The Value of Building Long Term Customer Relationships
Cinema Industry

The Value of Building Long Term Customer Relationships

As a cinema enthusiast and expert, you know just how fun and exciting working in this industry can be. You want your customers to share in that same excitement and enjoy every experience of visiting your establishment.

Though there is no doubt that a large percentage of the population will go to see a movie at least once in their lives, you need a lot more than just a few sales to make a profit.

Most cinema managers know that you can’t expect a full house every night. Instead of directing your focus towards acquiring one-off customers today, you should think about building strong customer relationships. Long-term customer relationships can make all the difference. Needless to mention, the lifetime value of a loyal customer can increase if you take good care of them, while one-off visits from cinema goers don’t really increase your revenue in the long-run.

Opportunities and threats to building customer relationships

Even though cinemas are considered desirable establishments in most countries of the west, it’s not all smooth sailing. You have probably already encountered certain threats to your business. 

Competition

One of the greatest challenger to the cinema industry is the rest of the entertainment industry. Going to the cinema is not the same experience as picking a restaurant. If you’re hungry and determined to eat out, you can go for Indian, Italian, Chinese, or Mediterranean. If you’re looking for entertainment outside of the house, going to the cinema is just one of your options. Other options include bowling, arcade games, concerts, and so on.

Not only do you need to convince people to watch a movie instead of seeing a show or bowling, you also need to turn them into repeat customers. A person that visits your cinema once in their whole life does nothing for you in the long-term. Your task is to find the right balance between margin optimization and upselling with every visit. 

Opportunity cost

One big obstacle you have to work with is people’s time. In today’s society, everyone is always on the clock. Most people work the majority of their days, so they only have a few hours of free time. Thus, your customers face trade-offs, like going to the cinema or having dinner with their families. You have to convince them that their limited free time is best spent at your establishment. 

You can use different tactics to make the cinema experience more wholesome and enjoyable. Advertise family movies and cartoons to families and present them as an opportunity to spend time with the family. Introduce new snacks at the concession stand that will make up for the absence of a restaurant. 

Immersive experience

One of the greatest features of the cinema experience, which is often overlooked, is the fact that for two hours, you are present in the moment. Movie goers are advised to put their phones away for the duration of the movie. Some cinemas are located underground and don’t have phone reception. Being on your phone in the cinema is regarded as rude and a waste of time. 

This feature of the cinema-going experience is very underrated, though you can use it to your advantage! The cinema offers a fully immersive experience and we’re not talking about 3D. Going to see a movie offers customers an opportunity to completely submerge themselves in the film and focus on entertainment for a few hours.

Cinema revenue optimization

When you’re thinking about increasing the revenue of your establishment, it’s easy to focus only on “filling the next seat” and making money today. You need to find the right balance between filling marginal seats and investing in long-term value creation. People often overlook the importance of the latter. Though new client acquisition is vital for a growing business, you also need to create lasting relationships with your existing customers. Everybody knows that taking care of an existing customer is, at the very least, cheaper than taking on a new one.

Statistics from June of 2019 showed that 14% of adults in the US visit the cinema one or more times a month, while 40% does so less than once a month. The lifetime value of a movie goer can reach about $3,300. In theory, if you can increase the lifetime value of a customer with 1% compounded over their lifetime, you can enjoy a 50% increase in their lifetime value (assuming their lifetime is 32 years). 

While that is a purely theoretical calculation, it shows just how small of a change can lead to a big increase in your revenue. Essentially, this should convince you to focus on the long-term and develop your customer relationships. A happy customer is guaranteed to come back. A customer that is neither happy nor unhappy is more likely to pick a different form of entertainment next time they have a day off.

Increase your customers’ lifetime value

One relatively easy way to increase the lifetime value of a customer is through sales at the concession stand. Upsell by offering to buy the large drink or popcorn only for $1 more. Making $1 more today means very little to your revenue. But if you can continue along that path for a year, you will see a large increase in the customer’s lifetime value. Similarly, if you can convince your movie goers to increase their frequency of attendance by only 3% every year, you will enjoy a 76% increase in their lifetime value. 

The smallest improvements can lead to large increases in revenue. The problem with that is that you don’t get to cash in the customer’s lifetime value as one check on the first day they visit your establishment. That’s what scares lots of managers away, and continually forces them to focus on the short-term and meeting their targets this month. If you can think ahead and commit to the long-term, you will create meaningful results over time.

A marginal gains-mindset

If you don’t believe me, then take the example of coach Dave Brailsford. In 2003, British cyclists got a new performance director in the face of Brailsford. For 100 years, the fate of British cyclists had been bad; they hadn’t won any medals and were doing poorly overall. The new performance director was committed to turning everything around in a way that didn’t seem meaningful at all. He believed that if he could improve every element that goes into riding a bike by just 1%, the Brits could finally enjoy victory.

Long story short, it worked. He made the smallest changes to everything he could think of, from redesigning the bike seat to make it more comfortable to finding the mattress that can give the athletes the best night of sleep. What do you know, 5 years later, the British cycling team began to dominate the game. Due to Brailsford’s efforts, the team had an incredibly successful decade starting in 2007.

Implementing 1% improvements seems very unattractive because they are not noticeable at first. It doesn’t matter if you can sell your customer the large popcorn instead of the medium today; you’ll make $1, which ultimately won’t make or break your revenue report. However, if you can continue to do that every day for the next 12 months, 5 years, and 15 years, you can dramatically increase your revenue.

Improve customer relationships

Not everything is about the money. Well, it is, but you can’t be too focused on the money, or else you’ll end up thinking short-term. To think long-term, you need to nurture your customer relationships. You can’t put a price on those!

Ask for feedback

Creating a friendly dynamic with your customers can be as simple as asking for feedback and taking it seriously. If your customers are not satisfied with an aspect of your service, they will be happy to know that you take their opinion seriously. Fixing these issues will help you build a stronger bond with your customers and create a more comfortable environment for them. You’d be surprised, some of these issues are easy to fix, too!

Incentivize loyalty

Give your customers a reason to come back. One thing that’s been very popular with cinemas all over the world is memberships and loyalty programs. Give your customers loyalty cards. Allocate points to their accounts for every visit and reward them with free movie tickets or refreshments from time to time. The more they go to the cinema, the more rewards they will get. In other words, being a part of the loyalty program will encourage them to visit your establishment more often.

Communicate

Find other incentives for your movie goers through open and personal communication. Perhaps your customers would like to see specific snacks at your concession stand. Maybe there is a movie genre you’ve been neglecting. All you have to do is ask!

Follow up with your customers regularly. You can send a survey to your customers after every visit. If you’ve registered that a customer hasn’t been to the cinema in a while, reach out to ask why. Maybe your movie selection is not interesting to them, or maybe they no longer live in your city. This process can be automated, which virtually takes all the work out of it. 

Adopt a personalized approach

An opera house in a European capital once heard that a couple attending the concert was there to celebrate their anniversary. To make it even more special, the opera house director hand wrote a letter for the happy couple and placed it on their seats. They were also offered a complementary glass of champagne at break. These simple gestures cost the opera house nothing and helped them gain a couple of loyal customers. 

In this day and age, even large corporations like Starbucks manage to create a personal relationship with their customers. Birthday messages can be automated and one complementary popcorn a year won’t break the bank. What it will do is show the customer that you value them, and a loyal customer will keep on giving!

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Martin Berg

Martin is the CEO of DX. With 10+ years of Cinema Ticketing experience he charts our strategy, is involved in our R&D efforts, and spends time thinking about the future of our industry.