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From handling business “in the trenches” to studying the largest companies in the world in grad school, Jeremy Larochelle offers his unique insights into business, entertainment management, marketing, and more!

Solving The Casino Millennial-Baby Boomer Marketing Funnel Conundrum with Entertainment

Jeremy Larochelle

 

What do Millennials, DJs, and funnels have in common?

The answer may surprise you. As fun as the three combined may sound, it isn’t the set-up for a new drinking game. Instead, the three components come together to help us understand the future of the gaming industry and how we can capitalize on an impending change now efficiently and cost effectively through entertainment.

The Millennial demographic was the topic of discussion at the 2015 Global Gaming Expo in Vegas, as this collection of consumers brings with them a huge opportunity and perhaps an even larger challenge. According to the PewResearch Center, Millennials are projected to surpass Baby Boomers as the nation’s largest living generation 75.3 million to 74.9 million by the end of 2015. Normally an increase of this magnitude would be a welcome sign in any market – a fresh crop of new consumers to replace the old. However, this new charge doesn’t appear to be responding on the gaming floor in the same way as their ancestors. Research is revealing that Millennials typically find current slot products uninteresting, seek skill-based games, want a social atmosphere, and prefer night clubs over gambling – pretty much the opposite experience that has been cultivated collectively by the industry up until now. This has left many in unchartered waters as they seek out what drivers will lead this next generation to the gaming floor. According to the CEO of the American Gaming Association, Geoff Freeman, there is “going to be a lot [of] throwing things up on the wall and seeing what sticks.”

Freeman’s statement provides us with a key element regarding Millennial based marketing in the casino business. It suggests that they may not be opposed to gaming, but rather they are sitting at the top of the marketing funnel, a place where consumer behavior teaches us that prospects are still learning how the intended products and services can enhance their lives. This, in turn, tells us two things. One, it will take time before this group will take the place of the profitable consumers currently on the gaming floor. Second, because the head of the funnel is larger than the spout we will need to fill it with more prospective Millennial gamers so a reasonable amount can filter down the funnel and eventually replace their predecessors. Taken together, this creates a unique challenge as we are left with two disparate groups within the funnel. Sitting at the bottom are previous generations who are converted, loyal, and most likely advocates for a particular brand. As such, they provide the property with the majority of its revenue at this moment in time. However, the longevity of a casino’s success will eventually rely on getting enough Millennials to replace them at the bottom of the funnel.

So how does a casino’s marketing team attack this situation? With the current mix of generational consumers nearly split down the middle, you cannot simply cut the budget of one and give it to the other. Especially when you are taking away from the profitable sector in the Pre-Millennials and allocating it to the generation that is still contemplating if your services are the right offerings for them. For these same reasons, it would be unwise to dramatically re-align your entire marketing message and risk alienating those gamers that currently help you keep the lights on. What you can do now is to re-align through your entertainment offerings– especially if you are a larger entity with various programming opportunities such as lounges, clubs, showrooms, pools, and restaurants. Take Las Vegas where many prominent casino brands have adopted a tent pole design that “props up” the organization by attracting non-gaming individuals to the property through key entertainment offerings. Many big names on the strip include four elements in their portfolio: (1) a branded show such as Cirque, The Blue Man Group, or Absinthe; (2) a headliner such as Céline Dion, Carrot Top, or Britney; (3) a celebrity chef/kitchen such as Gordon Ramsay, Wolfgang Puck or Emeril Lagasse; and (4) a big-name DJ such as Steve Aoki, Dash Berlin, or Tiësto.

These poles achieve a lot of good for the casino. For one, they create additional income centers for the property. In 2013, an article in The New Yorker reported that half of Steve Wynn’s profits were coming from his dance clubs with the gaming floor beginning to take a back seat to bottle service and confetti cannons. The pole’s also provide powerful branded ammunition to compete in Vegas’ noisy market. Today, nearly every major casino on the strip features a high-end night club and outlandish pool parties stacked with brand-name DJs. MGM has Hakkasan with Steve Aoki and Tiësto on regular rotation; Encore has XS with the likes of Diplo, Zedd, and Manufactured Superstars; The Cosmopolitan has Marquee with Cash Cash and Dash Berlin. You can grab a Gordon Ramsay Burger at Planet Hollywood or one of his steaks at Paris before you head out to a Cirque de Soleil show at Aria, New York New York, the Bellagio, the Mirage, Mandalay Bay or Treasure Island. Any of these offerings could be destinations in and of themselves in other markets, but in Vegas they are revenue centers, marketing machines, and perhaps most importantly investments in a Millennial generation that hasn’t even been realized yet. Why? Because they continue to bring potential new prospects onto property, which places them in the mouth of the funnel where they begin their journey of learning how gaming can enhance their lives and (hopefully) move down into the spout to become brand ambassadors.

This pole design is not exclusive to Las Vegas or even properties with big brand names and even bigger budgets. Many casinos outside of Sin City have multiple bars, more than one restaurant, and spaces that can create revenue and achieve long-term branding goals if properly utilized. This makes it very plausible to craft a diversified entertainment program that appeals to your current profitable customers while luring future prospects onto the property. You can continue to appease your Pre-Millennials with showroom entertainment while hosting afternoon pool parties with regional DJs that drive those Millennials across your floors where they can hop in the funnel and begin the process of learning about your brand and how it fits in their lives. Clubs, lounges, and bars can easily be rebranded by adjusting the entertainment offerings towards one side or the other and then allowing the demographic shift to happen naturally (or with a little marketing push if needed), just as adjustments in menu selections and price points can sway the clientele in a chosen restaurant. These are all efficient and cost-effective modifications that can be done without sacrificing your budget or the overall brand of the property and they can help protect your very valuable current assets in the Pre-Millennials while positioning your property for long-term success with this next generation of prospective consumers by allowing them to investigate your offerings while your management team can learn what drives their behaviors, so your property is ready to capitalize when the time is right.

Lego Photo by Stefan Schindler from Flickr Creative Commons

Marketing Funnel from http://adamhcohen.com

Adele…25…and the Four P’s of Marketing

Jeremy Larochelle

 

And just like that… Adele’s 25 is already breaking records. With just three days under its belt, the Brit-singer’s highly anticipated album has sold 2,433,000 copies, surpassing the 2,416,000 of NSYNC’s No Strings Attached release in 2000. Even more impressive is just how huge this album already is in its first week when compared to some other superstars. Justin Timberlake’s 20/20 sold 968,000 copies its first week, Taylor Swift’s Red sold 1,208,000, Britney’s Oops!…I Did It Again sold 1,319,000, and Eminem’s The Marshall Mathers LP sold 1,760,000.

So how is it that 25 will outperform some of the music world’s brightest stars, during a time when we are all constantly reminded that the industry as a whole is underperforming? Is it Adele’s musicianship and song-writing prowess? Is it the new distribution mediums available? Is it social media and a new era of viral-promotion?

In all actuality, 25’s success comes in the nearly perfect integration of the four P’s of marketing. Interestingly, her marketing mix, as complex as it may look, is made quite simple by her unique musical ability, which has driven demand in a way that has allowed her label to control a few key elements and thus boost demand in an era when record sales are hard to come by. To understand how it all plays together, let’s look at 25’s release from the perspective of these fundamental components of marketing.

Product: At the core of any marketing mix is the product. The better it is, the more opportunity it offers the other elements of the recipe on which to build. There is no doubt that Adele brings to the table a strong product in 25. This is made evident by both the overwhelming industry accolades and sales success of her previous album 21. 25’s predecessor won three American Music Awards and seven Grammy’s including Album of the Year, Best Pop Vocal Album, and Best Pop Solo Performance along with a host of other trophies. It climbed to number one on virtually every pop chart around the world at one time or another and has remained on many since its 2009 release selling over 11 million copies in the U.S. alone to date. While music tastes are subjective, this is pure empirical evidence that Adele has a strong product on which to build her success.

Promotion: The success of 25’s promotion lies in the consumer adoption cycle of 21. Adele’s previous album remained on many charts and continued to sell while the artist went into hiding, had a baby, and started her next release. When looked at from a product adoption cycle perspective, it could be argued that 21 had just started to enter its decline phase, thus leaving the bell curve peak of its 11 million plus consumers anticipating a new product from the artist. This would be between 90 and 95% or about 9.9 million persons chomping at the bit for a new Adele album and may help explain why her first single Hello had over 27 million views during its first day on YouTube. This was enough to prompt the conversation by the global press if Adele’s upcoming release would match its predecessor and ignite a viral outbreak on social media to help make that happen.

Place: Adele’s product quality and promotional power allowed her team to control her places of distribution, which has become a vital component in the modern recorded music marketplace. Today, more and more customers consume their music through either a digital distributer such as iTunes or an online streaming service such as Spotify with the latter providing diminished returns for the artist and their management team and requiring more movement to count as an album sale (1,500 streams = 1 album sale). However, due to decreased promotion and demand drivers, many artists must release to both channels to break through increased noise in the market. This “necessary evil” comes at a huge cost in regards to physical album sales. Luckily for Adele, the huge demand for her latest product has allowed her team to forgo releasing her tracks to streaming channels, which has ultimately doubled demand for her physical unit sales and defended another element of her marketing mix – price.

Price: When you achieve a product that is relatively price/demand inelastic, it is safe to say that the other components of your marketing mix are singing in harmony. This is exactly the case with 25. You can’t stream 25 yet and nobody seems to care…or even complain. Many will buy it because they know the product is worth the price. Others will buy in so they too can be a part of the conversation or to contribute to the success of a superstar who doesn’t really seem like a superstar. Either way, Adele’s musical ability has fueled a promotion powerhouse that could be properly manipulated by her management team, which ended in increased sales in an industry where that doesn’t really happen too much anymore.

Solve the Issue Not the Problem

Jeremy Larochelle

 

 

When I signed up for my HMO health care provider, I chose a D.O. over a M.D. In my research, I found that while both save lives and treat illness everyday the D.O. focuses on the “whole” person while the M.D. seeks to address the disease itself.

Much like my medical provider preferences, I have found that the holistic approach to management may be best in the live entertainment field as well. This is due to two primary issues inherent in our industry. The first is there are numerous stakeholders with varying agendas working on a single project (the show). Many times these needs clash with one another. For instance, the artist may feel like the bass is overpowering her vocals, making it difficult for her to reach specific notes. However, the sound guy argues that the current bass mix is paramount to the best F.O.H. sound. Off stage, the waitstaff feels the overall volume is too loud, making it difficult for them to take drink orders while customers in one section feel as though they are struggling to hear the boom stick. Each one of these stakeholders has different needs regarding this one element of the show – the bass EQ. Making matters worse, this is just the tip of the iceberg. There are additional sound frequencies that must be addressed along with lighting, seating, ticket pricing, bar service, security, and parking among others, resulting in a litany of stakeholders’ needs that must be balanced.

Contributing further to the need for a holistic approach is the subjective (and at times emotional attachment) these stakeholders place on the final product. This is especially true when there is a lack of communication between senior leadership and line-level employees. For example, a bartender may enjoy the light jazz he has always had in his room because he is a fan of Coltrane and it allows him to chat with his guests more freely. However, management has decided to attract a different demographic and in doing so has shifted entertainment to hip-hop, a style of music the jazz-loving bartender feels is nothing more than noise.

These two underlying issues in the venue space make reactionary approaches to problem solving oftentimes inefficient and short lived. This is because the quick-reflex tactic will likely address the problem, but only appease one stakeholder group, leaving the other factions feeling alienated. This alienation is only exasperated by their emotional attachment to the product, which can increase the probability that (given the chance) they will work outside the box to return to the environment they once deemed as satisfactory. This could lead to them challenging the new initiative a number of ways such as poor performance, internal gossip, and negative appeals to customers – all of which can ruin the guest experience and put the organization’s mission, strategy, and profitability in jeopardy.

While management will never have 100% buy-in from such a diverse and emotionally charged group of stakeholders, they can mitigate this risk by simply stepping back and analyzing the issue from a holistic approach much like a D.O. would do. For example, a few months ago there was a huge problem with volume at a venue I manage. Waitstaff in a particular location couldn’t hear their customers, so they demanded that the volume be turned down. The sound technicians obliged immediately and brought down the overhead speakers that made up the house. However, the volume was never low enough for the waitstaff who continued to complain and thus the cycle continued until there was nearly no sound in the house. The reactionary approach to the problem was not working and a result was needed. The technicians and myself decided to step back and walk the room. We stood by the bartenders who were having trouble hearing their customers and traced the problem to the position of the artist’s monitors. We then spoke with the artists, who informed us that they relied on the house system to hear their vocals and when it got lowered they needed to make-up the difference via their monitors, so they would turn them up. Stepping back, speaking with all stakeholders involved, and walking the room revealed that the reactionary problem solving approach of arbitrarily lowering the volume was actually contributing to a louder environment and making the problem worse. Instead, we followed a holistic approach, which led to true results that helped appease all involved and moved the program forward.

The take-a-way from this should be that it never hurts to slow down, step-back, and seek out the root of a problem. Most of the time it will only take a minute and a simple fix is all that is needed. However, the few minutes it takes to analyze the problem offers a host of benefits. As mentioned, it will provide keen insight into a potentially larger issue that will only re-occur or get worse if not properly addressed. In addition, there are numerous indirect benefits to the holistic problem solving approach. For example, it will force you to speak with and (more importantly) listen to your line-level employees. The benefits of listening to your troops on the ground are tremendous. They know your customers (probably better than you), have a unique view of the day-to-day operations, and can offer suggestions to better the guest experience, work environment, and profitability. After you are done listening, you can explain your plans to address the issue with them. They will see this as a sign of respect, which may help them buy into your ideas and act more patient as your plans unfold.

While this post is focused on my experience in the entertainment industry, the concept of tackling problems holistically can be carried over to many organizations. Give it a shot and let me know the outcome in your business model.

Photo Credit: Gavin Schaefer from Flickr.  

Mariachi Trailblazers – Mariachi Reyna de Los Angeles

Jeremy Larochelle

 

I celebrated Mexican Independence Day (Grito de Dolores) as I do most other holidays – putting on a show. This one was special, because it featured America’s first all female mariachi group Mariachi Reyna de Los Angeles.

To say this performance was great would be an understatement. Their intonation was flawless, their musicianship stellar, and harmonies angelic. I would argue this quality hasn’t come cheap. As the first in a male dominated musical style, I am sure these ladies have had to overcome huge odds. I would wager many have wanted them to fail and their performances have been criticized much more harshly than their masculino counterparts. Yet, they have endured, overcome, and continue to inspire through the power of music. When you listen to them perform, you hear and feel that strength only a woman can possess and if you work in the industry, it is one of those performances that will remind you that music is much more than entertainment.

Muchas gracias Mariachi Reyna de Los Angeles.

Herd Mentality in Entertainment

Jeremy Larochelle3 Comments

 

Regardless if we want to believe it or not, at our very core humans are animals. As such, there are primitive psychological behaviors that influence many of the things we do – even if we don’t notice that we are doing them. One of these rituals is the need to follow the herd.

At its core, herd mentality is a survival instinct ingrained in our DNA. According to Pat Thomas, general curator at the Bronx Zoo. Over the course of our evolution, we have been taught that individual members of a herd should relate and act in a similar fashion so they do not stand out and appear different from other members of the group. Why? Because, in the wild if a member of the herd acts too much out of the norm, they are often singled out by a predator and do not survive.

Over the course of human evolution, this survival instinct has become lodged in our brains. Dr. Gregory Berns, Professor of Neuroeconomics and Director of the Center for Neuropolicy at Emory University, informs us that those fear receptors are located in a very specific spot called the amygdala, which is comprised of the brain stem and cerebellum. Some still call this the old mammalian brain and not only is this place responsible for that fear of being eaten by a predator, it is also accountable for our emotions, long-term memory, connects events with feelings and controls hormones and body temperature.

So, why is this entertainment manager spending his time explaining biology and evolution? What does this all have to do with booking entertainment?

Let’s put the pieces together.

First, the ingrained concept of pack protection that is inherent in all of our mammalian brains causes us to seek out crowds of people whenever we are in a public environment. It is something we do naturally and often without even noticing it. It works like this. A potential consumer walks by the room and sees it is jammed with people. Subconsciously the receptors in their mammalian brain begin to fire, kicking in long-term memories and coded DNA from the evolution of our species, which tells them they would be safer within the pack, so they enter.

Many will argue that sold out shows are the result of numerous causations such as marketing spend, notoriety of the performer or club, day of the week, etc. These are correct assumptions. However, marketing teams and management often cease their efforts once the show has begun. This is ill-advised, because it is likely that they will achieve greater success if they continue to strategically manage the room once doors are open in an attempt to first achieve, what I call, the adoption tipping point and then work to avoid (another one of my terms) the exodus tipping point.

The adoption tipping point is when the room begins to build at an exponential number. If you have ever worked in a live environment you will notice that a 200 plus person venue will not grow with only ten fans in attendance. However, once twenty, thirty, forty or more arrive the adoption cycle approaches a steeper upward slope. Studies by Rick Nauert PhD and his team at the University of Leeds, discovered that it takes a minority of just five percent to influence a crowd’s direction and the remaining 95% follow, without realizing it. In my years as both an entertainer and manager, I have witnessed this phenomenon. For instance, I have watched the attendance of a 253-person club jump nearly 370% in less than 15 minutes due to the adoption-tipping point being initiated.

Unfortunately, the same biological influencers can also work against club attendance. If enough of the crowd is removed, evolution causes the brain to re-investigate the environment and if it is deemed unsafe (too few in the pack) it will initiate the fight or flight reflex. As you guessed it, just like adoption a tipping point will be reached and exponential losses will occur.

These biological influencers suggest that, with the assistance of proper marketing and promotion, management should seek to ensure that (1) the adoption tipping point is achieved as soon as possible; and (2) the room should constantly be monitored and adjusted to avoid the exodus tipping point. Here are a few suggestions to get you started.

  1. Start with a stacked deck. Entertainers should have a following of at least 10% of room capacity or the venue should provide ways to increase the initial attendance to at least 10% out of the gate. Offering free entry, free drinks, etc. can achieve this. Females are of particular importance, because they initiate the mating behaviors of males, which are also controlled by the mammalian brain. However, many venues think that just letting ladies in for free the whole night will work. This isn’t necessarily true. It is best to find ways to stack the deck early and reach the adoption tipping point as soon as possible. However, it serves a club little purpose to let in females for free if they are approaching capacity. Instead, they should hold off on free entry until the exodus tipping point is being approached and then open up the floodgates to prevent the negative tipping point from being hit. Letting ladies in for free is important – but it should be done strategically throughout the night.
  1. The venue should never be dead. This is extremely true in live entertainment situations where bands take breaks. Keep the lights on, keep the instruments lit, keep the music pumping and keep people on the dance floor. If there are televisions in the club, do not turn them on, especially to sports or the news. Do everything you can to remind people that the show will continue.  Breaks should never be used to calm the room down as that would inevitably cause you to reach the exodus tipping point.
  1. Breaks should never be longer than fifteen minutes. To be honest, in today’s market breaks shouldn’t exist. I know a lot of entertainers will send me hate mail on this one, but it is the truth. There should be a DJ or other entertainment happening if the group must take a rest. Consumer behavior has radically changed to the point that even thirty-second television commercials are becoming obsolete. The modern consumer’s attention span has diminished by unprecedented amounts. What makes you think they will hang out for fifteen minutes while the band is on break? My on-site research estimates that for every two to five minutes after a fifteen-minute lull in entertainment attendance drops by nearly 10% and follows a strong negative compounding effect from that point onward. Keep the energy up. Do a raffle, have the bartenders do tricks, give out free drinks, monitor band breaks religiously, or find entertainment that doesn’t need to rest for so long.
  1. Be fluid. Someone needs to take control of the room and monitor behavior for an approaching exodus tipping point. They must have the authority to make changes “on the fly” including promotions, getting the entertainment back on stage, or letting in females for free without resistance that will cause the exodus point to be hit.

In closing, there are no hard numbers for an adoption or exodus tipping point. Entertainment is largely qualitative in nature and numerous outside forces impact the speed at which a room reaches capacity and when the process reverses. It is up to the club owners and management to gauge their venues. I would encourage many to start off by logging hourly headcounts. Don’t worry about bar sales or other metrics at this point. Create a baseline over the course of at least a month or longer. If you utilize numerous styles of entertainment, you should have multiple metrics for each act. Numbers are an amazing tool and they will reveal very valuable information including when the room generally approaches capacity, when the trend reverses, and which styles of entertainment help you approach a full house quicker and which hold crowds longer. From there, make adjustments and then re-analyze your results. Continue this process as you adjust for demographic parings relative to bar sales and marketing.

For all of you “marketing whizzes” out there, remember true marketing is not just about pretty posters and television commercials. It is part quantitative science that involves understanding numbers and how to adjust your business environment to move those metrics into a positive relationship. In entertainment management, a large portion of this analysis is done during the show.

Strategic Analysis of Live Nation Entertainment

Jeremy Larochelle

 

 

The following paper was the final deliverable for my MBA strategic management course at Southern New Hampshire University. The purpose was to analyze the macro-level strategy of an organization of our choice.  For ten weeks, we explored how that strategy impacted virtually every aspect of the firm from their financials to their competitive position and H&R practices. I chose to put my experience as a booking agent and undergraduate degree in music business to good use and analyzed the top promoter in the world – Live Nation Entertainment.

My analysis of Live Nation Entertainment revealed an organization executing a well-crafted strategy to vertically integrate the unique value chain elements of their main concert business. As a result, the company has catapulted past their competition in the U.S. concert and event promotion market as well as the global online ticketing industry where they hold commanding market shares in each. Despite this success, there is much more opportunity for the company to grow…almost an entire planet.  I touch upon management’s future plans throughout the paper and offer my own insight as well.

Jeremy Larochelle’s Strategic Analysis of Live Nation Entertainment