Your Collector List
In this episode of the Art Business Morning Show, Patrick dives into the crucial importance of a collector list for artists and photographers. He explains how this list can significantly enhance the value of an art business and outlines strategies for building and maintaining it. Drawing from a personal anecdote in the pool business, he highlights the valuation process and compares it to developing a collector base in the art world. Through vivid examples and real-life case studies, Patrick demonstrates how treating collectors like VIPs can result in substantial business gains. He emphasizes that a well-cared-for collector list is the most valuable asset for any art business.
Podcast Transcribe
Patrick Shanahan: Coming up on today's edition of the Art Business Morning Show. We're talking about your collector list—specifically, what is it? What can it do? How do you treat it and why is it the most important asset that your art business can have? Allow me to jettison the earbuds, whatever those things are, headphones, those things.
All right, welcome to another edition of the Art Business Morning Show that will put you on the path to a six-figure-a-year-plus art business. A while back, a few years ago, I had a conversation with a pool guy. And specifically, he was telling me a story about how the pool business—what's up Jonah—about how the pool business is valued.
How to go about the valuation of a pool business, meaning you've got a pool business and I want to buy your pool business, how would you possibly put a price on that? And this was a mega fascinating conversation on a number of different levels. Number one, I realized in my local area, I live in Southern California, so there are a lot of pools.
There was a mini version of pool, route M&A—M&A being mergers and acquisitions—going on. So pool businesses, in some cases, were buying and selling routes to the big guys. Big guys were acquiring little guys, people were retiring and they actually had something to sell at the end of it because there's a value to the routes that they had.
Not only did I learn that, but I learned that there were actually brokers within the pool business, within the pool route business, that you could sort of contract with. They would help you value and sell your pool route. Which is sort of crazy. Like, you don't necessarily think of a pool business like that.
You don't necessarily think it has value. And so he kind of broke down for me how they valued the pool business. So it's like, how many pools does the business have under contract? How many an average employee can do in a day? The value of the pool route over years and the multiples that would ultimately lend you to the purchase price of the business.
So it was like the number of routes times some period of like two years equals the valuation of the business. It was something like that with some other little factors put in there. And so it was just a fascinating conversation. And I thought about that today as I was contemplating this episode.
And it's like, okay, let's have that same conversation through an art or photography business. If I asked you the question, how does one go about valuing, okay, placing a value on your art, your photography business? Stated yet another way, I just showed up at your door, knocked on the door and said I am here to buy your art or photography business.
How would you come up with what a number is that that business is actually worth? And that's a fascinating question, right? How would you respond to it? And it's sort of interesting in its own ways. Like artists and photographers and their corresponding businesses are not sold as often, certainly, probably not as often as pool routes of all things.
And, you know, also you need to be an artist or photographer that's continually producing to probably have a serious value on it. But let's play with the thought exercise anyway. And if I went about contemplating how that might look, it's like, okay, I suppose you'd have to place a value on the work and the inventory, how much work on average is being created by the artist in a particular year? What the annual sales are, what the percentage increase in purchase price of those works have been over, say, the last three to five years?
And at that point, I would imagine, you emerge with some sort of equation where you plug those variables in and it spits out some sort of value of what that business is. And I would say I'm sure that that works for most people, but I would say that calculation is wrong because it's missing something significantly important.
It is wrong because it does not place a value on the most important asset an art or photography business can have—its collector list. It’s the collector list. It is the single most valuable thing—blanket statement—that an art or photography business can have, full stop. And I'll circle back towards the end of the episode on the valuation part. But let me first define the collector list.
So what is a collector list exactly? A collector list essentially is a list of buyers that have purchased works from the artist or photographer over the years. That's the succinct definition. I would say for mature artists and photographers, that list elevates to a list of folks that have bought multiple pieces of work over the years. And for those that are just starting out, you have an email list with 10 people on it—that's your collector list. And then obviously everything in between, but that's essentially the collector list.
But let me peel this onion a bit. That is a collector list by sort of talking about it historically, I would say, and then in personal practice. And then let me explain sort of why all collector lists are not created equal. Historically, I always talk about this book from Wyland. I'm going to show it on Instagram. I'm going to show it on Facebook. On Instagram, you're not going to see this, but I actually have it pulled up. Oh, wow, look at this circus you look on here. I talk about this guy's book all the time. Wyland the whale guy, totally amazing. And you can buy this book from his website. Do yourself a favor and go and buy it.
It's $22, it's short. You can only get it from his website. Don't be a starving artist. Like, literally amazing lead. Wyland the whale guy. And I talk about him all the time. I got to get my little setup going here, hold on, make sure this is all looking right. Podcast becomes a little bit more difficult when you're streaming in 27 places at once.
Let me get back to my notes. So he has in this book a statement about the collector list. And I read this like some years ago and again, in his book, I believe he defines a collector or someone that has bought upwards of seven to eight pieces of art over the course of a lifetime. So yeah, you acquire a collector, you market to a collector. Over the course of your art-selling life to this particular collector, you're going to sell upwards of eight pieces.
You keep getting better, your prices keep going up. The collector just goes along for the ride with you. And so historically, and also in that book, which is amazing, he talks about he gives you some sort of tradecraft and tactical advice on how important it is to treat these folks like VIPs and what that might look like.
I don't want to ruin the book for you, so I'm not going to do that. That's historically. Let me tell you about currently. We've been working very closely with our customers here at Art Storefronts going on five years and plus now. Now initially, when we were a young company, it was just essentially me and one other guy, my marketing team Taylor, and we would pick customers and we'd run case studies with them.
Anyone that's been listening to this podcast for any period of time knows who these customers are. We kept using the same ones over and over again because we had access to everything and it was just easier to do. They trusted us. And so, as things and time have matured, the marketing team has grown at Art Storefronts. And now, instead of just one-off case studies, we're being way more proactive in the amount of help that we're giving customers.
So my point in telling you that is that we're getting to run more and more experiments and more and more case studies. What started as literally myself and Taylor on one-off case studies here or there on a whim, things that we wanted tested, has morphed into like, I don't even know. We had like 50 experiments running this month in various different capacities and various different things. So the point is we're learning, we're learning, and we're not just learning because like, oh, go do one case study and then teach everybody how to do it. No, figuring something out.
We test it, it either works or it doesn't. If it doesn't, we don't do it again. If it works, then we go do it again to make sure it wasn't a fluke on the one person that it did work. And then after we've done it twice, we go and do it 25 times. And this is what we're doing at the live art shows right now. We ran six of them this week. We have another 10 running next week. The weeks previous, there were a bunch running because you prove a thing is working, then you go and run it a whole bunch of times and you pick up all the tradecraft to get better and better and better.
So when I steer it back to the collector list, you know, what started out as initial experiments with collector lists has literally morphed into standard operating practice principles at Art Storefronts. Like in the past, if we used to tell you to run a sale for Mother's Day, Father's Day, Black Friday, run a live art show, you're having a gallery opening, you're going to release a new series and we would organize collectively what should be the series of marketing techniques that go in that.
Now one of the most important things in every single one of those marketing events that we encourage folks to do is the collector list. How are we treating the collector list? How are they getting notified? How are they getting first dibs? How are they being made to feel like they're staying at a Four Seasons? And it is fundamentally changing people's businesses. It is absolutely staggering by which I put staggering in the upper echelons on how incredible of an asset this is to a business, full stop.
Treating your collector list like
royalty fundamentally is the most important thing I've seen in our business, full stop. In our business that is selling direct, anyway. You've got to be selling direct. So what ends up happening is in each and every one of these marketing events that I mentioned, running a sale, let's just say, you used to run a sale and you would announce the sale and you'd email your list and you'd make some posts and maybe you'd run some ads.
And then maybe you'd do some hand-to-hand combat during the sale, which means following up with people individually and then you'd extend the deal sales over. Now it's all of that. But the first step of the sale is you notify your collector list before anyone else gets access to the sale and say, "Hey, collector list, hey VIPs, so glad to have you at the Four Seasons again. You want bed and breakfast? You want a late checkout? And by the way, here's all the works that are going to be in this sale. I wanted you to see them first. Thank you so much for the patronage." And what happens is some large percentage, some small to large percentage, and let's just keep the math really, really simple. Let's say whatever you're releasing has a hundred pieces in it. The collector list, if treated right, if you're cultivating one, will buy some percentage of your sale of your new series before the public even gets to see it.
Even gets to see it. So again, going back to the simple math, let's say you release a series or you're having a sale, there are a hundred pieces for sale, you tell the collectors about it first and the collectors buy 20 of the hundred pieces. Okay, well, your collector list just bought 20% of your entire sale before the public even sees it.
Before the public even sees it. It is a phenomenal, phenomenal thing. And whereas I validated this early on with customers and like the ones you choose, now I'm starting to see it in the twenties, thirties, forties, fifties. And in some cases, the percentages are above 50 and 60%, which is staggering because these people were smart.
They were building a collector list their entire career. And they release a new series with a hundred pieces in it and 60% of it's bought before the public even sees it, phenomenal. In many cases, I've seen it represent five and six-figure events, just the collectors, it's that big of a deal. But there's a caveat in that.
Not all collector lists are treated or valued equally. The way to think about it is like buying a boat. I was on a boat this weekend, it was glorious, out doing a harbor cruise, amazing. Let's just think about it sort of like buying a boat, your collector list. There are some boats that are sitting in the harbor that have a detailed crew that comes out every month, they're waxing, polishing, cleaning the teak, wiping everything down, pressure washing the covers, the whole deal.
They're lubricating the motors and running the motors and flushing them and filling, making sure the tanks are filled and putting WD-40 in the hinges. They're taking care of those boats. Those boats in the harbor are a really good collector list. But there's others, other boats in the harbor, hope this one's not yours.
And they are technically floating, but the once beautiful blue canvas cover is so encrusted with bird grit that it's completely white and there's probably two gross tons of elephant seals sitting on the swim deck. And the entire boat is listing at like a 25-degree angle. There are some boats, some collector lists that are in really bad shape because they haven't been taken care of.
And you know, there are everything in between. The point is, a good collector list is essentially defined as the list that is taken care of. That's the plant that's been given water. It is the list, the boat, that is when work has been put into. And as I continue to talk to hundreds of artists and photographers, week in, week out, from all walks of life, all backgrounds, all colors, all media types, mixed media, jewelry.
I mean everything imaginable. I feel like I've got a really, really good lead on how you folks have been taking care of your boats, of how you've been taking care of your collector lists. Now, sadly, one of the most depressing things in all of this is I talk week in and week out to people in their late forties, fifties, sixties, seventies, eighties, probably only two a month in their nineties, but even two a month in their nineties.
And those folks never understood the business model. And I'm not blaming them. The world was a different place when they came up, but they never understood the business model of selling direct. And the whole reason you sell direct, yes, you don't want to pay commissions to other people, but the whole reason you sell direct is because you maintain the information on your customers.
You have the ability to turn those customers into collectors. You have the ability to market to those collectors in perpetuity. And so I see, oh, it's depressing. I mean, I talk to so many that have just never had a list. They've never kept the list. And again, you can't blame them. They were selling in galleries, selling in hotels.
They were doing the show circuit. They didn't understand that they needed to keep these people in the database and market to them. And I totally understand that, but it's deeply depressing because they're at that age and they don't have a collector list. And it's like, oh my gosh.
It's like, oh, it just, it breaks my heart. So some people don't even have one at all, and that's terrible. They don't even have a boat. They can not even have a boat in the harbor at all. Many others have a boat, but it's a small dinghy. Totally okay. Many others have a boat that's apparently floating, but that's okay.
At least you've got a boat. And you know, even the ones that have a nice boat, a nice collector list, at times they're not taking care of it as much as they should be. And it's an awesome thing because boy, it's an opportunity, boy, you have an incredible opportunity. I mean, an amazing opportunity.
So let's talk more specifically and we'll give it some teeth with some examples on what a collector list can do, right. And more importantly, what you should think about it. And I used to come up with a new analogy where I was making notes that I think is way better. But I used to say your collector list is the 401k of your business.
It's the pension of your business. It's the one that's going to pay you forever without the early withdrawal penalties. You don't have to start taking it when you're 65. It's paying now. But I actually, I thought of a much better analogy. All of you guys, artists and photographers, all of you, you're all just essentially commissioned sales folks.
That's what you are at the end of the day. You are commissioned salespeople. If you sell, then guess what? You earn a commission. You get paid because you sold the work. Your collector list is like you'd being that commission salesperson, except you've got a base salary. You've got a base salary for just showing up.
Before you were commissioned only, you were grinding, you were making sales. When you did, you had a good year. When you didn't, you made nothing. Now you've got a base salary built in. Now you've got 60K, a hundred K starting before you can get up out of bed in the morning. You walk out your front door, go and get a coffee, walk the dog, you've got a base salary.
That is what your collector list is. For a very minimal amount of effort in context, you have the base salary in your business. I mean, it is staggering. It is staggering to contemplate. Now I realize that in terms of episodes for this podcast and more teachings that I need to do on the workshops and everything else, I need to get more into the tactical of how you make these people feel like they're staying at the Four Seasons.
How you make them feel like they're VIPs. That they are getting in with the velvet ropes before anyone else. That they're not waiting in line. And I will do that because I think it's so important. But let me just start with a couple of mainstays that are like actual examples. And I'll give you three.
Now, great friend of the pod, Matthew Locke. I've been on a whole bunch of case studies with him. Pre-COVID, he had a gallery show. And I might even have told this story in the podcast before and I'll tell it again. It's a good one. He had a gallery show and full dog and pony in a nice gallery in Toronto, in Canada, that's where he's from.
Very successful show, sold over a hundred thousand dollars Canadian in total pieces of this particular show. But I was working with him to make a playbook for how to have a gallery show ahead of time. And what we did is every one of his collectors, they got their own webpage, a hidden webpage on his site. And every one of those collectors got a personalized video that was hosted on YouTube that he made talking to this person.
"Hey, Steve, how you doing? Totally want to just thank you again as always for your patronage over the years. You've been incredible to me. I hope you and Susan are having a great time. I saw that vacation to the Maldives. My goodness, that water looks great. I want to go next time. By the way, having this big gallery show, love to have you come.
If you can't, totally understand that. And I just wanted you to have first crack, no pressure. So you could see it before anyone else. I respect and value you as a collector. And I want
you to let you know that I'm able to create and have a comfortable life as a result of your patronage," something along those lines.
That's pretty good for the moment, but that's what he sent. And he really, he gave these folks the VIP treatment and guess what? His collectors ended up buying up, I think about 25% of the show, which in his case, the pieces were starting at 5K and the pieces went up to 30K.
The fact that 25% of his show was bought before the show even started was pretty significant. And in addition to that, in the VIP treatment that he doled out, he also earned a commission for one of his celebrity collectors. A name all of you guys know, a very famous movie star. And that was a massive, massive, massive deal.
His collectors ended up buying up, I think about 25% of the show, which in his case, the pieces were starting at 5K and the pieces went up to 30K. The fact that 25% of his show was bought before the show even started was pretty significant. And in addition to that, in the VIP treatment that he doled out, he also earned a commission for one of his celebrity collectors. A name all of you guys know, a very famous movie star. And that was a massive, massive, massive deal.
So anyway, the point is, okay, he sold 25% of the show. Then he had one of his celebrity collectors that loved this VIP treatment. Say, "Matthew, I'm not really feeling any of the pieces in this show, but what I want to do now is I want to commission you for a piece." And what did that celebrity collector do? That celebrity collector showed the piece all over Facebook and Instagram, and the guy's got 60 million followers on Instagram. So what do you think that did? All because Matthew took care of his boat.
All because he was detailing it and making sure and resurfacing the teak and spraying the bird crap off the canvas covers. You see that result and it's just phenomenal, phenomenal. In addition to that, contemplate the psychology.
Contemplate the psychology of the fact that he sent all of these personalized videos to these folks and treated them like VIPs. Then what happens? It is dog and pony show night. Dog and pony show night means there's literally a line outside the gallery to get in.
There were velvet ropes. There were bartenders, there was music, there was performance art going on. And the very first people that got into that show, a whole bunch of them walked in and saw little red sold dots placed here, there, and everywhere on some of the works that were sold already. Do you understand the psychology of that? When you walk into a show and you were one of the first ones to get in there and you want to see some work and a whole bunch of it's already gone, you all understand that psychology, you know what it is.
You ever flown coach before? I have plenty. Who boards the plane first? It isn't you, it isn't me. It's first class. And then as soon as we all get on there, what happens? The little curtain closes. You're not coming in to use this bathroom. You're not going to see who's in here. And what do we all do? We all secretly want to be up there in first class, don't we? We all want to be set up there.
We want to see who's up there. Who are these people? Is there anybody famous? That's the type of psychology. And contemplate all the collectors that were walking into that show and seeing that all of this art was already bought, and they were maybe first-time collectors and they're like, "Oh my gosh, this guy's up and coming, this guy sold 25% of the show."
And we haven't even been able to walk in yet. This seems like something I should buy. This seems like something that's going to appreciate. And it's just so, so powerful, the psychological effects that that happens. All of that created as a result of taking care of his collector list, of treating his collector list like VIPs, it's remarkable.
Another great friend of the pod, and then I'm going to use a totally new one because I know I use these two all the time. We just recently assisted her on a live art show. In her case, it was smaller pieces. It wasn't really top-dollar art like Matthew's. She was moving from one studio to another studio.
So it was color studies and sketches and smaller pieces and some medium-sized pieces. All told, I think the thing had 82 pieces on sale. She let the collectors know before she ran the show, guess what happened? The collectors bought 38 out of the 82 pieces, which is 46% of the total show, bought before the public even saw it. Wham.
She understood her collector list. Okay, Patrick, I get it. Those two big established artists, you talk about them all the time. Shout out to Debbie Arambula. Debbie Arambula, another Art Storefronts customer. Not a name that I've leveraged before. We ran a live art show with her last week. June 3rd, as I'm recording this, and she did something really interesting.
I don't know what the total size number of her actual collector list is, but Debbie did what I like to call in certain circles the fake it till you make it technique. The don't-have-any-tips-and-you're-a-street-artist-doing-some-busking-put-a-couple-of-dollars-in-there-first technique. You fake it, you grease the skids, you prime the pump a little bit.
In Debbie's case, she emailed her entire list and treated them all like VIPs and collectors and said, "Hey, I'm having this show on Thursday. Because you guys are loyal VIP, email new subscribers and collectors, you get first crack at it. Here's the show." Now, in Debbie's case, she sold, I think, 12-18 pieces before the show even started, which is a big deal for her.
Again, all of that was just treating her email list like her collectors. So, by the way, you notice a trend, live art show, live art show, live art show, big deals, big deals. So let's circle back to the original question and it started to get hot. So my little key lights are starting to boil my brain today.
How do you value an art or photography business? If I knocked on your door right now and I said, "I'm here to buy your art business, give me a price," how would you value it? If I were a savvy buyer, buying art businesses and photography businesses was my job, let me tell you what I would look at.
Let me tell you what my due diligence would consist of. I would feature heavily on the collector list in the valuation. It is the single most important valuable asset that an art business can have, full stop. And I continue to see it again and again and it continues to just put me laser-focused on the only thing that matters, which is building that thing.
So what are your takeaways? If you don't have one, it's time to start building one. We've been redundant on understanding the business model, selling direct and how important that is. If you have one, it's time to start treating these folks like VIPs. Don't let your boat be the busted one that's listing with elephant seals on the swim step and bird crap all over the cover.
Take care of these people, reach out, send them the Christmas card. Send them a handwritten note, like and comment on their Instagram posts. People love that. Instagram is just going nuts today. They will love that. The good news, the good news in all of this, though, if you're listening to this now instead of 20 years from now, there's still time to start working on this list.
Ready, set, go. As always, thanks for listening and have a great day.