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Data-Driven

Why customer information can unlock a goldmine for casinos

Data-Driven

Ace Rothstein could not have endured this.

Robert DeNiro’s old Las Vegas movie character smugly portrayed his company’s marketing dominance in Casino. The trips, shows and meals, he indicates, exist to snare customer money.

“And in the end,” DeNiro concludes, “We get it all.”

Not any more. The “we’s” multiplied faster than the customer base with gaming’s massive 1990s expansion. And the “all,” gaming’s composite revenue pie, shrunk into bite-sized profit margins during the Great Recession. Operators need an answer.

Enter the data czars—companies that dice, slice, crunch and squeeze numbers to extract financial gains. Their advice helps many casinos find 5-10 percent more revenue in their database, and some substantially more, via changes in comping.

This process becomes millions of dollars saved, numerous jobs preserved and even the difference between profit and loss.

Comping’s eyeball era, in which a supervisor or host routinely gauges a customer’s worth on the floor, gives way to color-coded charts, graphs, 3D tools and hourly reports. Direct-mail campaigns can be assessed and adjusted midstream with email blasts and text messages that reflect recent gaming history.

Numbers crunching and gut instincts have come together. Casino operators navigate the forest of prolific data and shake the money trees, while trying not to alienate customers who complain about reduced offers.

 Information is massive, even unwieldy, and execution must be smart. Small gains matter, because never again will one property, or market, “we get it all.”

The Finer Points

Randall Fine is the turnaround king, anchored by algorithms and software.

The former executive for Harrah’s Entertainment and Carl Icahn’s gaming company led Greektown Casino in Detroit out of bankruptcy in 2009-10. He now commands the marketing charge for Revel in Atlantic City, which recently emerged from bankruptcy.

His innovations have been both an individual and company trademark. Fine’s Las Vegas-based outfit has become one of the gaming industry’s largest strategy, consultancy and management companies. He has championed, with figures and software, an important premise.

“Operators have tens of thousands of customers in their active database, and they are only scratching the surface with this information,” Fine indicates. “In many cases, they spend way too much money on customers for whom they could get the same business even if they spent far less.

“We help them be more efficient and determine where the diamonds are in the rough. We enable them to go far deeper into their data. The average segment breakdown for casinos is eight. We can give them 200-500.”

The deeper breakdown could include age, marital status, household income, etc. It can also entail market experimentation. In a target group that normally gains $100 in comps, some could be given $50 to see if the change affected someone’s decision to visit.

While Fine’s comping advice is based in data, he embedded a human gut instinct into Revel’s program. Customers have begun cashing in Revel’s eye-popping “You Can’t Lose” promotion, applicable to July play. Patrons can recoup most of their slot-machine losses for that month at a 5 percent clip over 20 weeks. The promotion appears laden with giveaways, but Fine has bet that players will return for free money and add their own funds to the small bank account awaiting them.

Fine intoned his own movie theme, The Godfather, in calling it an offer customers can’t refuse.

Fine’s outfit continues to evolve technologically as well. It unfurled the LaserPoint CRM product last year. This is a cloud-based, software-as-a-service product intended to package and automate database marketing at a price lower than a single database analyst. The system promises 10 times the customization of typical casino direct-mail programs, 15 percent increases in revenue and 50 percent reduction in the time necessary on property to manage direct-mail programs.

There is no software setup or installation for the casino. The property submits data through a secure web portal. The data runs through LaserPointCRM’s algorithm-based segmentation system and the monthly mail campaign file is sent back to the casino, through the same secure web portal, ready to take to the print shop.

Fine tapped a colleague from the Greektown era to sell it. Alex Calderone, the former Conway MacKenzie restructuring specialist who helped recruit Fine for Greektown, was hired this year to lead LaserPointCRM. This product is the software extension of the philosophies Calderone heard from Fine several years earlier. Calderone was asked to build upon LaserPointCRM’s early success.

“We were looking to get into at least one state with this,” Fine says, “and we ended up in five (Washington, California, Minnesota, Mississippi and Oklahoma), so we’re very excited about that. Software takes a long time to sell in this industry.”

Fine remains a staunch believer in direct mail. Technology companies that print coupon offers out of slot machines, for example, favor a marketing process right on the game. Many believe direct mail has outlived its usefulness.

“Anyone who says that must not work at a casino,” Fine says. “There is not a casino in the United States where the marketing department would say direct mail is passé. Casinos are different than most other industries, and I’ll tell you why. In many of those industries, 90 percent of the cost of the direct mail piece is printing and mailing. Only 10 percent is the actual offer, and it’s usually something lame. Ten percent off something lame is not compelling.

“With casinos, however, 90 percent of the cost is the actual offer. You are sending them free money to play, free hotel, etc. Given the older age of our customers, they want to be able to touch that offer, to feel it, to put it on their refrigerator, because it has free money in it.”

A Financial MRI

What’s in a name? Everything, according to Marketing Results Inc. founder and President Gary Border, a former Harrah’s Atlantic City executive who formed his own company in 1988. It has offices in Las Vegas and Sicklerville, New Jersey.

The company, which engages in campaign management and consulting for casinos throughout North America, derived its name from an icon. Or make that, Icahn.

“Back in 1987, I was reading an article Carl Icahn had written, and he asked, ‘Why don’t people use the word results in the name?’” Border recalls. “That sounded like one of the smartest concepts I had seen for a marketing business.”

Border unveiled his own smarts, joining legendary casino operator Jack Binion as a partner and senior vice president of the newly formed Horseshoe Gaming Corp. in 1994. Ten years later the company that began with $40 million was sold to Harrah’s s for $1.45 billion.

Success today requires a numerical perspective, Border says.

“There is so much competition in this market that you have to be on your data game,” he says. “You need analysis to support most decisions. At one time, you could make the decisions without data and if you made mistakes, nobody noticed. Now if you are more than 100 percent invested in a customer (comps exceeding theoretical win), you have a problem.”

Border’s company touts AIM (Advanced Intelligence Marketing), which rolls out its fourth generation software in the next 90 days. It is a casino database marketing tool driven by technology, and it is a logical extension of the third generation, a 2011 rollout that enables real-time information. The fourth generation makes this technology more available via smart phones, tablets, etc.

All told, AIM allows operators to obtain daily mini-reports along with a monthly summary of their direct mail campaign. The information is stored in a central location, cloud-security style, and can be accessed quickly.

A lengthy process precedes AIM’s implementation. Marketing Results conducts an overall property look, including a database analysis of the last 24 months. A market research segment follows, producing a “shared wallet” view of the casino. Then comes a lengthy executive meeting to review recommendations. Somewhere in this process, Marketing Results combines hotel and gambling databases if needed, enabling these parts of a property to work together.

The casino will retain Marketing Results for at least a year and renew for one-year periods. It will be able to utilize the software and take part in a weekly conference call.

One of MRI’s favorite segmentations is the profiling of a customer into five life stages. The first is a gambler a property has never seen, labeled a prospect. Stage two is a new member who signed up for a player’s club card. The third stage, a regular player, involves anyone who has made multiple trips. Stage four is a fader, a gambler whose visits are declining. A stage five player is inactive.

These segments will help determine a property’s comping and recruitment efforts.

Klebanow: Interpretation is Everything

Andrew Klebanow has participated in the hospitality industry since 1975. Before becoming a consultant in 2000 and later forming Gaming Market Advisors, he served as vice president of marketing at Sam’s Town and Santa Fe Gaming. He oversaw repositioning and re-branding of player rewards programs at both properties.

While other companies tout products, he offers the classic consultant’s role. In his view, there is no substitute for common sense.

 “Systems that gather, store and analyze player data continue to evolve and are now very robust,” he says, “but data warehouses and analytical software also require skilled operators. Those operators may work at the casino or for a vendor. They know how to use the system, but do they know what questions to ask to solve problems unique to the business?”

Klebanow illustrates his philosophy with an anecdote from a recent casino property tour.

“The casino was otherwise quiet, but these banks of video poker machines were full,” he says. “It struck me as odd that the rest of the property was not that busy.

“What the property said was, ‘The customers love them, we have a high win per day, no worries, who cares who is really playing them?’ We dug deeper and saw that all these customers used all their free play, all their comps, all the points they had accrued. Once you factored that in, these players weren’t profitable.”

Even when data is compiled, it may be incomplete. Casinos factor in comps, meals, gifts, etc., but often fail to account for taxes, Klebanow says. The tax on free play adds considerably to the offer, but “somehow, the taxes never seem to find their way onto the expense line,” he says.

The cost of conducting a campaign is thus more expensive than casinos originally thought.

Klebanow, based in Las Vegas and Denver, works on a project basis. He will be asked to provide recommendations for a property to make better use of its database and conduct a better marketing campaign. That might mean helping a company understand its own logistics, like food and beverage.

“When customers are asked for their rewards card when they buy a meal at the buffet, for example, their expectation is that they will get a discount or a free meal after X purchases,” he indicates. “Now, most casino buffets operate at a loss or at a minimal profit margin. Throw in a discount or rebate program and that profit evaporates, or worse, increases the size of the operating loss.”

While Klebanow values human-nature knowledge in the technology age, he sees the handwriting on the tablet, so to speak, for direct mail operations.

“In the U.S., you may not see the mail used much five years from now,” he says. “We can learn a lot from emerging markets. In the Philippines, for example, they have an interesting problem. The mail doesn’t work. But everyone’s got a mobile phone and everyone’s got an internet account.

“What you need to do is have the customers visit a casino website, have them log on and see their offers on their computer and their mobile phone. You can send them reminders, saying, ‘We credited you with $50, click here,’ and when you click, you see the $50 offer. You don’t need the mail for that.”

Looking at Games

While the industry craves information, Casino Data Imaging puts a special concentration on the games themselves. Analysis in this area concerns the environment in which customers play. Evaluation can mean the interpretation of product placement, game traffic, and even ergonomics, besides revenue.

“You want to know which games are trending up, which ones are down and where your best games are located,” says George Levine, executive director of sales and marketing for CDI, the Las Vegas-based company which began providing slot analysis in 2001 and evolved into other games. “What is winning, what is losing for you? Where are the games placed? Is something affecting its performance—whether the game is placed near signage, or a problem with aisle space, even the comfort in seating?”

CDI products are in more than 150 casinos, including giants like Mohegan Sun, he says. The company places its software into the property’s casino management system and then educates the operators.

“You can have the greatest concept in the world, one that everybody wants, but if it can’t be implemented properly, it is useless,” Levine says. “We are interested in interrogating the folks (clients) on the things that are actionable to them and then helping them.

“Part of the installation process is to thoroughly understand how the casino conducts analysis. This includes understanding the questions they must answer every day. Understanding this is key in formulating the best practices for each individual user, which makes our product easy to use.”

The company has expanded from its [email protected] Analysis product range into GlobalSuite, which addresses other games as well. It rolled out 11 months ago.

 “CasinoCAD is CDI’s legacy slot analysis program,” Levine explains. “GlobalSuite encompasses all the popular features of that platform and much more in features and the depth of analysis. Examples include Multi-Game/Multi-Denomination analysis, pivot analysis from the visual map and/or reporting module, dynamic reports where you can easily change the report parameters, multi-point performance color coding and more. CasinoCAD was solely for slots. GlobalSuite also includes modules for table games and player data.”

Interactive Performance Analysis (IPA) is a new feature located within the GlobalSuite data dashboard control center. IPA quickly allows the end-user to first select the required analysis categories such as denomination, manufacturer, game theme, lease products, areas, banks, etc., to compare and contrast to one another and house averages.

Regardless of the supplier or the operator using that supplier’s products, all of the new technology in marketing through analytics comes back to a basic common thread:

Data is king.

Casino Connection Sports Editor Dave Bontempo is an award-winning sports writer and broadcaster who calls boxing matches all over the world. He has covered the Philadelphia Flyers in the playoffs, as well as numerous PGA, LPGA and Seniors Golf Tour events, and co-hosted the Casino Connection television program with Publisher Roger Gros.