How to Take the Emotion Out of Discounting

Jim Lewi is the president of LiveWorks Events, host of the Aspen Live Conference and a consultant at Goldstar, to name just a few of his titles. Recently, he covered discount channels in the article below in his company’s newsletter. It’s a nice refresher on the importance of RPS. You can read more from Lewi at the LiveWorks newsletter.

“Our job is to take the emotion out of discounting” is a line I use when talking with industry peeps about our consulting client, Goldstar. And emotion should never play into your decision to use discount channels to move tickets when making money, reaching an audience and filling seats is the goal.

At the Pollstar Conference a few months back, a national promoter told me that “if I have to use Groupon or Goldstar, that means I didn’t do my job.” What? Do all of your shows sell out, or are they even projected to? If you are like the rest of us, the answer is no. In many of those cases, there is an audience that doesn’t even know your show is coming to town, so why not use all the tools at your disposal? Once the act hits the stage, every empty seat means $0 in revenue … and not just for that seat.

Shouldn’t we be counting the zeros when average ticket price tells us nothing?

We should be measuring revenue per seat like the airlines do. For instance, if the Jim Lewi Band played a 15,000-seat arena and only sold four tickets (to my family, of course) at $500, the average ticket price would be $500, even though a majority of the house is empty. But by counting your unsold tickets as $0, you find out how much each seat contributes to your bottom line. Based on the example above with a 15,000 cap, your average ticket price is $500, but your revenue per seat is only $0.0333. Revenue per seat tells us what we really need to know.

In music, many tell us of the perception that the show is a dud if you’re listing tickets through a discount channel. The truth is this “perception” is only in the eyes of the business, not the fan. It is an emotional response we give based on protecting the act’s brand and value in the market, but most fans aren’t doing research to find the best deal like they would with other products. Maybe someday there will be a “Kayak for live entertainment,” where a consumer can search for the best deal, just not yet. Goldstar, Groupon and LivingSocial are all marketing avenues that need a new measurement scale. CPM (cost per thousand people reached) is generally how marketing is measured. It doesn’t apply here as there is an actual sale, so the more tickets sold, the higher your CPM goes. It should be going down.

The only way you will really know is to “test and measure” results. Don’t assume that you are hurting your show or act by discounting (unless it is to your own list) when chances are you are doing the opposite. There is a lot of data to back this up.

When done properly, using a discount channel helps move the primary market. If you haven’t tried it yet, you should. Otherwise, you are just guessing … and probably wrong.

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