The number of casinos has been fairly flat nationally for the past decade but the overall supply of gaming has skyrocketed.
The battle for gaming revenue is as intense as ever, so what strategies can marketers pursue to stay ahead of game?
This was the focus of a session at the Casino Marketing & Technology Conference, which took place this summer at Caesars Palace Las Vegas Hotel & Casino. The table was set by moderator Craig Border, president, Marketing Results, who noted that in 2009, there were 1,397 casinos in the U.S. across the tribal, commercial and racino sectors. Over the next 10 years, growth in the number of properties was minimal; only 51 new properties that fall into those classifications opened, bringing the total to 1,448, or 4 percent growth. Looking at slot machines, the number in those facilities increased from 782,000 to 803,000, a 3 percent increase that mirrors the same slow pace as the total number of properties. Table games grew 8 percent from 2009-2019.
“If there aren’t that many more properties, why does it feel so much more competitive?” asked Broder. “The answer lies in the growth of supply in ‘other gaming categories.’” These are things like cruise ships, bingo rooms, café operations such as Dotty’s and Betty’s, card rooms and off-track betting parlors, which have grown at an amazing pace during the exact same time frame. In 2009, there were 279 of these types of facilities; the current number is 1,428, or only 20 less than the total number of casinos. That’s 412 percent growth.
In the face of these competitive realities, two marketing executives discussed how they approach the challenge of carving out a greater share of business when customers have an abundance of choices. A summary of their presentations follows:
Leila Pleasant, senior manager of player services, Muckleshoot Casino Resort, Auburn, Wash.
Refinement, or the art of making the most of what you have...
There are 28 of what I would call strong competitors for us in western Washington. Over the last three of four years, we have been planning a major expansion that includes a 400-plus room resort, adding eight dining outlets and moving our floor from 3,000 machines to 4,000. With that in mind, we knew that we had to find a way to separate ourselves from the pack.
We started out with a lot of different executives, we had some consultants come in. Some said “rinse and repeat,” some said “let’s start from scratch, what you’re doing now isn’t working.” And at the end of the day three years later, we really did none of that. I’m here to say that before you start anything, take a look at what you’re doing now, what your competitors are doing, what do you do well and where are your areas of opportunity. I am referring to operations only.
I stand by the word “refinement.” Refinement is subtle change. Small changes is what it took for us to move our needle at Muckleshoot. We didn’t come in with new goals that were over the top. We didn’t clean out our executive leadership and hire a whole new management staff. And we did not make major investments in technology. It didn’t take a big financial investment for us to change the way we did business. One thing myself and my team stands by when we’re asked what can we do now: I don’t have the bandwidth is not the answer. You do have the bandwidth. You probably already have the technology and the skill set. Take your blinders off and figure out what you can deliver in-house with your systems, whether it’s slot, tables, database marketing or your analyst team. Find out what you can do and what tools you have to work with.
Here’s what we actually did:
We are always looking at trip count. Incremental trips; how can we get more trips. Our database is filled daily, packed with people who live zero-to-eight miles away—they’re who fill our casino every single day. So you go into your database and do your segmentation and you say, “Oh my goodness, we already have 17-trip average, how do we lift that?” A lot of the challenges seemed impossible at first. How do you move the needle with people who are coming 17 to 19 times in a locals market? I took a look at what programs and promotions received the highest response, separate from dollars. Who was moving based on the metrics that I put on a piece of mail? Who had the strongest response and how quickly was that promotion consumed? Did I get people to check their mail and walk into the casino four hours later or did it take three days? I looked at those two factors before making changes.
Our property executes continuity 12 months a year and we have been doing it for nine years. We have evolved a program to continue to get lifted results from trip, coin-in and revenue. Some of you may be thinking “well, continuity, that’s a huge entitlement program.” If you lift that criteria and your invited group responds to it, what’s so wrong with entitlement? Set that bar out there and they will respond. Continuity has moved our needle tremendously. In one single day, we were executing 5,000 pieces; I now order 9,000 pieces. It was a program that spoke to our database and when we realized there were people north of 25 miles coming to us, we thought, “let’s expand it.” Can we get more people out of that core group? Do we just want 16 to 18 percent response? No, let’s get 24 to 28 percent out of the same people we’ve been talking to. We wanted to make it more convenient for people; I didn’t have to re-create a program, get new vendors, or expand the budget.
In 2015, downloadable free play was first made available in Washington State. It had been around since 2012 and we got to hear about issues that operators were facing in other jurisdictions. I bring that up because there are a lot of new tools that we are using at Muckleshoot. Kiosks and virtual drawings have been around for two years. I was still doing drum drawings and scared to cross that line to go virtual. We went to virtual and implemented kiosk utilization. Those two items in themselves represented huge growing pains in the first 90 days. There’s a learning curve with everything that our guests and our team members experience.
With that being said, since 2016 we have lifted our player group overall trips by more than 20 percent month-over-month. We can take away some of the programs and matrices; our expectations for the group was maybe 2.4 or 2.5 and try to get them to four trips. How much can you move? I have a database with a locals market with an expended reach of more than 100 miles, we literally lifted it over 19 percent. It’s directly related to the program changes we made with continuity and implementing the kiosks with bounceback offers.
We have also seen an increase of over 15 percent in player engagement. Typically we might see who’s going into the casino, who’s going to a buffet, who’s picking up tickets. We have 15 percent more of those people coming in and engaging in some type of gaming activity. Our walk rate is diminished, literally diminished, with implementing the kiosks. I drive every single offer with an expected behavior for gaming and if you want it you have to activate it with our kiosks, and that has driven our increases in trip count.
Some people may say “revenue,” some may say “theo,” which I didn’t include in the results highlights. But my job as a marketer at Muckleshoot is to bring bodies in and I can help influence coin-in, but I can’t control theo—that’s not my department. When it comes to coin-in, we took a look at all of our existing programs and direct mail, that’s where we have the largest budget. I looked at who was activating it, who was using it and where were they coming from. The coin-in increase is all traced to looking at a target market based on travel time and radius, nothing else. [We look at] travel time and radius and doing a hard implementation on changes in the last 24 months.
The other point on promotions is we’re a Scientific Games/Bally house and we are now taking full advantage of the bonusing tools that we bought years ago and either nobody was using or regulation didn’t approve. Again, we looked at what we were doing in-house and what we were missing, whether it was a system or a talent. We use in-game bonusing tools two days a week and it moves the needle; it is delivering the behavior that we anticipated.
We also looked at qualification for criteria; it could be based on trips or any one of our standardized key performance indicators for response rate.
On the results: I do know that since 2016 we have been on a growth trend, and the exciting thing about that is that it took very little work. There was more work analyzing the data, measuring and predicting what’s next. It was not difficult for our guests or our team members. It was really important to take what we were already executing and just make minor changes. Coin-in and theo are up north of 11 percent and casino win is almost up 16 percent since 2016. This is with our poker room closed, our buffet at half-closed with a limited menu and valet for patrons 58 and over moved to the second floor of our parking garage because of a new construction project. In the year ended March 2019, we realized our highest ever top- and bottom-line results. Patron count is down, but the value of the player who walks through the door is up over 43 percent at this point. We have tailored our programs and promotions to the people we recognize value in.
I really believe that our kiosks have changed the behavior of our guests, both response rates and activations, and in-game bonusing tools can increase per-player bet volume.
Mario Maesano, senior vice president, marketing, Hard Rock Hotel & Casino Atlantic City
Creating unique emotional connections with your brand...
I made a presentation to a group of casino executives a couple of years ago and, as marketing and advertising is the best visualization of the brand, I pulled the key springtime promotions from about 20 to 30 regional properties. Twenty of those properties were giving away a Jeep Wrangler. I pulled all of the posters, covered the logo, put them on slides and asked the executives at this casino if any of them could tell me which property was which. None of them could. I asked if any of them could tell me which one was their property and none of them could, until someone said, “Yeah, the one on the bottom left, that’s ours.” And a big chuckle came through the room.
That’s an example of the sea of sameness that we’ve created in regional marketing. We are doing the same things over and over again. What has that created? We have started to market ourselves more and more like a commodity, no different than salt or sugar cane. Commodities are marketed on minor differences, most often on value or packaging. In our world, when we market ourselves as commodities, instead of value, location becomes a marketing tool, as well as packaging or theming or amenities. Once you start marketing just on location and as a commodity, it really becomes a race to the bottom.
What can we learn that industries which are in much tougher competitive situations than casinos learned decades ago? To me, from a 10,000-foot view, it boils down to branding and brand differentiation. Research shows market leaders are almost three times more likely to have a strong brand differentiation story than their competitors. They have something that connects emotionally with their consumers. Once you have that differentiating position, it allows you to be more targeted in your marketing efforts because you can speak directly to your audience.
Why is brand differentiation important from a consumer psychology standpoint? We in the casino industry are very good at gaming psychology; how people game and how to develop them into higher-level players and probabilities. What we tend to not be very good at is retail marketing strategy that comes from outside the industry. What it tells us is a difference in the consumer’s mind that makes it easy for them to choose between close alternatives. And the difference, in the consumer’s mind, helps to explain why they’re spending more of their disposable time and disposable income on a specific brand. It helps them justify driving further (increased trips), spending more per visit (driving ADT) and visit more often (increasing frequency). It also helps them rationalize their purchases, making them feel more satisfied, more loyal to your brand and, one of the key benefits, more forgiving when they have a bad service experience.
What is brand differentiation? We all have brands. The difference between brand and differentiation is subtle and it’s a little tricky. Differentiation means that there is a meaningful difference between you and your competitors, and it’s a lot harder than it sounds. Having a strong property with brand differentiation requires tremendous focus, tremendous discipline and unwavering dedication to executing that. You have to do it when times are tough as well as when times are good.
MAKING A BRAND
There are a million definitions of brands, but just for simplicity, brand is basically your personality. It’s not your marketing or your advertising; those are brand factors. Your brand is everything that involves your property. Your brand is no different than a person’s personality. There are things that a person does that are in character and those that are out of character; things that you are known for and things that you are not known for. It’s as much about what you say “yes” to, and more about what you say “no” to. Being dedicated to your brand is not easy. It means you are going to say no to things that may be financially viable in the moment in favor of a long-term, consistent brand strategy.
One example of a company that is familiar and lost their brand: Coach. When Coach first started out their goal was to be mid- to high-end luxury purses, wallets and so on. They targeted very well, and became a very upscale, aspirational brand. Then somewhere, about five or 10 years ago, they lost their way. They created lower-priced product and targeted a lower-end consumer. They lost their aspirational qualities and their high-end customer, and now they’re struggling to find their footing.
So when I go back and talk to GMs and ask them what’s your brand and what are you trying to accomplish? More times than not, they’ll say we just want to make as much money as possible. That’s great, but that’s not a brand. That does not emotionally connect with your customers. If that message gets down to the front line, your brand could easily be diluted. And once you dilute your brand, you will have a loss of revenue, at least on the high-end, a loss of customer loyalty and possibly turnover.
Brand differentiation is basically your key competitive advantage. It’s not being different for difference sake, it’s difference that is ownable, financially viable, sustainable and, more importantly, emotionally connected.
A real-world casino example: Maryland Live! It’s where I worked for seven or eight years. Live! is wedged between Washington, D.C. and Baltimore. It is wedged between two monoliths: MGM National Harbor and Horseshoe Casino Baltimore. Both competitors are much closer to the consumer base of about 7.5 million people. When MGM and Horseshoe first opened up, analysts predicted that they would destroy Live! Casino and take the vast majority of their market share. Fast forward to today and Live! is number one in the market in slot revenue and a close number two in table games revenue.
How did a small casino in the middle of Maryland take on MGM M Life and Total Rewards from Horseshoe? It came down to branding. We all had the same slots, we all had the same table games, they had restaurants and we had restaurants—we all had the same toys to play with. What we focused on at Live! was our family ownership, the fact that we could do things uniquely that other casinos with corporate structures can’t do, and we focused on our name: Live! It was a name that our owners chose 20 years ago, and we utilized it to mean that anything can happen at any moment. We took that brand and carried it through the entire organization; it’s not just the marketing and the advertising, it’s everything. It went through our standard operating procedures, our scripts, our rewards program, advertising, promos, the outlets, our PR—even our hiring strategies tied to those core values and branding options. When you combine all that together, it created an emotional connection with our customers that differentiated us clearly from our competition and led to some great success.
THE LONG GAME
This is not rocket science, the hard part is sticking to it. You have to understand the competitive landscape, what the competitive differences are, and, most importantly, you have to talk to your customers. You have to do quantitative and qualitative research to see what you can do, what your customers feel your competitive differentiations are, what they feel your competitors do well and how you fit. It should tie to your mission and your values and the story of your company. And, most importantly, it has to be achievable—not just for the weekend but without fail, every single day your brand has to be the lifeblood of your company.
In evaluating your brand you need to avoid some traps. One is service. Service is the most common thing that people think sets them apart; but we all have customer service training programs and unless you’re doing it so that the million people in your database say that you’re number one, it is not a brand position. Everybody does it well for the top one percent. Few do it very well for the million people. When you can get a million people to say service is your brand position, then you’re doing it right.