Alexandre Martin, CEO and co-founder of Smeetz, explains why now is the perfect time for culture and leisure organisations to take another look at these innovative strategies…
The implementation of dynamic pricing strategies could generate a 15% surge in revenues for leisure and cultural organisations.
That’s the assessment from Smeetz, the data-driven ticketing and dynamic pricing software supplier for attractions and cultural venues which has recently closed a CHF1m funding round.
Switzerland-based Smeetz, which is in the process of opening a UK office, said that as well as a revenue increase, successful dynamic pricing strategies lead to capacity optimisation. Organisations can see an increase in attendance rate by 10% by spreading visits between peak and off-peak hours and days. Dynamic pricing also enhances end customer satisfaction and boosts businesses’ resources management and forecasting, the group added.
Founded in 2017, Smeetz’s vision is driven, according to CEO and co-Founder Alexandre Martin, by the fact that “unlike hotels and airlines, leisure and tourism providers do not have an integrated solution to optimise pricing during peaks and lows and suffer a significant loss of income without even realising it”.
We spoke to Smeetz’s leader Alexandre Martin to find out more about this expanding business’ plans and why culture and leisure could finally be ready to embrace the dynamic pricing boom.
TTB: Firstly, could you define dynamic pricing?
Alexandre Martin: “Dynamic pricing is an advanced pricing method that allows to continuously adjust prices in real time according to various industry-specific factors – such as demand, weather forecasts, peak hours, days of the week, time remaining before an event, website traffic, and more – thanks to simple models (manual or rule-based) or advanced ones based on artificial intelligence.”
TTB: Could you tell us how widespread dynamic pricing is in the leisure and culture sector?
AM: “Unlike hotels and airlines, dynamic pricing in the leisure and cultural industries is in its early stages. A few sectors within these industries such as ski resorts, festivals/concerts or sports events are starting to use dynamic pricing in a manual and conservative way. However, a lot of organisers do not realise they do price differentiation (not to be mistaken for dynamic pricing) by charging a different price between high and low season or weekends and weekdays, for example.
“Museums, theme parks and attractions are still cautious with the idea of changing prices in an automated way. The idea of frustrating end-customers is often the reason why organisers are unwilling to implement dynamic pricing models.
“People are starting to consider dynamic pricing to recover from the pandemic. Leisure and cultural providers need indeed to counterbalance capacity restriction and one way the speakers see that happening is by spreading visitors from peak to off-peak times by reducing the prices of the less popular time slots as well as by increasing the average spending online and onsite. The speakers imagine dynamic pricing to be fully standardised in about five years.”
The Chillon Castle Foundation, the most visited castle and historical monument in Switzerland with nearly 400,000 visitors per year, is one of Smeetz’ most high-profile customers…
TTB: How does prevalence of dynamic pricing compare in leisure/culture compare to other comparable ‘ticketed’ industries?
AM: “The most obvious comparison of what we call dynamic pricing in the leisure and cultural industries is what is known as Yield Management used in aviation and hospitality. Yield management has started in the 1980s in the airline industry after having established that the industry is driven by limited capacities, time-limited resources and varying customer willingness to pay.
“The goal was to find a way to sell the right product to the right customer at the right time for the right price in order to maximise revenue and capacity. Of course, you don’t want to fly a plane across the globe that is half empty.”
TTB: Could you tell us more about those three areas?
AM: “Let’s see how limited capacities, time-limited resources and varying customer willingness to pay impact the leisure and cultural industries.
“In terms of limited capacity, two years ago, the leisure and cultural industries did not have limited capacity or at least not as planes or hotels. Therefore, at first we imagined dynamic pricing to serve the leisure and cultural industries to just increase their revenue. But now, after the COVID-19 pandemic, they are facing the same issue regarding the limited capacities. Capacity of museums, amusement parks, attractions, and festivals is restricted by the number of visitors you can welcome at the same time.
“Next, tickets are a time limited resource as they usually have a date of use for a specific day. Due to limited capacity, cultural and leisure providers even implemented time slots during the day to better manage the number of visitors in their establishment at the same time. The concept of time limitation has amplified as people do not book for an entire day but for a few hours only. The struggle is how to deal with the less popular time slots that are half empty while the most popular ones are too much in demand?
“Finally, in terms of willingness to pay, leisure and cultural activities attract all kinds of people such as the young, the couples, the families which do not have the same budget to allocate to it. By reducing the price of the less popular time slot you may match the willingness to pay for the family with four children. At the same time, you are reassured that the people with time constraints with a higher purchasing power will not bargain the price of the most popular time slots.
“We can see that there are more similarities between the airlines, hotels, cultural and leisure industries than differences. The only major difference remains in how well dynamic pricing is established in the airlines and hotels industries whereas in the leisure and cultural industries it’s still in its early stages.”
TTB: What benefits can dynamic pricing bring to leisure and culture operators?
AM: “By implementing dynamic pricing strategies, the leisure and cultural industries can expect the following benefits
● Increase in revenue: help optimise prices and earn up to 15% extra revenue.
● Capacity optimisation: increase attendance rate by 10% by spreading visits between peak and off-peak hours and days.
● End customer satisfaction: increase customers’ satisfaction by allowing them to buy at a favourable price in advance or by offering last-minute offers.
● Resources management and forecasting: encourage customers to buy tickets 2x earlier in order to secure pre-sales and anticipate the organisation of your budget.
“Now more than ever it’s important to think of dynamic pricing as a way to recover faster in the post COVID-19 era. Especially with capacity restrictions, organisers should rethink their business and try new ways of generating revenue streams.
“The implementation of dynamic pricing strategies can help optimise capacity by spreading visitors between peak and off-peak hours, days, etc. and generate up to 20% extra revenue. The offer of dynamic packages allows providers to sell ancillary services (merchandising, F&B, etc.) online to generate revenue in advance and better plan visitor flows.”
TTB: Please tell us about your plans for the coming years, especially your expansion into the UK and beyond?
AM: “Smeetz has ambitions to become an international leader in the field of ticketing and dynamic pricing for leisure and cultural activities, starting by conquering the UK market.
“The first step was achieved in May 2021 when sealing the collaboration with The Crocky Trail, the award-winning family fun playground. The latter was closely followed by its little sister, The Habberley Trail.
In addition to this news, the post-pandemic environment brings with it exciting new opportunities for Smeetz with the appointment of a UK Country Manager. Until the end of the year, the team will travel a lot to the UK for meetings with clients and partners, conferences and trade shows, to open the office and to hire a local team there.
“Starting next year, the goal will be to put into action our expansion plan by replicating the same penetration in France, Germany, Spain, Netherlands and the rest of Europe.”
Rob Kirkwood, of The Crocky Trail, said: “With Smeetz we managed to set up our online ticketing in the record time of two weeks. The integrated marketing tools help us reach a much wider audience and track prospects during the customer journey. We linked the FB pixel to our Smeetz booking widget and we are able to know exactly what communication strategy works best and how to optimise it. Result? Our sales have gone through the roof since using Smeetz!”
TTB: Could you also give details about the closing of the convertible round and upcoming fundraising?
AM: “Smeetz recently closed its convertible round of CHF1.0m that accelerated operations before the next financing round. Now the goal is to raise a Series A of CHF4.5m to be able to push the expansion forward and to replicate our entry in the UK market in the rest of Europe starting 2022.
“We are looking for venture capitals that can help us grow our sales and marketing, customer success and development teams to achieve the following objectives:
● Acquire new customers
● Enter new markets
● Keep customer satisfaction high
● Stay on top of innovation in terms of software development
● Continuously try and adopt new technologies
Smeetz is a sponsor of TheTicketingBusiness Forum, the world’s No.1 B2B ticketing business meeting, which will take place from December 2-3, 2021 at Emirates Old Trafford, Manchester. Contact Smeetz here.
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