Everyone has heard of the Pareto principle (also known as the 80/20 rule.)

For those of you that have forgotten what Pereto’s principle is, it simply states that, for many events, roughly 80% of the effects come from 20% of the causes.

By understanding this principle, many businesses can dramatically improve their bottom lines by focusing on the most effective areas and eliminating, ignoring, automating, delegating, or retraining the rest. Simply put, Pereto’s principle allows businesses to know where to put their resources.

And this is never truer when selling performing arts program book advertising.

You see, year after year, we experience 20% or more of previous advertisers dropping out of the program book. This is due to all sorts of reasons—not in the budget, we’re going a different route this year, we’re taking a year off, etc. etc.

So, this means, to get back to even from the previous year, we must sell new advertising to at least 20% of the market. But if we want to experience an increase over the previous year’s revenue base, we must sell over and above this. We like to shoot for 15% over the previous season, so we need to now sell 35% to get to a year-over-year increase.

However, this 20% of new program book ad sales takes 80% of our account executives time. And this is just to get back to even!

Every five years or so, I get calls from performing arts organizations that we’ve approached in the past about taking over their program book publishing, and now they want to talk.

Because of the Pereto principle, I know what the “talk” is going to be about.

They are going to tell me they’ve lost all their program book ad revenue and now they need help.

Why is it five years? Well, if 20% of the program book advertising revenue drops out year after year, in five years, there will be zero advertising revenue.

This is because these organizations continually only go after the previous year’s advertisers, and never cultivate new advertisers. Why? Because that 20% of new advertisers is going to take 80% of their staff’s time. And who can afford that?

Fortunately, only a handful of performing arts organizations let their program book advertising erode this far. Most of them realize that they need to do something sooner before it’s too late. Whether they know this is because of Pereto’s principle, I don’t know.

But don’t think this only applies to performing arts program books.

Recently I had the opportunity to interview Chris Stager of CRStager. Chris specializes in performing arts marketing and audience development, and he finds the Pereto principle is alive and well in ticket sales also.

Chris has found that ticket renewal campaigns and new acquisition campaigns are two campaigns. This is because of Pereto’s principle.

Chris states “…what it takes to get 75-80% (ticket) renewal rates is a relatively task-based function of mailing multiple times and then calling the “non-renewers.” And, if you get an 80% (ticket) renewal rate, then you have to replace 20% through new acquisition efforts. But that effort that yields 80% of the money takes about 20% of the effort. The new (ticket) acquisition effort, which is much more strategic, yields only 20% of the revenue to keep even and requires 80% of the energy and attention.” You can hear the full interview here.

As you can see, the Pereto principle is everywhere. Why not embrace it for all that it is? Good selling!

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