The Hugged and the Hunted
by Charles Anderer
August 5, 2011
Four years into The New Normal, the most successful casino marketers are confronting a reshaped world by asking more from their hosts and giving more to their best players. Player reinvestment costs at the lower levels are under a microscope, as is the price of slot play.
That was the gist of the three-day-long Casino Marketing Conference held at Planet Hollywood in Las Vegas last month. The conference, which is co-produced by BNP Media Gaming Group, parent company of Casino Journal, and Raving Consulting, drew over 350 people. It kicked off with an Advanced Player Development Summit, setting a results-oriented tone for the entire event.
Player Development sessions focused on how much you should be hugging existing rated players compared with hunting for new ones, how to reward hosts and divvy up the work.
“Customer service is not enough anymore,” said Steve Browne, president, Raving Service. “You need a service and sales model for your hosts. They can’t be a bunch of back slappers, baby kissers and comp writers.”
There are two ways to grow; either expand the number of people on the floor or get players to spend more when they’re there. The four strategies for hosts are acquisition, retention, growth and reactivation. “Who should be acquiring, retaining, growing, reactivating?” asked Browne. “It might not be the same person. Acquisition is about service, sales is about growth.”
Hunting is expensive, your reinvestment levels need to be much higher than what you spend to retain. If, on the other hand, your reinvestment levels are too high, you will not get players, you will get shoppers. Finding the right reinvestment level is the “black magic” of player development, Browne said.
VIP parties and tournaments shouldn’t be filled with existing players. Say you’re throwing an event for players with $250-plus average daily theoretical win (ADT) for 25 players. “Hosts can fill these events with players who would normally be there anyway; that’s retention,” said Browne. “Look for players who are overdue and/or need reactivation. These are growth strategies. Go into the database and find hidden gold.”
One Raving client used to break out host duties as follows: 12 percent acquisition, 65 percent retention, 3 percent reactivation, 20 percent growth. When they went to a service-plus-sales model, it was 10 percent acquisition, 40 percent retention, 10 percent reactivation, 40 percent growth. The host job was broken out into managing players and generating sales leads.
“Growth can come from the lower segment of the database,” said Browne. “They are not spending to their potential. This is where hosts should be spending most of their time. They need to build reports out of the database that show spend over time; three, six, nine months.”
One the upper end, high-ADT (i.e. $1,000) low-trip frequency players represent the best sales leads. They have more money to spend and are spending it elsewhere. Low ADT, high-frequency players are in the retention/maintenance file.
“Getting a good player to visit you once or twice additionally per month helps grow your business,” said Browne. “The casino five minutes away will always be their first choice. You need to get their incremental business.”
Customer service is not enough anymore, You need a service and sales model for your hosts. They can’t be a bunch of back slappers, baby kissers and comp writers.
— Steve Browne, president, Raving Service
If more is to be asked from hosts, how best to motivate and organize them? A number of different approaches are being used with success.
“The more closely you align business performance of the player to the host, the better,” said Sean Vestal, director of player development, Lucky Eagle Casino. “For growth, measure year-to-year play. How much did you grow ADT and rated days? How many calls did you make?”
Steve Karoul, president & CEO, Euro-Asia Consulting, who was formerly VP marketing at Foxwoods, said a team approach was used there. Dual codes were created so a sale could be traced to the individual host and to the team as well. Success was good. Bonuses were based on EBITDA. “If it was out of the range, you were obviously buying the business,” said Karoul.
“Hosts should be paid like managers,” Bill Anderson, director of player development, Pechanga Resort Casinos. “They are on call 24/7 and that’s a big commitment.” He noted that while he was at Ameristar, they used a host survey score that figured into incentive plans.
“You will find out who your good hosts are by looking at those surveys,” said Anderson, who is not a fan of measuring the number of phone calls. “With calls, you will see a lot of calls being made the last two weeks of a quarter.”
Karoul said Foxwoods’ salaries for player development executives were in the $60,000-$120,000 range plus bonus. Executive hosts earned $40,000-$60,000 plus bonus. Vestal said Pechanga’s hosts make $40,000-$50,000 with potential to make 30 percent more. All agreed that a 70/30 split between salary and bonus is best.
Anderson added, “Whenever we lose a host, we lose 5-8 percent of play relative to active hosts. That could be grounds for setting growth targets at 5-10 percent.”
All properties have criteria for coding and uncoding players. Anderson looks for an ADT of $400-plus. “If they fall from $400 to $200, you’ll want to get them out of the host’s database,” he said. Karoul agreed that $400-$500 is normally where it falls. Vestal said, “If their first trip is $400, it might be six or seven times before we add them to the host’s list; if it’s $1,000, quicker.”
“At Foxwoods, we had a comp review committee that met monthly,” said Karoul. “Sometimes, you have to fire a customer.”
On the structural front, Amy Burbridge, director of player development, Wheeling Island Hotel Casino & Racetrack, uses a team of generalists. Wheeling has two outside general hosts who spend 60 percent of their time hunting and 40 percent of their time relationship building. The on-site personnel spend their time 70/30 hugging/hunting.
To counter the impact of the new Pennsylvania market, “We switched quickly from retention mode to pre-emptive reactivation,” said Burbridge. “While we lost frequency, we didn’t lose many players. The steady hand of the host helped solidify relationships while we looked to acquire and hunt.”
Browne noted that L’Auberge du Lac has an outside sales office in Houston to identify and acquire new players. At Foxwoods, Karoul had a telemarketing team that was 100 percent focused on inactives (three months or more with no activity). “You do need specialists at the top because 10 percent of customers generate 90 percent of revenue,” he said.
Everyone needs to focus on differentiated assets and what is unique about you. Put a new spin on ‘come in and play and we’ll cover your losses.’ Send a limo to pick up a potential VIP, have a host waiting for them and take them to dinner. That says, ‘You know me and you know my time is valuable.’
— Ginny Shanks, chief marketing officer, Pinnacle Entertainment
Ginny Shanks, chief marketing officer for Pinnacle Entertainment, outlined a number of bedrock principles for successful casino marketing:
• Define Your Brand: Your culture is your brand; it’s what you stand for to customers and employees. Your brand is not an advertising campaign. At Southwest, friendly is the culture. At United, friendly is a tagline.
She also pointed to a new ad campaign at the company’s Lumière Place Casino & Hotel in St. Louis which links the property to the city and its celebrities, as an example of how Pinnacle is growing its brand.
• Acquire the Right Customers: Half of the database at Pinnacle turns over every year. You should never be out of the acquisition business. Pinnacle is going to launch a continuous new member program that aims at multiple visits to cement loyalty.
“Everyone needs to focus on differentiated assets and what is unique about you,” said Shanks. “Put a new spin on ‘come in and play and we’ll cover your losses.’ Send a limo to pick up a potential VIP, have a host waiting for them and take them to dinner. That says, ‘You know me and you know my time is valuable.’”
• Finding opportunity is a matter of believing it’s there: Explore. Brainstorming sessions at Pinnacle led to suggestions such as what if we give VIP’s a leased automobile? And, what if we were to give them stock and call it the Owner’s Club? That led to creating a new loyalty program with what Shanks called WOW benefits. A leased Mercedes (E or M Class two years); an annual trip at the time of their choosing to Wynn/Encore; a seven-night Caribbean cruise, also at the time of their choosing; and 100 shares of Pinnacle stock. Those benefits got the hosts excited and enthusiasm from customers.
• Don’t always be on sale: If you have a defined brand, loyalty programs in place with real emotional connections and an acquisition plan, you don’t always have to be on sale, said Shanks. “At Harrah’s we called people Offer Abusers,” she said. “We incent, incent and incent. They weren’t abusers, they were just taking advantage of what they were offered. A coupon-a-day is not a strategy. We cut back on reinvestment to the $400 ADT player. We saved money and invested more in higher ADT segments.”
From a customer’s perspective, all casinos are the same; there is a perception gap between the properties and the players. It doesn’t matter what you put out there, if it is not perceived by the customers as valuable it is worthless.
— David Line, president and CEO, InfoSearch International
Has the recession ended? Probably not, in the minds of players.“The only way to get out of a downturn is to turn the housing market around, which isn’t going to happen for a long time,” said David Line, president and CEO, InfoSearch International. Citing Federal Reserve Survey numbers, Mike Meczka, principal, MM/R/C, said people “feel” 23 percent less wealthy in dollar terms than they did at the peak (wealth factor). Median value of stock holdings is down 33 percent. Patrons want to save more and take fewer risks. One in four people aged 55 plan to postpone retirement. Price is the more important consideration for 80 percent of consumers.
“Patrons are visiting casinos with some degree of frequency but not as often as in the past and they are bringing less money,” said Meczka. “They have also discovered that they don’t have to play as much to get offers from casinos.”
Gamblers are more optimistic than the general public at large,” said Glenn Goulet, CEO, Table Trac and CEO of Gaming Strategies + Insights. “About 1 in 5 are visiting casinos more frequently. Casinos might look at targeting players 35-50 whom they may not have seen for awhile. One in ten have stopped visiting the competition altogether.”
Goulet also noted that most gamblers think they are still gambling at the same level as in the past, so in many cases they don’t accept a loss of status. Many are therefore given one year’s grace period.
Why do people stop visiting casinos? 65 percent say it’s because they don’t have as much money. Only 5 percent say the quality of deals they are receiving is the main reason they stop visiting.
“From a customer’s perspective, all casinos are the same; there is a perception gap between the properties and the players,” said Line. “It doesn’t matter what you put out there, if it is not perceived by the customers as valuable it is worthless.”
The price of slot machines is a problem, said Meczka. “They’re saying, you’re taking my $500 in the first hour and the value just isn’t there. Hold percentage should be loosened. Give a better price/value to gamblers rather than the artificial value of free play.”
is executive editor of BNP Media Gaming Group and also oversees content development, sales and marketing for the company’s trade shows and conferences, which include Bingo World, Southern Gaming Summit, Gaming Technology Summit, New York Gaming Summit and Casino Marketing. He can be contacted at firstname.lastname@example.org.
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