Let’s do some simple maths and forecast a 30% decline for 2021 in the attendance of your venue, amusement park, museum or theatre compared to 2019 (yes... 2020 was an outlier!).
This decline in attendance might be rooted either in a still depressed international travel environment, or simply be the consequences of current government restrictions, which impose a cap on the number of people you can accommodate.
This 30% decline in attendance will most likely result in a loss of revenue of more less the same proportion. One way to make up for that lost volume would be to apply a price increase of at least 43% onto your customers. Even if the power of your pricing strategy will be covered in one of the next 4 articles, we are of the opinion that absorbing such loss shouldn't only be a function of your ticket price.
Why the average basket value is key !
We believe that smartly cross-selling and upselling products in your portfolio to increase the total amount spent by your customers can be the answer you’re looking for. This is what we call at Smeetz “dynamic packaging”. You simply let your customers create their personalised journey while combining different products and add-ons thanks to an innovative ticketing software and smart booking widget solution.
Offering such packages strengthens the appeal of online sales. Indeed, as those unique and personalised experiences are only available while booking online, it incentivises end-customers to book online, rather than on-site. Curious about all the benefits of online sales? Check out this blog.
Let’s go back to our topic. While cross-selling and upselling are widespread in the hospitality industry, they are far less known and used in the cultural and entertainment sectors. To give you some business insights, on the 100+ theatres, museums and amusement parks we analysed recently, only 3% of them are making use of such selling techniques to increase their average basket value.
Some quick maths to help you understand the benefits
To come back to our maths, we needed to achieve a 43% increase in sales. Let’s take the example of a museum selling adult tickets at CHF 15.00 and children tickets at CHF 9.00. If the typical average basket size stands around CHF 45.60, it means that we would need to push the same average basket size up to CHF 65.30.
Our experience shows that around 25% of end-customers prefer to purchase packages rather than naked tickets, and 50% of these end-customers do not consume the additional purchased services once on-site. Therefore, it theoretically implies that we should expect packaged offers to generate an additional revenue of CHF 157.00 in average to make up for the entire loss of volume. We would need to reach an average basket of CHF 202.60.
If this objective seems fairly high, it is however not impossible to imagine packages that could account for at least a third of that objective (CHF 52.40), so an increase of more less 15% of your total revenue.
The real question now comes - How do we create packages that grow the average basket value to CHF 98? Remember, we had an average basket of CHF 45.60 and we need an additional value of CHF 52.40.
To be honest, it’s actually pretty simple!
Let’s imagine the following scenario:
Are you ready to try dynamic packages?
Even though these lines described dynamic packaging in a quite simplistic way, the main objective is to cross-sell and upsell services based on your buyer persona and its likelihood to purchase additional products and services without cannibalising your on-site sales.
To quickly come back to those techniques, cross-selling is the process of adding related or complementary products to increase the value of a sale. Upselling, on the other hand, is the process of encouraging customers to buy a more expensive product rather than the one they initially chose.
There are endless opportunities when taking the time to look at what could be packaged together to offer a unique and personalised experience to your end-customers and strengthen their ties with your brand.
Have you ever considered offering packages that include external partners? You and your fellow cultural partners can promote each other's experiences and offer unique packages to your visitors. This way, you not only increase your revenue, but also grow your visibility without much of a marketing effort.
With less people and less volume, you have the opportunity to think differently and offer products/services that rank higher in perceived value and quality (and price as well!), rather than playing an increase in volume.
If you’re curious how Smeetz can help you design and implement successful packaging solutions, you can take a look at our blog post on dynamic packaging here.