Running a gallery is expensive. People cherish their time because it equates to money spent on their own labor as well as their staff’s, and when you waste time it equates to lost money. Art dealers are no exception. Every hour of their day must be dedicated to meeting or following up with the right people in order to make sales, or working with artists whose work they want to sell. No matter where you look, you’ll find that the economics of running a gallery are pricey. The real issue is that most of the costs necessary to run a gallery are inviolable. You can’t change the price of shipping, crating, insurance, payroll, and rent.
Factored into the economics of running a gallery is time, such as time spent doing administrative tasks. The key to optimizing your gallery’s economy is less focus on admin and more time spent on sales. Admin tasks normally fall to a gallery assistant or intern. While this frees up a dealer’s schedule, it also inhibits those assistants or interns from helping with other, more pressing duties that make running a gallery easier. Dealers work several hours or even days to create and send out offers, and this doesn’t even include interruptions. If you can maximize the ability to get your offers out in 70–90% less time, you and your staff can do more things that contribute to your gallery reaching its goals, including interacting with current clients and connecting with new collectors.
As of now, no one has automated repetitive tasks that happen behind the scenes. However, these tasks take time and are expensive. Associates are pricey, but they are doing the tasks that dealers don’t have time for that must be done. Utilizing a client relationship management (CRM) platform assists in eliminating these time-draining tasks. A CRM tool saves you time, and in turn saves you a lot of money.
Dealers today don’t value their time as much as they should. They’re accustomed to overcompensating for the ways they do things instead of resorting to much easier and quicker methods. In order to economize your gallery you must use the most current technological practices, even if that means replacing your old ways for newer ones. Dealers are used to leveraging their memory (which is fallible), keeping track of spreadsheets and checking invoices to monitor and nurture leads, but this method wastes time whenever you’re trying to draw up a new list of clients.
Selling art isn’t about working harder, it’s about working smarter. To be economically efficient, you must cultivate collector leads in a more productive manner. Client management software and tools allow you to save time, work shrewdly, and make more sales. You should be outside engaging and interacting with clients, not sitting behind your computer inputting leads that you remember from previous cocktail parties and art fairs, and manually contacting hundreds of collectors one at a time.
Memory is Fallible
How does this seemingly irrelevant commercial relate to running your gallery? The funny thing is that dealers are doing exactly the same thing as the guy in the commercial. They are trying to remember so many small facts and details that their brain is fatigued and forgets the obvious stuff. Dealers keep track of collectors in many different, non-centralized ways, but perhaps the most ridiculous is relying on their memory. You can’t possibly remember the names of every collector you meet, or your level of engagement with them. Memory is fallible, and therefore it’s one of the worst mechanisms for storing information. It’s the most ineffective way to use your brain in this day and age.
Cloud-based systems have essentially become an extension of our brains. CRMs are cloud based systems that you can access whenever and wherever, just like your brain! When a dealer tries to leverage their memory to figure out what they sold to someone 3 years back, they’re just wasting their energy. Instead you should store that info all in a single centralized place, accessed via mobile, and that’s where a CRM comes in.
This point might seem tangential, but it is crucial for dealers to understand that they shouldn’t act like the guy in the video. Trying to enhance your memory is a waste of time, going out and chasing potential clients isn’t.
Use data to make the best decisions
A data-enabled art dealer leverages information to make decisions wisely. Take art fairs for example. Galleries spend anywhere from $30,000-$100,000 or more for just one fair. If you can’t change your gallery’s cost of going to art fairs, at least make an informed decision of which fairs you will attend. After all, the goal of participating in these events is to meet and engage with new collectors and sell more art. CRM tools enable you to track your own data and this in turn, this can guide your fair selection process over time and show you trends that can determine which art fairs you will participate in.
I choose the example of fairs because they are a hot topic in the industry at the moment. The argument about whether art fairs are profitable for an art gallery or should be discarded altogether is a highly contentious debate. I’m not taking a stance on the issue, but instead hoping to instill this simple message in the minds of art dealers: if you’re going to participate in art fairs, look at your data and do your research before deciding which ones to attend. Don’t attend the most expensive, most reputable fairs just to break-even for more exposure, attend because the art you present will thrive there and reflect this in your sales.
Dealers see art fairs as an investment for the future. That’s why they are considered one of the top five business concerns for galleries. But art fairs can be a gamble, and you don’t know which one will pay off until you’ve already invested in it. Our advice at ARTERNAL, the only CRM for the art world, is this: don’t wait to see how a fair pays off, know that your investment will pay off. How? With data.
CRM software allows you to leverage all of your gallery’s information. It also allows you to determine for yourself how you want to run your gallery, rather than choosing the method you feel is most current and fruitful at the time. Now, you’re not just licking your finger to check where the wind is blowing, you’re getting the most in depth weather report to predict the forecast. In other words, a gallery can gather information on all its client and artist trends via a CRM tool to make important business decisions, such as which art fairs to attend and which new clients to target.
The “Castelli model”, which Marc Spiegler explains in his interview for Artnet, is the traditional model of running a gallery where the majority of negotiations and sales happen within the gallery. The decline of the Castelli model and foot traffic, combined with the rise of technology and globalism, presents one explanation for the increasing popularity of art fairs. Galleries can’t meet demands at home, so they follow collectors wherever they may be. If you must go to collectors rather than waiting for them to come to you, you should at least know where your relevant audience is.
Dealers must make strategic decisions of where to target collectors using data from their client databases. And if your client database doesn’t have collectors interested in the artwork you’re currently trying to sell, focus on a new untapped audience that is interested in the kind of art you sell. In his Artnet interview, Art Basel’s global director Marc Spiegler states that the art world, like any other industry, is more competitive than it was 10 years ago. CRM software presents a solution for this too. You can follow leads that matter, and you can be the “traveling salesman” from the comfort of your gallery. You can contact your leads strategically and from anywhere in the world, and follow up in person or at art fairs only when necessary.
CRM software gives you the tools that you need as a dealer to understand the economics of your gallery better. You need to buy into the current conversation about technology so you can understand your markets better and leverage new information to operate effectively. Dealers like Lisa Cooley who have closed their gallery doors explain that the rise of technology, especially social media, has created a desensitized and isolated market, stripped of the in person relationships and interactions that used to drive art sales. CRM tools are dedicated to bringing those relationships back, nurturing them, and making them easy to manage, while also providing ways to build your client network.
Dealers are constantly under pressure to make sales and are desperately trying to find ways to maximize profits. You can’t cut your way to growth, there are no ways of getting around art fair fees, storage and shipping costs, or monthly rent. But you can use tools that save you time and in turn make your job easier and running your gallery a little more efficient and affordable.
Effective use of time is a key part of the economics of running your gallery. It saves you money and helps you run more efficiently. If dealers understand their economics better they’d be able to run their business more successfully. For just as many galleries that are closing, more and more are opening, and there are just as many art grads as ever before. The potential for business is out there, you just need to know where to look and how to manage it.