Measuring the Success of Promotions…It’s not just how busy you were.
By Craig Pendleton
Casinos don’t just need increased headcounts and business volumes; they need increases in the volume of customers that represent higher revenues, increased profits and a stronger return on the casino’s investment in promotions and rewards. The current business world now has ways to count and measure these activities. No more blindly throwing promos and giveaways at casino players in the hope that this will increase gaming play, sales, headcount and ultimately profits.
The Old Way
Operators used to view a busy gaming floor, increased gaming on the promotion days or an increased door count as a successful event. Often there may have been multiple concurrent promotions and really no effective way to measure individual activity and results other than through a direct redemption of an offer. Rarely are all of the increased collateral costs included in the full calculation of return on investment. The casino may have been busier but what overtime labor costs were incurred? What other costs of the promotion occurred such as additional traffic control in parking areas? Set up and cleaning crew costs included? The list may be long. Did the promotion have a net increased positive effect to produce resulting levels of profits over the baseline figures for the week or month (if in fact there is a system in place to establish individual player habits and history)?
The New Way
With technology and analytics casinos can now measure not only specific attendance and redemption in conjunction with each promotion, they can also calculate the actual increase in total gaming within a time period against a true baseline of normal levels per day, week, month, player tier, player demographic and per each individual player’s current regular level of play. Now it can be determined if the promotion truly affected the bottom line or just caused players to modify their behaviors by simply changing what day they visited the casino and calculate if their actual total amount of coin-in increased. With individual player tracking the true benefits and cost of each promotion can be calculated.
Many casinos have analysts on staff. Most are quite talented but often are not analyzing the proper data. This can be due to improper processes or it may be due to the lack of adequate systems to interface various software programs in real-time to completely collect and measure data in all areas. Many properties have the ability to track and capture gaming activities but few have a complete system in place to capture all activity of gaming play and non-gaming expenditures of each player. Being able to track all activity allows a total analysis of gaming activity, cash expenditure on non-gaming activity and the individual redemption behaviors of each player in all casino outlets. To capture this data it requires a collection of a player’s card identification during each activity. This can be in the form of a card swipe to redeem a comp, a redemption of physical promotional collateral such as a coupon or collecting this information when the player makes a full cash purchase or discounted cash purchase outside of the redemption process.
The goal must be of rating and valuating each customer from a loyalty perspective of all activity gaming and non-gaming. Treat all activities as a process of a loyalty club not simply a player’s club gaming activity. Many business offer loyalty rewards programs with various offers based upon certain levels of regular business from a customer. Casino customers are already familiar with using loyalty programs for other businesses.
Assign different point values for earning points for different types of activity. Non-gaming spend typically does not result in the same level of profitability for the casino as gaming activities and as such generally should not result in as many points earned from gaming. Redemption can also be at different levels. Assign different point values for redemption for different types of activity. Some properties may additionally offer different point conversions for redemptions of points. Typically the best redemption conversion is for match-play or free play.
Player’s Club cards should be used as a loyalty card. Some large casino operators have been doing this for many years. Collect carded activity in all areas. The collection of information by a carded swipe should occur at the time of any and all activity. Hoping that players will volunteer their card information will not lead to strong compliance and collection of data. Offer tiered discounts for non-comp activities. Example: 5% discount with all non-gaming purchases for the lowest base tier player’s club group with higher discounts offered for higher player’s club card levels. The discount does not have to be offered for comp redemption. Players can decide if they want to pay with cash using a discount or use comps. Some states will not allow redemption of comp value for alcohol and this may also be in effect for discounting liquor.
Loyalty club cards should not require the card holders to be 21 years old (or whatever the age of legal gaming at the casino). Creating and tracking activity of customers prior to them reaching gaming age for non-gaming expenditure activity allows pre-development as future casino players and a level of comfort for frequenting the casino property. This simplifies the process of turning existing loyalty card holders into gaming players versus recruiting brand new customers once they turn of age to gamble. When coming with friends of gaming age card holders can each collect their own reward points.
The process for the casino is to collect history of all activity in order to find out the specific behaviors of each person. Are they food and beverage customers only? If they gamble do they also eat or drink at the casino? Do they stay at the hotel? Go to concerts? Attend promotions? Are they weekday or weekend customers? Do they change the days they come to participate in promotions or come on non-promotion days to avoid the crowds? Which promotions are they attracted to?
Require a loyalty card to participate. Collect data and then analyze activity with promotions to determine if offers actually increase their play or simply move it to another time of day or day of the week. Analyze which offers result in the best ROI for each individual. Tailor offers specific to each player, establish best offers, frequency/timing of offers, how points are redeemed.
Stagger offers to periods of time when casino is slow. In some cases casinos may attempt to attract or “move” regular visit days and times. Control the flow of offers to increase volumes but not overwhelm the casino, overwork the staff and irritate regular players who are inconvenienced by crowds and restricted access.
The Ultimate Goal
The goal is for the casino to receive the highest return on investment on promotions leading to the highest value of sales/profits in return. Large promotions that are not specifically targeted per guest reflect a large investment with much of the value lost in the costs of producing the event (marketing materials, actual event costs, discounts/rewards/prizes costs, collateral expenses). If a player responds to food promotions but not to offers of hotel discounts, golf, concerts, sweepstakes, why not offer food and beverage targeted promotions to this specific player and avoid offering other items? Why offer additional discounts and other offers that do not increase visitation, amount of play or non-gaming spending? How often do offers to a player result in action? Offering some promotions too frequently may not result in redemption.
Analyze everything to determine the best “magic offer” for each player to maximize promotional marketing return. It’s not about how busy the casino is, it’s how effective the return is on individual offers are when all added up in the end.
Craig Pendleton is the President of National Foodservice Consulting, Inc. He has consulted for the past 25 years as a Tribal Casino Specialist. He can be reached via email at firstname.lastname@example.org or visit www.nationalfoodserviceconsulting.com
Original Article in Indian Gaming Magazine January 2019: http://www.indiangaming.com/istore/Jan19_Pendleton.pdf