Lessons from the Airline Industry

Students of hospitality schools are often advised, as they embark on their careers, to look at other industries for emerging trends, new technologies or promising business strategies and see how the y may be applied to their own businesses. This advice also holds true for students of the gaming industry. Technological advances such as wireless technologies or e-marketing were first developed by other industries and are only now being embraced by the gaming industry.

An important lesson can be learned by watching what is now occurring in the airline industry. Today, several of the so-called “legacy airlines” are either in Chapter 11 bankruptcy or on the brink of filing. This is not because there is a shortage of customers. The nation’s airlines have recovered from the drop in passenger volume caused by the events of 9/11 . Anyone who has traveled lately knows that the nation’s airports and planes are running at or near capacity.

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Customer Service Measurement Tools

Recently, anew casino opened a sizable expansion of its property, including a larger slot floor and new restaurants. Through a carefully planned opening marketing campaign, leadership announced the opening of its expansion to the regional community in print ads, broadcast media and direct mail.

A small group of wealthy retirees, comprised of three couples, were some of the recipients of this direct mail campaign. They had visited the old property and found the facility not to their standards. It’s cramped and the restaurant offerings were limited to a small snack bar. However, the new facility looked much more appealing and they decided to give the place another try. Also, the attractive “free slot play” offer was just the hook to get them to try the place again.

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First, Get the Product Right

Marketing is a process. Marketing begins with “product marketing” – a process of conceptualizing, aligning, and delivering products that meet or exceed consumer needs, wants, and expectations at a price that creates a value. If there is unutilized capacity, then it is filled via “demand marketing” programs- a constant stream of motivators that are packaged and delivered to motivate first time visits among the uninitiated or additional repeat visits among experienced, existing players. Demand marketing is comprised of cash mailers, promotions, two for one meal coupons and other offers that attempt to increase traffic into a casino during midweek and daytime periods.

Casino marketers are often forced to turn to demand marketing prematurely when the package of gaming and entertainment amenities is insufficient to stimulate consumers to visit the property. In other words, the sum total of products that the casino has to offer is not, in and of themselves, sufficient to attract people. Before a casino turns to demand marketing, it must first make sure that its products are aligned with the market. It must first make sure that the products are right.

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Player Incentives: Don’t Give Away the House

Almost all segments of the leisure and hospitality industries utilize loyalty programs. Airlines, hotels, rental car companies and even restaurants employ methodologies to induce repeat visitation, foster loyalty and build long term relationships with their more frequent and most profitable customers. The airline industry first instituted these programs in the early 1980’s and was followed by hotel and rental car companies. Today, a wide variety of retail industries employ some form of reward programs. They have all come to understand the value of incentives rewarding frequent users of their products and services. While there are no hard and fast rules regarding the percentage of customer reinvestment, it is generally assumed that these industries return between 2% and 15% of the theoretical revenue derived from their loyal customers in the form of various incentives.

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Delivering Outstanding Customer Service

For years many Indian tribes have recognized the importance of customer service in their casino operations. Gaming is after all, an entertainment experience and, while winning money is an important part of that experience, the majority of customers walk away from a casino with less money than they had than when they entered. They are left with the memory of the experience, hopefully positive, that will prompt them to return. Great customer service adds value to that experience and acts as an inducement to return. Rude or indifferent service can easily sour these experiences and discourage patrons from returning.

To advance the concept of quality customer service, many tribes have invested in employee training programs that teach employees how to deliver outstanding customer service. These programs focus on teaching the importance of a good attitude, a smile, empathy towards player concerns and taking ownership in order to solve a customer’s problem. While smiling and caring employees are an important factor in the delivery of outstanding customer service, it is just one component of the service delivery process.

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Effective Billboard Design

Virtually all casinos rely on outdoor advertising tocommunicate with their existing and prospective customers. This mode of communication, in the form of traditional “bulletin” style and “30-sheet” rotator billboards, has been embraced by gaming operations for decades. Casinos in competitive markets seek the best locations and in turn, bid up the price of available boards. Billboards are often purchased deep inside secondary competitors’ markets and in markets that are far beyond logical market definitions. In fact, the hunt for available outdoor space often takes casino marketers outside of their traditional markets and into regions where they cannot hope to penetrate.

Outdoor advertising is also expensive, often comprising up to one third of a casino’s advertising placement budget. Yet despite these high costs, casinos continue to rent outdoor space in illogical locations, deliver messages that are not salient to drive-by traffic and create murals that are often illegible or unreadable. Much of the outdoor advertising that casinos employ is simply ineffective.

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Marketing’s Role In the Design of the New Casino

Recent advances in game technology, improved access to capital markets and the continued growing popularity of Indian gaming is creating a climate that is stimulating an unprecedented expansion of Indian casinos. In the next few years, many tribes will expand their facilities or build new casinos to better serve their guests and to provide essential services for tribal members.

Opening a new property or introducing a greatly expanded facility puts tremendous strain on the property’s leadership and often thrusts managers in unique roles that differ dramatically from the day to day operations of the gaming enterprise. While architects, contractors and consultants manage the construction process, property managers are often enlisted to help with developing the new property while continuing to manage their own departments. The slot director and table games director play an integral role in designing the new casino floor as does the food and beverage director in designing the kitchen, dining room and menus. More often than not though, marketing is not invited to participate in the initial planning of the new property.

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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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