Marketing

The Complexity of Bonus Point Multiplier Promotions

Posted on April 17, 2008

Bonus point multipliers have long been used as a marketing tool in casinos. The practice dates back to the earliest days of player tracking systems. For many of the earliest systems, point multipliers were in fact, the only bonus module available. Today, all casino management systems offer some form of point multiplier promotion in addition to far more sophisticated bonusing modules, such as free play, electronic coupons, random free play jackpots as well as large progressives linked to every machine in the casino.

Despite the advent of these more sophisticated bonusing modules, casinos still embrace point multipliers as a marketing tool. They are perceived as a relatively low cost and easy promotion to implement. The recent downturn in the U.S. economy has forced casino marketers to find more ways to stimulate play and move customers from competitors’ casinos without giving the house away. As such, point multipliers are now being used with far greater frequency because of the need to market more aggressively. One need only scan the print ads from the recent President’s Day weekend to appreciate this. In Southern Nevada, one casino offered 5x bonus points over the holiday; another offered 7x points while a third heralded 2x points all day on President’s Day. This begs the question, if bonus point promotions were so salient to gamers, why would anyone go to a casino that offered 2x points when another one down the road offered 7x points?

View Full Article Read More

10 Ways to Make Your Rewards Program More Successful

Posted on August 16, 2007

Casino player reward programs and the tools to identify and reward players have become the most important elements in casino marketing plans. Nevertheless, for most gaming operators, player reward program participation rates remain low relative to some of the most successful reward programs in the industry. Despite the importance of player reward programs, most operators fail to enroll the majority of players into their rewards program and give those players enough incentive to use their players club cards every time they place a wager.

When evaluating the success of player rewards programs, casinos often look at tracked or carded win as a measure of reward program effectiveness. Tracked win refers to gaming revenue that is generated by people using their reward cards while gaming. Tracked win tends to measure the usage pattern of the casino’s heaviest users (those people who visit most frequently and have the highest handle volumes). The tracked win rate refers to the ratio of tracked win to overall gaming win. Even so, most casinos’ tracked win rates are low, often hovering in the 25-35% range. Conversely, the most successful gaming companies, notably Harrah’s Entertainment and Station Casinos, have tracked win rates in excess of 80%. At the very least, a casino with a successful player rewards program should be enjoying tracked win rates in excess of 50%. Anything less indicates problems that may not be readily apparent to the gaming operator.

View Full Article Read More

How to Calculate the Player Reinvestment Rate

Posted on June 16, 2007

The terms “player reinvestment” and “player reinvestment rate” are often used to describe the costs associated with the suite of benefits that casinos bestow on their players. However, despite the frequency with which these terms are used, there is no industry-wide definition that describes the specific components that make up player reinvestment. To better understand how the industry defines player reinvestment, a survey was conducted among casino operators in a number of jurisdictions including Indian casinos, riverboat/barge casinos and Nevada casinos.

A key finding of the research was that in the evolution of most casinos, understanding what a property’s player reinvestment rate is does not become an important issue until two seminal events occur: 1) the casino institutes a host program and 2) it begins to mail out cash and free play offers to various segments of its database. Then, as discretionary comp costs and mail redemption costs rise, casino leadership begins to ask, “So what is our player reinvestment rate?”

View Full Article Read More

The True Cost of Marketing

Posted on February 17, 2007

When trying to understand how much a casino spends on marketing, most casino managers look at specific departmental expenses on the profit and loss statement including marketing expense, advertising expense, player rewards program expense and total comps (which often appear as line items on the P&L). The sum of these is considered the total amount a property spends on marketing. And while this methodology is valid, it leaves out several hidden expenses that must be considered when trying to understand the true amount that a casino spends to attract new customers to the property and foster loyalty among existing customers.

Two areas of a casino’s business operations that are not normally considered as part of the marketing equation are food and beverage and entertainment. They are normally considered stand-alone revenue-generating departments that, for the vast majority of casinos, produce negative results every month. They are allowed to operate at a loss because they serve a supporting role to casino operations. Yet, the operating losses that they produce each month are never considered a form of marketing expense. To better explain why they should in fact be considered as part of the marketing equation, two hypothetical scenarios are offered.

View Full Article Read More

Designing a Tiered Player Rewards Program

Posted on January 17, 2007

As a casino matures and its database of active players grows, it is the natural tendency of casino leadership to consider the implementation of a tiered player rewards program (TPRP). This marketing initiative is driven by a number of factors, not the least of which is the realization that a small portion of the casino’s database is contributing an inordinately large share of gaming revenue. Thus a TPRP is implemented to offer the casino’s best customers higher levels of service and recognition. However, creating a tiered rewards program involves far more than the design, manufacture and distribution of various colored membership cards, distributing the appropriately colored cards to the right segments of the database and the planning of a few premium player parties. A TPRP, like any marketing initiative, requires clearly defining attainable objectives, a strategy that will allow the casino to achieve those objectives and tactical plans that carry out that strategy.

The first question that must be answered is “what are the objectives of a TPRP program?” While fostering loyalty, providing higher levels of recognition and taking care of the casino’s best customers are all reasonable objectives, they are immeasurable and cannot be quantified. Rather, a casino must delineate measurable goals. These goals may include: increasing the number of “A” level club members, grow the “A” and “B” segments by 10% and 5% respectively or increase the median number

View Full Article Read More

White Paper: An Analysis of Harrah’s Total Rewards Player Rewards Program

Posted on December 17, 2006

Harrah’s Entertainment’s Total Rewards Customer Loyalty Program’s (“Total Rewards”) basic structure is a tiered program. Unlike the vast majority of casino reward programs, players do not earn bonus points. Rather, they earn a combination of Tier Credits and Reward Credits. Tier Credits are used to determine one’s ranking while Reward Credits are used for comps and other purchases.

When a player inserts their card into an electronic gaming device, the LED display shows the customer’s name, the number of Tier Credits accrued over the course of the calendar year and then the number of Reward Credits that are available for redemption.

Total Rewards offers four tiers, the highest level being 7-Star. The following table details the number of Tier Credits, earned on coin handle that must be earned within a calendar year in
order to advance to each tier.

View Full Article Read More

The Changing Role of the Casino Hotel

Posted on October 16, 2006

A hotel addition to a casino has long been recognized as an important amenity for any local casino that seeks to evolve into a regional gaming and entertainment destination. A hotel allows a casino to be more than just a daytrip destination. A well designed and well maintained hotel that is effectively marketed can generate a substantial amount of profit as a stand-alone revenue center. Also, the hotel allows the casino to generate incremental revenue through casino marketing programs.

Traditionally, hotels were developed at casinos as standalone profit centers where a portion of room sales (normally 20%-30%) were allocated towards casino marketing and the remainder sold to transient, group and commercial segments. However, this business model is changing. Casino operators have begun to realize that hotel rooms can be used to overcome locational disadvantages and drive greater revenues into the casino. The trend is to allocate a far greater percentage of hotel rooms to casino marketing, which are then offered to various segments of the database through demand stimulation programs.

View Full Article Read More

The Changing Face of Casino Marketing Programs

Posted on September 16, 2006

Casino marketing plans have long been built around several basic programs. However, technological advances are subtly changing the traditional casino marketing mix. The ultimate winners will be those casinos that not only embrace these new technologies but learn to harness it to build a sustainable competitive advantage.

Since the mid 1980s casino marketing was comprised of several player benefits built around the casino management system (CMS). Casino management systems have evolved from slot accounting systems with rudimentary player tracking modules to more complex systems that are capable of rewarding a wide array of player benefits.

View Full Article Read More

Taming the Marketing Beast

Posted on February 16, 2006

In the world of hospitality and tourism, casinos are unique animals. They are far often larger than traditional hotels, offering more rooms, restaurants and amenities than most resorts or convention hotels. Yet despite their shear size, what differentiates casinos most is their copious consumption of marketing dollars. And while some casinos are efficient users of marketing dollars, others act more like large beasts, with a ravenous and unending appetite.

A casino that is a marketing beast is characterized, first and foremost by a never ending need to spend money in order to drive traffic through its doors, ostensibly to keep the slot handle up. Typically, a marketing beast is a casino in which there is a marketing promotion or program in effect virtually every day of the year. Bus marketing programs, monthly large drawing drum promotions, daily tournaments, midweek promotions, an endless parade of merchandise giveaways, and of course, copious amounts of direct mail offers are used to feed the beast. Often these promotions are layered on top of each other with customers coming in and redeeming multiple offers on the same visit. It is as if management is afraid that, without these marketing programs, the flow of business will immediately stop and the beast will collapse. So, to keep the beast alive, money is spent. Empirically, a beast can be defined as a casino that spends in excess of 25% of its revenue on marketing and

View Full Article Read More

E-Marketing to Casino Customers

Posted on August 16, 2005

Email and the Internet have quickly become an integral part of the lives of most Americans. Most readers of this publication rely on the Internet and e-mail for daily communication with both friends and business associates. This behavior is no different for the general population.

Currently, it is estimated that 61.2% of adults use tl1e Internet regularly. While it is generally assumed that younger age groups comprise the bulk of Internet users, usage among older demographic groups has increased significantly. Today, the 47% percent of the US population over the age of 50 uses the Internet regularly and their usage rate is increasing faster than younger demographic segments. In 2000,45.8% of people aged 55-64 used the Internet. In 2003 that number jumped to 56.7%.

View Full Article Read More