In Part 1, we saw visual proof of the massive influence that your top 10% of players have on overall casino revenue. At most casinos, the top 10% of players represent around 82 to 88% of total slot and table theo. It also appeared that the VIP group remains mostly stable over time, but we finished that essay by stating that individually, players are highly volatile.
In Part 2, we saw the volatility from year-to-year among individual VIP players, and saw that a huge sub-group will reduce spending considerably -- 25%, 40% and more -- the following year. Some quick math showed that spending reductions from one year to the next total approximately 22-24% of total casino revenue. Slowing and reversing just a portion of these declines is an opportunity to recover millions in casino revenue that is currently just walking out the door.
Now that we understand the opportunity and see the value in increasing focus on VIP customer retention, the next step is to assemble a strategy and begin to execute it. Often, this is where resistence from other team members and executives. Some people may not agree that the current amount of effort spent managing VIP players is inadequate. Some may feel that the hosts & player development should be left alone to manage relationships with elite players. Some may feel that the amenity package offered to VIP players is already too generous. In our view – and we refer back to the first set of graphs – it's nearly impossible to put "too much" effort on retaining VIP guests. They represent nearly the entirety of revenue, and as such, more attention will almost always pay off in increased loyalty.
Speaking of hosts, they do have personal relationships with individual players, and as such, they are a vital component in executing any plan to boost loyalty. VIPs don't respond like mass-market players to generic offers aimed at a marketing segment. They will redeem these but they need personal attention, and offers customized to their preferences, as well. Again, this is Casino Marketing 101 but it's important to remember that personal attention from hosts is essential for successfully reducing decliners and defectors.
So what can we do that we aren't already doing? If the casino has a team of hosts/PD who are already supposed to be maintaining individual relationships, what can we add?
- Find the right players on whom to focus.
- What metrics do you currently use to become a VIP? To qualify for a host? To reach high player card tiers? ADT/ADW are worthless in this context since they don't factor in frequency. Card tier is also a poor indicator because many casinos maintain elite status into the following year. Look for average monthly spend/theo, as it combines spend and frequency, and can be calculated and compared over recent periods.
- How often are you searching your database to find declining players? Not once in a while, not when a host notices, not once a month. You should automate database searches and run them every week, if not every single day.
- Early intervention is key. Reviving a decliner who has already found a new favorite casino, or whose spend has dropped 70%, is much more difficult than intervening when the decline is just 10 or 20% and loyalty to a competitor has not yet been established.
- Observe highlighted players. Try to theorize on why their spending is down.
- It's impossible to create a mental picture of a player's gaming patterns from text-based CMS screens. Create and use graphical data visualizations to easily see bunches of visits, hi/low clusters, jackpot wins and unusual losses, and to see changes over extended time periods.
- Don't look exclusively at theo. Players lose actual dollars, not theo. What looks like decreased play may be a run of bad luck.
- Look for patterns in the offers redeemed, and those skipped. Attempt to discover preferences in their favored offer type and value. This could provide insights into the minimum value this player needs to incent a trip, or days of the week where the player may be regularly visiting a competitor.
- Deploy hosts to (re-)build the relationship.
- Recognize that hosts generally don't have relationships with everyone they cover. Most spend the majority of their time on a subset of customers who are loud, talkative, jovial, demanding, and frequent. That's human nature. But these characteristics don't make them great players from a profitability standpoint. They are probably pretty good, they have a host, they hang out in the high-limit room, but there are probably hundreds of high-value guests whose assigned host barely knows because they don't ask for many favors. A big problem with this is that if those players are unhappy, they won't complain either, they will just visit a lot less often (if at all) and the host won't even notice.
- Again, early intervention is essential. If a player's visitation drops from twice a week to once a week, there are still 4 opportunities per month to have an in-person conversation. If the visitation has fallen all the way to once or twice a month, there's just fewer times for the host to talk to the player, and more likelihood they won't be on-property at the same time.
- When talking to decliners, the host's goal is to pinpoint an area of dissatisfaction that can be remedied. Not all decliners have a specific issue, their reduction in play often is triggered by entirely external events or circumstances. But all knowledge gained is helpful in understanding which players can potentially be revived and what actions need to be taken in order to do so.
- Not all hosts are experts in personal communication. This is a task for people who are actually good at getting others to open up, sometimes about personal issues. Hosts who don't actively engage with their customer base are unlikely to be very helpful in discovering any insight about their players. Keep an eye on the hosts who thrive, they are incredibly valuable.
- Craft personalized marketing packages.
- Mass-market segments can get by with mass-market marketing. At the elite level, you need to able to tweak and customize offers and combine them to create portfolios catered to individuals. Your goal is two-fold, you want to deploy marketing dollars effectively towards offers that will lead to redemption visits, and secondly, you want the player to recognize that you see them as an individual and are making an effort to treat them as such. This is the cornerstone of hospitaility, but it is increasingly rare when casinos have tens of thousands of customers and thousands of hotel rooms.
- Be flexible with pre-set rules or limits. A consistent $800 per month player who requires $400 in comps each month is still a pretty great player, even if a 50% reinvestment rate is extremely high. You don't want to capitulate to every customer demand but if your data shows that this person is a value-hunter who chases the best offer across multiple casinos, it's better to be overly generous than to lose the player. Similarly, extending deadlines on offer redemption can be a favor you offer to preferred players,
- If you are going to build customized offers, you need the technology to produce specialized mailings and emails, to update your CMS, and to process and analyze the lift generated against standard offers. If your database staff are used to just running standard queries or relying on simple marketing automation tools, you might run into some issues. Hire a specialist, it's worth it.
- Keep at it, be patient.
- Results don't come immediately. Patience, focus and dedication are required, and it must be a consistent, group effort. Marketing, the hosts, operational leaders must all understand the reasoning and the goal, and must all support the effort and help out.
- Understand that many decliners can't be reversed, or only to a limited degree. Most Major League Baseball players get a hit less than 3 times in 10. Your results might be worse, recovering only a few percent of players. That's OK - as we saw earlier, just a few percent translates to hundreds of thousands or millions of dollars.
- Small wins are still wins. We also saw earlier that some VIP players drop 60, 70, 80+ percent from one year to the next. Improving a player from a 75% drop-off to 60% or 50% is still a big boost.
- You're likely to get better. Most things get easier with practice, this is no different. Finding the types of customized offers, the types of communication, and the player patterns that lead to higher recovery rates will allow you to keep using the most effective methods. You'll also find the hosts who have the highest success rates.
These 5 steps are basic guidelines you can use to craft a plan for your own casino, which you can adapt to your unique challenges and circumstances. However, I'll point out a universal truth, a Step 0. And that is, the ability to predict and prevent declines before they occur, keeping high-value customers happy so they want to remain loyal, is the most valuable step of all. It is so important to constantly be monitoring and mining your player data for players just starting to decline, or at risk of declining soon, in order to intervene early, potentially before the decline even begins. Not only is it easier to prevent a decline than to recover a lost player, but anticipating declines will place less of a burden on your employees and team members, and allow you to individually service more players and keep loyalty rates high.