How much money do you make per customer?  If you can’t answer this question, stop what you’re doing and go figure it out.  You can’t run your business without this key metric.

There’s a lot of talk these days about the secondary market (ticket reselling).  The only reason the secondary market exists is because tickets aren’t price correctly in the primary market.  Our industry seems to be the last to adopt modern economic principles surrounding revenue and yield management (I like the term profit management as it doesn’t matter how much money you bring in if you’re not making a profit).  The airlines were the first to leverage revenue management back in the early 80’s.  They learned to manage perishable inventory (e.g. the revenue from an empty seat can’t be recovered in the future).

So why hasn’t the ticketing industry caught on to this concept?  This question has baffled me for many years.  The only conclusion I’ve come to is that the supply chain remains disjointed and is filled with mistrust.  Unfortunately, the lack of transparency over the years has allowed everyone in the supply chain to take advantage of each other:  ticketing vendors charge fans exorbitant fees and lock ticket sellers into long-term contracts; promoters earn additional profit with hidden fees using cost plus contracts; artists require price caps on tickets and then resell their own tickets in the secondary market; venues allow fans without tickets into the venue to earn profit on food and beverages; ticket brokers grab the best seats before real fans have a chance to buy tickets, the stories go on and on…

This is all going to change soon as dynamic pricing becomes commonplace, the primary and secondary markets merge, and tools from companies like TicketBiscuit provide transparency in the marketplace.

What should you do?  Understanding your profit per customer metric is the first step.  I’m not just talking about ticketing.  How much profit (not revenue) do you make on ticketing, food and beverages, merchandise, etc. per customer.  With this information, you can then determine how to price tickets, how much to pay for talent, how much marketing you need to do, etc.  Don’t let the history of this industry dictate how we approach the future.  Just because it’s always been done this way doesn’t mean it will continue to be done the same way in the future.  The Times They Are A-Changin’…