What, Why and What Do We About It
By George Haldeman
If we are going take a logical approach to problem solving, we have to first understand the nature of the problem. Business intelligence tools applied to a casino's database will give us a very granular look at the revenue streams from known customers. Market research projects that are designed to give us insights into our own customers as well as the broader market will shed further light on the situation. Between the information provided by our BI tools as well as our market research, we have a very thorough understanding of both the “what” and “why” of the problem.
Once the what and why are understood, we can begin to decide what we are going to do about it. Far too often marketers attempt to skip right to what to do about it without fully understanding the problem itself. Assuming we have our what and why questions resolved, we can begin to develop strategies that will guide us though our decision making process.
What
Breaking down a database into its component parts facilitates a complete understanding of the current (and prior) situation. We can measure and track acquisition and defection rates as well as trip frequencies and worth migration in order to grasp what factors are affecting our rated revenue the most. We can drill into the data and determine if there are variations in the data by factors such as geography, game preference or worth levels.
A good business intelligence system can present this information quickly and in formats that facilitate action. Multipage tabular reports are too cumbersome to use for decision making. Graphs, maps and filtered reports are far more useful for making informed decisions quickly.
Why
Once we understand defection, retention and acquisition, we need understand why these situations are what they are. That is where market research comes in. Properly prepared and analyzed customer satisfaction studies will give you the insights about your customers’ attitudes about your property as well as their thoughts on your competitors. Attitude, awareness and utilization studies will give you similar information about the broader market.
Market research not only allows the marketer and their ad agency the ability to carefully craft targeted messages that resonate with customers, but also enables the operators the ability to focus as well. The old adage applies—if isn't broken, don't fix it. They need to continue on with their strengths to improve on the weaknesses. The research will tell the marketer and the operator what matters to customers the most. That is where everyone needs to be focused.
What Do We Do About It
This is point in the problem solving process where it pays to have smart and experienced people on your team. They need to develop strategies for growing gaming revenue. Strategies for growing rated casino revenue must start with the establishment of the target market. Very few, if any, casinos can appeal to everyone. Play-based information such as worth, and combined motivators such as atmosphere and rewards, must be considered when identifying a target market.
Strategies are further developed by incorporating the strengths and weaknesses identified in the market research. When your marketing messages ring true with the customer, they resonate and therefore drive visitation. If, on the other hand, you are saying things the guest doesn't believe (even if they are true), they will not only fail to engender loyalty but may drive people way because they don't trust you.
Once the overall strategy has been vetted and agreed to, you can begin to develop a variety of tactics. Direct mail programs, special event schedules, player development initiatives, online and new media initiatives can all be developed in support of the overall strategy. It would seem to me that a discussion between the general manager and the vice president of marketing regarding how each initiative supports the overall strategy is very important.
The process of increasing revenue does not end with the establishment of programs and the various criteria that goes with them. There is the execution phase. Execution must, repeat must, be monitored very closely and continuously. Customers don't know what your strategy is. They don't even realize the tactical decisions you make. All they see is the execution. Execution includes the look and feel of the advertising (including direct mail), your rewards and recognition efforts, as well as your product and amenity offerings.
Marketing in today's environment means reporting on the results of various marketing initiatives, analyzing those results and making small changes in order to improve the results. It is a circular process that requires continuous monitoring. There are too many moving parts both internally and externally to believe that any problem is permanently solved.
Conclusion
In the high-stress time we are living in, it is easy to jump straight to tactical level changes. Changing direct mail offer structures or adding and deleting special events and promotions cannot improve the long-term revenue generation abilities of a casino marketing effort if they are not done as part of an overall strategy.
As an example, creating a floor-wide sweepstakes drawing at a property whose focus is on high-end table revenue would be completely divergent from the target market and the initiative would fail miserably. The opposite is also true. Having a $250,000 blackjack tournament when the property is a mid-level slot house would also be contrary to the strategy.
Marketers must dedicate the appropriate resources to understand the “what” and “why” of the problem. If you don't understand those issues, your actions will be random and your results will vary tremendously. Some of your efforts will be successful and some will be failures. Failing by itself is not necessarily bad. Not understanding the reasons for the failure and repeating the mistake could be fatal. We owe it to our ownership groups to make informed decisions and execute them flawlessly.
George Haldeman is a 24-year veteran of the casino industry. As a founding principal of Strategic Gaming Advisors, he provides his clients with powerful analytics and proven techniques for optimizing revenue in competitive markets while maintaining a financially disciplined approach to program development. He can be reached at haldemang[at]sganv.com.