Can you imagine: you have complete control over Paradiso and can now exactly determine how the Amsterdam pop mecca is run. What would you do? I was posed this question a while ago by Paradiso Labs. Read on to discover my answer to this question.
Many organisations are concerned about the effects of the new privacy legislation. The General Data Protection Regulation (GDPR) makes it mandatory for organisations to operate with more accuracy from May 2018 with the data they store from citizens (such as customers and followers). This legislation came after social unrest about data use and storage.
The fact that the new data legislation has a huge impact on the daily practice of data for clubs and pop venues is now indisputable. Do we already know all the implications? Hell no! Just as people used to believe that cows would produce sour milk and horses would become stressed due to the introduction of the steam train. Currently, the fear of data usage resembles the fear of the steam train.
You strive for a method to collect data that fits well within the environment of your organisation. Multiple options to store raw data directly from your website and social media channels, but also from external data sources, must be assessed. However, technology is not the point of departure for data usage. The people that use the data and the objectives that are set by way of a framework are the point of departure.
I am convinced that each organisation will be assisted by the (smart) use of data. And that each organisation can shape their digital transformation with the framework. That is why I shared eight tips how Paradiso — or clubs and pop venues in general — can become more digital and increasingly efficient, can keep using their data and leave the competition in the dust.
1 | Design your club for economy 4.0
There is a major difference between what companies imagine with the current digital revolution and the actual impact of the digital innovations which existed in recent years. You see the advent of faster, smarter devices, where software often takes on the role of hardware. For example, you have an app to make photos, instead of a real camera. That is the digital revolution at surface level: decreasing sales of alarm clocks and cameras.
What happens below the surface is far more important. Thanks to the advent of smartphones and social media, among others, brands, artists and organisations develop relationships with fans and customers. For example, they decide to like or follow a page on Facebook, because it is a brand which:
- Provides a certain need in content;
- Answers questions quickly and fully (for example via chatbots);
- Is likeable, or loved.
Now, I hear you saying: liking people or following certain pages — so what? As an organisation, you cannot underestimate this relationship with potential fans and customers. It is the most important predictor of the growth (or shrinkage) of operating capital. Digital assets are inside that virtual, social network and in the various internal and external systems. These assets are made up of the context of data, where marketing, communication and sales processes can be optimised.
Because of the importance of this virtual capital, we even speak of a relationship economy these days. Or the economy 4.0. I would therefore design Paradiso based on the characteristics of this new economy. This starts with the deployment of the Business Acceleration Framework and the Business Acceleration Plan. The latter includes the entire digital transformation of an organisation and allows the framework to take off. Below you will find the steps that you will take before you can embark on this plan that will let your business take off.
2 | Set your club 5 objectives
Handy tools and useable insights will not have any impact if you do not link any objectives to them. After all: what do the tools or insights serve? Therefore, a real digital vision commences with setting objectives for the digital transformation. Which objectives should clubs set themselves?
- Brand Equity (Increasing the brand value) — This is the financial value which is in the brand. It is generally assumed that the brand value corresponds with the cash value of future cash flows that are allocated to the brand via relationships with fans or customers. This objective shows why relationships with fans and customers are so important;
- Brand Reputation Performance (Improving the brand reputation) — This is the approach of the marketing (and the most important milestones), that, if you should be able to summarise in a graphic overview that would fit on a single A4. From this overview appears the rhythm of the communication of a club. This rhythm (the digital heartbeat) is hugely important and has a directly impact on the Brand Equity.
- Marketing Efficiency (Optimising the efforts and expenses) — How efficient is your marketing? And do you still deploy your marketing in a traditional manner (inefficient) or digitally (where your target group is)? As a club, give data a context, so that you can deploy your marketing budgets in a smarter way;
- Business Acceleration (Accelerating the primary revenue models) — New technologies make it possible to accelerate existing revenue models. Clubs will have to centralise data, train teams and optimise their technological infrastructure;
- Business Activation (Finding new secondary revenue models) — In addition to the optimisation of existing business models, as a club you also wish to develop new revenue models. Consider a mature eCommerce department or the digital exploitation of (video) content.
When you as a club have determined five objectives, you can commence taking the 9 steps of the Business Acceleration Plan.
3 | Take the nine steps of the Business Acceleration Plan
Before you can commence, you must first take the nine steps from the previous graphic. These will prepare your club to shape your digital transformation and increase your company value. These nine steps must be taken by each club if they wish to become a digital organisation.
1. Digital mindset
It is of major importance to make a digital mindset in your club leading. For example, you have to attract other personnel, because everyone (in the office, not necessarily behind the bar) requires digital skills. There is no digital department anymore: every department has people with digital skills. Everyone must have a digital mindset, if you want to use the framework.
2. Translate your Business Model Canvas
The Business Model Canvas (A. Osterwalder/Y. Peigner, 2010) helps strategic managers and start-ups create a new business model or assess an existing model. This canvas is also essential for clubs. It makes four key areas transparent: customers, offer, infrastructure and financial viability. The canvas serves as the foundation.
3. Implement the Business Acceleration Framework
The data from the Business Model Canvas only really comes into its own in the framework. This leads to specific, useable insights that will bring Paradiso further. This is why we have the business intelligence that is required for creating content, starting and optimising the sales, marketing, communication and service process. This makes it clear which input gives which output.
4. Determine the Business Acceleration Maturity
Changes are often met with resistance. That is understandable. Some of the colleagues are scared, for instance, that new technologies cost much time and effort. This is not the case, in the long term, with the framework. When a club reaches Business Acceleration Maturity, digital maturity, then you see the effect of marketing or sales efforts. That is why you strive for that maturity and you predetermine when this phase is reached. This makes it more transparent for colleagues why the efforts to reach the status of digital maturity are required.
5. Define your launch platform
Ultimately, as a club you want to have excellent execution and analysis. This is established in the framework, where data is analysed that comes in via a Data Management Platform. Data is processed in this platform in various forms, but is also stored, transformed and extracted. This comes directly from the Data Sources Assessment. If I was Paradiso I would want to know where my data comes from. And whether the data is legally useable and complies with the new privacy legislation. After all: without knowing your data landscape, you are lost as a pop venue.
6. Determine your interfaces and channels
Determining (and designing) interfaces and channels is one of the first practical applications. For instance, consider channels as partnerships, publishing content via sites and apps, but also the use of digital advertisements. If you fill these channels, as Paradiso you can determine whether the current use of resources is profitable.
7. Lead your club through the framework
The framework has a significant amount of measurements that you have to enter. Consider the number of returning customers (the retention), the reach and the interaction of the publication of content, the extent to which you are informed of customer profiles, etc. These parameters can be found below, with more explanation. Load all data in the different basic objectives, with which you lead your club through the framework.
8. Design your dashboards
If you wish to know if your efforts make sense, then it is essential to be able to compare today’s results with the past. You can do this by designing dashboards, giving you control over the way in which your club performs. The data is collected and processed here, which leads to valuable insights.
The 12 basic analyses (more on this later) help here, because they allow you to compare in real-time which efforts lead to which results and to what extent certain investments make sense. Design the basic analyses of your club according to the below image. This will provide you with insight into the five objectives that clubs must set in order to undergo a digital transformation.
9. Monitor the results
Monitoring the results of the basic analyses is of utmost importance. You run the risk that as a club you have been investing in something for some time which does not lead to specific results. That is why it is important to measure the results of experiments. Measuring is knowing, and with a monitor you can measure, and therefore discover, more. Maybe the posters for events that you hang up are simply not worth it. It is better to discover this today rather than tomorrow.
4 | Analyse your club on 12 points
Before clubs and pop venues can maintain the speed of the digital world and can accelerate with regards to the competition, they need to withstand the 12 analyses below. The first four analyses take place in the first two to four weeks, with the other analyses taking place between week four and 12. Obviously, it can proceed faster if you invest more time into it. However, this is a realistic planning. The 12 analyses are:
1. Brand Equity
The digital assets of a club. You calculate this value through assessing the profiles that you have and to scan them if they are legally usable. Profiles are of more value if you have the different characteristics, such as the first name, surname, e-mail addresses, addresses, interests, etc. Clubs strive for complete (identified) profiles: after all, these ensure larger cash flows and a higher Brand Equity.
2. Develop a Digital Heartbeat
You strive to find a rhythm in the level in which you post on social media as a club. This rhythm is your digital heartbeat. Moreover: without a digital heartbeat, you do not have to worry about the content of your messages. In principle, you’d already be dead digitally. Have we developed a digital heartbeat? Then I would focus on the actual content with the content impact model.
3. Perform a marketing scan
Before we commence promotion of a certain event in Paradiso, we will first consider our post rhythm (the digital heartbeat). We always ask ourselves the following questions: does this campaign fit our rhythm? And: will we succeed in filling the sales funnel on the basis of our plan? If we do not, you cannot measure the objectives and will set unrealistic targets. This renders the marketing campaign inefficient or unlikely to succeed. That is why we first carry out a Marketing plan Scan.
4. Sales curve
Each sales curve is a rising line of ‘sales’. Consider for example the ticket sales for a concert. By comparing historical data, you discover what such a sales curve generally looks like and how far in advance people purchase tickets for a concert. By discovering the curve, we do not deploy any marketing if no one is ready to buy a ticket. By linking marketing to the curve, it becomes more efficient.
5. AARRR Funnel
The AARRR model allows clubs to convert their followers into physical visitors or customers. Using Dave McClure´s AARRR model you gain control over the digital ecosystem of your club. The five layers/metrics consist of the different data sources from the different channels. These are: acquisition, activation, retention, revenue (income) and referral. I would assess these five layers at Paradiso, so that we see the results of the marketing efforts, where the bottlenecks are in this funnel and where optimisation is needed.
IPM stands for interaction per thousand fans. This allows you to compare pages or channels with each other. The IPM formula is: ((Number of comments + likes) / number of posts)) / #fans) = IPM. I would calculate how Paradiso performs when compared to the rest of the ecosystem, by developing a digital heartbeat and by discovering how it interacts with others in the digital ecosystem. This results in the so-called connection rate, which expresses how many likes, comments, shares, etc. Paradiso messages receive.
The Benchmark focuses on the number of followers and the online interaction of Paradiso and compares this to the level in which this is present with the competition. After all, each club or pop podium strives for the highest position on Facebook and Google. That is why we compare the digital performance of Paradiso with that of its competitors.
8. Expenditure over time
With the sales curve (the regular sales peaks) there are usually marketing expenses which have driven those sales. By comparing the investments in marketing of Paradiso against the results, you arrive at an Expenditure over time Scan. This allows us to discover which resources and which timing offers which results.
The ARPU is the average revenue per customer (also called: the average revenue per user). This parameter has a direct influence on the Brand Equity. That is why at Paradiso we assess how the sales curve has progressed in recent times and we subsequently look for the retention. Here we ensure that customers or visitors return, to increase the revenue. In addition, we wish to expand the life cycle of customers (the CLV), so that we can improve the brand equity in three ways. This scan also allows us to utilise the AARRR better and is therefore essential to every club.
10. Target group
It is important for each club to assess the demographics (target group), so that it becomes clear which conversation you wish to have with which target group. This also contributes to an optimal ARPU of a club. One can glean this data from the customer database, website analytics and social media analytics of your club.
This scan is about the question: will my visitors return? A nice practical example: if you organise a certain party every week and more people attend every week, does that mean things are going well with that party? It seems that way. But if visitors do not return, there is no basis for growth. That is why the Retention Scan is one of the first analyses that you as a club want to carry out and is an important growth matrix.
12. Customer Lifetime Value
The Customer Lifetime Value (abbreviated: CLV) is a calculation of the net revenue that a customer generates when they are a customer: the revenue of the first to the last purchase. Whatever value your customer has can be determined by calculating how much he or she spends, how often they return and how long they remain a customer. By optimising the CLV, the Brand Equity of a club rises and is therefore essential for every club.
5 | Apply the analyses of the database in practice
When you have completed the above analyses, you can get to work with practical applications of the data that you have gathered. Consider for example an analysis of the profiles of your customers. If you are aware which artists the visitors of Paradiso wish to see, then you can adjust the programming to this. This can of course also be artists that you have not booked before in Paradiso. This allows you to apply the data of the club specifically to serve your commercial objectives. In this way the Business Acceleration Framework contributes to the Brand Equity.
6 | Inspiring case: Armin van Buuren
If we are discussing the reach of artists, then we should also mention Armin van Buuren and the Johan Cruijff Arena. The DJ is proof that digital fans can actually fill a stadium. By first mobilising his digital fanbase, he was able to get approximately 75,000 visitors to the Arena in Amsterdam.
That is why Paradiso — or any other club — would do well to research the online presence of artists and let those affect the programming. As long as the followers of the artist or band are not bots, they give a good impression of the number of possible visitors.
7 | Another application: optimising the catering industry
Another way in which you as a club or pop podium can use data to increase your turnover or revenue is by optimising your catering provisions. You do this by linking (co-)profiles of visitors to their spending. From this it transpires that you should sell organic snacks, cans of Schultenbräu or red wine, because your visitors want this. Thanks to linking the (online) profiles and their expenditure to each other, it quickly becomes clear where the commercial opportunities lie for your establishment.
8 | Restructuring processes and systems
If we make the above insights more specific for Paradiso, then the club must make choices. These are choices that sometimes hurt and may not be easy for those involved. The processes and systems will be reformed and restructured. In practice this means the following:
- New agreements will have to be made with the ticket provider. This makes it possible to gain insight into the profiles of ticket buyers, so that a clear communication and marketing strategy can be formulated for it;
- A data ecosystem will be created which connects to the launch platform, the Business Acceleration Framework. Here, the data will really come to life for the club;
- Reviews will take place, where the collaboration agreements with software suppliers are discussed and revised where necessary;
All these aspects will contribute to a digitally-driven organisation. In this new version of Paradiso all contact will proceed via digital channels, all being well. This occurs on the one hand because the club (after all these steps) finds its way in the business ecosystem that is digital.
But also ensures that efforts become measurable and marketing euros are spent in a smarter way, existing business models can be optimised and new revenue models exist. Not only through locations on Leidseplein and Tolhuisplein, but also by becoming a digital club, Paradiso unquestionably has an advantage over other pop venues and clubs.
The use of information will be increasingly integrated in the daily business activities to be able to make better decisions and look for new revenue models. This is only possible when analyses are carried out in a simple and natural way and are not limited by technology.
Technology is not the point of departure for data usage. The people that use the data and the objectives that are set by way of a framework (read: the Business Acceleration Framework) are the point of departure. You will have to look for a method to collect data which suits the environment of your organisation. There are multiple options to store raw data directly from your website and social media channels, but also from external data sources. The best method varies per organisation. External platforms are often suitable, but sometimes an own created solution will suffice.
Bear one thing in mind in your search: the match with the existing infrastructure is the factor that is most important. Often an infrastructure has a certain power to process and store data. In such a case you can expand your infrastructure in a relatively easily way. In addition, the question arises whether you want to host data with your infrastructure, or whether you make the correct connection in the cloud. The latter is preferred, after all, you want to access the information at any time and from any location.
Most sensible route
Use the data and analysis tools that you already have in house and add, step by step, what is missing in the framework. The adoption will be increased by making use of an existing environment. Building a completely new infrastructure is often unnecessary and excessive. Investing in a simple data warehouse, the place where all data is stored, in the cloud and data mining, the conversion into usable data for reports, dashboards and publishing tools which match the framework is the only correct and most sensible route.
The use of data for marketing, communication and/or sales purposes has different options. The data required for this comes from the ecosystem of the club and further afield. When using characteristics of fans or customers for marketing, communication, and/or sales activities you must do the following with the data: validate, enrich, profile, segment, match, localise and decide. This creates the correct context and significantly increases the chance of relevance, reach, interaction and transaction.
When you have an image of the profile of your fans and customers, you can embark on meaningful interactions and connections and become relevant (again). The challenge is discovering the correct context from the framework using the automated analyses. When this is done properly, irritation among fans and customers is avoided, after all, irritations can reduce the value of an interaction and not do justice to the relevant value.
Chance of evaporation
Many companies are concerned about the effects of the new privacy legislation. The so-called General Data Protection Regulation (GDPR) makes it mandatory for organisations from May 2018 to proceed more conscientiously with the data they store from citizens (such as applicants, customers and followers). What does the GDPR mean for clubs and pop venues that use data to promptly make adjustments or develop new business models? What does the legislation mean for the digital assets of an organisation?
The GDPR highlights the importance of a good, sustainable relationship with followers, fans and customers. From May 2018 they can be removed even quicker from the systems of organisations, which further challenges organisations to be relevant in their lives. If you do not focus on this relationship, the GDPR can have dramatic consequences for your business. An organisation can lose their entire digital assets that it has invested in during its existence in one fell swoop. It can literally evaporate. As an organisation you have to comply with the GDPR to secure your business model and digital assets in the long term. Perform a scan of your conditions.
The database of the club or pop podium is not a static fact, but actually a dynamic environment. It is an environment which requires maintenance and one which can be increasingly optimised. Working with data does requires an organisational transformation into an analytical company, where data is considered an asset and analysis a distinctive competency. The design of the processes with regards to the framework and choosing the right people within the organisation to constantly improve this competency, is the key to success here.
- This post is a pre-read of Part 3 — Chapter 10 of my new book ‘Digital Assets’ the translation of the Dutch publication ‘Digitaal Vermogen’.
- Also read the publication ‘EDM and the Digital Domain’