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Tiers Without Tears

There are many considerations in creating an open-tier players club and slot club expert Jeffrey Compton explains the step-by-step procedure.

Tiers Without Tears

Slot club overhauls are not uncommon-many clubs are reaching the decade (or more) mark, so it’s time to research, re-think and possibly re-tool the club to current realties, including what games are now on the casino floor, who the customer base consists of, what the competition is offering and what innovations are now possible through technology.

One of the most common possibilities discussed during a slot club overhaul is open-tiering: creating additional card levels, each based on a player’s action over a certain period of time. The reason for the word “open” is that all casinos already tier their benefits. The top players get the best goodies compared to once-in-a-lifetime, low-potential visitors who get almost nothing.

The subject being discussed is not so much the development of the tier process, but how to explain more of it to casino customers. While no two casinos are alike-nor are two players clubs alike-most marketing executives will confront similar issues when they decide to open-tier their club. Studying how others have handled these issues can avoid the most common pitfalls.

There are several reasons behind the increase in the number of casinos offering open-tiered players clubs. Most airline reward systems (a model for casino players clubs) are tiered, as are several high-profile casino industry leaders including Station Casinos Boarding Pass and Harrah’s Total Rewards. Technology has made the entire process easier.

But the most important reason has been the tremendous growth of local-market properties. Open-tiered clubs work extremely well in casinos that measure player worth based on a month, three months, six months or a year of action as opposed to those destination casinos that still use a theoretical per-trip measurement.

What is open-tier? Why should you consider it?
Again, all casinos have tiered benefit systems. Comps are based on a percentage of theoretical win, and direct mail offers are split into three or four groups with the top tier getting a comped three-day weekend while the bottom tier receives a weekday discount. So when a casino and its players club are creating the tier structure, they are not creating new benefits as much as they are telling the players what benefits currently exist, and what they have to do to gain those benefits. This may be the perfect opportunity to create a special parking area for your platinum members, but most casinos already offer room and meal comps, line passes and special events.

A well-designed open-tier players club can accomplish several things. The most important is that it tells your players what benefits they already have coming and what more they can get by playing more at your casino. Most players, even your best customers, tend to play at more than one property-if geography allows it they play at two or three. One goal of an open-tier club is to possibly increase their trips to your casino from four-out-of-10 to six-out-of-10.

An open-tier club can also improve the fairness of your overall comp distribution. There are many profitable customers on your floor who do not use their fair share of benefits because they are unaware that they earned them. If they did take better advantage of what was coming to them, they would form a much closer bond to your property. On the flip side, you have customers that are long past their prime playing days who are getting more than their share because they know how to work the system (i.e., your staff). An open-tier players club sends both messages, and hopefully more benefits to the deserving than to the demanding.

The process of creating tiers should never be a rush. If your players club is in trouble, it is not because you do not have open tiers, but usually due to other factors including poor marketing of the current club, inadequate amenities or poor customer service.

Also, before you begin, you should do a complete formal study of your competition’s club-what they are rewarding your players at different levels as well as the overall strengths and weaknesses of their player reward system. Being able to address a problem in their reward setup (badly constructed tiers or a lack of coherent information given to members regarding their club) could give you a competitive edge without having to resort to a costly benefit war.

Setting Up Open Tiers
Having open tiers for a brand new club at a brand new casino (especially in a new market) is probably not a good idea. Unless you already have extensive experience with your player base, you could make the top levels so hard to obtain that your players (who have no idea at this point how many points they would normally earn in a month or year) don’t even try-or worse, you have made the tiers so easy to obtain that the VIP line at the buffet is longer than the regular one. (As with most player club benefits, it is very hard to make massive changes to your tiers once they are established.)

More importantly, holding off a year or so before offering open tiers to your club allows you to store a weapon in your marketing arsenal that can be used after the glow of a being a new casino has begun to wear off.

How many tiers should you have? Probably the fewer the better; there are successful players clubs with only two open tiers. For a first-time effort, three or four tiers are better, based on the following:
Top Tier-the top 1 percent of your database.
Second Tier-the next 9 percent of your database.
Third Tier-? If you have a third tier (with the base card being the fourth tier), consider aiming for the middle of your business-thus, everyone with this card is in the next 40 percent of your database. Or do what Station Casinos does and make the third tier extremely easy to obtain ($500 coin-in every three months), thus putting the majority of your active customers into some sort of VIP status.

Run a list based on the percentages above (or similar scenarios) and see how many people fall into each category. Increase that number by 20 percent and decide what benefits would work (and you can afford) based on those numbers. That will give you a good idea what to base your tier point minimums on.

It is true there are still a few players clubs out there (primarily in Atlantic City and Reno) that do not disclose exact point-earning information to their players. While I am a big believer that players should know how the basic club works, I am not about to tell an experienced marketer how to do his job. Please realize that a player’s enthusiasm in pursing a goal is directly tied to his knowledge of what’s involved. At the very least, he should know how many points (or whatever) are needed to reach each tier-even if he doesn’t exactly know how to earn each point.

How long should the earning period and subsequent benefit period be? Much of it depends on your current technology and staff skills, but six-month periods are a good beginning. For example: players earning 12,000 points between January and June 2008 automatically become Diamond Members and maintain that status through December 2008 (or possibly through June 2009). Three-month periods can be overwhelming to your staff and/or system, and one-year periods create too long of a benefit period for declining players.

What you name your tiers is up to you-as long as the players and the staff can quickly figure out which is which. Although overused, the words Gold, Platinum and Diamond are more intrinsic than Spring, Summer and Winter.

After they were up and running awhile, many open-tier players clubs, including Station Casinos’ Boarding Pass, Harrah’s Total Rewards and My Borgata, created an uppermost “stealth” tier for their absolute best players. Besides requiring at least $1 million in coin-in per year, the tiers are advertised (when they are advertised) as invitation-only, thus allowing management to completely review a player’s record including number of visits and overall profitability before handing out unlimited rooms, comps and entertainment.

Benefit Construction
The first area to research in setting up open-tier benefits is whatever the casino currently offers to players at a particular level. If these benefits are in line money-wise and working marketing-wise, why not tell everyone about them? Yes, your benefits will (and should) increase because more people know about it, but the purpose of this entire effort is to increase awareness to increase comp effectiveness to increase player interest, and thus increase profitable

Almost every benefit listed on an open-tier players club brochure falls into one of the four following categories:

Hard Cost Benefits that begin when a player attains the tier. These costly cookies include an additional cashback percentage or automatic point multipliers; cash bonuses or gifts given upon tier attainment; automatic meal discounts or point redemption discounts; guaranteed invitations to special tournaments and events; free self-parking (if there is normally a charge) and/or monthly car wash; and (if it offers extensive food and drink) membership to a exclusive on-site club.

Although these are frequently the benefits that really sell a tier to a player (especially one who is reading the brochure very carefully), they can be very expensive, and require both marketing and financial analysis-especially for benefits that do not require continued play to take complete advantage of.

A lack of facilities and amenities may limit your choices, but if your casino is like most (where the top 10 percent of the players earn 90 percent of the points), think carefully before offering increased cashback. This goes double for casinos that also have low-hold (99 percent-100 percent optimal payback), $1-and-up video poker on the floor.

Priority Service-including line passes, VIP check-in, preferred restaurant and showroom seating, host assignment, VIP cashier/players club line, special parking area or priority valet parking. Managed correctly, these perks benefit the casino as much as the upper-tier player (who has more time to play while not standing in line) at relatively low cost. And mixed properly with the list above it can create a very effective (and competitive) menu of benefits-with one caveat. Please make sure that your regular check-in, players club and cashier services are above average. It’s bad enough to (overly) remind new customers that they are not among the elite, but it’s even worse if they have been standing and waiting 10 minutes to cash in their voucher or pick up a players club card.

Benefits Based on Play (but not Tier)-this includes basic slot club cashback, comps and free play, special event invitations, room offers and discounts, and almost anything sent through the mail. It is important to realize that this type of benefit should not be tied to a tier, but remain based on play over more recent periods of time-and in the case of direct mail offers, should not be completely spelled out.

When you guarantee too much direct mail cash or comped rooms or special events you are at best creating a player entitlement (completely destroying the surprise gift element of the benefit) and at worst inviting abuse. These benefits should be referenced in the club brochure but not overly emphasized as the reason to obtain a tier. And each one should have the appropriate “based on play” asterisk.

Puff! This includes benefits that no one understands (exclusive items in the casino’s annual gift catalog) or non-benefits (small discounts on the overpriced items sold in the gift shop or free admission charge to the spa where anything else costs money). Too much puff can cheapen a good program, and there should be no benefit listed that a first-month booth worker can’t explain.

Marketing the Tier Club
A complete discussion of how to effectively market a players club is another article, but there are several efforts that can make the job of selling your club and its tiers a bit easier.

Players clubs need an effective, well-designed brochure that explains the club, tiers and benefits in language that everyone understands-and remember that many people do not understand the terms cashback, free play or comps. Unless your club never gives out such information, the brochure should also contain the point-earning formula, the basic redemption formula for cashback/comps/free play and how to use the kiosks, and/or card displays to obtain basic information and download benefits.

All of the above information should be available on the casino’s website, allowing any customer to obtain this information without having to sign in or give any form of personal information including an e-mail address.

Booth personnel should be trained to not only be able to explain the benefits of the club and the benefits of each tier (and yes, this is a tall order) but they should try to convey the specialness of each tier. You are trying to sell a club and its tiers-not create a caste system.

Jeffrey Compton is president of CDC Consulting, and is widely recognized as the nation’s top expert on slot clubs.

 Jeffrey Compton is the retired founder of CDC Consulting and president of CDC E-Reports, a b2b gaming news and information service with over 1,200 paid subscribers.

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