Case Study | Norwich Theatre Royal

Benchmarking your business and marketing performance against other organisations

Ever get the feeling that you are on your own? That the challenges your organisation faces are unique? That there is nowhere to go to get really decent objective advice about how to improve business or marketing performance?

We all share those feelings. As well as the opportunity to network and share experience and expertise available through the Arts Marketing Association (AMA) and other networks which helps to lessen them, here is another idea which may help: benchmarking.

What is benchmarking and what is it for?

Benchmarking is a way of measuring performance in both marketing and business terms against that of other organisations, with which yours has something in common (e.g. art form, industry sector, scale and marketplace).

Benefits of benchmarking include:

  • The chance to measure performance against others - are your programme sales as good as they could be?
  • Evaluate campaigns - why did that gallery get so many more attenders to the same touring exhibition?
  • Discuss issues with similar types of organisations - do you get a level of funding from your local authority that matches others – if not, why?
  • Evidence for both internal and external advocacy/PR work - answers at your fingertips when Trustees ask why you don’t run a marketing operation like the Royal Opera House
  • Knowledge to inform future marketing and business planning - understand why it would be a good business idea to double the amount of space in your front of house areas, and project accurately how much additional income you’ll be able to generate

Benchmarking can be as simple or as complicated as you want it to be. It already happens at an informal level in most organisations, but it only becomes a really powerful tool when it’s focused and structured more formally.

Background

For the last eighteen years, Norwich Theatre Royal (NTR) has taken part in a benchmarking project along with fourteen other large-scale regional presenting theatres. We compare information on business performance in a number of different ways, mostly to do with sales e.g. tickets, programmes, merchandise, catering, sweets and ice creams. We also compare average price paid, payments to producers, wage costs, staffing levels, expenditure on training and marketing, number of Friends and income generated, business rates, maintenance costs, capital expenditure, sponsorship income, grants and local authority support.

Membership of the group has fluctuated slightly over the years, but the majority of participants have stayed the same. The usefulness of the project should be self-evident, but its longevity is due to several factors:

  • Primarily, it is business-led, not led by any other agenda or external influence
  • The information is concise
  • Its main focus is on sources of income
  • It is confidential – we all see the individual figures for each theatre, but undertake never to show them to anyone else
What we can show in the table is our own set of figures against an average of all the other participating venues: Large scale presenting venues benchmarking figures - 2013/14

Averages excl.

Norwich Theatre Royal

Norwich Theatre Royal

Difference

Average Capacity

1,135

1,300

165

Number of Performances

349

433

84

Annual Capacity

414,969

551,200

136,232

Total Seats Sold

252,989

415,403

162,414

% capacity filled

60.5%

75.4%

14.8%

Total Net Box Office

£5,508,014

£8,891,706

£3,383,692

Average ticket price paid

£19.50

£21.41

£1.91

Payments to Companies

£4,468,225

£6,483,061

£2,014,836

Retention as % Income

20.6%

27.1%

6.5%

Programme Profit

£42,421

£72,412

£29,991

Programme Profit/Admission

£0.16

£0.17

£0.01

Merchandise profit

£20,756

£10,635

-£10,201

Merchandise profit/admission

£0.08

£0.03

-£0.05

Catering profit

£144,533

£225,336

£80,803

Catering profit/admission

£0.57

£0.54

-£0.03

Confectionary & Ices

£101,643

£173,349

£71,706

Confectionary & Ices profit/admission

£0.40

£0.42

£0.02

Total Profit

£324,716

£481,732

£157,016

Total Profit/Admission

£1.28

£1.16

-£0.12

Salaries & Wages Costs

£1,851,256

£1,895,726

£44,470.50

Full Time Equivalent Posts

81

100

19

Staff Training

£11,387

£13,441

£2,054

Marketing Expenditure

£476,583

£486,552

£9,969

Marketing Spend/Seat Sold

£1.85

£1.17

-£0.68

Friends Membership Numbers

1,654

12,408

10,754

Friends Membership Income

£45,218

£241,530

£196,312

Business Rates

£30,353

£31,292

£938

Maintenance Costs

£155,534

£104,449

-£51,085

Capital Financing Charges

£336,834

£0

£0

Capital Expenditure

£914,380

£222,009

-£692,370

Sponsorship Income

£27,183

£65,404

£38,221

Grants

£42,672

£0

£0

Local Authority Support (net)

£458,297

£37,000

-£421,297

Net support per seat sold

£1.81

£0.09

-£1.72

Key findings

For NTR, the key findings from 2013/14 include:
  • NTR played to nearly 15% higher capacity than the average
  • Average ticket yield is higher than the average
  • Box office retention compares well
  • Merchandise profit is lower (but we didn’t present The Lion King in this year and a couple of the other venues did - which skewed the figures)
  • Marketing spend per seat sold was nearly 40% lower than the average
  • Friends’ numbers are over 7 times the average
  • Friends’ income is over 5 times the average

(Note: Clear definitions are needed to ensure that comparisons are valid, e.g. does marketing expenditure include salaries or not?)

This information was one of the main drivers for our 2007 capital appeal and modernisation plans which among other things delivered a new Theatre Royal front of house with double the amount of foyer space we had previously. We now generate an additional £0.40 per head profit from front of house sales compared to pre-modernisation.

Even after eighteen years, the discipline of assembling and comparing these figures with our peers each year is still a strong focus for us. Our aim for 2015 is to learn more from other venues whose business performance in catering and merchandise is better than ours.

Taking benchmarking further

Over the last two years, we have added a more qualitative element to our benchmarking, measuring levels of audience satisfaction with various aspects of our service (ticketing, bars, catering etc.), the artistic quality of performances, and an overall rating for their complete experience. Twice a year, we compare these measurements to the average of a group of thirteen other venues (a mix of presenting and producing theatres). This is a commercially-run benchmarking project, devised by Katy Raines of Indigo (more information here).

It provides us with information on why people attended, how they felt about it, how they rated their experience of the venue and their assessment of value for money. The example shows how audiences rated the artistic experience.

We then use this information to aid programming decisions, assess our performance in terms of levels of customer service, for internal advocacy (especially with Trustees), and to help our visiting company partners assess their artistic performance.

Other ideas

Other ideas for formulating performance indicators might revolve around the following headings:

  • Economy (e.g. income and expenditure, subsidy per head of population)
  • Efficiency (e.g. staff costs per seat sold/admission, staff costs as a percentage of expenditure)
  • Effectiveness (e.g. number of complaints received, percentage of ticket sales/admissions from a particular area)
  • Equality (e.g. concessions as a percentage of tickets sold/paid admissions, number of first time bookers/attenders as a percentage of the total, checklist of facilities for people with disabilities)

These ideas are taken from a set of performance indicators developed by local authority run venues a few years ago. Inclusion of elements of performance measurement - a concept anyone working in the public sector will be very familiar with - and benchmarking will increasingly be seen as playing a key part in helping to raise standards.

But you will know your organisation and its circumstances best, and therefore what would be the most appropriate indicators to measure.

Tips for setting up your own benchmarking project

1. The first and most important thing is to decide who to benchmark with

Already facing a demanding workload, you will need to be sure that you are making the most valuable use of your time. So, what is the most urgent context for you and your organisation? Is it earned income, effectiveness of marketing spend, quality of visitor experience or something completely different? Once you know this, then you can start to find potential partners. (At this stage, it is crucial to have agreement internally, especially from senior staff and leaders, their support can be mobilised when you are contacting anyone else).

2. A benchmarking project could then involve the following steps The requirements of individual organisations might vary:

  • Decide on areas of primary focus
  • Identify appropriate performance indicators
  • Find which organisations are performing ‘best’ against each performance indicator
  • Share information in order to understand how they achieve such high performance
  • Look at actions to close the gap
  • Implement the change
  • Set up a monitoring system to track achievement
  • Review the indicators from time to time

3. It is best to try and start as simply as possible Collect the easiest information to gather, and start comparing it with others. That way, everyone involved can begin to see the usefulness and, most importantly, begin to trust partners. This will make it much easier in the future to develop the scope and ambition of your project.
  • Keep it practical – the information has to be useful to each participating organisation
  • It shouldn’t be a burden, administratively or logistically, or it won’t get done
  • Don’t try to do everything – data can quickly become addictive and distract you from other important tasks
  • Decide what to leave out
  • Establish ground rules for sharing information – trust is paramount
  • Assemble datasets as you go along – don’t leave it until you have finished the activity you want to measure


More information on Norwich Theatre Royal’s annual survey and its social impact report is available here With thanks to Kate Sanderson, who co-presented two sessions on benchmarking with me at the 2006 AMA Conference in Cardiff. Case study by Mark Hazell, Marketing Director, Norwich Theatre Royal, m.hazell@theatreroyalnorwich.co.uk