The Balanced Scorecard Approach to Entertainment Booking

 

The Balanced Scorecard is a strategic instrument that organizations use to analyze the core components of their operational efficiency and how they relate to the bottom line. Fundamentally, Scorecards tackle four elements of business operations.

  • Finance
  • Internal Processes
  • Customer
  • Learning and Growth

Inexperienced managers primarily focus on the finance aspect of the business. They look for ways to reduce the bottom line and increase profitability. More often than not, they do their financial analysis with blinders on in regards to the other Key Performance Indicators (KPI’s) of the business. A problem that will likely lead to short-term gains at the sacrifice of long-term success.

This long-term detriment arises because of the interrelated nature of various aspects of your business. For instance, you could push workers to produce more widgets and in the short-term, they will likely meet your demands. However, if your internal processes are not analyzed for operational constraints. You will reach a point where no matter how hard you push your team. They will not be able to produce another unit. The same can be said for learning and growth. If your employees are not being adequately trained in the latest widget making technology, your business will eventually hit a point at which your staff is unable to properly produce the widgets of tomorrow. Finally, if you ignore your customer complaints to focus on lowering costs. Eventually, you won’t have any customers to service.

The thing to keep in mind is that balance is vital to any long-term business success. The venue booking world is no different.

The Balanced Scorecard
Image From: KB Manage

When you run a venue, your success depends on creating constant and increasing successful shows over time. This is how you cover operating expenses, maintain a competitive advantage, and (most importantly) pay-down long-term capital costs such as real estate and equipment. When these investments are paid off, exponential returns set in. This is why managers need to keep the present in check while also crafting a path to support continued long-term success.

One of the best ways to do this is to operate the venue from a balanced scorecard approach with KPI’s focused on the live entertainment ecosystem. Here are some examples to consider.

Finance – This is the primary focus of most venue leadership. Understanding the total cost of the act, production, and support staff versus your returns on ticketing and ancillary income such as food and beverage, merchandising, and sponsorships are important. In addition to the operational fees associated with the event, you need to understand your ticket scaling and market demand (price point) for your shows as well as the elasticity of demand in relation to tickets sales versus ancillary income sales. E.g. if you drop ticket prices by “x” amount you raise drink sales by “y.”

Far too often, management simply looks at the cost of the band versus ticket sales not realizing their venue could likely support a grander marquee name and see better returns thanks to the power of price elasticity. In addition, short-sighted managers may work to cut corners in regards to act hospitality to better their ROI, which brings me to my next KPI.

Act Relations – Price elasticity and ancillary income are directly correlated to the quality of the act you bring in. If the band rocks, your customers want to drink more. Their fans want to buy merchandise and with consistent quality acts. You will attract sponsors with deeper pockets.

So, what happens if you treat acts like… well… crap? Security treats them like thieves. The Box Office fights with them over comps. Marketing drops the ball on their upcoming performance. You put them up at one-star hotels or leadership doesn’t even bother to come to their shows and say hi and thank you!

Over the short-term, there will be little impact. However, over the long-term. Things will change. Word will spread in the touring community about your lack of hospitality and soon your options for higher-quality acts that can sell more tickets and (more importantly) more ancillary items will dwindle as well.

Venue Character – Your venue should have both an identity and functionality for all involved. A proper stage with modern sound and lighting will appeal to better entertainers and draw experienced production professionals. These elements alone will feed off of each other and elevate your programming. But don’t stop there. Make your venue into the place that acts, managers, bartenders, servers, chefs, box office peeps, and support staff are proud of. For instance, it is reported The House of Blues welds a box of Delta Mississippi mud under each of their stages to give their clubs that “special” blues-spirit. What a cool story to tell your family during Thanksgiving when they ask about your new job.

When you create that type of character, your employees will be proud of what they do and it will show in their work. More important, they will talk about that cool environment to acquaintances and through the power of word-and-mouth, you will create an organic pull marketing campaign for both customers and employees that will stand the test of time.

Fans – Venues survive thanks to the fans. They buy the tickets, the drinks, the food, the merch, and are whom the sponsors want to get in front of. The customer experience is paramount to a venue’s success and no Balanced Scorecard would be complete without a “customer” element.

One of the benefits of the venue customer is the power of “group think” in the live event environment. I have discussed this phenomenon numerous times. To recap, typically in a group environment individual decisions morph into the collective mindset of the pack. E.g. if a venue is hopping. More people want to join in. If four people around you purchase a beer – suddenly you will want a beer.

This benefit can also be a detriment. Piss off too many of a group’s fans through overzealous security procedures, exorbitant ticket prices, dirty bathrooms, poor parking – the list goes on. And quickly things can turn for the worst. In a world of Yelp and Google reviews, you must actively listen to your fans and work to rectify problems that are proving commonplace. I would suggest that you work to “wow” the fan experience. As this would create a pull marketing strategy with the band. E.g the fans could force them to play your club. This can give you negotiating power and possibly get them in the door at a better rate than your competitors are offering.

In conclusion. I am a generation X’er, so I grew up when the organizational mindset was still rooted in the industrial concept of using employees like cogs and disposing of them at will. Luckily, this has changed and thanks to the Internet and social media customers and employees have a very powerful collective voice. It has become so powerful that nearly all major organizations have some sort of Corporate Social Responsibility (CSR) division, leader, or manager.

Unfortunately, I still see concert venues rooted in the old-school concept of using-up entertainers and spitting them out. They remain focused on short-term profits at the cost of long-term opportunities. I am not saying that you need to go into the red for every show. Nor, am I saying that you need to overspend on production or talent fees. What I am saying is that you need to recognize the ecosystem of your operations and how establishing balance among these unique KPI’s could lead to lower costs and better profitability for years to come.

Stakeholder Management – The Key to the Business Ecosystem

Note: The following article is copied from my LinkedIn feed. Follow me by clicking here

 

Stakeholder management is vital to a business’ success. Not to be confused with the financial “shareholders,” stakeholders represent all the persons with a “stake” in your company. This can be anyone from customers to employees, suppliers, and shareholders to the local community and even the planet.

Stakeholder management reminds us that the organization doesn’t exist on a deserted island. Rather, it is part of an ecosystem that constantly must be reviewed for signs of in-balance. Listening to stakeholders helps the savvy manager maintain harmony in this ecosystem.

Entertainment venues are no different. Say, a theater isn’t listening to traffic and sound complaints from the neighborhood in which they operate. Community members have been voicing their opinions across social media. However, social-listening and reporting is not part of the job description for the marketing department’s social media specialist and the issue goes unnoticed. Soon, the complaints gather steam and reach city hall. Afraid of not being re-elected, city officials initiate a temporary noise ordinance and amp up ticketing around the venue. Almost immediately the business begins to suffer and the organization is forced to go on the defensive. This costs valuable financial resources, jeopardizes important relationships, and can even tarnish the brand name.

This example may seem simple, but it is not uncommon. Even more bothersome is the fact that it can be rectified rather easily and with minimal cost. They could assign one of their marketing employees (even an intern) to troll the web for bad reviews on sites such as Yelp, Facebook, Google Search Results, TripAdvisorManta, etc. If staffing is an issue, anyone can set-up alerts for the business name on Google. Then, when someone posts said name on the web. .. you’ll get notified about 75% of the time.

Surveys are a great tool to get specific feedback from your customers, suppliers, and employees. Survey Monkey makes that real easy.

Finally, get out and talk to your customers, employees, and community. This may be the greatest stakeholder management tool at your disposal.

The key is to realize that your business exists “because of” the ecosystem in which you operate. That system consists of you, your customers, employees, government officials, competitors, suppliers, the community, and planet. Actively listening to their concerns fosters better cooperation between all involved and initiates greater success.

KPI’s in Venue Management

I recently asked my LinkedIn network what KPI’s, besides revenue, they use for their entertainment venue analysis.

 

I figured this would be a tough question because I removed the most prevalent answer when it comes to venue management analysis – revenue generation. I wanted to omit the low-hanging fruit to force my network to consider other Key Performance Indicators regarding their entertainment space and how valuable they can be.

 

For those who do not understand what KPI’s are.  Here is a quick and simple breakdown from Investopedia. According to their site. “Key performance indicators (KPI) are a set of quantifiable measures that a company uses to gauge its performance over time. These metrics are used to determine a company’s progress in achieving its strategic and operational goals, and also to compare a company’s finances and performance against other businesses within its industry.”

 

The revenue metrics are the most important and fairly easy to digest in regards to entertainment booking. If you book a band and they sell out the venue. That is a positive KPI. Just remember, if you are in charge of assigning revenue metrics you should include ancillary income such as food and drink sales.  I have seen many situations where one act didn’t sell out the room but brought in a demographic that drank the house dry resulting in an overall larger return on investment.

 

Key Performance Indicators go beyond just revenue-generating metrics. Better institutions will assign them to other areas of the business eco-system such as cost reduction, process improvements, and customer satisfaction. All of these variables work off of one another and when assigned properly and analyzed consistently can lead to exponential growth.  Here are a few suggestions of non-revenue generating KPI’s to consider for an entertainment venue.

 

Cost Reduction: Is the venue overstaffed? Are your performance hours not in-line with your demographic (e.g. does the room die at 11:00 pm, but you are paying entertainment and employees to be on-site until 2:00 am)?

 

Process Improvement: Are you getting your guests in fast enough and moving them to areas of revenue such as the bar efficiently?

 

Customer Satisfaction: Are you monitoring the social chatter regarding your venue?  Are the reviews of your entertainment, venue, and operations positive? Are you surveying past customers to learn about their experiences to share with your team?

 

*BONUS – Employee Satisfaction: Are you talking to your team to see if THEY are happy? Do you survey guests regarding their experience with specific employees through analysis such as Net Promoter Scores and satisfaction surveys?

 

These are just a few suggestions regarding non-revenue KPI’s you can adapt for your entertainment venue. Just remember each business environment is different and you may have to tweak your analysis to uncover your areas of weakness and opportunity.  If you would like some help analyzing your entertainment venue, give me a shout.

 

 

Volume…what makes a good entertainer GREAT!

 

As someone who books bands for a living, I can’t believe I am going to say this. “Acts that don’t actively monitor their volume drive me nuts.”

 

There I said it.

 

Now, I am specifically speaking to the artists who perform in “background music scenarios.” Performance spaces in hotel lobbies, small bars, and restaurants that typically don’t focus on the entertainment (e.g. they don’t have a stage and dancing isn’t encouraged). In these situations, it is crucial that the artist pay careful attention to their volume as they are not the center of attention. Unfortunately, many newer performers have trouble grasping this concept and I believe that inexperience is to blame.

 

If you were to observe a veteran performer against a greenhorn in a similar environment, you will likely see what I mean.

 

Thanks to years of trial and error, veterans have been psychologically conditioned to accept the fact that they are not the focus of the room, which places them in the proper headspace to handle the gig. This comes through in everything from their song choice to their banter with customers and even how they read the room. As such, a true club pro will read a “background music” gig differently. If they see patrons leaning in too close to talk or notice the overall volume has increased. They will intuitively pull back the dynamics to restore order. The true masters will even alter their song selection choosing keys with darker…less bright characteristics such as D over E Major.  Notes that don’t conflict with the timbre of the average speaking voice and thus raise the overall decibel level in the venue.

 

As mentioned, seasoned pros typically fair better in these situations. However, other psychological factors come into play.  Artists still seeking the coveted “record deal” will have more trouble adjusting to these situations as their professional focus is to break through the noise and get noticed. As such, many have (rightfully so) adopted a mentality where they seek to command the stage and everyone’s attention. Chances are if an entertainer has more original tunes in their catalog than covers. They may be inside that headspace and the booker should enact more due diligence and proceed with caution.

 

A final word of warning is this. When vetting an act propositioning you for a gig. Many will say anything to earn the job and that includes telling you that they can meet any volume requirements.  It is always best to look beyond their puffery, especially if you notice that they are less-experience or more focused on the original music track of their career.

 

As for you artists out there. Don’t be discouraged by these gigs. For one, they can supplement your career and put food on the table.  They are also an excellent way for you to better your room-reading skills and ability to perform at softer volumes, thus increasing your overall dynamic control. These skills will come into play in other avenues of your career.