Why discounting is going to increase over the next ten years.

Discounting is not new.  Discounting or “couponing” as it is/was more commonly referred to in other industries has been going on for decades.  Who hasn’t clipped a coupon out of a Sunday paper or a magazine and brought it into a store to save that additional fifty cents or 10% off?

But more importantly, who hasn’t walked up to the cash register at that Grocery Store or Duane Reade and found out they FORGOT a coupon that they were supposed to bring?

There goes that fifty cents.

Unless, of course, it’s a digital coupon.

And unless, of course, you’re carrying a machine in your pocket that can pull up that coupon in about 15 seconds, so you can show it to the 17-year-old cashier before the guy behind you with the anger management issues pops his melon.

Paper couponing is going out just like . . . well . . . papers.  Coupons and discount codes have been going online over the last five years, and will only continue to do so over the next five.

But what is really going to increase the USE of those digital coupons at cash registers and box offices all over the country is the increase in consumers using smartphones, which have the ability to search for and e-clip those coupons WHILE you’re actually purchasing your product.

In March, Nielsen reported that 49.7% of US mobile subscribers now owned smartphones, which was a whopping 38% (!) increase from the previous year.  More than 2/3 of the folks buying phones in the previous three months were buying smartphones.  Additionally, smartphones have an even deeper penetration in the younger market (tomorrow’s audience).

And if you think this smartphone adoption is going to decrease over the next five years, well, you probably still think Facebook is a fad.

What all these smartphones mean is more people waiting in line for tickets to X show, googling, “X show discount” and getting cheaper tickets . . . no coupon necessary.  It’s already happening . . . and it’s going to happen more.

Why?

The web gives the world access to information with a couple of keystrokes.  It empowers us.  And it empowers the consumer.  And as we create products (smartphones, faster and freer Internet networks) that allow them to gain access to the web wherever they are, the consumer’s power only increases.

Which means we’re going to have to deal with it.

Discounting isn’t going away.  It’s becoming more prevalent.  But don’t be depressed.   We just have to accept it, and do one of two things:

  • Create a product so unbelievably demanded by the public that they won’t care what they pay (see Book of Mormon)
  • Create new pricing/discounting strategies that allow the customer to use this new found power, while protecting our revenue streams.

If we don’t, then the only phones we’ll be using in ten years will be DumbPhones.

 

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Comments
  • LoriO says:

    I see on average 12-15 Broadway/Off-Broadway shows per year. There is NO way I could afford that without discounts. I am usually buying tickets for a family of 3. The discounts are really helpful to those of us who travel from out-of-state. Full price tickets for one show could be as high as $400 for us. Factor in transportation, parking, food (and let’s not forget ticket “convenience fees”) and that is easily a $600+ day. I can come to more shows or see shows multiple times thanks to discounts. And unfortunately, I haven’t seen BOM yet because I’m unwilling to pay scalpers and I can’t find tickets in my price range unless I buy 8 months out. But I did see Godspell 10 times 🙂

  • Lorraine says:

    Funny, I had a whole response drafted in my head on this very subject in relation to your last blog about pride and the local audience and much of it relates to what my friend Lori (hi!) is talking about. Volume.

    My primary question is this: are there enough seats in the house for volume to be a significant factor in revenue? If not, being one of the locals you referred to in your last blog is reserved for the elite.

    There is a fine line between promotion and gimmick, but ideally, in my “If I rule the world” plan, there would be an organized, collaborative effort (and I really don’t know what is already in place like that) with expanded subscription opportunities (like TheaterMania’s Gold Club) but as more of a financial partnership (and maybe different subscription tiers and ticket pricing for more bwy vs. off, etc.).

    Also frequent flyer type plans with points toward discounted tickets (similar to Audience Rewards) and then a club card thing where for every xxx amount you spend, you get a pair of tix at xxx discount.

    Hey, speaking of locals, how about discount days or lottery based on zip code! Like the pay your age day at Godspell. 😀 (ok, that one was partly facetious, but not entirely. 🙂 ) And with all due respect to Lori! 😉

    p.s. Regretably, I only saw Godspell a measely 5 times. 🙁

  • Scott says:

    Isn’t the reason that Broadway has been increasing their pricing over the last few years, Save “Book Of Mormon”–to allow them to discount but bring the bottom Line of the show up. Especially in this Economic Decline. 40% off $140 is alot better than 40% off $120.

  • Rich says:

    Ken, you’re right, Broadway ticket discounting is increasing, and is now considered a strategic right-of-passage for new plays/musicals. As a result, few theater goers buy at list price, anticipating discounts that will inevitably follow an opening. And this in turn kills profit margins and reduces investors’ prospects for recouping. Thus, as an B-way investor, I hate ticket discounting, while as a consumer I love it!

    Solution: Producers should go after the cost side of the equation and strive to reduce capitalization costs more aggressively, as well as refusing to routinely buckle under to B-Way theater-union demand labor wage increases, which are disproportionate to everywhere else in the country. Though vastly under publicized, inflated production costs are at the heart of the need to discount

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