Membership Has Its Rewards

I found this story about  Goldstar supplier and major regional theatre ACT (Seattle) extremely interesting.  Here’s a tidbit:

“In early 2003, ACT Theater was down to its last $3,000. Only an aggressive fund–raising campaign and ruthless budget cuts kept the theater afloat. Despite the belt tightening, over the past five years ACT has piled up another big debt: more than $2.5 million. On top of that, like every nonprofit arts group in town, ACT has had to cope with the recession, a downturn in season subscriptions and a drop off in corporate giving.

[Carlo] Scandiuzzi: “A lot was riding on us balancing the budget this year.”

Note to anybody running any organization: a lot is ALWAYS riding on balancing the budget (and preferably a little better) every year.  It’s just that in Carlo’s case, the accumulated financial problems of the organization meant that the stakes were much higher than usual.

But I digress.  Belt-tightening and aggressive fund-raising helped the organization stop the bleeding, but they still identified a significant problem: they had a building with four stages.  Now, this is nice, but it’s also expensive, and nothing’s worse from a maintenance and mood point of view than a building sitting empty.  It’s like living in the plague years, and believe me, I know the feeling.  At the end of the dot-com boom (you know, the ‘bust’ part), I spent a lot of time in office buildings set up for 200, but occupied by 20.  You feel like the guy who can’t make his mortgage payment but still drives the Bentley he leased when times were better.  It’s nice  to have the Bentley, but it’s killing you.  Which makes it a lot less nice to have the Bentley.

So ACT took two really interesting steps.

First, it threw open the doors to having other, often smaller organizations use the building: “ACT has teamed up with everyone from dancers and musicians to smaller theater companies. It also started a new works series. Those initiatives helped the company increase artistic offerings from 12 shows in 2006 to 45 last year.”

A propos of our discussion about not shutting down the factory, this is exactly right.  Utilization!  You’ve got a fixed cost in the form of a building that’s not easily disposed of (and you don’t want to.  It’s a valuable asset in the creation of content.)  The answer’s not shutting down; it’s gearing up, but in a new way.  This move alone shows me what kind of people work at this organization.  Not committed to the past, not arrogant, not closed minded, focused on solutions, and fired up to move forward.

And that’s before I mention the next thing, which is one of those concepts that it’s nice to see someone finally trying:

“In addition to its traditional season subscriptions and individual ticket sales, ACT launched a membership program. For $25 a month, members can see anything at ACT, as often as they like.

Scandiuzzi: “Like a gym membership. What it does, it appeals to a younger constituency that wants flexibility, doesn’t want to be tied to let’s say, I have to be here every other month. It frees them, they can call the day before, see a play, a dance, whatever.”

Brilliant.  Absolutely brilliant.  Again, it’s about utilization, but it’s also about breaking with the failed past.  A number of years ago, a friend of mine had a job he really hated.  I mean, it was the kind of job where waking up every day made him miserable, but he wouldn’t quit because he was afraid of what came next.  Not that he was afraid that he might not be able to get a job, but that he didn’t know if he would like the job he got next.

“Well, you know you hate the one you’ve got, don’t you?  Even IF you just just randomly jumped to a new job, you’d stand pretty good odds it was better than your current situation,” is what I said to him.

The financial situation of the ACT was terrible.  Absolutely abysmal and it brought them to the brink of disappearing.  Therefore, a dramatic change in a new direction, especially one as smart as this, could hardly be anything but an improvement.

Scandiuzzi says, “”It seems like it’s a fire sale, but when you really look at the numbers, we come out far better in the long run than we would otherwise.”  It doesn’t seem like a fire sale to me.  A predictable, monthly $25 per month from hundreds of “members” sounds like the basis of a good business model.

And they balanced the budget for the year.

I approve.