscription series sales format. In the season following the research study, revenue rose 135% and attendance increased 109%. Background Indiana University Auditorium is a 3,200-seat performing arts facility on the Bloomington campus. Its mission is to provide entertainment for University faculty, staff, and students, as well as the 30,000 residents of the surrounding community. In the mid-90s, the Auditorium presented 14 to15 events annually that were packaged into two primary subscription series. The Broadway Series, which had over one thousand subscribers, comprised four touring Broadway shows, such as Crazy for You, Five Guys Named Moe, and Rodgers & Hammersteins Cinderella. The Artist Series offered three dance, classical or world music events, featuring noted artists as opera star Marilyn Horne, the Hubbard Street Dance Company, and the Guildhall Strings ensemble. This series had only a few hundred subscribers. The remaining seven to eight events, collectively called Singular Sensations, were sold not on subscription but as single events. There was no thematic connection between these events which included attractions like Slide Hampton and the Jazz Masters, The Flying Karamazov Brothers juggling troupe, humorist Mark Russell, and the Broadway tour of 42nd Street. Both subscription series offered subscribers the same reserved seats for each event in the series as well as a discount of up to 30% off the single ticket price. To purchase Singular Sensations tickets before they went on sale to the general public, patrons had to subscribe to one of the two subscription series.

During the 1995/96 season, overall ticket sales reached an all-time low. Only 22,682 tickets were sold, representing an average of 56% of capacity and revenue of $390,671 ($35,500 per event). Most alarmingly, almost all subscribers purchased tickets for events and then did not attend. This created embarrassing pockets of empty seats in prime locations. There were also problems surrounding booking the events. Attractions had to accommodate a specific number of nights so that they could be shoehorned into a subscription package. They also had to thematically fit with the existing series so that subscribers would not be alienated. These restrictions meant that the Auditorium had to pass on many attractive shows. Especially concerned by the growing downward trend in ticket sales, Indiana University hired Bryan Rives as the new general manager of the IU Auditorium to improve attendance and revenue. Market Research Upon arriving at the Auditorium, Rives discovered that there was no market research that could guide change. He immediately implemented a market research campaign to understand the organizational problems from the customers point of view and what changes would have customer support or at least not create customer backlash. He led a qualitative study comprising a series of focus groups divided into pools of subscribers and non subscribers. Several major issues were uncovered:

Patrons felt the Auditorium forced them to buy shows they did not want. They thought lesser-quality events were purposely packaged in a subscription series next to popular events so that artificially high ticket sales generated more profits for the Auditorium. They also had the impression that the most popular events, offered in Singular Sensations, were excluded from subscription series packages so that patrons were forced to buy a complete subscription series if they wanted access to Sensations tickets before the general public.

A significant number of subscribers said they subscribed in some years

simply to keep their prime seats. They resented the fact they had to re-subscribe each year to retain their priority as a subscriber. Of great concern to long-term subscribers were changes that would not take into account the loyalty of long-term subscribers.

When asked about subscriber benefits, not a single subscriber mentioned the

major discount they received, which comprised up to 30% off the single ticket price. One subscriber did mention that she thought she might be getting a discount but was immediately informed (incorrectly) by the other subscribers in her group that she was mistaken. And when asked to write down the price they thought they were paying on a per-event basis as a subscriber, subscribers noted a price that was much higher than the actual price.

Subscribers did not need the expensive season announcement brochures. Almost all spoke of the shame of wasting the money on the printing and mailing. A simple its time to renew letter was enough.

The most puzzling information derived from the focus groups was that subscribers had no perception they received any discount and thought that their per-event price was much higher than what they were actually paying. Rives reviewed the marketing materials from past seasons and discovered that the subscriber discount was either never mentioned or was part of the small print. Additionally, the per-show single ticket price did not appear; only the price for the series was displayed. Rives then helped the Auditorium staff understand that:

Subscribers highly valued the loyalty they had demonstrated. Most subscribers felt they were overpaying because they were forced to buy

a season package that contained events they had no interest in attending. Subscribers had no idea they received a significant discount from the single

ticket price. Subscribers had a higher perceived value of the per-event prices they paid

because these figures were not in the season brochure. Subscribers of one series interested in one or two events in the other series

would not buy the entire second series and would not purchase single tickets during the public sales period. They had mentally already made their purchase for the year when they subscribed.

Action Taken With the research data that showed subscriber wants and expectations, Rives custom-crafted a new presenting program for the Indiana University Auditorium. The staff booked higher quality events with the number of performances based on projected customer demand, not the needs of a particular series. Additionally, the concept of subscriber was turned on its head:

All pre-established subscription series were eliminated and events were offered on a pick-your-own season format. To qualify as a subscriber, customers simply had to select a minimum of five events from all events offered that year. The term Pick 5 to Subscribe became the call to action during the subscription campaign.

All subscribers were assigned a priority number based on when they first

became a subscriber. Orders would be filled in order of priority number if an order was received by the subscription deadline. Thus, long-term loyalty continued to be rewarded with premium seat locations.

All subscriber discounts were eliminated. Patrons now paid the same ticket

price as single ticket buyers. Thus, subscribers no longer saw a package

price but the actual the single-ticket price. The single ticket prices were also increased to meet customers perceived value of events as demonstrated by the research. Since these new, higher prices met their expectations, there was no significant loss in the subscriber base. Additionally, they knew they were getting better seats by subscribing.

Subscribers were no longer guaranteed the same seat for each event since a

Pick-your-own series format does not allow for that option. However, subscribers discovered they were in similar seats or in even better seats for their selected performances because subscribers with higher priority were not buying tickets for events they had no intention of attending.

Results As a result of these changes, the following seasons revenue rocketed up to $917,502, an increase of 135%. Attendance increased 109% to 47,388. Per event, revenue increased from $35,515 to $83,409 and attendance grew from 2,063 to 4,308. Sales continued to increase over the next several seasons, peaking near the end of Rives six-year tenure at a record high of $2 million.