It used to be that very little was required in the way of incentives to ensure a customer remained loyal to a particular casino. Stephanie Maddox, founder and owner of Power Strategies, a marketing technology consulting company, remember when all it took was the promise of a shiny satin jacket.

“When I started in gaming in the 1980s, player tracking was a punch card that got punched every time someone hit a jackpot, and after so many punches they got a free satin jacket,” Maddox said. “And people wanted those satin jackets so bad.”

Just how bad Maddox soon discovered when word got around that one of the slot carousel attendants, when properly tipped, would punch the card whether a jackpot was hit or not. Even the most respectful and seemingly trustworthy customers gravitated toward this satin jacket shortcut. “People were tipping $20 and getting multiple punches to their cards,” she said. “We all learned a lesson the hard way, that people who shook the general manager’s hand and told him what wonderful customers they were are often not the most loyal players in the house.”

The art and science of determining loyal casino customers and properly incentivizing them has come a long way since the 1980s, as Maddox and other panelists participating in the “Making Player Loyalty a Winning Proposition” session at Southern Gaming Summit can attest. Unfortunately, it appears that a growing number of operators believe that the best and only way to ensure continued customer play at a specific facility is through financial incentives such as free play, which is having a deleterious effect on certain segments of the player base and has many marketers questioning is there any such thing as loyalty in gaming anymore.

“It’s easy to say that customers are promiscuous and will follow the coupons anywhere and for the mass market that is likely true,” said Matthew Ryan, vice president of  relationship marketing for the Pinnacle Entertainment Group. “The retail-level customer will definitely follow where the next T-shirt giveaway is... in hyper-competitive markets, they’re going to chase around the money.”

“But with your more valuable customers, I think you can create loyalty,” Ryan added, “not only through your marketing practices, but by relationship building. That is where loyalty really lies for that type of guest.”

 

TECHNOLOGY LENDS A HAND

One new key to this type of relationship building is technology. A growing number of operators are turning to CRM and analytics technology to properly classify players, find those worthy of keeping, and to determine the proper level and types of incentive needed to keep them coming back to the property. This type of information becomes even more valuable as gaming markets tighten and the competition between regions and properties becomes fierce.

“In general the gaming industry is in a dogfight,” said Christy Joiner-Congleton, CEO of STICS, a predictive analytics company. “This increase in competition eventually comes to every market. Some will survive and others won’t because this type of competition eventually drives the margins out of the business. Pretty soon you’re soliciting the wrong people and incentivizing them too much. In such situations, you soon find that knowledge is power; not that you just know your customers, but how well you know them. Getting into the business of truly understanding your good customers will give you an edge.”

The database mining provided by Stics and other analytics not only help operators keep current customers, but, if properly applied, find new ones.

“There is always some gold in the database,” Congleton said. “For example, you can identify the infrequent customers—the players that have not been back to your property in three or four years and have aged off the marketing systems. It is so much less expensive from a marketing and relationship perspective to bring back someone who has been to your facility—some studies have shown that it is five to 10 times more costly to bring in a new customer than bring back one valuable customer who has been neglected. Operators ought to be focused figuring out who the infrequent customers are and what is needed to bring them back.”

“Properties should also search out the one-timers, people who have been to the property at least once,” Congleton added. “You have already done the work to get them to the property one time, yet typically 30 percent to 40 percent of these players will never return. That is a lot of players.”

Ryan agrees that targeting infrequent and one-time customers for retention is an area the industry should exploit more. “It’s important to get that first time customer to come back for a second and third trip by getting them engaged in your brand and culture,” he said. “That is where a lot of the low-hanging fruit now lies within our industry.”

Operators should also look at the potential of technologies beyond CRM and analytics to drive new or more frequent business to the casino floor. Maddox, for one, would like to see gaming properties better embrace mobile devices and systems, concepts that have proven customer-friendly and have the ability to create loyalty.

“We need to start looking at technology and how it can drive player behavior,” Maddox said. “Does adapting a coupon the cell phone dive customers to the facility? Maybe not, but if I’m walking by a slot machine and it sends me a text message telling me its jackpot is about to hit, maybe I stop and play that machine. The technology now exists to geo-locate a customer throughout a property, we should be pushing instant offers out to them at the actual point where they can be used instead of sending them through the mail.”

“We’re going to see technologies come into play that are really going to make the experience in the casino more worthwhile to the player,” Maddox added. “It’s going to cost the operation, but in the end will keep the player and build some of this loyalty that we are talking about.”

 

PERSONAL TOUCH REQUIRED

Most casino marketers would agree that analytics, database mining and other such tools have the potential to drive more customers and play to a property, but when it comes to creating and engendering customer loyalty, these technologies will only take a property so far.

“One of the things we have seen happen in the last five years is that we have thrown a lot of technology at the business of customer loyalty,” Maddox said. “We’ve said, ‘gosh, if we throw more technology at the customer—launch a website, go mobile or otherwise just do more with the technology—we are going to create more loyal customers.’ I don’t think we have proven that theory yet. I think at some point we will ‘technologize’ the business of loyalty, but we are just in the infancy stages of figuring out how to make that work.”

“We are not making our customer more loyal because they can push a button and call a host from their screen,” Maddox added. “We still have to bring in that human factor; it is still about the face-to-face interaction when it some to loyalty… sometimes we forget how important that piece is.”

The best way to go about creating the interpersonal relationships needed to foster ongoing customer loyalty is still very much an art. One thing is certain however, it requires dedication and complete involvement from the entire casino staff and management team.

“From my perspective, the marketing department actually plays a pretty small role when it comes to creating customer loyalty,” Ryan said. “A billboard or a mailer can only do so much. Customer loyalty starts at the top with the general manager. If the general manager can’t name the property’s top 200 customers, and doesn’t speak to them or have dinner with them on a regular basis…then you are missing out on one of the biggest engagement opportunities there is. If the vice president of operations acts the same way when it comes to these top customers, then you have a major problem. The level of engagement you need to make top customers loyal needs to start at the top and permeate down to all areas of the organization. You need to know each important customer individually, understand their difference and how to cater to them to make them loyal.”

“The relationship you build with the guest is what keeps them coming back to the property,” added Vernon White, vice president of gaming for Tunica, Miss.-based Fitzgeralds Casino Hotel. “I had the privilege of working with Jack Binion for 10 years and the one thing he preached was that when you’re with a guest, no matter if they are a $500 player of a penny slot customer, you make them feel like they are the most important person in the world to you at that time. It was something we became real good at… we had people coming in five days a week because it was so nice to be there, they got treated much better than they did at home or anywhere else.”

“In the gaming industry you’re trying to make people happy to give you their money,” White added. “It isn’t like Walmart where you are going to bring something home for your $500…you’re pulling a handle or playing cards and leaving your money there. The importance of maintaining the relationship is 100 percent on the mark.”

Maintaining this type of customer loyalty philosophy is not easy in today’s casino marketing world, especially when there is so much money chasing fewer and fewer players and all gaming resort properties are judged by quarterly financial results. Still, Ryan and others believe it is vital to take the short-term pain for long-term gain, especially when customer loyalty is involved.

“If you throw a lot of coin out there and do a lot of promotion, it likely won’t even do all that much short term and it definitely won’t do anything long term,” Ryan said. “If you focus on engagement, relationships and the right customers…it will hurt and it won’t protect every dollar in the market, but in the long term it will be more profitable.”