You don’t learn about it in art school.
I many find artists don’t bother or have ways to track metrics about their business. It is understandable. Determining what is important and then finding ways to track them is not easy.
The show gives viewers a world-class education on how to assess a company’s future prospects. The sharks ask many questions fast. The need to know the cost of manufacturing, retail and wholesale prices, and other costs. They want to know what is the cost to acquire a new customer, and the customer retention. They assess other resources and then decide if they can invest and earn a profit.
The sharks don’t always ask about lifetime customer value because startups don’t have enough history. It does come up when established businesses are pitching to them. It gives them valuable insight into the potential profitability and longevity of the company. Knowing these things will do the same for you.
First, let’s look at the two categories of those who buy art:
Successful artists sell to both types of buyers. Sometimes they use different marketing methods to find them. I believe artists need to develop as many relationships with art collectors as possible. It is a key to your success. This does not mean ignore other ways to get to market. They are also important, but should not be top priority over building a direct buying collector base.
Collectors are important because they represent potential sales of many pieces to the same person. They also are your best source for referrals to other collectors, or to opportunities that would not be open to you otherwise. A devoted fan may make introductions to people who can make a big impact on your career. You don’t get this from the casual art buyer.
Most important is the more direct buying collectors you have, the less you are reliant on third-party distribution. The bigger the pool of collectors who buy from you, the greater control you have of your career. Taking control and making more money has universal appeal.
With enough collectors, you can sell most of your original work to a small group of people. This situation is ideal because one-on-one relationships put you are in control. Nothing can happen to alter your ability to sell to them. Facebook can become a ghost town, and galleries can close. When things happen, it has zero effect on your relationships your collectors.
Over your career, collectors will buy multiple pieces from you. While no situation is the same, it is realistic to expect to sell a collector three pieces on average. They might buy two for personal use and one as a gift.
Your collectors represent a potential lifetime value in dollars spent with you. It will average out given enough time.
(Average Net Wholesale of a Sale) X (Number of Repeat Purchases) = (Lifetime Art Collector Value)
These figures will vary, but are believable and will work for illustration purposes:
$750 net wholesale per piece x three lifetime sales = $2,250 lifetime collector value.
This example does not include other intangible benefits. For example, if 5% of 100 collectors refers other buyers to you, you gain $11,250 in sales. (Five x $2250 = $11,250)
I know it is hard for artists to think about art buyers and art collectors in terms of numbers. On a personal level, it is not about numbers, but in building a career it is always about them.
Most full-time artists aim to make more than $225,000 in their careers. That is why you need to use your collectors as a base and build your third-party sales on top of it. Collectors will buffer you when other distribution channels fail. They give you the confidence and income to make the right decisions and even say no to tempting, but risky propositions.
We will talk about these three items in an upcoming post. In the meantime, you should make thinking about what you can do to work on each of these areas. Your long-term career success is dependent on how well you do.
I believe it is critical for you to track metrics that are important to making decisions about your career. You will find knowing your numbers helps you make the best decisions about how to market your career, and in many other ways as well.
Advertising and marketing are always hard costs. Being clear on your metrics helps you decide where to use your resources on customer acquisition. I want you to see how a small group of loyal buyers can protect and grow your career. If you want more help on you can build a loyal collector base, read Guerrilla Marketing for Artists: How 100 Collectors Can Bulletproof your Career.