Movie theaters are a paradox…
Consider this about movie theaters:
Patrons claim they charge too much, but cinemas can’t charge less and stay in business.
The bulk of a movie’s gross doesn’t come from the theater, but theater box does determine a movie’s downstream value.
Home presentation of a movie might equal the theater’s, but people do want to get out of the house and have a shared experience.
Studios and exhibitors are both partners and rivals at the same time.
Theaters are at the top of the movie consumption food chain, yet are the hardest release mechanism to operate profitably.
- And the list could go on.
I think of it this way: The movie theater’s presence is like the duck-billed-platypus, they both come from an older time and newly developed competition poses challenges, but they both continue to happily survive.
Regardless, we can all agree that in order for a theater to survive, it must treat its’ customers well. And in order to treat them well, it must know them well.
The secret to knowing your customers really well is…
… there is no secret; knowing your customers and treating them well go hand-in-hand. Treat customers well and you will naturally get to know them better. They in turn will promote your venue and increase theater loyalty.
Here’s how you treat your customers well in order of importance:
CLEANLINESS, CLEANLINESS, CLEANLINESS. Your theater must be clean and this is everyone’s job. This means it is second nature for everyone to pick-up loose wrappers, sweep up popcorn, mop sticky floors, and check that the bathrooms are clean. Dirty theaters undermine all your other efforts to win and keep customers.
POLITE STAFF. This would seem to go without saying but I’ve seen plenty of theaters that have a manager or staff member that needs to be repaired or replaced but for whatever reason, no action is taken. Fix the problem person pronto; it costs you future revenue every single day they work.
COMFORTABLE SEATING. Customers care about their seats. Note that you don’t necessarily need $250 rockers-the best-fit comfort vs. seating cost at your theater depends on your pricing and position in the marketplace. At a minimum, seats should be clean, solidly mounted, a bit cushy and 22” wide with 40” between rows.
CORRECT TIMES ONLINE AND ON YOUR PHONE MESSAGE. The times on your site and message should, of course, always be correct. Inaccuracies on other websites (Yahoo, Google, AOL, etc.) can be corrected 90% of the time. Click HERE for detail from the January 2014 Theater Owner’s Edge.
CLEAR AND FAIR REFUND POLICIES. This would seem to be another no brainer, but some theaters are notorious for Stalinist refund policies; sick kid-don’t care-we need to see the hospital admission form and confirm critical condition.
A Better Refund Policy: a customer may request a refund if they leave within the first 15 minutes of show start for any reason and within the first hour for an emergency. Exceptions are case-by-case. Any stale or disliked concession product will be replaced or refunded at the customer’s option.
ONLINE AND/OR RESERVED TICKETING. Online and mobile ticketing along with reserved seating grows every year and is becoming a necessity in a competitive zone. Don’t be behind the curve offering these amenities.
COMPLAINTS ANSWERED IN A TIMELY MANNER. A poor rating on Yelp, Google, etc. should be answered quickly and honestly. It’s all you can do and is enough for most customers. If you have 20 one-star ratings you should re-evaluate your operation from top-to-bottom.
RESPONSIVE REPAIR PERSONNEL AND VENDORS. There is no reason a house should be dark for four days or you should be out of small cups for two weeks. Find new vendors if you have to.
These best-in-class “customer wellness” policies come from the top: management must implement them by example and follow up with regular staff training. We all know this, but it’s easy to get complacent. If you find yourself with nothing to do or improve on at your theater, you aren’t looking carefully enough.
2014 was a bad year for movies
Theater loyalty programs will improve 2015
So a billion dollars didn’t flow into US theaters that might have in 2014. Is this one of the inevitable downs in the movie release cycle or a cause for real concern? I’d say it’s a cause for concern.
Patron growth in the past decade has been flat and this year visits are down. At the same time, capital expenditures and operating expenses are up because of digital projection yet the supposed increased revenue from digital projection-alternative content and 3D, has not materialized.
OK, enough doom and gloom. Technology is being released in 2015 that will help.
I’m just back from the Utah grocery chain, Smith’s.The stores are well-run and feature the latest technology including loyalty programs that give frequent customers worthwhile savings.
<<Look at the coupon I was handed>>
Notice the coupon is for $2 off a Colgate-Palmolive product and Colgate happens to be my toothpaste brand. I’ve bought the small Colgate tubes many times at Smith’s. To save the $2, I’ll have to buy the big tube of Colgate. And I will; a $2 savings is worth my trouble and I’ll certainly use the toothpaste. If my brand were Crest, I would have received a $2 off coupon from Proctor & Gamble, the makers of Crest.
Smith’s has my exact buying information from their rewards card. I always use the rewards card because of the real savings the card gives me.
This same concept is what the major chain theaters are already doing. This paragraph is from the AMC prospectus of April, 2014:
Transaction data from this loyal customer base are mined for consumer insights that are used to develop targeted, relevant customer offers, leading to increased attendance and sales. The program increases switching costs (the negative monetary (annual fee) and psychological (lost reward potential) costs associated with choosing a competitive theatre exhibitor), especially for those patrons located near competitors’ theatres. We believe that increased switching costs dissuade customers from choosing a competitor’s theatre and lead to higher loyalty.
My Note: 50 points or 2½ visits by a guest earns a small popcorn. Regal is, of course, also capturing data and doing target marketing.
Clearly, the thinking on AMC & Regal’s part is not just to reward loyalty but to gain the data on the customer’s purchase; who they are–contact info and metrics; age, gender, what movies they buy, how often, when, etc.
In the meantime, think about a loyalty and rewards program that you could offer at your theater(s). A couple of guidelines:
- It’s got to give the customer clear, solid benefits. This is crucial. I would not have signed up for the Smith’s card if I didn’t get real savings the very first month. Same with theaters. If you have to come to the theater more than twice before you get a benny; say a small popcorn, your plan is not good enough and many folks will not sign up.
- It must be a Mag stripe or E-card and it must have a retrieval-enter mechanism if the card is lost or the customer doesn’t have the card on them. Saying to the customer, “Sorry chump, outta’ luck”, if the card is lost/not-present is unacceptable. Everyone knows that loyalty Mag card data can be found with a retrieval phone # or Email. To not offer this feature is shabby treatment of your customers and there’s plenty of other theater choices and online review sites to make your extra effort pay for itself many times over-either to your benefit or your detriment-you choose.
- Avoid giving free tickets in your loyalty program. This is asking to be billed full price by the studios as you are giving away their movie with no benefit to them. If you do give free tickets, you should have a separate ticket category for no-charge / loyalty redemption and an understanding if and how much you will be billed for those loyalty giveaways. Not all distributors have the same policy-a good estimate of the # of free tickets you are allowed is 2% of the weekly total, but this varies from distributor-to-distributor, movie-to-move and time-to-time, ranging from 0% the first two weeks of a run up to whatever doesn’t look outrageous on the box report.
- Think about a generous concession giveaway loyalty program. Then train your employees to upsell from the freebie. Do not look at it as lost high-profit sales; look at it as giveaways of low cost product that can be easily upsold.
- Finally, conisder a loyalty program that the customer has to buy into, as AMC does above. Anyone will take anything for free and the customer perception is that it is worth exactly what they paid for it; nothing. Plus, you can’t giveaway much when they paid nothing for it and you have the costs of the cards and the technology to consider.
Example buy-in program: $10 buys a card good for a year. The card gives you their email, name and zip. The customer gets:
a. No service fee if they buy tickets online.
b. Discount pricing. Example: If your ticket price is, say $9, then every $20 spent at the theater earns a free LARGE popcorn or drink. If your ticket price is $11, then $25 spent at the theater earns a free LARGE popcorn or drink.
You get the idea; the customer must purchase more than a pair of tickets to benefit, but two tickets and a soda earns a LARGE popcorn right then and there. A couple making two visits and buying a single concession item each time pays for the card. And you didn’t give them a cheesey “courtesy” size, they earned and you gave ’em the bad boy.
And no tricky exceptions; like bottled products don’t count as drinks or paying for someone else doesn’t count as money spent on the card. You are giving them an item that costs you, say, 60 cents when they spend $20-25-that’s 2.5%–and earning their loyalty and gaining their contact data and buying preferences.
c. If they buy their tickets online and save the service fee that’s actually a benefit to you; an online purchase cements the customer coming to a movie. How many times have you meant to go to a movie and then didn’t go-you wouldn’t have done that had you bought your tickets online.
d. KISS-Keep It Simple Stupid. It should be able to be explained in 10 seconds.
e. That’s it. Charge a bit for the card, give them nice savings, and the card will have real value in the customer’s mind-it’s not another throwaway piece of plastic taking up space. They give you their contact data; you know what they bought, when and how much. It’s win-win. More next month.
Have a Happy-lots of customers-Holiday!
Do these simple things right every day at your theater and you will be rewarded with strong attendance and good word-of-mouth:
1. The lobby, restrooms and theater should be super-clean. The customer’s impression of your theater starts as they approach the theater; sidewalks and parking count. Your theater does not need to be over-the-top fancy, but it should be spotless. Trash bins should be emptied before overflow and buckets sprayed out regularly, your feet should never slip or stick anywhere, etc. Every manager knows the drill, but it’s easy to get complacent.
2. Always have correct shows, dates and times on your website. Double check them. Don’t fret too much about search engine times being wrong; it happens. If a customer gets a wrong time online, politely tell them that you have no control over what some yahoo posts on their site (without putting the other guy down;) and that your website is the best place to find the right info. Offer a free ticket if appropriate.
3. Your picture and sound should be sharp and crisp. The port and 3D glass should be regularly cleaned. Do not over-clean your lenses, this causes fine scratches and produces a soft focus effect. Leave the lenses alone unless you are an expert. Avoid doing anything remotely complex service-wise before a show, it’s asking for trouble.
4. Do at least one walk-thru of each theater during a show. Do a sound-picture check; look for proper temperature, trash in the aisles, problem customers, etc. Not doing walk-thrus and catching problems is the #1 cause of bad online reviews.
5. Staff your theater appropriately. Don’t have your September staffing hat on; business will double at least in November and December. Better to overstaff a bit than be caught short.
6. Same goes for inventory. You can’t sell it if you don’t have it.
This goes for candy, popcorn and soda of course, but also for your non-sales inventory; trash bags, toilet paper, paper towels, etc. Running out and buying stuff at the store is a pain-in-the-neck and expensive.
7. Have a plan of action if the worst happens; your projector goes down, your single popper seizes up, etc.
Examples of back-up plans: all movies pre-loaded on each server drive so you can swap out your least busy show. The phone number of whoever services your projectors along with other needed information tagged on each projector. You shouldn’t have to scramble for this in a breakdown, time is crucial. Call service immediately; don‘t try and fix it yourself unless you have someone who knows what they’re doing.
Have back-up popper parts and someone who can service the popper. In the worst case-an unfixable popper and no back-up-have the phone #’s of rental shops that have poppers.
8. Have enough change and singles for a busy weekend and don’t let cash accumulate in your registers or onsite. Make regular drops to your safe and daylight drops to your bank. A single loss can put an employee in the hospital and financially ruin an otherwise great Holiday season.
9. Trailers, posters, standees, signage and ads up and correct.
10. Don’t forget the little fixes; chair repairs, door stops, broken concession stand items, curtains tacked, etc. The little things accumulate fast when it’s busy. You may not be able to get to everything that week, but at least stay on top of customer facing issues, chairs especially. Nothing reflects more poorly on your theater than loose chairs, broken cupholders or ripped fabric. If you can’t fix a chair that day–and often you can’t–place a nice fabric bag over the chair with a printed sign that says “Out of order.” Garbage bags over chairs or crime scene yellow tape wrapped around them is not acceptable.
11. Finally, treat your customers as they deserved to be treated-LIKE GOLD. Never let a customer with a known problem walk out the door unsatisfied.
That’s it. Easy yet challenging, it just takes diligence.
Download a list of these 11 checkpoints HERE.
Be Honest and Direct with Your Email
Your email must be opened to be of any value, that crucial double-click is key to all that follows. The Theater Owner’s Edge open rate for the past year has varied from 25.6% to 55.2%. Here are 6 things I have learned:
Don’t be cute or clever in the subject line; be clear and concise. Here is the subject line of one my worst open rate emails and my highest unsubscribe rate:
Subject: The I-word…
The post was about theater Inventory (aka. the I-word); a knotty topic that confuses most folks. The subject line was a takeoff of the F-word. It’s not clear and it uses round-about logic (…the I-word, that’s like the F-word, that’s bad, it must be about something bad, I better find out about that…).
To most readers the subject line was an invitation to unsubscribe because of the I-word’s association with the F-word. Plain stupid on my part.
Ironically, “The I-word” article contained difficult-to-find information about a tough subject and took a lot of time to write. Moral: the subject line is king.
Use as few characters as possible to convey the essence of the email. Most email in-boxes are set to display 35+/- characters in the subject line preview. Save space where you can; use “&” for and, drop unnecessary “thes”, no “justs” and “onlys”, no caps except the very first letter, use “6” – not six, “thru” for through. Use short words, but don’t make it look like a text; “u” for you, “ur” for your, etc. are no good. Email subject lines are not grammar tests, they’re marketing tests.
Do include keywords what the email is about; “keep theater costs low”, “dealing with bad reviews.”
Stay out of the junk folder. Don’t use spam-my words or characters, Examples: Secret, Shocking, Hey, Winner, Credit, Never, Debt, Free, Money, !!!!, ALL CAPS, “@” sign; and that’s but a few. Here is a complete list of spam words. Spellcheck your email; misspellings are red flags for spam filters. Think about what you would open in your inbox.
The same goes for the body of your email but with lee-way. You can use “free” or “secret” in the body, but still be careful. Look through your junk folder and you’ll find emails that are not junk. Look at the subject line and content and you can usually see why it was marked as junk. Use an email service; it’s less likely to get your email thrown in spam or your address blacklisted.
Don’t include attachments; include links where you need but no more than 2 or 3.
Timing of an email blast is important; best day for theater emails is Wed or Thurs, best time maybe 9-10am or 12-1pm but opinions vary. The theory is an Email that arrives when the receiver is sitting at their computer or at the top of the inbox –first in the morning or after lunch– is more apt to be opened.
Below is a picture snip from our Email service’s website; data cannot be changed on my end.
- Open and open rate figures do not include readers that read the email in their preview pane.
- The highest open rate was the Feb’14 “Correction and Apology” at 55.2%. I guess readers wanted to know what I screwed up!
- The lowest open rate was Mar’14 article “11 tips to save $ when shopping at CinemaCon” at 25.6%. This subject line presumes the reader was going to CinemaCon and many were not.
- Your unsubscribe rate should ideally be below 1% to keep your list from being flagged by your email service as an account to monitor for spam and I have (nearly) always achieved that.
- The highest unsubscribe rate at 2.6% was the Jul’13 article about inventory, “The I-word…” As discussed this is an unclear subject line and, perhaps, made some readers think it was a waste of time to subscribe?
- The lowest unsubscribe rate was, again, the Mar’14 article CinemaCon article, I guess because folks who were on the edge of opening it didn’t open it (it didn’t apply to them) and therefore did not unsubscribe.
- Open rates decrease as your E-mail list grows and include more non-core subscribers, in my case theater and theater management folks. This Email, “6 ways to get your email opened”, is going to a list of almost 6000 people and I will post the open rate next month.
- Don’t trust claims you hear or read about someone’s high open rate unless you can verify it. Figures are often exaggerated and, if it is in the subject line of an Email, probably a come-on to get you to open THAT EMAIL.
From: YourName@YourTheater.com, not Info@YourTheater or YourName@Gmail, etc.
Subject: Name your two best new movies; customers will presume the rest; that other movies are playing, you have specials, etc. New movies reign supreme.
Example Subject Line: New Fri 12th: Dolphin Tale 2 & No Good Deed
If You Have No New Movies: Include the name of your strongest movie and most popular special.
Example Subject Line: Fri 12th: Guardians of the Galaxy & Tues all $5.
Do you own a theater you want to sell? Or know of one available?
Online Reviews & Social Media can Help, Hurt, or Waste Your Time–it’s Your Choice
How reviews can help: 90% of online theater reviews talk about cleanliness, staff, picture/sound, and seating. Focus on these issues; clean theater, polite staff, best picture and sound; and you will get good reviews. Potential cutomers are more likely to turn into real customers when they read good reviews.
How reviews can hurt: It could be that your place was dirty or an employee was unhelpful on a certain day; I think most of us can imagine that happening. Multiple bad reviews will impact attendance negatively.
Most important: if a review of your business on Yahoo, Google, or Yelp is negative, don’t assume it’s wrong, ignore it, or get defensive (see the cartoon at the end of the post). There may be some truth in it. Look at your theater with fresh eyes and drop-in when you are not usually on-site. You might be surprised at what you find. Look for problems and focus on fixing them with whatever works for you and your staff; more training, warm-fuzzy chats, reading-the-riot-act, etc.
Remember: Most customers realize that online reviews are anonymous and are a guide only. They are looking for a consensus of opinion, not zeroing in on that one bad review.
You should know: If you have a bad review that seems over-the-top negative or directed at one person on staff, contact customer service at Yahoo or Google reviews and express your belief that the review is not genuine, but vindictive. They know this happens. Business customer service for Google is here, Yahoo is here or here. I would create a Yahoo or Gmail account if you don’t have one to access all tools available.
They will look at when the reviewer’s account was created, the number of reviews they’ve posted, whether all their reviews are bad, etc., and will remove bad reviews.
Yelp is a little different: Software rates the reviews as to whether the review is a recommended review (unbiased by their algorithm) or an unrecommended review (biased by their algorithm). The algorithm is based on how long the reviewer has had a Yelp account, the number of reviews they have posted, the number of Yelp friends they have, how old the review is, etc.
An unrecommended review may move to recommended because that reviewer starts posting more reviews. There is nothing customer service can do to change the status or remove the review. This means posting your own reviews doesn’t do much good. Yahoo and Google are moving in the direction of the Yelp system as it does, in theory, provide more accurate reviews and will generate more traffic on their site.
How online reviews waste your time: If you overly focus on them they will distract you from more important business issues and waste your time like crazy. The best way to handle online reviews is to do a good job running your theater, remove bad reviews as possible, and check them once in a while to stay in touch.
How often have you seen these two phrases?
Like us on Facebook!
Follow us on Twitter!
The question you need to answer when you promote your theater on Facebook and Twitter is Why should a customer Like or Follow you? Because…? This question goes unanswered too often.
The only answer that would convince me is that you will give me an exactly stated discount or freebie in the very near future, guaranteed. If I don’t see that, I will not like or follow you. I’m tougher than most on knowing the exact offer, but not on the discount concept or the fact that I want it now-not some indefinite time in the future. A recent survey by Twitter.com themselves found that 94% of people who follow brands on Twitter did so for discounts and promos, 94%!
You must have a sign-on offer and it must be good; a free popcorn, half off a movie ticket, etc. The promo must also be exclusive to Facebook or Twitter customers-otherwise it’s a sham and they will (or should) stop following you. You may want to make each offer different so you can track Facebook vs. Twitter in your POS.
There is a lot of overlap in Facebook and Twitter posts, but there are differences as well. Tweets have a lifetime of a few hours, Facebook posts a few days. Tweets must be fast-breaking and short. Not as much with Facebook. You might Tweet a redirect to Facebook of a longer offer or promo, but not the other way around. Also, there are Twitter folks who never look at Facebook and vice-versa.
OK, now you’ve given the customer a reason to follow your theater. You still must consistently update your Facebook and Twitter feeds. If you don’t update on a regular basis, don’t bother doing Facebook or Twitter for your business-it hurts you by looking inconsistent and not offering what you claimed.
Consistency is the key to making Facebook and Twitter useful to the viewer. Relevant content is also critical and I will use a few live examples rather than try and describe it. I’ll add my aptly priced 2 cents where needed.
Both of these pages are updated regularly, have plenty of photos and visits, and talk about upcoming town and theater events. They display a personality without overdoing it. At times they have Facebook exclusive offers.
Here’s a new theater that recently launched and is doing a nice Facebook page:
The updates and photos have an arts feel, personality shines though, and I love that photo of the packed theater from the August 7th update-proof that Lido Live is the place to be.
Here’s a Twitter feed I like:
AMC theatres have a quarter million (!) Twitter followers. There are lots of free offers, flashy photos, and good customer interaction, especially tying to their popular loyalty program, AMC Stubs. Properly done like AMC’s, a Twitter feed can amount to customers advertising for you for free, sounds good to me!
To repeat: the best Facebook and Twitter pages have a crucial factor in common: their owners update them religiously.
Don’t give up posting when you don’t see a sharp increase in followers and gobs of coupons at the box office, it takes time and it is not a direct money-maker. It is a soft sell and cannot be exchanged for hard dollars. For that reason, you should limit your social media time to, say, 30 minutes per day. Or you might delegate social media to competent staff or a student-someone with a flair for and a love of the media.
Final Thought on Social Media: In 2006 I overheard a friend’s college-age daughter talking about a new online phenom that was better than MySpace. It had a strange name and sounded goofy to me. Of course, it was Facebook and we all know the rest; Facebook boomed then busted a bit and… who knows what’s around the corner? Social media and its uses are fluid as can be. Stay alert to new trends, but don’t put that ahead of running a sharp, clean theater.
Linkedin is a different breed of cat
Linkedin is not primarily a sales tool for a theater manager, but every theater manager should have a Linkedin account. The contacts you make can help you in many ways; a way to talk to other managers and exchange ideas with, businesses you might sell screen advertising to, a way to connect with local civic leaders, industry groups to join, a place to find good employees, to name a few.
Like Facebook, Linkedin is also a standalone search tool for people and companies.
Consider this: Linkedin is the only major networking service where members regularly upgrade to a paid membership. Who would pay for Facebook or Twitter? It’s a no-brainer to have the free Linkedin account.
What not to do: Quick story: arriving in Salt Lake City on Easter Sunday 2013 after driving 800 miles straight, I was stopping at the first hotel I saw-a mid-priced national chain. It looked a little shabby, but I didn’t care. Well it was bad. A look online the next day found this review…
Horrible, just horrible. Can’t believe XXX gives their name to this dump. The rooms feature:
• Tattered carpeting with urine stains
• Thread bare towels
• Rock hard beds
• Paper thin walls
• No curtains and peeping Toms in the parking lot
• Hall lighting perfect for junkies to shoot up under
• No security
The ramp for wheelchairs is so rotted that a chair fell thru. Maids tap their keys on the doors at 8am, even with the do not disturb. If they cannot get in your room by noon forget about getting your threadbare towels for that day.
This motel serves as housing to several of the local truck driving schools and the students run around drunk, swearing, spitting, and brawling. Punch marks in the walls are everywhere.
Room service is slow as they have only one server; an old fellow with a walker–it’s sad really. His equally old dog roams the halls scarfing up food left on room service trays.
Staff is plain mean; I asked a heavily tattooed front desk bruiser gal for help with my luggage and she told me she was alone and couldn’t help. She then smirked and went back to texting. XXX needs to do a mystery stay here. I think they would take their name back.
My stay wasn’t quite that bad, though I did wonder about the dog in the hall. The review was on-target and perhaps helpful had I read it. As the hotel was clearly a dump, here is what I imagine the owner doing when he read that review (or didn’t read it or didn’t care) and what not to do if you get a bad review.
8 Easy Steps To Shorten Your Box Office Line
Ask virtually any entertainment event patron what their biggest frustration about attending is and you’ll often hear – “the box office line was too long”. Ask a similar question to any box office attendant – “the box office line was too long”. Ask the Box Office Manager – “the box office line was too long”. Ask the General Manager of the venue – “the box office line was too long”. There’s a theme here…
We’ve all been through this experience – some of us have been on both sides. How do we shorten the box office line? The longer we’ve worked in this industry the more little tricks we’ve picked up. We’ve compiled our list of ideas and we’d love to have you add to it! Leave us your tips and tricks in the comments section below.
- Separate Your Lines – Do you have all of your patrons going through a single line? If you know that you’re going to have VIP ticket holders, and people coming for will-call, and ticket purchasers, and kids-club members looking for extra tickets, go ahead and break those up. Have a separate line for each of those and maybe two for the day-of-event ticket purchasers.
- Open Additional Windows – I know this sounds obvious, but there are plenty of reasons to not consider doing it. Even if you don’t actually have an additional ticket “window”, can you set up an additional station on a portable table next to the windows? How about a remote station located directly at the front entrance? This is especially something to consider when you know that you’re going to have a large walk-up.
- Easily Visible Seat-Maps – Do your patrons spend a lot of time deciding where they would like to sit? If you can print out an enlarged seat map near the ticket window – your patrons can be deciding while they stand in your short line.
- Rapid Sell Feature – Many ticketing systems now have a feature that will allow you to sell tickets for that evening’s event very quickly. It provides you with the ability to go directly to that evening’s event, bypassing all of the clicks to actually find that event. If this is a feature that you are not familiar with – talk with the ticketing account representative that you work with.
- Credit Card Processing – If it’s taking you longer than two seconds to process credit cards at your box office then it’s time to revisit your credit card gateway/processing. It doesn’t sound like much, but every second counts when your line is out the door.
- Season Ticket Sales – If you are seeing patrons return to your venue even once, grab them and see if they would consider purchasing season tickets or a flex pass of some kind. They will probably appreciate that you’ve noticed them. Also, give extra emphasis to season ticket sales during the off-season. The benefits of selling all of those tickets and getting the money upfront don’t have to be explained.
- Mobile Ticket Purchases – If you tell your patrons that there is a way for them to hop on your website and purchase their tickets, they won’t be in line for long. Plus, the fees that you collect will typically be higher for an internet sale – a win for both sides. It may even be beneficial to have some signage near your box office that lets them know that they can buy them from their mobile phones. Make sure that your online ticketing page is mobile friendly and that your ticketing engine is mobile adaptive – otherwise you’ll create a mildly inconvenient experience into a bad one – fast!
- Create Online Demand – Many of your patrons will pay for the convenience of purchasing their tickets online. But there are more benefits to buying online than just bypassing the box office. We give our patrons the ability to completely design their print-at-home tickets. What incentives can you offer them for buying online? Will you use space on the ticket to promote your biggest donors? Will you provide a sponsor coupon that is of value to your patrons? Sit down with your marketing team and come up some creative ways to motivate people to buy online.
A conscious effort to shorten your lines will obviously benefit everyone involved. At the end of the day, if the only thing that your patrons remember is how great your event was, you’ve done your job!
Share your own tips with us below!
Don’t think about profits,
take these 6 actions…
Hope your summer is going well.
Which is more important in the theater business, thinking or doing? Hmm, if you do something without thinking, you are more likely to choose the wrong action. If you think without doing, then no action can happen. And it might be that no action is the best choice, but experience and history prove that action is usually the winner, especially action that has produced profits for others; no ifs, ands or buts.
With that in mind, here are six things TO DO in your theater and the specific product and vendor that will save you money or increase sales – in other words – increase profits. Note that I do not receive a commission from any specific recommendation, though I have received free or discounted samples as noted.
PS – See the end of July blog post to calculate your year-end 2014 sales based on sales as of 6/30/14. Are you on target?
1. Shop your credit card processing
No single thing you can do this year is more important than shopping your card services vendor. I have seen three requests for new POS systems this week, and we could save each of them from $2,000 to $11,000 yearly by changing card processors. Example: if you can save 1% in card processing fees – not uncommon – and your theater does $750,000 in total box/concession sales with 40% on cards, you will add $3,000 directly to your bottom line. As a dealer in payment services, I will not make recommendations on this blog. Here a few processors to consider in alphabetic order, there are many more:
a. Casablanca Ventures-Wynn Salisch email@example.com 203-253-7259
b. Mercury Paymentfirstname.lastname@example.org 800.846.4472
c. Process Point*-Brooke Gaztambide email@example.com 877-365-5040
d. Sage Payment Solutions-Carrie Dubray Carrie.Dubray@sage.com 860-592-0079
e. Vantiv/Fifth-Third Bank-Helen Brune firstname.lastname@example.org 859-802-1591
f. Your bank’s recommended processor
*Note: Process Point and Diamond Ticketing are partners in the Diamond card gateway.
First, talk to other theater owners for recommendations; do not take one opinion as Gospel. Ask for a quote from 2–3 processors. If you are new to credit cards, give your best estimate of sales. If you are already signed with a processor, provide the quoting processor with your last card statement. Without that statement they cannot price their service accurately and you will look like a tire-kicker and no good salesperson (aka. busy) wants to waste their time with a customer who likes to play coy. Don’t worry that the quoting processor will see what you are now paying and so barely undercut your existing pricing. Say something like, “I’m looking to save money on processing costs and to make a change within the next 60 days. I’ve heard good things about your service and am getting quotes from two other vendors. I will not play one processor against the other – I don’t do business that way.”
Then look at the quotes and make sure you are comparing apples-to-apples. Be wary if you hear “processor speak” – “You’re getting our best rate; 1.6% to MC/Visa plus 12 basis points, 2 cent gateway fee, batch header, PCI compliance, and full moon fees etc.” This is designed to confuse you so you cannot compare apple-to-apples. Go straight to the bottom line and calculate your effective card rate.
Effective rate = Total MC-VS* fees in a month / Total MC-VS in that same month *Do not include AMEX fees or sales as these are accounted differently.
Your effective rate should be no higher than 2.5% and can be as low as 1.9%. Note that I commonly see effective rates in the 3.5% range. Other factors to consider are any gateway fees to connect your POS to the processor, the length of the contract, and any cancellation fees. Understand that the system is complex and do not try and learn all the details. The fees charged by the true back-end processors – there are only five in the country – are all very close. In the example above, that $3,000 the theater is losing is going to middle-men; the gateway, the ISO (independent sales organization) that sold you the card service, the POS maker, etc.
Effective rate is king. If there is a $500 early termination charge and a 2 cent gateway fee, you are still well ahead of the game by cutting your effective rate by 1.0% and risking the early termination fee and paying the gateway fee.
Final thought: Do not think, DO. The percentage of sales on cards will only increase and therefore your potential lost profits will grow in proportion.
2. Invest in modern point-of-sale hardware & made-for-theater-software
If you are using paper tickets and a cash register for ticket and concession sales, you are losing money in umpteen different ways every month; higher credit card rates, employee dishonesty, inaccurate inventory, lost up-sale opportunities, extra accounting labor, etc. And that list is far from complete.
Software: The nine companies following are the major players in theater POS systems in the US. Note that Googling “theater POS systems” will show a few others as well, but they are either not specifically made for movie theaters and/or the majority of their sales effort is no longer directed at movie theaters. THE NINE are in alphabetic order:
Jack Roe Incorporated Carrie Dietrich 615-331-9368
NCR-Radiant Rodney Little 770-299-6313
OmniTerm Darrin Lewis 905-629-4757
Ready Theatre Systems Corey Aldrich 865-212-9703
Retriever Software Phil Norrish 720-570-1173
Sensible Cinema Rusty Gordon 615-799-6366
TicketSoft Philip Wood 972-982-8620
Veezi Justin Silverman 323-944-0470
Vista Entertainment Solutions Danny Fairman 323-944-0470
Every system has its advantages and disadvantages. As a dealer in movie theater POS software and hardware, I will not make recommendations on this blog. Look at the websites, call the contacts listed, talk to users of the system, and go to a trade show. Put all that information in a pot, stir, and narrow down to two choices, then ask for a full hour long demo and ask questions, questions, and more questions (not at a trade show – it’s too hectic) or, better yet, ask for a trial period for your theater.
a. Do you like the system and find it easy to use? Is their service department responsive and polite? Does the sales rep get back to you on a timely basis and do you get a get a good vibe from them (aka. are they giving you the straight scoop)?
b. Are the features and reports you need included? Can you view your theater(s) key metrics via the internet in real time? If a desired feature is missing, do you feel that the company will work to include that feature in the future? Every theater wants something special and it is not possible to include every item that every customer requests, but requests for logical features should be taken seriously. Do not accept the answer, “What do you need THAT for? You don’t need that!” YOU are the customer, YOU know what you need, not them.
How do updates happen? Do you have to know to go get an update or are they auto downloaded? Do updates commonly have bugs? Talk to others users.
c. Do they sound competent and detail oriented? What does their website look like? Are there missing pictures and broken links? If yes, that’s an indication of their attention to detail and POS development is about three things; details, details, and details.
d. Can shows & times be auto-uploaded to your website, to CinemaSource, to Tribune Media, and so to the internet at large? If the POS can’t, or it’s not easy, your web shows & times will be prone to error. No fun for your customers or for you.
e. What is the initial price and yearly cost of the system? Pay particular attention to the credit card processing options from item #1. What hardware does the system require and does the POS company sell that hardware? If they do, are their prices fair as compared to what you can find online yourself, say within 10–15%? Note that price is #5 on my list of important issues; if (a), (b), (c), or (d) above are way off, what difference does the price make?
f. What are the five year prospects for the system? How substantial is the company (e.g. do they attend major trade shows, do they have backup staff, etc.)? All POS software is proprietary, but the POS hardware should not be proprietary and you should not stand for it – that is a red flag you will not be able to change without pain, pain, and more pain. What development platform is the POS software programmed on? How long will that development software package be supported? All of the POS’ terminals use Windows and the preferred operating system is Windows POSReady 7. But the Microsoft development platform that each POS software is written for varies. MS support policy and sunset dates can be found at Microsoft Support.
g. How are internet ticket sales handled? Is the purchase easy for the customer? Is the redemption and accounting clear on the back end? Does the buying page look and feel professional? Be wary of anyone who claims, “The convenience fees from online ticket sales will more than pay your licensing/support fees.” I have never seen this to be true though I’ve heard the claim. Will you be able to SELL TICKETS (not just be listed) on one of the two major national movie sites, MovieTickets.com or Fandango.com? How do patrons avoid standing in line? A bar code reader or an APP is a must if you sell more than minimal tickets online.
h. What do other theater owners say about the system? Talk to several users. To repeat, do not take one review as Gospel.
i. How are gift cards handled? Can you buy gift cards online? Are the outstanding gift card balances available to you should you decide to change systems? Be wary of any answer other than YES.
j. Does the system offer reserved seating? Does that work when buying online as well?
k. Does the system offer E-Box reporting to Rentrak and the distributors? This will be a requirement in the future.
l. Do they have a loyalty card program? If this is important to you, make sure you understand the details as loyalty card programs and features vary widely.
m. If you host a film festival, make sure the system’s features include multiple venues, a shopping cart, flex and multi-passes, and any other feature you need for the film festival. The handling of film festivals by THE NINE vary widely.
n. How is inventory handled?
o. Anything else you can think of? No POS system or company can be all things to all people, but all your questions should be taken seriously and answered honestly. Be a little wary if all you hear from the salesperson is yes, yes, yes. Finally, remember that you are buying a product (the hardware and software) and a service (the support and people behind the software), and most complaints revolve around the support and people. That being the case, make sure you feel good about the support and people.
The following products are the major components of a theater POS. The companies below are who Diamond Ticketing uses.
Par Tech Corp
Partner Tech Corp
All three companies offer great products and have one product that may fit a niche a little better than another product. I have received discounted demo units from all three.
Note: I no longer recommend consumer Windows 8.1 All-in-Ones for POS use. I will not get into the details why here; suffice to say that they are the wrong tool for the job. Please call me at 866-323-5411 x109 for recommendations based on your needs.
Low volume ticketing: Epson T20II
Mid-range volume: Samsung-Bixolon SR-350II
High volume ticketing: Epson T70II
Practical Automation for concert style tickets (model #?)
APG Multi-pro series (these guys rule!)
Scan in Options:
Honeywell 1400g barcode 2D area scanner
Motorola DS9208 omni-directional 2D scanner
Apple I-Pod 5th gen 32G for APP scan-in
There is always more to know and try, please call me at 866-323-5411 x109 if you have any questions.
3. Buy your thermal receipt paper from Label-Rite, North Wales, Pa
Most theaters use thermal receipt printers from Epson, Samsung, etc., like this. They take 3.125”/80mm paper and the best paper for a theater application is the #20lb heavy duty thermal paper with a green stripe on one side and a perforation down the roll, like this. The continuous green bar makes it easy for the usher to keep the correct side of the ticket and the perforation allows for a clean rip. Do not buy the #15 light weight paper as it will twist/jam in the printer and the flimsy stock will not rip along the perf. Do not buy paper without a perf unless you never rip tickets. Label-Rite in PA offers the best price and service that I’ve found, their normal price is $106.70 / (50) roll case. Through a special offer, Theater Owner’s Edge Readers can buy this heavy duty thermal paper for $99 per 50 roll case or $2/roll. See below and note that DTS has received free sample paper from Label-Rite.
Label-Rite First Time Customer Special Offer – $99.00 per case (50 rolls)
Green Stripe Thermal Admission Ticket Roll with Perforation, #20 paper. Rolls – 3 1/8“ wide, 3” outside diameter. Contact Eric at Label Rite: 215-464-6115 x 104 and mention The Theater Owner’s Edge Newsletter special promotion. Offer good through July 31, 2014. 5 case maximum purchase.
4. Buy Nestle Pure ½ liter water bottles
This is a nationally recognized brand name, has attractive labeling and is available for 11.6c per bottle from Costco, Walmart, etc. Your profit margin is 94.2% on sales if you price at $2/bottle. This is a higher margin than popcorn or soda and is likely your third best seller after popcorn and soda. Water is 3rd in line to the profit throne and you should make every nickel you can on it as long as your brand is not the super-store’s house bottle – that screams cheesy/price-gouging for $2 a pop.
5. Use customer facing screens with your POS
This is a quick way to boost snack sales. Using desktop publishing or photo editing software like MS Publisher or Adobe Photoshop, make a page/photo of your special and save it as a jpeg. Then go to control panel/display/adjust screen resolution and use the dropdown box to change the multiple displays option to “extend these displays.” Make the cashier facing display (monitor #1) the main display. Now go to control panel/personalization and use the desktop background feature to choose that photo as your desktop background. Now the customer display is prime real estate for a concession promo, the sample to right took me 15 minutes start to finish in Publisher. KISS applies: offer one or two items and maybe at a discount to your main sign, you can even change by the day, like right. A two keystroke macro could change the daily special. Hardware, as low as $250.
Train your employees to actually point to the screen and say something like, “And do you want this special?” It’s not hard and it will become second-nature in time.
6. Invest in a modern, snappy website
I look at tons of theater sites and many of them – maybe ¼ – are not up to snuff. In fact, they stink. Common problems with theater sites: the shows and times listed are manually updated and are wrong, they are confusing, the information they contain never changes and the whole mess looks like it was written 15 years ago. Maybe one in fifteen theaters have no website at all, they post times on Facebook. What planet are these guys living on!? Until recently, however, a professional website could cost $2,000-$5,000 or more and required an HTML programmer.
Now, professional web template services produce great looking websites with no need for HTML skills. Take a look at Wix.com. There is no cost to build the site using their service, but you will have to host the site with Wix.com for $25(+/-) / month or $300/year. That is more than you will pay for traditional hosting – maybe $5 a month, but it will take you 10 years or more before the extra monthly fees will equal the up-front cost of hiring a good programmer. You also avoid the problem of hiring a not-so-good programmer that looked good and/or that programmer moving to Nepal, becoming a monk, getting hit by a beer truck, etc., leaving you with no idea what they did, where it’s hosted, or the passwords.
Take a look at this Wix template called, The Night Club. You can easily work a times page into this design that auto-populates shows and times directly from your POS.
Some of you aren’t computer people and don’t want to mess with anything .com. No problem, someone in your theater will be able to handle Wix.com. Diamond Ticketing also builds affordable websites for our customer’s using Wix.com, please ask.
That’s it. DO any or all of the above and you will save money or increase sales.
Quickie look-see: is your theater on target for 2014?
Based on a review of public and private theater box and concession sales ending the 2nd quarter – 6/30/XX – the first half of the year accounts for an average of 48% of a full year’s sales. Therefore, you should multiply your total sales as of 6/30/14 by 2.08 to see what your total sales will be for 2014. Is that figure better than 2013’s total sales? If it is, you’re doing good. 2014’s national box office is down 1.4% as of 6/30/14 compared to 2013.
The Importance of Being….
Suppose someone told you that the tallest mountain in the world, Everest, was 29,000 feet tall? Would that impress you? Probably not. The speaker’s knowledge of mountains sounds vague because the height sounds like an estimate. But what if they said that Everest was 29,002 feet tall? The creditability of the speaker is enhanced because the figure is exact.
The first modern height of Everest was made in 1856 by Andrew Waugh using data from the great Trigonometric Survey of India (1802-1857). Using the best tools of the day, dozens of measurements were averaged together to come up with a final figure of… exactly 29,000 feet.
Realizing that 29,000 feet would sound like an estimate, Mr. Waugh arbitrarily added 2 feet to the final figure. That measurement was the “the exact height” of Everest for 99 years until 1955 when better equipment and methods refined the figure to today’s 29,029 feet. So exact is a relative term, but the concept of being exact is what’s important, no matter how exact you really are. And being exact applies to running a theater or any business.
1. Be exact with cash. Your managers should not have mis-counts that are discovered at the bank, be in the habit of rounding to the nearest $1, leave tills for the next manager that are not what they should be, etc. The tills should be say, $200, and the bag drop should be, say, $2,482.75. Exactly. Amounts different from your POS should be explained as best as is possible. Differences do and SHOULD occur. Any manager who is always, always perfect with their cash must be fudging. And you as owner or general manager should look at how much each manager is off every week or month. Not to accuse, but to know who’s good, who’s too good, and who needs improving. Good cash management should result in a maximum error of one-tenth of one percent vs. what the POS or register says, that’s $10 off per $10,000 of sales.
2. Be exact with inventory. This refers to both ticketing and concession inventory. Ticketing inventory means that if the POS or your reels of tickets show 89 people in the theater, there are 89 people in the theater. A couple off is not unusual due to bathroom breaks, theater hopping, etc., especially in teen movies, but if there are 78 in the theater rather than 89, it’s time to look carefully at the possibilities, 2000 pounds of humans are not hiding under seats. Doing a correct concession inventory was the subject of the July 2013 Theater Owner’s Edge here and I will not repeat the boring details. Most important: If a product is not accounted for in your inventory – it didn’t go through the register and is not in the spoil box – it went somewhere. Assuming your inventory counts are correct, in order going up of severity of your problem, the product was:
a. Mis-rung on the register; in this case another product should be over in the inventory
b. Eaten by an employee
c. Given away by an employee
d. Sold by an employee for the full retail price and the cash put in their pocket.
Notice that the product grew legs and walked away is not on the list of what could have happened. Over the course of thousands of dollars of concession sales errors do accumulate, but you should be within ½ of one per cent accounted for, that’s $50 off per $10,000 of sales.
3. Be exact with Labor. Your employees should punch in and out on time according toa posted, emailed, or online schedule. Work to the nearest 15 minutes. If your firstevening shows on a Saturday are at 6:45, then the three evening employees coming in should punch in at, say, one at 5:45 and two at 6:00. Same with punch outs. Last shows at 9:30 might mean all except your closer clean up and punch out by 10:15. If three non-manager employees Mon-Thu and six non-manager employees Fri-Sun punch in 15 minutes early and leave 15 minutes late, that’s $140 extra spent per week on labor, matching social security, and workmen’s comp. That’s $602 per month. Are you OK with taking six one-hundred dollar bills from your pocket each month and shredding them?
Give employees a little room for error; say 5 minutes, but if they are regularly more than 5 minutes early then they should wait to punch-in and if they are regularly more than 5 minutes late then they should be reminded the purpose of the time clock.
4. Be exact with your accounting. Pretend for a moment that you are a state sales tax auditor and have been sent by your state’s revenue department to audit the theater’s sales tax payments. Standard practice when auditing small business sales tax is to audit for a three year period, but only do a detailed analysis of six months or one year chosen at random. The amount of error is then multiplied by six or three, unless the owner wants the auditor to hunker down and do the whole three years in detail. Guess which option most owners choose!?
You as an auditor will want to work directly from reports that are generated by the point-of-sale computer or a cash register. You will be suspicious of handwritten box reports or Excel spreadsheets that were “produced” downstream from original sales records.
OK, now stop pretending and start worrying. Will your tax payments match what the POS, cash register or original paper reports generate? Are you correctly backing the tax out** of the round figure that you are charging the customer? The auditor will probably want to glance at your operation in action-especially the cash part. Does everything look and feel right? That means cash doesn’t go anywhere other than the register and, preferably, sales don’t take place other than at the stand or box office. Look at your operation with outside eyes.
** Call me on this if unsure of the detail here.
There are more audit strategies than this, but no worries if everything is on the up-and-up.
Final sales tax thought. Are you paying the use tax (the out-of-state version of sales tax) on items you purchase from small out-of-state vendors that do not file returns in your state? If you aren’t paying the use tax on these purchases on your monthly or quarterly sales tax return, you will be-with penalty and interest-by the end of the audit.
5. Be exact with your picture and sound. The picture should be dead-on in-focus, it should not be striking the masking by more than 1-2” and the port glass should be clean. Easy stuff. Sound can be trickier; the frequencies should be mixed correctly coming from the audio processor so that voices (especially female) are clear and crisp. Your system should be mixed so that when the voices are “right”, the sounds effects are not way too loud. This can be a challenge with action movies; the effects are meant to be loud. Getting the sound right requires a person who knows sound and has a real- time audio analyzer. RTA’s are now available from the App stores, but they still require a good sound guy. Call your local guitar shop if you don’t know a person. Ideally, each movie should be mixed according to the specs that come from the studio, but this almost never works. The specs either don’t sound right on your system and/or you don’t bother to do it. Get a good local sound guy who drops by your theater now and then and uses those two things on the side of his head.
6. Be exact in your whole operation. What does that mean? It means you run a tight ship. Your employees look neat and sharp. Your restrooms are clean. Your theaters are regularly swept and mopped. The popcorn kettle is cleaned as per the manufacturer, not when it gets so gunky it won’t turn. Your critical equipment has service numbers attached to the equipment with a label-maker. The website and phone message are always correct. Details, details, details. If you care, your employees will care.
You do this not because you are OCD, but because little things add to big things and that gives your theater a tailwind-to-profits. Do things slipshod and you will be fighting a headwind for your profits. And the best part?-unlike the movies you show, this is all within your control.
5 Mistakes To Avoid When Determining Your Online Service Fees
As you search for information about ticketing systems, you may come across some systems that give you the ability to set your own online service fees. Instead of the ticketing company setting the fees and collecting the money, you are in the driver seat. The money goes straight to you and then you, in turn, pay your ticketing company. When ticketing companies set the online fees they are typically taking a large share of that money and send you back only a small portion.
Being able to set your own fees is certainly, in our opinion, the better way to go. YOU have control. YOU get to decide what your patrons will be paying for their entertainment experience. However, there are a lot of things to consider when setting your own fees. We have been giving our clients the ability to set their own fees from day one. Over the years we have worked with many clients and potential clients on finding just the right fee structure for their organization. In our years of experience we have come up with a couple of mistakes to avoid when trying to find your perfect balance. Here they are, in no particular order:
- Your Online Fees Are Too High – Very few things frustrate a patron more than service fees that are through the roof. We’ve all been there – buying a couple of tickets and paying $10-$15 in “service fees”. Having your ticket fees too high may stop your patron in their tracks, or worse yet, complain to someone about it. We’ll talk more about this in a minute.
- Your Online Fees Are Too Low – Very few things frustrate an executive director/company president more than leaving potential revenue on the table. People have become accustomed to paying an online service fee – We pay a fee for concerts, movies, plays, etc. If your organization sees online service fees as a revenue source, don’t sell yourself short.
- Not Knowing Current Trends – Ticket pricing and fee structures are always changing. Knowing what other organizations similar to yours are doing is important. Your patrons are probably looking at other entertainment options and will see what your competitors are doing. Don’t get caught behind the times.
- Getting Spooked Into Changing – You may have a few people call and complain about your online fees. That’s okay. Now, that’s not to say that you don’t take the time to listen to your patrons, and you don’t disregard their feedback. They often have a good pulse as to what others are doing. But don’t change your fees after a couple of calls. Help them to understand the reasons behind the fees.
- Misjudging Or Not Anticipating Ticket Demand – Do you have a hot ticket? Is your show sure to sell out quickly? Is your event geared to a specific group? As you evaluate the demand for your tickets, you can more easily gauge how to set your online ticket fees. Higher demand can justify raising your fees, or slower demand may lead you to keeping them where they already are.
Other Items To Consider:
Merchant processing – Remember that in some cases you’ll need to figure your merchant processing into your fees. This is something that is often passed along to the patron as a convenience or facility fee.
Non-Profit Organization/Breakeven pricing – If you are a non-profit organization you may want to consider setting your fees so that they more closely align with your not-for-profit status. Ticketing systems that allow you to set your own fees will give you this opportunity.
Fees can be a very touchy subject. We’ve seen “investigative reports” done by news stations on why fees are so high. Don’t get caught up in hype. Choosing a ticketing system that lets you set your own fees puts YOU in control and allows you to be the master of your ticketing and fee structure and practices.
For more information click on the link below.
How to increase your theater’s bottom line up to 54%
- If you don’t accept credit cards, start accepting them immediately. The highest percentage of theaters that don’t accept cards are drive-ins and 1–2 screen houses. None of the following is putting down small theater owners that don’t accept cards. I respect you guys making a living running a small theater-it’s not easy, but cards have changed the retail payment landscape. Take a look at card acceptance with fresh eyes.
- Increase the percentage of customers that use credit cards.
This flies in the face of conventional wisdom-that credit cards cost you money. Credit cards do not cost you money, they make you money.
Independent studies show that when customers use their card they spend more money. The google search I used was:
“Do customers spend more money when using credit cards”
Here are the top three results:
|Site and Article||Range of increase in study|
|GetRichSlowly.org/blog/research reveals credit cards encourage spending||40–56%|
|Average increase in sales with card use||52%|
Concession sales increase with card acceptance for two reasons:
- Customers now have the ability to spend more $ than is in their pocket
- The “Monopoly money” feel of making a purchase on a card vs. cold cash.
It is not possible to break factors #1 and 2 apart, but the sited studies above prove the combined truth of #1 & 2.
None of the studies were funded by card companies; they would rather consumers didn’t read them in fact! The 56% from the McDonald’s study (cash sale $4.50 vs. card sale of $7.00) is probably the most valid as it applies to theaters, but let’s use the average of the six numbers or 52%. Now let’s cut that number in half since we all know that customers are annoyed with theater concession prices from the get-go.
That means concessions sales will increase 26% with card use. The figure of 26% increase at concessions, by the way, is almost exactly what I have calculated from detailed analyses of same-day card vs. cash concession receipts at numerous theater locations.
Here’s how this applies to a theater that does not currently accept cards:
This well-run, owner operated theater might take $70,000 to the bottom line.
Box sales will not increase with card acceptance, but in a fairly short time 40% of your box sales will be on cards, the US national average at theaters. Therefore:
$500,000 box sales x 40% = $200,000/year on cards
$200,000 x 2% effective card cost* = $4,000 to process box sales, this is a new expense
* Effective card rate defined below
Concession sales icrease 26% from $200,000 = $252,000
$252,000 concession sales x 40% on cards = $100,800 on cards
$100,800 x 2% effective card cost = $2,016 to process concession sales, this is a new expense
|New Expenses to process cards:|
|$6,016 total new expense|
|New Gross Profit from card acceptance|
|Box – None|
|Concession – $52,000 in new sales x 85% gross profit on concession = $44,200|
|Extra gross profit, $44,200|
|New expense, $6,016|
|Bottom line extra profit by taking cards, $38,184|
|Original bottom-line profit no cards, $70,000|
|New Bottom line profit taking cards, $108,184|
|Profit increase with cards, 54%|
Not all issues have been taken into account in the proof above. They include:
- Cost of credit card acceptance equipment
- Employee dishonesty issues
- Increase or decrease of transaction time to accept cards vs. cash
- Time involved accounting cash vs. credit cards
- Probability of a chargeback on cards vs. loss of cash
- Customer like or dislike of accepting cards and long term business consequences
- Competitive business situations with other theaters
Nearly all of the above favor credit card use. Here’s why:
- The card acceptance equipment is part of the point-of-sale system or, if you have no POS, will be supplied at little or no cost to you by your processor. Still, cash has no such expense.
- This is HUGE. Unless you are at your theater 24/7, cash IS walking out the back door. The owner of one of the ten largest chains in the country said to me, “It’s not if employees are stealing, it’s how and how much.” The COO of a six chain drive-in told me last week that sales increased 40% when they replaced management at a theater where they knew they had an employee dishonesty problem. Think about that figure of 40%? They were losing thousands of dollars per week. In our example theater if only 10% of your employees pockets one $20 bill a week, you are losing over $2,000 a year. And that is a way-low loss rate. The best estimates show loss at an all-cash business to be between 3–5%. This is not possible with credit cards.
- Transaction time to take cards is 2–3 seconds with a modern POS. Compare that to customers and employees fiddling with bills and coins.
- An accurate cash bank deposit takes time, more cash takes more time. It may only add an extra 60-90 minutes per week of yours or a trusted employee’s time, but that time could be better spent on something else.
- Card chargebacks and research of card charge questions do take time and cost money. At Diamond Ticketing with hundreds of venues doing internet ticketing, charges are reversed 1/10th of 1% of the time. In-theater sales with a charge slip and signature are charged back 1/80th of 1%. In our example theater, the loss due to chargebacks might equal $100 per year. This speaks in favor of cash, but robberies and mysterious disappearances can and do happen with cash.
The smartest theater owner I know will not let his gal walk 300 feet to the bank with more than $5,000 in cash at a time-it doesn’t take a cat burglar to see someone walking out of the theater at 11am with a bank bag and know that’s easy cash. Or how about this: when I owned my theater I drove to the bank less than a mile away. I got an important phone call on the way –the kid’s school– and did not go straight to the bank but to the school. And I left the bank bag with $30,000 in cash on the car seat unlocked in the school parking lot. Yikes. That was me, I’m sure you’ve never done something that stupid. One lost deposit could be years’ worth of card acceptance expenses.
- One adult taking two kids to the movies with snacks costs the better part of a $50 bill. Do you have a $50 bill in your pocket right now? Do you use a card to pay for things when you’re out? When a business does not accept your card are you inclined to go back to that business?
- Your competitor takes cards, but you don’t. Where do you think customers are going to go if they have a choice?
Six of the seven additional factors are in favor of cards.
One last item I must mention: A theater that has an ATM for customers to access cash from their card for a fee. The theater owner thinks, “Now I’ve got the best of both worlds (rubbing hands together like Mr. Smithers), no credit card fees and I nick the poor slob for $3 at the ATM!” This is no way to treat your customers. I would not go back to that theater and I doubt you would either. Here is a typical Google review of one of those ATM theaters:
|ONE STAR [RATING]|
|AVOID AVOID AVOID AVOID AVOID AVOID AVOID|
|I did not have time to run to the bank and planned on using my credit card, which every other movie theater I’ve ever been to would accept. Guess what! They will not take credit cards; instead they force you to use an ATM. They must be hiding cash from the IRS. The ATM machine charges $3 to withdraw cash. It is a total rip off and it is one of those non-bank ATM’s where you risk compromising your password.|
I’ve convinced you or I haven’t on card acceptance. Let’s move on.
Most of you fall into this category…
You (grudgingly) Accept Cards, but take the thinking above to its logical conclusion: If accepting cards increases profits, then accepting cards more should increase profits more. Therefore, you should not only be accepting credit cards, YOU SHOULD BE ENCOURAGING CREDIT CARD USE! How? Big sign at your Box Office:
Now you’re saying, “He’s nuts!” Well, that may be, but the math is not nuts…
|70,000 customers per year.|
|40% or 28,000 tickets are purchased with a card.|
|Average card purchase is 2.5 tickets = 11,200 card transactions.|
|You give out 11,200 new $1 off coupons.|
One quarter of the $1 off coupons you give out get redeemed, 2,800 redemptions costing you $2,800.
One half of the customers getting the $1 off coupon would have made the same purchase at the stand regardless of the coupon so you gave $1 off to 1,400 “old” customers but gained no sales. This cost you $1,400 in sales and $210 in cost of concession goods (15% concessions COG x $1,400).
$1,400 “new” coupon customers made a purchase. Average sale is $3. You made $4,200 in new sales. Gross profit on $4,200 in sales would normally be $3,570, but you gave $3 worth of product for $2 in sales. That giveaway of $1 of product on those 1,400 coupons cost you $1,400 x 15% (total sales x COG on concession) = $210. Your gross profit on the new sales is $3,570 – $210 = $3,360.
You paid card fees on the new concession sales, $4,200 x 2% = $84.
You paid card fees on the old concession sales that we will assume would all have been cash, 1,400 sales x $3/sale x .02 = $84
|Your Bottom line|
|Gross concession profit on new sales $3,360|
|Higher COG on sales you would have made regardless of the coupon $210|
|Card fees you did not incur before expense, $84 + $84 = $168|
|Extra gross profit $2,982 or 4.3%|
Note that I have not added the card fees of customers that would have paid for their tickets in cash, but that now pay with a card to get the $1 concession coupon. I’m not trying to quantify that number; I’m showing you that the $1 promotion on existing ticket credit card sales makes sense. Any folks who use their card to get the $1 coupon have every intention of going to concessions– in other words, “found” concession sales. You know… gold. Adding that factor in, my best estimate is that you would add another 4.3% to your bottom line profit for a total increase of $5,964 or 9%.
And my numbers are conservative:
- One quarter of coupons are redeemed.
- One half of the coupons redeemed would have gone to concessions anyway and then spent the exact same amount at concession, some will spend more now that they have the coupon.
- All “old” concession sales would have paid with cash.
- New concession customers with the coupon spend just $3. Remember that $3 is not a per-cap, it’s the average sale at the stand, which is more like $7–8.
- Should you make the coupon good for that day only? Hmm, let’s think about that: you want immediate use, but if they use it later there is no diff in the math. If they don’t use it later-more likely-it cost you maybe 32 cents in ticket credit card fees that there was a 40% chance you would have paid anyway, 13 cents on balance. And you can now reuse the coupons and don’t have to time-stamp them or listen to customers complain. I think anytime use is the way to go.
- Should you let customers use more than one coupon at a time? Now that’s nuts! Never allow combined discounts, God did I learn that the hard way.
What should we call this program?
It’s a simple loyalty program. Your theater is offering something other theaters don’t and enticing customers to spend that loyalty at concessions. And if a customer would have come anyway and now gets a bit of a discount, you’re still ahead of the game and have an even more loyal customer.
|* Effective % card rate =|
|Total charges for card acceptance in month|
|—————- divided by —————-|
|Total credit card sales that month|
You should shop your credit card processor every time your card contract comes up, usually every three years. Make sure you are comparing apples-to-apples. Here are three processors to try:
|Amy.Dunaway@Vantiv.com||National Association of Theater Owner’s preferred processor|
|Brooke@GetProcessPoint.com||Diamond Ticketing’s preferred processor, Process Point|
|Your Bank’s Processor|
Complete Veezi POS for under $1,000 offer continues
We are extending our $999 Veezi point-of-sale hardware/software special until May 31st. I’ve seen strong interest and answered tons of questions. To make the leap, however, takes time; Easter and Spring Break were in the mix last week, folks need to do research, others may need to get in the loop, etc. Therefore we are extending the offer 30 days. After that, summer will be here and all your efforts should be directed at making profits, not goofing around with your computer system. The detail on the April Veezi special is below.
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