Customer loyalty - Part 1

Part 1 of a two-part analysis of customer loyalty programmes looks at the front end. It's not just about gathering information

Customer loyalty is an important subject discussed among casino operators at all levels.

No matter who you are within your organisation, loyalty is vitally important. Get it right and you are likely to increase casino profits, improve the experience of your customers and obtain the vital data necessary to ensure the ongoing success of your loyalty efforts.

However, misunderstanding the loyalty process can result in missed revenue-generating opportunities or even lost income. With so much at stake, getting it wrong is not an option.

Today’s casino management systems allow operators to log all manner of player transactions on the gaming floor. Every time a player elects to insert their membership card into a slot machine or hand it over to a table games pit boss, their play is tracked in exchange for that all-important currency: loyalty points.

The level of in-depth customer profiling that can be achieved allows casino managers to consult such details as whether a given player has won or lost and by what amount; how much money they have cashed in and out; what time of day they generally like to visit; how many times they have attended the casino; whether they prefer to play blackjack or roulette, high denomination or low denomination slot machines; or any of a multitude of other personal preferences that are communicated to a casino’s management system with every bet that is made.

This raft of data is then coveted by a casino’s marketing department and, in the right hands, can greatly affect a casino’s loyalty endeavours to improve its bottom line.

Whatever the scale and complexity of your loyalty scheme, though, it can be argued that the basic goals will always be the same - to obtain as much useful player data as possible and to attract more customers, retain those customers and grow the profitability of those customers.

According to Benjamin Chilcott, director of consulting services at the UK-based loyalty marketing firm Concise Consultants: “It’s not just about collecting the data, but also looking at that data in order to understand what it’s telling you and then using the information effectively to change the way you treat and market to your customers.

“Loyalty is much more than simply offering incentives to encourage your patrons to come back. It is also about providing them with a reason to give your gaming business the data you require to further customise their gaming experiences and drive their profitable behaviour.”

Therefore, the questions that you should ask while planning and re-evaluating your loyalty programme are critical to the whole process. The more relevant you can make the marketing communication with your customers, the more likely they will be to return to spend, gamble or buy within your casino.

What criteria will you use to segment your customer base? Which segments will you market to and which will you not? Will you offer hard benefits or soft benefits, cash-back or cash rewards, bonus points or complimentary points? What has your research told you will likely be the most effective customer incentives? Have you ensured that you are geared to reward new behaviour and not existing behaviour?

The questions are varied and the answers you uncover might be somewhat surprising. Perhaps your grind players are worth more investment than you had first thought. Or perhaps your local customers are not the frequent visitors that they could be. It might not be enticing for this segment to spend their hard-earned loyalty points on hotel rooms, for instance. But dinners or theatre tickets might be very appealing rewards.Unless you analyse your data effectively, your loyalty efforts will always be based more upon guesswork than empirical fact.

One thing that is certain, though, is that the integrity of your gathered player data is paramount to your success. Therefore, your gaming-focused IT solutions are as important as the creativity of your marketing team.

Progressive Gaming International believes that a partnered approach is the most sensible way to tackle an all-encompassing business strategy like loyalty. If there is cooperation within an organisation as well as among its external suppliers, it stands to reason that a loyalty scheme can be implemented to better effect.

Therefore, PGI prefers to focus on providing the technology to manage the gaming aspects of a loyalty scheme and recommends working closely with a specialist consultancy, such as Concise Consultants, to get the most out of its tools.

The key elements to approaching a loyalty scheme then, are: to develop customer propositions designed to capture relevant information (i.e., to obtain the right data); to create internal systems, teams and processes to manage and use their data (i.e., to engage the entire organisation in the loyalty process); and to design strategies to maximise the use of their data (i.e., to apply it in meaningful ways to generate the most amount of profit possible).

Brian Macsymic, PGI’s director of product management for its Casinolink Enterprise Edition, said: “Casino management systems such as ours provide an array of sophisticated promotional and reporting engines that allow a casino to run its own marketing loyalty campaigns and track their profitability. They can also be used to identify player characteristics and useful trends, like which customers fall within certain target criteria and when the high and low traffic periods within a casino are.

"Savvy operators will draw their own conclusions from this type of information and then use their management system’s marketing features to do something about it.”

Benjamin Chilcott elaborates: “We generally assist our clients to use their all-important data in a variety of constructive ways. For example, to create customer segments based upon profitability and to then develop tailored marketing campaigns to make each segment more profitable.

"Or to increase the number of customer visits during periods of slow trade in their casinos. Or to provide greater control over existing complimentary rewards processes.”

Casino operator Aspers, which launched the UK’s first unified loyalty programme (under the 2005 Gambling Act), was well aware of the benefits that strategic loyalty could have on its operations. So when it approached Concise Consultants for advice, it was keen to develop a fully integrated membership and loyalty card.

The resultant Aspire Club has been rolled out rapidly for its members. Aspire was launched in September 2007 to coincide with the opening of Aspers in Swansea and in December 2007, Aspire was launched at Aspers in Newcastle. The scheme has also just been rolled out at Aspers Northampton, which opened in June this year.

The Aspire Club offers three tiers of membership: blue, silver and gold. All patrons start with blue membership and can redeem points for gaming chips, beauty treatments, food and beverages, sporting and leisure events, as well as gifts and services.

The Aspire Club is proving to be a powerful promotions tool that Aspers uses very effectively to drive increased footfall, for example by offering additional bonus points for attendance on certain days of the week. The results speak for themselves, with attendance figures increasing significantly when a promotion is running.

“Casinos that engage in loyalty must realise that they cannot partially do so,” concludes Chilcott. Without the proper resourcing, analytical tools and processes in place, it is not possible to maximise the value of the player information that is collected.

"It takes a serious commitment from an organisation to conduct customer loyalty and customer relationship management properly. However, the financial rewards make it all worthwhile in the end.