Marketing

Designing Effective Prospect Mail Programs

Posted on July 16, 2005

Casino operators have long understood the importance of using mail to communicate to various segments of their player databases. Direct mail has proven to be the most effective tool in the marketing arsenal to foster loyalty and encourage repeat visitation. However, direct mail can also play an important role in reaching prospective customers who have not yet visited the casino property.

The notion of using direct mail as a prospecting tool has long allured casino marketers. If designed correctly, the effectiveness of prospect mail programs can be accurately measured and
the end result can lead to a cadre of intensely loyal gaming customers. However, just like other forms of advertising media, without an understanding of the hazards inherent in prospect
mailing, the casino risks wasting precious marketing dollars and alienating its existing customers.

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The Best Way to Communicate With Your Customers

Posted on June 16, 2005

When conducting market assessments or feasibility studies for casino expansions, researchers often carry out qualitative research in the form of focus groups in order to gain a better understanding of the needs of the market. While not a primary objective of the focus group research , the effectiveness of advertising is often included as a secondary topic.

Researchers include this topic to better clarify any proposed marketing strategy that may be part of their market assessment. Advertising is a significant expense for any casino, particularly
for those properties that are about to introduce new gaming, dining, entertainment, lodging or other amenities. As such, researchers need to have an understanding of the advertising
tools that are most effective. A common question that researchers pose to casino customers in such settings is, “what is the best way a casino can communicate to you?” Invariably,
the answer is always the same. Mail is the most effective tool in the casino’s advertising arsenal to communicate with its customers.

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The Problem with Host Programs

Posted on April 17, 2005

At first blush, casino host programs are an intriguing concept. Casino personnel are recruited to identify and develop new players, foster loyalty and offer premium gamers higher levels of service and recognition. Their collective actions are designed to endear players to a particular casino. However, adopting a concept and developing it into a successful program are two separate and distinct actions. It is far easier to commit to a host program than to design a successful program, implement it and measure its results.

Host programs were first developed in Nevada well before the era of sophisticated player tracking systems. New premium gaming customers would be identified by table game personnel
who would in turn inform a host. The host would introduce himself to tl1e new player and begin the task of developing a relationship with the customer. Hosts also conducted their player development activities in satellite offices in cities far removed from Las Vegas or Reno. They utilized an informal network of referrals to identify new potential customers and stay in contact with existing ones.

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Creating the Right Player Reinvestment Strategy

Posted on March 16, 2005

As ga1ming markets mature, and revenue growth slows, casinos struggle to find ways to remain competitive, grow market share and gaming revenue. Inevitably, casino operators are forced to increase the amount of marketing dollars that they spend in various forms of player reinvestment. As spending increases, marketing leadership is faced with answering such questions as “what is the casino’s player reinvestment rate” and “how much is the casino spending to reward and retain gaming customers?”

Unfortunately, these are not easy questions to answer. First, player reinvestment is an ill-defined term. Not all casinos define player reinvestment in the same way. Some use it as a catchall phrase to describe all marketing expenditures while others use the term only to describe comps issued through the property’s casino management system, bonus points redeemed for cash and redeemed mail offers. Others attempt to better define the term to describe all of those expenses that are expended to foster loyalty and encourage repeat visitation.

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The Marketing Dashboard

Posted on February 17, 2005

It is generally understood that the sum of all marketing and advertising expenditures is the second largest expense in U.S. casinos. However, despite their impact on a property’s profitability, it is difficult to easily identify all of the costs that make up marketing and advertising on a property’s profit and loss (P&L) statement and see their effects on both property revenue and cash flow performance.

Most casino P&Ls do an excellent job of detailing each operating department’s revenue and expenses. However, marketing and advertising expenses can be found on multiple pages of this report. For instance, system generated comps (those generated by the casino’s player rewards program) normally appear in the slot club department. In addition, comp expense can be found in slots, table games, hotels and on almost every revenue-generating department’s monthly operating statement. Thus, answering the simple question, “what is the ratio of comp expense to property revenue?” becomes a time consuming task.

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Harnessing Demo Software to Improve Casino Marketing

Posted on December 16, 2004

In the casino industry, the process of querying and analyzing a market’s demographic composition has long been the function of consultants who conduct market feasibility studies or, in large multi-unit gaming companies, analysts who dedicate the majority of their time scrutinizing demographic data. T he vast majority of casino marketers conduct a cursory review of area demographics as part of their annual marketing plans. This is not to suggest that marketers do not recognize the value of analyzing regional demographics. Rather the cost of demographic software coupled with its limited applicability has restricted its application.

In recent years the costs of software that generate detailed demographic reports for any geography and demographic mapping software have dropped to the point where any casino can now justify their expense. More important, the contributions that these software products can make to a casino’s advertising and marketing efforts far outweigh their costs.

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Lessons from the Airline Industry

Posted on November 16, 2004

Students of hospitality schools are often advised, as they embark on their careers, to look at other industries for emerging trends, new technologies or promising business strategies and see how the y may be applied to their own businesses. This advice also holds true for students of the gaming industry. Technological advances such as wireless technologies or e-marketing were first developed by other industries and are only now being embraced by the gaming industry.

An important lesson can be learned by watching what is now occurring in the airline industry. Today, several of the so-called “legacy airlines” are either in Chapter 11 bankruptcy or on the brink of filing. This is not because there is a shortage of customers. The nation’s airlines have recovered from the drop in passenger volume caused by the events of 9/11 . Anyone who has traveled lately knows that the nation’s airports and planes are running at or near capacity.

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Common Mistakes in Marketing Research

Posted on September 16, 2004

A locals’ oriented casino-hotel located in a resort community recently completed a major expansion to better serve tourists visiting the city. After extensive market research, the casino’s parent company had made the determination that the property was highly desired by tourists and that an expansion of its hotel and entertainment offerings was critical if it was to grow its revenue. After investing over $50 million, the new resort expansion opened. While locals were impressed with the new property and liked its richly appointed amenities, tourists did not show up in any great numbers. Revenues remained essentially flat and EBITDA plunged as operating expenses associated with these new amenities increased.

In the post-opening period a team of executives tried to understand what went wrong. They began a marketing forensics exercise in which they reviewed all the data that was used to bring the company to the decision to expand into the tourism segment. This is what they uncovered.

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Selecting the Appropriate Advertising Agency

Posted on July 16, 2004

There is a tendency among people who are recruited for leadership roles in gaming organizations to change things. The logic is that, by shaking things up, the organization’s business performance will improve. New marketing directors and property managers often target the casino’s advertising agency as one of those institutions that must be changed.

The motivations to change a casino’s advertising agency are varied. There is often a tendency to criticize current advertising as ineffective. There is also a desire by the new manager to bring in an agency that he/she had worked with in the past. Rather than first evaluate the capabilities of the existing agency and to provide new direction, the new marketing director or property manager will sometimes summarily dismiss the current agency as incompetent and bring in an agency that he/she knows can do the job .

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First, Get the Product Right

Posted on June 4, 2004

Marketing is a process. Marketing begins with “product marketing” – a process of conceptualizing, aligning, and delivering products that meet or exceed consumer needs, wants, and expectations at a price that creates a value. If there is unutilized capacity, then it is filled via “demand marketing” programs- a constant stream of motivators that are packaged and delivered to motivate first time visits among the uninitiated or additional repeat visits among experienced, existing players. Demand marketing is comprised of cash mailers, promotions, two for one meal coupons and other offers that attempt to increase traffic into a casino during midweek and daytime periods.

Casino marketers are often forced to turn to demand marketing prematurely when the package of gaming and entertainment amenities is insufficient to stimulate consumers to visit the property. In other words, the sum total of products that the casino has to offer is not, in and of themselves, sufficient to attract people. Before a casino turns to demand marketing, it must first make sure that its products are aligned with the market. It must first make sure that the products are right.

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