Wednesday, December 29, 2010

Customer Service from a Marketer's Point of View

I have been a lifelong customer of American Airlines. A frequent flyer, credit card holder, miles gifter--you name it. I started flying AA because they had direct flights into St. Louis, where most of my family lives. From there, I started to accrue miles, and soon enough, I booked all of my travel on AA. It became a habit. I knew their routes, the layout of their planes, and how to navigate Dallas Forth Worth airport like a local. In performing arts terms, I was a long time subscriber. That is until now.

My flight from St. Louis to Washington, DC was canceled the day after Christmas due to weather (even though DC didn't receive any snow, and my plane was at the airport ready to take off). I was informed by a robo call, which also told me that I was rebooked for a flight 26 hours later. The message ended by instructing me to call AA reservations if I had any questions or concerns. Knowing that I had to be at work the next day for two interviews with major media outlets, I tried calling the number given. After being hung up on four times, the automated telephone system said "we are experiencing high call volume. If you would like to speak with an agent, please call back later." Knowing that I wouldn't be able to speak with a human, I tried working out my problem on the AA iPhone App and on their website, neither of which were designed to handle cancellations. My last option was driving an hour and a half to the airport, which I did only to be met with an apologetic but complete ineffective gate agent. So with no other option, I boarded a flight 26 hours later, however I decided I would no longer be an AA subscriber.

As marketers, we know that it costs significantly more to attract new customers than it does to retain them. Customer service is one of the easiest ways to create brand champions or to drive loyal customers away. As the economic crisis continues, we are all being forced to examine our expenses and improve ROI. So here are some thoughts on customer service as a marketing tactic to reduce churn:

1. When dealing with a customer service complaint, take a holistic view of the customer. At Arena Stage, we are fortunate enough to have a robust database that allows us to see a holistic view of our patrons. Each time a patron comes into contact with our company, it is recorded. Any employee can log into the database, and see a lifetime's worth of interactions. Like most companies, Arena Stage has policies and procedures, however our greatest asset is the excellent judgment of our front line staff. They are instructed and empowered to thoroughly review a patron's file, and to depart from most policies and procedures if necessary to retain loyal customers. I would rather waive a $10 exchange fee for a longtime subscriber every once in awhile than spend ten times that finding a new subscriber. Senior managers must allow front line employees the flexibility to take care of highly valued customers.

2. Track all customer service issues, and start to look for a pattern. Each time a customer complains, be it to front of house, box office or anyone else, the complaint should be logged into your database and tracked. Every Monday morning, senior members of the Arena Stage staff are sent a CSI (customer service issue) report listing all the complaints that came in the previous week. These complaints are then put into a spreadsheet, sorted into categories and analyzed for any visible patterns. If the same issue continues to come up, you can bet that there are ten times the number of frustrated patrons with the same issue who haven't complained. It is then your responsibility to proactively address the issue swiftly to prevent future patrons from having a similar disappointing experience with your company.

3. Be proactive, rather than reactive. The best service comes from proactive management of customer service issues. Instead of relying exclusively on complaint tracking and analysis, be proactive and solicit opinions. Send customer satisfaction surveys. Benchmark numerical responses from year to year, and ask open ended questions. Aggressively solicit customer service issues and correct them before others have to experience them. In addition, if you notice a customer has experienced a problem, try to contact them before they contact you. We ask our house managers to get the names of all patrons who share complaints and/or concerns. This allows us to follow up with the patron and suggest a solution, apologize or offer some form of compensation before they contact our box office. Imagine receiving an apology and a compensatory offer from a box office before you even contact them to report an issue.

4. Even small gestures go a long way. After doing a little research on airline customer service, I was reminded by Time Magazine's Richard Zoglin in his article "The Airlines' Customer Complaint Lines: No Answer" that even small gestures go a long way. You might not be able to meet all the demands of an angry customer, but you should be able to offer a little something to most of them. A comp ticket to an under-performing show, a free drink at the bar, complimentary parking, an autographed poster or perhaps a handwritten response from your Artistic Director. In today's world of fast-paced, unfriendly, automated response systems to customer complaints, it shouldn't take much to stand out from the crowd. Differentiate yourself from your competition by making a small gesture to each upset patron.

By offering better customer service, you can reduce your marketing expenses by slowing down churn. Make it a priority to retain the customers you spent valuable time and resources attracting in the first place.

Sunday, December 05, 2010

Why I Hate Comp Tickets

If there is one thing that can kill your earned revenue quicker than anything else, it is a misguided complimentary ticket policy. Someone asked me the other day why I hate comp tickets so much, so I decided to list my top reasons:

1. Comp tickets devalue what it is we do. For my entire career, I have watched artists struggle to make the argument that the arts mean business, and that an artistic career is just as viable an option as any other. However, these same artists then give away the fruits of their labor to anyone with the most feeble of reasons. In the past few days, a viral video entitled "Explaining the Arts Non-Profit," has been passed among my colleagues illustrating this point. It starts out with one bear saying how much he enjoys a choral group, and then asking for a comp ticket. The other bear responds by saying that putting on a concert is expensive, and would prefer it if the first bear would purchase a ticket. The first bear is befuddled by the response because he thinks the choral group is made up of volunteers who perform as a hobby. For many of us, the arts aren't a hobby--they are our livelihood, and we deserve to be compensated for work that enriches the lives of so many people.

2. People don't show because they aren't invested. Many organizations believe that they must give away comp tickets to "paper the house" in order to fill as many seats with butts when important people such as reviewers are in the audience. However, in many cases, it backfires on them. Those who receive comp tickets haven't paid anything for them, therefore they aren't invested and many don't bother to show up. An average no show rate for comp tickets is in the 30% range. Next time you are at an opening night performance, take a look at how many empty seats there are. I would bet dollars to donuts that those empty seats are a result of a faulty comp ticketing policy. Not only are organizations giving away free tickets, but they aren't even getting the results they want out of them.

3. Blood in the water. Nothing smells of desperation worse than massive public discounting and uncontrolled comp ticketing programs. You might as well put a sign on your theater that says "no need to buy because we can't give tickets away." Marketers are in the business of managing perception more than reality. Even with shows that are under performing, smart marketers have tools in their toolbox to create the perception of demand.

4. Comp tickets create box office nightmares. The old saying that "those who pay the least complain the most" definitely applies to recipients of comp tickets. Recipients of comp tickets, in my mind, are the most entitled and demanding group of patrons to serve. They demand the attention of box office and front of house staff, which in turn takes a significant portion of your limited resources away from your full paying audience.

That all being said, there are a few good reasons to use comp tickets in a controlled and well thought out strategy:

1. As benefits for full time employees and actors. In many organizations, comp tickets are an important part of the benefits offered to employees. Organizations want their employees to be proud of their work, and knowledgeable about what is on stage, so offering them complimentary tickets is well worth the loss in revenue.

2. For members of the press. Press members who have agreed to cover a particular performance should be offered a comp ticket. However, do not give out comp tickets to press who haven't agreed to coverage. If a press member wants to see a performance but isn't going to cover it or your organization, it is more than acceptable to ask them to purchase a ticket. Just because they are a member of your credential press corps doesn't automatically entitle them to a free ticket.

3. To cultivate potential investors and/or donors. Comp tickets can and should be used to host potential investors and/or donors as a means of cultivation. However, these tickets should be monitored and tracked. I have seen companies give away thousands of dollars worth of comp tickets to potential donors who were in the "cultivation" process for years without a single donation.

4. As a professional courtesy. Most organizations have a vested interest in other artists seeing their work. Agents, casting directors, affiliated artists, artistic directors, and producers comprise most of this group. In some cases, if a relationship is exceptionally important, offering comp tickets would be appropriate. In many cases however, a discount for industry professionals will work just fine.

In closing, here are a few quick thoughts on developing a comprehensive comp ticketing policy for your organization:

1. Create a budget for comp tickets. Used in much the same manner as an expense budget, this allows an organization to plan for a given number of comp tickets each year for various purposes. Make sure to get buy-in from all members of senior management as they will be responsible for managing the comp tickets for their departments.

2. Develop very clear instructions on how comp tickets are to be distributed. The key to a good comp ticket policy is clarity. Make sure your policies are easy to understand and simple to follow. For fairness, it is important that the same policy be in effect for your entire organization. Once a clear and concise policy is created, stick to it.

3. It's like a crack addiction--it will be tough to wean people off of them. If your organization has a serious comp ticket problem, you might need a couple of years to turn it around. Be will piss people off. But we are talking about the livelihood of the organization and its artists. Why would anyone want to buy a ticket if they know that your organization gives them away at the drop of a hat? It will be tough, but worth it. I promise.