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Where Have The Customers Gone?

Understanding the reasons for customer inactivity

We’ve all noticed it. Fewer customers and smaller spend. So what do you do about the often-complex and multi-faceted question of why customers (often very good ones) simply disappear?

Over the last 20 years, the dramatic expansion of legalized gaming in the United States and beyond combined with extraordinary advances in technology has allowed casino (and casino-hotel) operators to dig deep into the world of consumer behavior activity on the casino floor.

Both holding onto and expanding the marketplace for customers at your property or properties are at the heart of the retail and casino marketing mission. So why do once active “good customers” disappear? What are the myriad reasons? And if we can identify the reasons, can we fix the situation? A continuing challenge for operators, all the more so as most gaming markets are experiencing tough economic times.

Defining Inactive Customers
Over a number of years and a number of research projects completed by Gaming Research, Inc., it is clear that what may or may not constitute “inactivity” depends upon a number of critical factors. For example:

  • Whether a particular legalized casino (or even riverboat) is catering to a local, regional or tourist-driven marketplace.   
  • Depending upon level of player worth (ADT), different definitions of time and inactivity are often put in place.
  • Adding more complexity to the question, the demographic-behavioral correlates of gender, age, distance, historical frequency and favorite game type need to be part of the definition as well.

The question of real vs. imagined inactivity demands a detailed micro-level analysis of the existing database, at the individual property level as well as across property(s) levels for entities in multiple jurisdictions. This is not an easy task, but necessary if one is to understand inactivity, which is always defined by the relationship of frequency vs. recency and combines both art and science.

In the final analysis, defining inactivity in a local casino in Las Vegas vs. inactivity in a local casino in Chicagoland or inactivity in a quasi-destination market like Atlantic City or the ultimate destination markets of Las Vegas or Macau is a formidable challenge.

This is the heart of the matter. What is critical here is the application of a scientific approach to both the sampling plan and survey construction to be used in understanding marketplace behavior.

In the context of investigating marketplace dynamics (changes over time from active to inactive), there are two important and related ideas.

First and foremost, within any defined market there is a “natural” exogenous impact on patron activity-those things not in the control of an operator which impact individual and ultimately marketplace

So, part of the research findings center around such exogenous (external) factors as money and credit available, changes in geography, changes in wealth, changes in health, changes in employment or possibly even changes in family life cycle. All of these areas can be “scored” and evaluated in the context of an organization’s specific market definition.

Furthermore, the “big picture” level this analysis, if done correctly, offers senior management what might be called the “natural marketplace” behavior that always occurs, whether in local, regional or tourist-driven markets.

Finding the Answers
Research has identified reasons once active, good customers simply disappear. The key for all operators (large and small) is to separate the natural market displacement that occurs (external factors) from the critical marketplace competitive forces that moved some of your customer base (by segment) to the competition. The following questions are critical, and can only be answered by an effective (and often ongoing) research commitment:

  • Why have some of your patrons migrated to the competition? What have we done wrong? What do we have to do to win some of these patrons back? What are the financial implications for putting in place a separate marketing plan for attacking our lapsed patrons?   
  • All of the above and more needs to be analyzed by the critical correlates of demographics and behavior: Is the problem (challenge) similar across all segments or is it a female vs. male issue? Or possibly a question of age appeal? Or is it the need to simply change first-favorite status-the whole question of “boredom?”
  • Lastly of course, a question most operators pay lip service to: the global issue of customer service. Is it relentlessly improving, staying the same or declining on the 50-60-plus service elements that patrons always experience during a visit?

So, once the research is completed-usually a six-week task once started-the hard part is follow-through. This requires a SWAT-team concept to put in place and sometimes revitalize commitments once thought to be impervious to competitive attack.

It also means that to win some of these patrons back (after all, divorce in the casino world is often forever), the blame game should be absolutely prohibited. Listening and learning why once-active good patrons leave is the beginning of a multi-step program to patron redemption.