Half Price Cannibalization? Only If You Do it Wrong

Rick Lester from the database marketing firm TRG posted an intriguing teaser on some upcoming data that I just have to talk about.  The group is looking at the behavior of half-price ticket buyers in the Bay Area, and here’s what their preliminary data says:

“In this case, my three decades of experience was not helpful.  I was convinced that cannibalization was likely to be a serious problem among half-price ticket buyers.  Once converted to a deeply discounted ticket, it was unlikely that they would ever again buy a full priced ticket.  I was wrong.  The cannibalization rate for the study data was less than 1%.  The majority of returning ticket buyers (from the 1%) made their next purchase directly from the organization they started with.”
I don’t hold it against anybody that they don’t understand this phenomenon.  You’re not staring at cold, hard data on this all day like I am for the last decade, but not a thing that Rick says in his post surprises me because I’ve seen the pattern again and again.

There is no such species as a “half price ticket buyer.”  There are just people in a marketplace evaluating purchase decisions all day and night long.  The reason that half price doesn’t cannibalize when it’s done well (and yes, Goldstar is the best at this, but there are some excellent outlets that do it well too, like Travelzoo, Plum Benefits and others) is that you’re reaching some of those consumers who otherwise would not have come to your show.

Producers and venues sometimes don’t believe me when I say that, but think about it:  how many people as a percentage of the targetable population are REALLY considering going to your show? 1%?  Numbers go a lot lower than 1%, you know.

The problem for most venues in the vast majority of cases is like the old joke about the difference between ignorance and apathy:  no one knows and no one cares.  No one knows your show exists and no one cares.  If you start with that assumption, you can’t go too far wrong.  Maximize your core audience, but think of the rest of the world as people who have no idea you exist.

Now, here’s how to do half price ticketing the wrong way.  (Actually, there are a number of ways to do it the wrong way, but we’ll focus on just this one.)

Discount to your own people.  Funny how from time to time, we’ll get a venue/producer tell us that they don’t want to work with us to discount, but at the same time, they’re spiffing the bejabbers out of their own audience.

Folks, a discount to your full-price buyers isn’t a discount.  It’s a price reduction.  See the difference?

And that’s the issue.  It’s the already-sold person who gets a discount who might not want to buy at full price again.  The person who’s never heard of you and goes through a discrete channel like Goldstar has two thoughts:

1.  Hey, let’s give this a try, and

2.  Goldstar (or Travelzoo or Plum or whatever) is magic and has special relationships with the venues that make this price possible.

But when YOU discount, they read something very different. They’re not fooled by the word “exclusive” or when you say “limited time” or whatever you’re saying when you’re kidding yourself that the consumer doesn’t get what’s going on.  If you want to see cannibalization in the industry, you should look at in-house discounting.  That’s probably where you’ll find most of it, because by definition, these are already your buyers.  (Even still, it might be better to have your buyers present than absent.)

Thoughts about half price ticket selling are often irrational.  It’s always the amateurs that say, “we don’t want to create a half price offer because we don’t want to damage the brand.”  It took me a couple years to realize that 99% of the time when people say this, they have absolutely no idea what they even mean.  It’s just another form of Pretendinitis, where your marketing plan to sell tickets you’re not selling is to try to create the impression that you’re selling a lot of tickets, which you’re not!

Damage the brand?  How about an empty house or money-losing shows and the damage they do to a brand?  How about not reaching anybody other than the same old audience again and again and again for years and years?

Damage the brand?  Perhaps you meant “maintain the self-delusion that our show is Wicked or the Los Angeles Lakers and sells out just by showing up.”  (UPDATE:  someone pointed out that even Wicked discounts judiciously sometimes.  True enough.)

Here’s my bottom line:  use half price tickets, sure, to make a little (or even a lot) more money, but primarily to grow your audience.  Unsold seats can be a strategic marketing asset, which is the way I’d see Rick’s data.  It’s sampling.  Gosh, people are coming to your show.  You’ll never have a better chance to market to them, so you’d better make the impression count.

“Effortless” sell-outs represent way less than 1% of all the shows out there, which means that even very, very successful shows will need to work to maximize their yield.  Half price tickets are, when done right, not about price, but about audience development.

If you want to know more about how to do that, just let me know.