The rapid expansion of the casino gaming industry in both domestic and foreign markets has increased competitiveness to levels never seen before, from slot machines and table to even live entertainment. But the one area that remains a top priority for all casinos, no matter their name, size or location, is customer retention through loyalty programs.
“Most casinos allow their customers to generate rewards from their spending throughout the casino, including gaming, dining, retail and entertainment,” says Tom Doyle, vice president of systems integration for Bally Technologies. “This forms the foundation for the casino to continue to market to the player as they leave the building.”
Depending on the player’s status and casino resources, a customer loyalty or incentive program can represent various experiences. Traditional experiences include compensating top players with hotel rooms when the casino is under maximum occupancy, or concert and sporting event tickets if it has not yet sold out. More modern experiences are often tied to new players, using social media and other electronic communications to get them to the casino on slow nights, or with non-gaming promotions to reinforce the casino as a complete entertainment destination.
“It has been well-established that different loyalty programs are needed for local casinos versus national casinos,” says Paul Gordon, vice president of sales for Rymax Marketing Services, Inc., which brokers deals with leading brands like Samsung, Michael Kors and Rachael Ray cookware as rewards prizes. “We see trends in technology impacting the loyalty space in a very positive way.”
The newest technology trends can be implemented several different ways, from social media to reward redemption to promotional displays on the casino property.
“To remain competitive, casinos need to find synergies and use technology to communicate the synergies,” says Alex Calderone, senior vice president of casino finance and business development for The Fine Point Group. “Successful loyalty programs will intersect both flexibility and transferability for the best player experience. As the industry consolidates so will loyalty programs, so pooled resources of properties will resort in enhanced promotions and bigger opportunities for casinos in the future.”
A Matter of Marketing
The biggest change for casino marketing departments is that the increased competition means they have to implement more proactive strategies to develop customer relationships. However, adjusting to this new environment still leaves areas that need to be addressed.
“The casino marketing department is defined as getting players to play in the casino and maintaining existing players,” says Ted Gottlieb, president of Gaming International, Inc., producer of the Win Cards player-education system implemented in over 200 casinos, riverboats and cruise ships worldwide. “Casinos do not have a department specifically for new player development or ways to incentivize new players to play games that they do not know. Cultivating beginners and low-level gamblers is grossly overlooked by the industry. Casinos need to look at things differently.”
Along with paying more attention to a new generation of beginner and low-level gamblers, casinos also have to address the rising trend of non-gaming revenue and implement that into their player rewards systems.
“I think a lot of customers now realize the importance of a good loyalty program that is built within a cohesive framework,” says Calderone. “The landscape has become a lot more competitive, so the entire marketing playbook has changed. Gone are the days of building a new tower to attract guests. Now you have to use the tools of the future, data analytics and player behavioral science.”
With non-gaming revenue hovering around 60 percent at many casinos, marketing now includes interactive experiences like the “You Guess” application implemented by Micro Gaming Technologies. Instead of building contests around gaming, it draws upon allowing casino visitors to guess on general topics like the weather, number of chips in a bowl, etc.
“Ultimately, the base emotion for a player or non-gaming guest is the same; they want to win in something,” says Travis Carrico, vice president of sales and marketing for Micro Gaming Technologies. “The promotional kiosk is now better suited for this trend by allowing for self-compensation, checking rewards points, purchasing more drawing entries, or gift items, or even receiving free slot play. We see even more unique promotional ideas and smaller properties guided by local markets and regular visitors.”
Micro Gaming Technologies helps guests capture the winning feeling with its software by allowing casino marketing departments to establish promotions that begin as soon as they leave the facility.
“We are giving casinos tools to control player motion right now,” says Carrico. “Combine that with the on-site touch-screen kiosk and we are eliminating the old methods of paper drawing slips and drawing barrels. It is important to create efficiencies in drawing promotions.”
Reeling in the Rewards
The terms “player rewards” and “incentive program” are perhaps two of the most ambiguous terms in the entire gaming industry. In the past, the term strictly meant benefits provided at the casino property, whether it be gaming, lodging, entertainment or dining. Now, to match the non-gaming interest of at least half of all casino guests, the definition of “rewards” or “incentive” has quickly expanded.
“We took a position early on to deliver high-quality brand equity with our products,” says Gordon. “We are dealing with a smarter consumer who knows the value of their play and how they are being treated as a player.”
Gordon and Rymax Marketing Services have seen tremendous growth in domestic markets, and have been able to categorize their clients into three areas of operations to identify the proper incentive program.
“New properties have to develop their players from scratch, while older casinos have to fend off new regional competitors,” says Gordon, “while well-established and popular casinos have to maintain their clientele by distributing the proper amount of external and internal rewards. The strategies are a lot different than before.”
Part of the more sophisticated reward strategy is treating each player visit as its own experience. This allows for more accurate compensation while the players receive the feeling that the casino truly understands their needs.
“If you have a bad day, we can detect that and may give you free play if you lost quickly,” says Doyle. “This is a very appealing incentive to the customer.”
For more interactive experiences, Bally Technologies also offers rewards promotions where the player can participate in the ski ball arcade game, or even seasonal games like a pumpkin patch promotion. They have also introduced the Beverage Order Service System (BOSS) that allows players to order a special drink during an event, like a Mint Julep on Kentucky Derby day or their favorite drink without having to talk to a cocktail server or bartender.
“The industry is catching up to technology,” says Doyle. “Clients expect to use everyday technology at the casino now. This is why you see the increased use of Facebook, email, text messages and mobile applications.”
The Five-Point Plan
For The Fine Point Group, developing architecture for successful loyalty programs tailored to specific needs of the casino has been an effective value proposition against its competitors. Despite the wide variety of the clientele, both foreign and domestic, they have identified five major components for successful rewards and incentive program implementation.
“It all begins with customer control,” says Calderone. “The customer has to have a good sense of when and where the rewards will be redeemed.”
Simplicity is also a foundation to building a successful program, as a casino’s ability to clearly articulate how points are earned and redeemed is often overlooked. This has become increasingly important as casinos have consolidated and often have multiple assets across different states.
Aspiration is the third point used in the firm’s design of a loyalty program architecture.
“A casino needs to give customers a reason to play,” says Calderone. “Customers need to be inspired to consolidate all of their play at one property. The single-tiered property reward structure is definitely outdated.”
With the rise in multiple-property casino brands, transferability has also risen in importance.
“You have many Native American tribes that own multiple properties that range in size from small to large,” says Calderone. “The ones that are not using the combined program are not operating at full efficiency.”
This helps prevent what Calderone calls “comp fatigue” when customers get burned out from receiving the same complimentary offers and amenities at the same casino property.
“The days of using the same complimentary offer at the same steakhouse over and over again are finished,” he says. “This new generation of casino customers gets tired of that fast. Transferability to external opportunities like retail, restaurant and even airlines are key in today’s marketplace.”
The final requirement in the Fine Point rewards program architecture is flexibility within systems. A successful loyalty architecture is created for different investment standards depending on the economic environment of each region or metropolitan area.
“Of course, you need to have a different reinvestment level in Detroit than you would on the Las Vegas Strip,” says Calderone. “All five factors have to be in place for the long-term success of the program.”
Focusing on the Future
With the transition from baby boomers to generation X and generation Y populating the casino, the industry is recognizing their different needs to establish long-term relationships.
One product that has been able to make the transition is Win Cards made by Gaming International, Inc. Established in 1987 and featured at Mandalay Bay Hotel and Casino since 2008, Win Cards help new players learn how to play casino games without intimidation.
Win Cards are handy, plastic cards with a dial designed to quickly and easily show beginners the basics of how to play the live casino games of blackjack, craps, roulette and baccarat.
“Most people who come to casinos do not know how to play craps, and are very intimidated by the live action,” says Gottlieb. “In this day and age, ‘I do not know how to play’ is not an excuse. With an entirely new generation of players coming to casinos, it is important that casinos do not get relaxed and miss out on revenue by not educating them on how to play. Marketing is a full-time pursuit, which is more than getting a guest there—it is getting them to play, too.”
This player development with younger demographics is extremely critical because of the sheer volume of casino properties across the United States today.
“The focused priority on high-end whales at casinos will never stop, and that is understood,” says Gottlieb. “But if you start young players off early, then you can develop them and have them as players for life.”
Part of that engagement for younger guests is the implementation of interactive and online gaming, as well as the use of iPads and similar devices. Free play and reward offers that incorporate this trend are a lot more likely to be redeemed by young players.
“In the future, it will be important for players to take their gaming experience to the slot machine and the promotional kiosk,” says Carrico, who is currently beta-testing these strategies at a Minnesota casino. “There is a need for both, and it has to come from the marketing departments to cultivate the gaming experience.”
Along with cultivating the gaming experience, the marketing department at all casinos will have to continue their efforts to transform the entire casino landscape for all guests with rewards and incentive programs, not just for those who come to gamble.
“In the next 10 to 15 years, the casino will be more of a cultural destination in this country, similar to what malls have become,” says Gordon. “The ability for casinos to create revenue, auxiliary businesses, jobs and overall economic development is all powered by the ability to build customer loyalty and incentive programs. That will never change.”