Research Library

But Did the Casino Make Any Money?

At a recent presentation of casino performance before the tribal council, the casino manager distributed handouts illustrating gaming activity. “Handle is up,” he proclaimed as the council members examined bar charts showing year over year handle growth. “Business is growing. The casino is experiencing consistent increases in handle from prior years. We’re driving revenue.”

The casino’s marketing director then walked the council through an analysis of recently completed direct mail campaigns, special events and promotions. For each of these campaigns the marketing director presented a profit and loss statement showing the profit made. “Our direct mail program has been very successful. Marketing has been able to drill down into the database and mine very profitable customers. Our theoretical win continues to improve and for each direct mail campaign, we have been able to generate on average, theoretical win in excess of 75% of expenses. Our marketing is working.”

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The Marketing Audit

Several years ago, the marketing director of a medium sized casino saw an opportunity to partner with a nearby hotel to achieve mutually beneficial goals. The casino, lacking a hotel, needed a lodging property to house its overnight customers. The casino’s marketing director also recognized the potential gaming value of transient lodging customers if they could be induced to cross the street and visit the casino. Thus, a promotion was created. The hotel agreed to set up a direct billing accow1t and the casino agreed to provide the hotel with a stock of coupon books containing a number of compelling offers to be given to guests upon check-in.

The coupons were designed, printed and numbered. As the books came into the receiving department, they were shipped to the secured document storage closet in the accounting office. The marketing director then requested several cases of coupon books from accounting, which he delivered to the hotel.

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A Behavior Based Approach to Market Segmentation

Market segmentation has long been recognized as a fundamental tool of casino marketing. Casinos throughout the United States segment their customers based on a variety of criteria. Casinos in Las Vegas use criteria such as convention, tour and travel, retail and invited guests. Atlantic City casinos h ave additional criteria defined by mode of transportation and distance traveled such as bus line run, bus charter, inner market and outer market.

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Must Be Present to Win

No industry relies on promotions to drive customer traffic quite like the gaming industry. Casino operators love to conduct promotions. In fact, in many gaming operations, the primary role of casino marketing is perceived as that of designing and implementing promotions.

Casino promotions take all shapes and sizes and run the gamut from frequent “hot-seat” promotions, in which players are selected from the casino floor and awarded a modest prize for playing slot machines, to large-scale drawings for cash, cars and even houses. For the latter, many casinos attach the caveat, “must be present to win” to their list of rules. Virtually all casino operators who employ this rule have, at one time or another, heard complaints from both customers and employees over this requirement. This article explores the pros and cons of requiring customers’ presence at drawings and how casino operators can design promotions that best meet the needs of their market..

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It’s Labor Day Again?

Recently, a casino manager of a large local-oriented gaming property had an epiphany. He realized that Labor Day was only six weeks away and he wanted to do something for his regular players. He assembled his marketing team and together, created a plan to give each customer a gift on the holiday if they earned a certain number of slot club points. The general manager defined some caveats: the gift had to have the casino’s logo on it, it had to be something patriotic and it could not cost more than two dollars. The purchasing director and marketing director then ran off to contact their vendors and see what they could find.

Unfortunately, the items that were available in sizable quantities were limited. None of the samples impressed the general manager. Further, some of the available items could not accommodate
the casino’s logo. Worse, all of the items presented cost well in excess of two dollars. Meanwhile, the ad agency was contacted and asked to start work on an ad. However, until the item was selected, the agency could not produce anything more than thumbnail sketches.

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Vegas is Not the Competition

A critical factor in determining the success of a casino operation is to correctly define the competition. By properly delineating one’s competition, a casino can design a facility that best meets the needs of its market, optimize the allocation of precious capital, forestall attempts by competitors to gain an advantage and more prudently spend marketing dollars. One of the single biggest mistakes an Indian casino can do is define Las Vegas as one of its competitors.

Casinos that make the assumption that Las Vegas is part of their competitive mix do so on the flawed hypothesis that, because some of their customers periodically visit Las Vegas, the casino can divert one or two of those visits to their property. While at first blush this reasoning appears sound, a closer examination of customer behavior reveals that this logic is flawed. These casino operators simply do not understand the basic reasons gamblers choose periodically vacation in Las Vegas and the reasons visit Indian casinos with such great frequency.

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Dispelling the Myths of Cash Back

The player rewards program or slot club is the cornerstone of any effective casino marketing plan. Too often these programs are created by mimicking what the competition is already doing or by examining what casinos in other markets do with their clubs. Often these programs use “cash back” as the primary incentive to get players to use their cards. Cash back in this scenario refers solely to the redemption of bonus points for cash. This article examines cash back as a marketing tool and some of the myths that surround it.

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Database Segmentation Analysis

Casino management systems give the gaming marketer a wealth of information to better understand individual player behavior. Each successive generation of management systems allows casino operators to understand their customers and develop programs that recognize and reward loyal play. All casino management systems give the marketer detailed player information showing trip history, actual win/loss, theoretical win/loss, point and comp redemption history, as well as information on personal player data.

While casino management systems can accumulate vast stores of data on individual behavior they tend to fall short in their ability to summarize the behavior of player segments. The report writing tools that come with many of these systems tend to summarize transactional data to better assist the slot and table game departments rad1er than provide the marketing department
with useful information to conduct and analyze marketing campaigns. Fortunately, it is not too difficult to extract the data from the master system and analyze it using a relational database program. This technique does require individuals within the marketing department with advanced skills using relational database programs. Alternatively, the casino can turn to a database marketing consultant to perform a periodic analysis.

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The Marketing Systems Manager

Marketing and operations executives always have a need for information from their casino management system. Fortunately, designers of these systems predicted many of those needs and designed a series of reports that can be run by the system. Of course accessing those reports requires training and skills senior executives often do not have the time to learn. In addition, executives often have a need for information these reports cannot answer. Who then does the executive turn to in order to extract the information he/she needs to make an informed decision?

Every casino marketing department has a group of professionals that know how to perform certain operations within the casino management system. The bus manager knows how to set up groups, assign tracking codes and monitor the performance of each bus. The promotions/special events manager knows how to set up an event and track expenses, forecast revenue and prepare proformas. The database manager knows how to pull mailing lists given a set of gaming criteria. Each member understands specific components of the casino management system. Few, if any, know how to operate all of the marketing modules within the player tracking system.

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I Want a New Club

A mid-sized casino in the southeast recently replaced its casino management system. Marketing had grown frustrated with the system’s inability to do all of the things that it needed in order to be competitive. The marketing staff could not conduct electronic drawings. They were unable to award non-negotiable slot credits to player accounts and pulling data for periodic analysis was cumbersome and difficult. After much lobbying, the marketing department was finally able to convince senior management that a new system was needed if the property was to remain competitive. The system that was replaced was only three years old.

The vendor who had provided the casino management system was not invited to participate in the RFP process. Rather than re-invest in a system that did not deliver on all that was promised, the casino chose to look at other providers. In addition to the sizable capital cost, the casino endured a week of disruption as reader boxes and other hardware were replaced and the staff was retrained on the new system. Customers were also frustrated as points and comps did not transfer over accurately into the new system .

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