Analytics in Casino Marketing
Although gaming has experienced steady growth over the last couple decades or so, today’s casinos face a growing number of challenges and threats. From internet gaming and sports betting, to new casinos popping up throughout the country, to many markets reaching maturity, brick and mortar operators will need to devise strategies that keep guests coming back again and again.
Of course, we all experienced the unimaginable with the COVID-19 pandemic; properties having to shut their doors to guests for months at a time, some having to undergo multiple closures and others never opening their doors again. From the disruption caused to our industry by the pandemic, a paradigm shift occurred in how casinos market to their players. Reopening strategies were centered on safety, social distancing and operating under reduced capacity which in turn, forced marketers to focus their efforts and budget on the ‘better’ and ‘best’ segments of players thereby reducing or even eliminating marketing of offers to everyone else. At the very least, it forced casinos to recalibrate their direct marketing and reinvestment strategy. For many, this was a painstakingly difficult decision to make because they felt they were abandoning a loyal subset of the customer base. How did this shake out for the industry? Amazingly, the industry is rebounding strongly with many operators experiencing record topline numbers in recent quarters and months. Additionally, high-traffic, high-congestion areas in the casino (like buffets) are still shuttered and staffing is reduced, which combined with more profitable customers on the gaming floor, has resulted in record profitability as well. Now, some would argue that these impressive numbers are attributed to pent up demand from prolonged periods of quarantining or the money artificially pumped into the economy in the form of stimulus payments. No doubt there is truth in this, but the fact is, casinos are yielding higher worth customers and reducing spend in areas that are less profitable. What lessons can we take away from this? Focusing on data to be more effective and efficient in casino marketing is the ‘new normal.’
For a decade now, there have been two key themes prevalent at G2E, NIGA and other industry events pertaining to the future growth of gaming; (1) looking to the future of gaming products such as iGaming, skill-based games, esports, millennial-appealing slot themes and (2) data and analytics. While the next generation of gaming customer and products are all important things to consider and will continue to shape innovation in the space, one thing casinos can do today, is better leverage their data to maximize their relationship with existing customers. Like in most industries, retention of existing customers is far more predictable and far less costly than acquisition aimed at unpredictable future customers’ needs. Most casinos in fact, are sitting on mountains of data that, if utilized, can provide insights into the play patterns and preferences of these existing customers that can be used now to formulate strategies that differentiate.
In 2003, Gary Loveman, CEO of Harrah’s Entertainment at the time, wrote a brilliant article published in Harvard Business Review titled Diamonds in the Data Mine. The article discusses how Harrah’s grew the brand exponentially in the face of a poor economy and formidable competition by developing a deep understanding of player lifetime value and preferences and then leveraged these insights to improve their Total Rewards program to incentivize and reward players for spending more of their gaming dollars with the Harrah’s brand. While everyone was investing in non-gaming amenities and impressive structures, Harrah’s decided to double down on technology and systems that would allow Harrah’s to better mine their database. Simultaneously, the organization adopted an absolute focus on customer satisfaction. The result? They unearthed more diamonds.
Even though the article was written nearly 20 years ago, the lessons are still highly relevant and applicable in today’s environment. As more and more casinos become data-driven, competitive pressure to win over these ‘shared’ players will be another obstacle for casinos to overcome. We’ve already seen this for a while now in many markets: the phenomenon of one-upmanship. In many parts of the country where two or more players play, casinos will try to outdo one another to capture a larger share of the market. This can lead to overinvestment in customers which translates to margin erosion and conditioning a customer to become offer-loyal versus property-loyal. An expensive predicament to be sure. This, in addition to the aforementioned industry challenges, has accelerated the need for casinos to gain a better understanding of the dynamics of their database and the competitive environment with analytics.
The onus is on the marketing department to develop a sense of curiosity about their database. Here are some questions we can be asking of our databases as we shape an analytically-minded strategy:
- Which are the most attractive segments and where is the most upside?
- Where are my best players in terms of proximity to property? Proximity to competitor properties?
- Which segments of players should we reduce offer frequency and rate of reinvestment?
- Where is the most cross-over?
- Which battleground areas (specific zip codes) are at risk from competitive pressure?
- How does my property, product, promotion stack up against the nearest competitor in these key battleground areas? What can you control that would stimulate more visitation and spend?
- Which offers are most effective?
- Which offers are least effective?
- Where might we be over-investing? Under-investing?
- Which methods of communication are garnering the attention of your best players?
- How exactly is business affected by seasonality and how can I maximize my marketing dollars during slow periods? During peak season?
All can be answered with a robust analytical approach.
By developing a deeper understanding of player data, promotional data and data derived from other sources in the operation, casinos can then allocate budget and resources into the activities and segments that are high-performing and spend less on the activities and segments that are underperforming. This frees up capital which can then be reinvested into other areas of the casino operation.
There’s no question our industry will continue to change, evolve and become more competitive over time. New products, new threats and new challenges will continue to shape how we do business, but one thing is for certain, we will continue to rely on data and analytical solutions to help us gain an edge. Expect Gander Group, already regarded as a leader and innovator in the casino loyalty space, to be leading the flock with this data and analytics opportunity.
VP of Strategic Accounts