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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!

Judge Judy – A Demo in Audience Compounding

Jeremy Larochelle

 

My mom is a HUGE Judge Judy fan and I will admit it, so am I.  However, we are fans for different reasons. My mom likes seeing someone her height take control of a situation. While I admire what the 5′ 1″ judge has done in creating a powerful global brand through the concept of audience compounding.

 

In fact, I admire her so much that I have created the Judge Judy Principle in regard to how venues can craft a loyal customer following. It works like this.

 

People are creatures of habit. Our brains have to process so much data each day, that the organ is constantly looking for things it can place on autopilot. This is where habits kick in. We habitually take the same route to work. We instinctively pick-up the same toothpaste without considering dozens of other brands. And for many of us, like Pavlov’s dog, we instantly check our messages when we hear that “ding” from our phones. This is a core part of consumer behavior and many of the top brands seek to utilize it to get their products and services into our auto-consumption routines.

 

Basically, brands need two things to break into our habits. One, they must always be where we would expect them to be and two, they need to give us the same quality product every time. Judge Judy has been doing this since 1996 and is reaping the rewards.

 

She has been on the air for 23 seasons and has remained in the same afternoon slot (roughly 3 pm – 5 pm) for that entire time. This is key to habit-forming because her fans know where they can get their Judy fix anywhere in the country with little effort. Second, her product is always the same. Her intro music and logo don’t change. She wears the same robe. The program is always filmed in the same courtroom – they never go anywhere special. Her bailiff, Byrd, always announces her and the case before jumping into a crossword puzzle. This is the second key to her success – she gives her audience the same quality product at each interaction. This prevents people from becoming confused and continually reinforces their positive stimuli response, which strengthens their tie to the habit and feeds the viewership cycle. It also explains why Judge Judy has a fan base of 10 million-plus every weekday and has been the number one syndicated daytime show since 1998. So, how does this apply to the booking of entertainment venues?

 

Judge Judy’s success is a testament to the importance of establishing a long-term booking strategy and sticking with it. Before the internet, iPhones, social media and streaming, entertainment consumers had fewer options so the onus was on them to seek out their choice of leisure. Technology has shifted this behavior. Consumers now have access to countless opportunities with little cost of engagement such as streaming music on Spotify, viewing videos on TikTok, or binging a whole TV season on Netflix.

 

Talent buyers and venue bookers must consider consistency in their programming as a way to counteract this challenge. Since the consumer’s cost to see live entertainment is more than, say, streaming Hulu at home, they are in a vulnerable position. And if you operate in a highly competitive live market these “on the fence” consumers have a multitude of options at their disposal as well. This means that anything you do that confuses them could become detrimental to your operations.

 

This doesn’t mean you need to book the same act each night, but your calendar should be consistent in one way or another. You can hold tight to theme nights such as Latin on Sundays, Karaoke on Wednesdays, and Pop on Fridays. Or you can book one style of entertainment such as an open format DJ regularly. The key is sticking with your decision once your A/B booking testing is complete (more on that later). This will mitigate the fan’s choice apprehension.

 

It will also fuel an audience compounding strategy that works like this. A customer arrives and digs your vibe, so they come back. If you are consistent and reinforce their stimuli response, they will stay along with the next patron who visits, likes what they see, and decides to come back a second time as well. Over time you will build a core group of promoters for the brand. This will lead to an adoption tipping point that is regularly hit, which will speed the time it takes to fill the venue.

 

However, if you change your entertainment too often you risk confusing and alienating the customers you have gained. In essence, you will start the whole process over and it will take longer for you to pack the house. Think of it like your 401(k). You put in money consistently every month. Later, you reap rewards with very little effort on your part. However, if you pull money out early it takes longer for those checks to cash. This is why Judge Judy is so successful. She has a solid brand that has delivered a similar quality product consistently for 23 seasons and has reaped the benefits of audience compounding in the process.

 

If you would like to learn more please reach out to me at [email protected] or call me at ‭(602) 842-2050‬.

 

 

 

 

The Power of a Venue Pull Marketing Strategy

Jeremy Larochelle

 

You may be surprised to learn that all of the ads you encounter each day aren’t just to get YOU to purchase products. While this is a majority of the brand’s intent, there is an additional hidden agenda and it comes in the form of a pull marketing strategy.

 

According to the Corporate Finance Institute. “In a pull marketing strategy, the goal is to make a consumer actively seek a product and get retailers to stock the product due to direct consumer demand.” For instance, if Doritos intends to launch a new flavor of chip. Retailers may be apprehensive of allocating valuable shelf space to the product. To mitigate this risk and get them to stock their new offering, Frito-Lay may introduce a pull marketing strategy to build awareness of the new flavor, increase demand, and pull consumers to the new product, forcing retailers to place orders for the flavor.

 

The same can happen in the concert venue world in various strategic ways. One approach is the fan perspective where the venue establishes its brand in a way that pulls specific consumers through the doors to experience the ambiance and /or notoriety. This is the case with legacy spaces such as The Greek Theater, Red Rocks, The Ryman, Madison Square Garden, and The Gorge. Another is to focus on a specific segment. The Bowery Presents does this with their chain of venues that focus on indie and up-and-coming rockers.

 

There is also a pull strategy that can be established by homing in on the talent. In this method, management focuses on enhancing the act’s experience to pull them towards their stage over other routing options.

 

Ryan Murphy did just that with St. Augustine’s The Amp by crafting a positive environment for acts that visited the out-of-the-way outdoor venue. His efforts soon paid off when legend Tony Bennett’s positive experience was relayed to Stevie Nick’s team. This led to a one-off solo show for the Fleetwood Mac star. Soon, The Amp was playing host to names much larger than its capacity.  Kacey Musgraves, who packs the 20,000 seat Bridgestone Arena, legends such as Robert Plant, OAR, Willie Nelson, and Kendrick Lamar made their way to St. Augustine, FL. Helping push The Amp to the #2 amphitheater spot in Pollstar Magazine’s 2019 Mid-Year report.

 

Not too shabby for a venue with a capacity of under 5,000 and well off the routing path.

 

Murphy’s pull strategy circumvented outside variables by going direct to the source of the commodity – the artist. Their handlers very likely were pushing for larger capacity venues that could provide more revenue, more wiggle room on deal points, more efficient routing, etc. Unfortunately, many venue leaders do not understand the rigors of the road and how it impacts artists of every level and, perhaps more importantly, their crew. Giving them a special spot that has a unique vibe, history, and a feel of home can have much more power than we think. It’s not just a pull marketing strategy… it’s a compassion for the artist strategy and it can pay large dividends as Murphy and The Amp proved.

Why You Should Avoid Physical Press Kits.

Jeremy Larochelle

 

Jeremy Larochelle offers up two reasons why he thinks it’s a bad idea to use physical press kits when selling your live entertainment services.

 

If you need help building your presskit, check out these online services that make life a bit easier.

Sonicbids: https://www.sonicbids.com/electronic-press-kit/

ReverbNation: https://www.reverbnation.com/band-promotion/press_kit

Bandzoogle: https://bandzoogle.com

The Ancillary Dangers of an 18 Plus Club

Jeremy Larochelle

 

In a previous post, I explained the vital importance of ancillary income for your club or venue.  This income stream covers everything non-ticketed such as VIP, lawn chairs, bottle service, merchandise, food, and beverages. You can only sell your customer one ticket but multiple ancillary units. This makes the latter a key component of your venue’s profitability.

 

That is unless you unknowingly fix them.

 

Let’s take a hypothetical club that holds 1,000 people and assume that each person pays $20 to get into the facility. This leads to $20,000 in income.  Let’s also assume that the venue only sells the ancillary value stream of alcohol. Now let’s look at two scenarios.

 

Scenario One – 21 plus only club:

In this scenario, you only allow persons 21 and older into the venue. For simplicity, let’s say 80% of those patrons drink and the average drink costs $10. This leads to an additional $8,000 in income for your venue. If you have one show per week, this leads to an additional $416,000 per year.

 

Scenario Two – 18 plus club: 

In this scenario, you have a mix of 50% persons aged 18-20 and 50% persons aged 21 and older. Using the same assumptions above, we now have 80% from only 500 fans buying drinks. This has cut our ancillary income in half to $4,000 per night or only $208,000 per year.

You just “fixed” your ancillary sales and unknowingly cut your additional profitability in half. If you continue this trend, you do so further reducing your daily, weekly, monthly, and yearly profit. A 75% underage to 25% drinking age mix leads to only $2,000 per night of ancillary income, which is just $104,000 per year. You are leaving $312,000 on the table.

 

Hopefully, these numbers demonstrate the importance of understanding how your ancillary revenue stream relates to your customer mix. With this understanding, you can now look for ways to adjust these variables in favor of profitability. Here are a few options for the scenario above.

 

Adjust the Customer Mix: This starts with understanding your market demand and business objectives. If alcohol is a main ancillary driver and your market has a healthy collection of 21 plus patrons to pull from, simply making your club 21 and older might be the best option. Otherwise, you will have to put in place ticketing and operational procedures that limit the non-drinking age patrons to an established percentage or adjust one of the other variables to make up the difference.

 

Add Additional Revenue Streams: Introduce non-restrictive ancillary options such as VIP, food, and merchandise options that appeal to your underage clients.

 

Pricing Strategy: Charge the 18-20 year-olds a higher entrance fee to counteract the loss you will incur from their lack of ancillary purchases. The best way to do this is to look at your historic bar sales to establish a baseline for the number of drinks purchased per each patron. If you find this to be two drinks per person, then you need to tack on a premium of $20 per ticket (based on the assumptions above) for each underage patron.

 

The key is to remember that you are in business to maximize your shareholder wealth and that venue profit potential is fixed by its capacity. For every underage patron you let in, you cannot let in a legal drinking age fan who would (most likely) contribute to additional income for your business. As a manager, it is your responsibility to find ways to maximize the profit potential by controlling your customer mix, your products offered, and your pricing strategies.

 

The Power of Queueing Theory for The Concert Venue

Jeremy Larochelle

Photo by Krizjohn Rosales from Pexels

 

In a recent post, I stated: “5,000 plus people trying to enter through less than four security lines is a safety concern in my opinion.” I want to use this post to help explain that statement and why I believe it.

 

I am fascinated by the science of management and even though the business of rock and roll may seem anything but. Venue operations math can help us develop ways to enhance the concert experience for fans, artists, and venue owners. One of these concepts is through the use of queuing theory.

 

Queuing theory is the mathematical study of waiting lines or queues. The formula may appear complex. However, there are a number of calculators online that will help you get the answers you need without understanding some pretty heady math that looks something like this from Portland State University.

 

 

Let’s move past these formulas and focus on how this can apply to your concert venue operations.

 

Part of the concert customer’s experience is entering the venue. This includes driving to the property, finding parking, and then going through security to gain entrance to the facility. This last element (security screening and entering the facility) present a unique challenge in that the operations team must weigh the customer experience of waiting in line against the demands of the security team to properly vet each patron. Part of establishing that balance is pinpointing how many security lanes you need per: (1) the venue capacity; (2) the arrival rate of guests; (3) the average security screen time; and (4) the cost of “x” amount of lanes, which can include equipment, such as screeners, and personnel.

 

You could achieve these results by speculating but guessing wrong could impact your operations in a few ways. For instance, your fans would likely end up waiting in line too long if you are underequipped. This could lead to lost consumer confidence and ultimately dipping revenues as word spreads about this negative aspect of the fan experience you provide. On the other hand, over equipping can lead to increased overhead and less profitability for the venue. Another unsustainable outcome. Luckily, there is a baseline to be found for virtually any venue and it is attained through a queuing theory calculation.

 

Let’s say that your venue’s capacity is 5,000. You open doors two hours before the show and a VIP lane an hour before that. You also know that a good chunk of your fans do not make it in on time due to traffic, family emergencies, etc. Taken together, you can estimate it would take four hours for the bulk of your customers to get through the gates. Your security team ensures that they can vet the average patron in 45 seconds or less and your observations say they are correct. Let’s place this information into our online queuing theory calculator.

 

We start by selecting the M/M/C model for a single queue with “C” amount of servers. Next, we need to average the number of people coming in per hour. To keep things simple, we will stick with a discrete probability. This means that we just divide 5,000 people by four hours, which is 1,250 patrons coming through the gates per hour. That is highly unlikely, but at this point, we are just looking for a baseline. We can adjust per our observations at a later time.

 

Place 1,250 under Arrivals/ Hour, which is Lambda in the calculator. Since your security team estimated they can vet each person in 45 seconds, that equates to 80 patrons per hour. Place 80 under Services/Hour, which is Mu.

 

Now let’s pick security lanes. Place four under the Number of Servers (C) and click Calculate. You will receive the following warning. “The queues will tend to infinity as Lambda is greater or equal than 4 times Mu.” This is telling us that you do not have enough servers to operate efficiently. It is NOT telling you it can’t be done. Rather, it is saying that there will be a back-up of the line. Remember, we are looking for a balance between customer experience, safety, and cost from which to start our ops planning. Further trial and error by selecting servers reveal that the optimal number of lanes is 16 based on these variables. At this level, your customer would walk directly into one of those lanes and spend (on average) 1.782 minutes waiting in line and another 45 seconds being screened. For a total service time just shy of three minutes. That is where you find the best customer experience at the lowest operations cost for a safe entrance into your venue.

 

Remember, this is your starting point. It is not saying anything less than 16 lanes for this size venue will fail. Rather, it is telling us that any number of security screeners below that will lead to a back-up of your line. I used a more advanced Excel calculator to find the average time your customer would wait if you only had four open lanes and found it to be between 27 and 30 minutes. This gives us a window. At four lanes, your customer could wait a half hour to get in while 16 lanes could lead to a zero wait time for the majority of your guests.

 

It is now up to you and your team to determine the balance between how long you want those customers to wait against the cost and logistics of adding more lanes. To do this you must take into account the price of additional screening stations (equipment and manpower) and if you have enough entrance points to accommodate their use. You could then analyze your open doors’ timeframe and how the line flows. Do more people come in at a certain time? Do you find that a large percentage of your clientele do not make it before the show? Finally, you could survey your customers about their experience. Did they have an issue waiting in line longer than 10, 15, 20, or 30 minutes? With this additional data, you are now more equipped to strike a balance between cost, customer experience, and the safety of your guests.

 

It all starts with queuing theory.

A Ticket Scalping Benefit for Bands

Jeremy Larochelle

 

Country-singer Kacey Musgraves was preparing for a sold-out show at the 1,800 seat Van Buren in Phoenix on February 13th, 2019 when she took home four trophies including Album of the Year at the 61st Grammy Awards on February 10th. Phoenix fans were lucky to find out that her management had already placed a second show on sale at the 5,000 capacity Comerica Theater in August.

 

I was certain that Musgraves new mass-market status was going to push demand, and consequently the price of tickets up. It appeared that I was not the only one.  The show sold great out of the gate and within weeks very few primary tickets were left. Fans were forced to purchase from the resale market. As usual, these prices were higher than the ticket’s face value – at least up until showtime.

 

Between 2:00 pm – 4:00 pm on show day a flood of tickets went on sale. Many at half the face value. Tickets are sometimes released closer to show time, but usually, these are from the act’s camp and sold on the primary market. Instead, these below-face value tickets were found on the resale markets. This got me thinking about the ticket brokering game, how it impacts the concert ecosystem, and if there is an added benefit to the practice.

 

Most of the press surrounding ticket scalpers or brokers is negative and rightfully so. They buy blocks of tickets at face value then jack up the prices. This results in less opportunity for true fans to enjoy their favorite artist. However, at its core, ticket brokering is pretty much the same as trading stocks. You buy a piece of a company at a reasonable price in hopes that their valuation will rise so you can sell the stock and earn money for your prediction. The same is true in ticket scalping. Individuals or companies buy up blocks of tickets based on the assumption that demand for a particular artist will increase. These entities then raise the price and make a profit on their analysis.

 

But what happens when these predictions are off and the broker is stuck with a block of tickets they can’t sell at face value? In the stock market, that individual can just hold onto the stock in hopes of a better-priced future. However, in the world of rock-and-roll concerts are time-sensitive. The ticket scalper’s opportunity to recoup his or her investment is gone forever once the lights hit. The only course of action is to sell at a loss and hope they make some of their money back.

 

This can be a HUGE benefit for the artist. In most scalping instances tickets are purchased at the agreed-upon ticket scaling rate between the venue, promoter, and artist’s management team. Yes, brokers buy up blocks of tickets, but they are typically doing so at face value, so the artist receives some benefit.  For one, they are more likely to have a sold-out show and for a band building their brand on the road. Sold-out shows help them appeal to promoters and talent buyers that represent larger spaces and better opportunities. As I mentioned in a previous post, buyers and promoters are constantly assessing the risk involved in booking an act and sold-out sales metrics help alleviate that concern. Second, and perhaps more important. The band and their team earn a larger paycheck. This helps them stay on the road.  Pay the crew, put on better concerts, market new events, and release new music.

 

I am not condoning ticket scalping. Especially in a day and age where bots can exasperate the process and cut off true fans within seconds. Just remember, scalping has been a part of the concert industry for decades. We all hate paying more than the face value of the ticket we receive. However, there are plenty of times where savvy fans get into shows at exceptional rates without impacting the Artist’s bottom line. There is some benefit to that.