Pondering Post-Pandemic Loyalty Programs
By Vince Manfredi
Our industry, indeed, our modern world will forever be changed when we finally put the pandemic in our rear-view mirror. While the outcome has been devastating for many, valuable lessons should have been learned along the way. Some thoughts:
When a huge, unexpected drop in revenue occurs, expenses need to be cut, and Marketing is typically at the top of the cut list. Some reductions are quite logical including, for example, broadcast television advertising and the “near life-changing” general market promotions. Most of us have developed a new appreciation and respect for the value of precious marketing dollars.
With rare exceptions, midweek daytime is a tough sell. There are only so many “golden agers” to go around. And they can only keep down a finite number of buffets. Spending $10 and more to attract players with a daily value of $7 is a losing proposition. It doesn’t take a math wizard to calculate the negative ROI. Yet, in spite of red ink staining our program and chipping away at profits, over-investing in unproductive market segments is rampant.
Consider the “subsidized motorcoach programs” as ironic examples.
We believe in the power of kinetic energy. Said differently, activity breeds activity. But there’s nothing worse than visiting corporate execs walking through an empty joint—even at 10 a.m. But a more frugal approach to incentives has become essential with shrinking markets, over supply and now the lethal pandemic. Ironically, we are aware of cases where this conservative approach yielded positive results. During the pandemic, we could not afford to cater to a $7 visitor who may then displace a high-value player when the number of gaming positions has been reduced by more than half.
The best tactic for maintaining any profitability with half of gaming position inventory available is to target best players only. One operator literally closed to the public on New Year’s Eve for several prime hours and catered exclusively to high value invited guests. The results for their holiday period outperformed optimistic projections, albeit with a messy P.R. challenge.
“The Hawaiian Number”—my analogy for an “all skate” massive retail promotion, ceases to make sense when success of such events requires maximum participation and occupancy. Casinos who cut these promos saved hundreds of thousands of dollars without the expenses of prizes, staging, marketing and human capital. At least one resort indicated that they actually had more traffic and a stronger bottom line without the hoopla of their regular car giveaway. (Sidebar: In the Theatre, some sarcastic actors refer to the big finale of a show as the “Hawaiian Number,” even if the work is a tragedy set in ancient Greece.)
Join the Club
Encouraging as much trackable play as possible will always be a primary objective, but are we tackling that task as efficiently as we could? Does our loyalty program send the right message to would-be regulars? Do the benefits make sense? Are we aggressively cultivating well-heeled players? Does the club complement the direct marketing effort?
We must remember the lessons we’re learning and create sticky programs that don’t break the bank. There are dozens of factors to consider including market size, market share, proximity to populations, regulatory concerns, competitors, floor hold, even the property itself and its amenities.
If properly promoted, the player’s club will be an integral part of any overall marketing effort. Making the club better will have a notable positive impact on results. Conversely, an error can be destructive and have long-term negative effects. In a high-volume casino, the results could cost millions, and somebody’s gig.
We’ve launched and retooled many loyalty programs over the decades. For context, when we started, there were no modern tracking systems. Today’s advanced on-game environment and sophisticated analytical tools have become invaluable in helping us to improve focus and results from our loyalty marketing push.
If modifying your loyalty program sounds like a daunting task, make no mistake—it can be. I am reminded of my grandmother’s words. She lived to be 100. She had been a seamstress as a young woman in Italy. She said, “One thousand measures and one cut.” We must evaluate the potential of any change to a program from as many perspectives as possible before execution in order to increase our odds for success.
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