This article originally appeared in the June Newsletter for Patron Technology. Here is a direct link to the article: Patron Technology June Newsletter.
I’ve just recently finished reading the book Competing Against Luck: The Story of Innovation and Customer Service by Clayton M. Christensen, Taddy Hall, Karen Dillon, and David S. Duncan.
The book’s central premise is to help people rethink the way they approach purchasing anything, using their “jobs to be done” framework. In the book, the authors suggest that customers “hire” products and services because these things accomplish something for the customer easily or cost effectively. In order for a customer to “fire” one product or service, another product or service must provide a level of innovation or customer service that sways the customer to “hire” it. For businesses, there is an opportunity to redefine what is delivered to the customer by focusing on the customer’s “jobs to be done.”
An excellent example is Amazon. Amazon innovated beyond traditional retailers by putting literally millions of items in front of the customer, far more than a typical brick-and-mortar business, at more competitive pricing. However, Amazon went further by engaging with the customer and redefining how customer service was measured. Instead of concentrating on a revenue model metric regarding how many items were shipped in a given period, Amazon chose to concentrate on the number of items successfully delivered to customers in a given period. Redefining success around customer service and the job that the customer needed to get done meant that more customers were hiring Amazon when it came to purchases.
I can relate to this strategy because I recently ordered a violin technique book for my daughter from Amazon. The item arrived exactly when Amazon promised — right before my daughter’s next violin lesson. Great! Unfortunately, upon its arrival, I realized that I had ordered the wrong edition. When I returned the order, not only did Amazon refund my order, but it also shipped the correct edition overnight. Amazon didn’t even want the wrong edition back. For Amazon, it was simply the cost of doing business. For me, I was still able to get the job I needed to get done for my daughter and her violin teacher.
What does all this mean for the performing arts? In a recent Atlantic article — “What in the World Is Causing the Great Retail Meltdown of 2017?” — Derek Thompson wrote about the steady decline of the traditional brick-and-mortar retail industry. Sears, JCPenny, and Macy’s are all closing stores while others, such as appliance retailer HHGregg, have filed for bankruptcy. Consumers are moving away from traditional retail consumption and instead are shifting their disposable income to more experience-driven transactions, such as eating out in restaurants and attending events and performances.
From a “jobs to be done” perspective, arts organizations have an opportunity to capitalize on this by redefining how they relate to the patron and how they define the metrics for success through understanding a patron’s “jobs to be done.”
At one time, it was enough to sell single tickets and subscriptions, cultivate donors, and use the outcomes in these three revenue streams to judge success. This was fine when the earned income to contributed income ratio for most performing arts groups was 40 percent earned to 60 percent contributed. Since the Great Recession, contributed income has become more important as ticket sales have declined. We have moved further away from the transactional process of selling a ticket and toward developing unique experiences and relationships with patrons. So how do we use the “jobs to be done” approach to redefine the metrics for success?
Instead of concentrating on:
- Single-ticket sales for an event
- Number of new subscriptions
- Number of donations to the annual fund
We should be redefining success in terms of:
- Multiple single-ticket purchases across a timeline by a patron
- Length of subscriber retention
- Donor loyalty and total dollars given
… And many more metrics that express success in terms of experience in addition to net revenue.
The biggest difference in these two groups is that the first group generates performance measures — think Amazon-shipped packages per month — while the second group dives into the customer experience and retention. This experience-based thinking requires a different set of processes.
Why does a patron come to your organization? What is he or she “hiring” you to do? Talk to your patrons and ask them why they come. Understanding why you were “hired” will give you insight into what is important and help you develop the “jobs to be done” processes needed to innovate and serve your patrons. This is the future of sustainability for the arts.