Customer Retention is Broken. Here’s How to Fix It.

The recent Spektrix Benchmark Report highlights a concerning issue for the arts: we’re just not doing well at retaining our customers. And not much has changed since we last did this report in 2014 where the retention rate was 31%.

On average arts organizations retain just 32% of their customers in the year following a visit (year two), and just 27% in year three.
This means you will probably lose around 68% of this year’s customers. That’s a lot of people. Let’s say you have 30,000 customers a year, that’s 20,400 customers. Ouch.

But, the step change in the number of customers you retain in year three is evidence of the value of customer retention. If you can get your customers to come back in year two, you’ll only lose a further 5% of them in year three.

How do the arts compare to other industries?

The arts are doing a little better than some industries, such as clothing who retain 24% but worse than the health and drug supplements industry who retain 44% of their customers.

But some companies are achieving great retention rates. Apple retained 92% of iPhone customers in 2017 while Amazon Prime keep 96% of their customers.

What are the benefits of increasing retention?

It’s around five times more expensive to acquire new customers than it is to retain customers. If we think about the resources we need to invest in getting in a new customer, such as expensive advertising, compared with the cost of emailing a customer who has already visited you once, it’s clear to see the return on investment is much greater when retaining customers.

For arts organizations, this means building a core audience who are loyal, will take risks with you and in general are easier to sell to. These customers are also more likely to support your organization with donations.

So why do the arts struggle?

In recent years there’s been a growing need to increase audiences. With the average age of audiences getting older, many organizations are focusing on getting in new audiences from all walks of life. And while this is valuable and necessary, we’re ignoring our existing customers in the process.

What are some examples of good retention strategy?

Okay, so you don’t have a budget like Apple or Amazon but you can steal the guiding principles behind their strategies and apply them to your own efforts.

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