Monday, September 25, 2006

Cirque du Soleil: what a business!

Yesterday evening I went to the
Alegria show of Cirque du Soleil. Impressive as a show and perhaps even
more as a business. Cirque du Soleil is one of the most effective
marketing machines I have ever seen.

First of all I must say the people who run Cirque du Soleil know something about customer experience:
from the second I drove into the parking lot to the moment I went out
of the place (Tour & Taxis, Brussels), everything went smoothly.
They got me a parking space very quickly, checked us in the tent extra
fast, delivered a fantastic show (here's my impression of the show
in French), always had smiling and helpful people to serve me as a
customer and to help me get what I needed and very efficiently got me
out of the parking lot with only minimal hassle (I have been to events
where it takes you an hour just to get out of the parking area).

Secondly, merchandising
seems to have no secrets for them. The first thing the customer sees
upon getting inside the tent is the incredible and very beautiful
collection of hats, T-shirts, shirts, DVDs, mugs and books of Cirque du
Soleil. I bought a book and the DVD of Alegria at a cost of 52€ and I
would bet Cirque du Soleil makes at least 30€ per person on top of the
revenue from tickets (just a wild guess).

Thirdly, there is clearly comething about operational excellence
in every single area of the business. I watched people work on lights,
on sound, on wlecoming guests in the main tent and of course I was
delighted with the performance of the artists (which is clearly a
central part of the operation). Precision, speed, efficiency and they
made it all look so simple! During the break I was thinking that every
single nut and bold of this huge machinery had travelled thousands of
kilometers without a glitch to be assembled in Brussels for a little
over a month, pondering at the degree of organization this performance
demands... Huge!

And of course all this translates in financial terms. Don't get me
wrong: financial performance is the by-product of all the hard work
done to create, produce, organize and deliver the experience to each
one of the 2600 spectators in the main tent. So I am not saying it's a
money machine that runs on its own, but it's probably the closest thing
I have ever seen to a money machine. So I did some research: Cirque du
Soleil has a yearly turnover of more than 500 m€ (yes that's five
hundred million Euros!). Here's an interesting article from Business
Week on this amazing business:

Download 20041213_BusinessWeek_CirqueDuSoleil.pdf

I also quickly tried to assess how much money is made when there are
actually 2600 people attending the show. Assuming the average price of
a ticket is 35€ and that on average people spend around 25€ per person
on food drinks and merchandising, the revenue of one show is over 150
k€ (yes, one hundred fifty thousand Euros). That's if the sow is
sold-out. Assuming a 66% occupancy rate (which is20060925_cds_occupancy
low considering the availability of seats as published on their site today),
each event yields 100 k€ in turnover (minimum)... In Brussels the show
is scheduled to be performed around 50 times, which means that their
turnover must be in the region of 5 million €. In fact that's not huge
considering the infrastructure required and the level of investment
that the creation of the show represents. Not bad, but not a game won
before it begins...

I really find this company stunning and a great model for anyone interested in excellence.

No comments:

Post a Comment