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The Evolution of Customer Analytics Marketing in the Gaming Industry Continued

Written by: Jim Stafford

Article Overview: My first article provided an introduction to the evolution of analytics in the Gaming Industry. Casinos operaing at or above stage three are experiencing real competitive advantage. This article describes stages three thru five in detail.

The Evolution of Customer Analytics Marketing in the Gaming Industry Continued

Stage 3: Predict Customer Value and Behavior to Align Offers -

Casino’s in this stage have already successfully created customer segments based on actual customer profitability. Casinos in stage three are adding the power of prediction to their marketing strategies, i.e., forecasting future customer profitability based on data from their CMS systems, player card, and other data like gender, age, and distance from the casino. A forecasting model predicts future/potential profitability for each and every casino customer as well as the likelihood to attrite. These predictions are then used to segment customers into as many segments as is deemed practical for marketing purposes. For example:

Potential Diamond
Potential Platinum
Potential Gold
Potential Silver
Potential Bronze

Specific promotions and comps are aligned to keep high value customers loyal, and to upwardly migrate low value customers that possess high potential.

Stage 4: Improve Customer Forecasts and Segmentations Based on a 360o View of the Customer

Cutting-edge casinos like Harrah’s are better able to assess current customer and predicted customer value by adding new and important data. A 360o view of the customer can be created by integrating data from Lodging, Food and Beverage, Meetings, the Call Center, the web and customer surveys. Once the 360o view is developed, new analytical techniques can be used to increase customer insight and deploy even more sophisticated segmentation strategies. These analytical techniques include traditional data mining using additional data, text mining (of unstructured data from call centers and the web), and Web Mining of customer website behavior.

The improvement in forecast accuracy from additional data can be very significant. Web data can deliver 20% better forecasts; Attitudinal data can increase forecast accuracy by 30%; and, unstructuered text data can increase forecast accuracy by as much as 40%.

Stage 5: Optimize and Operationalize Campaigns, and Offers Across Channels

Many casinos today are achieving increased marketing productivity by utilizing campaign management applications to automate labor intensive/manual customer segmentation and marketing activities. The most advanced casinos create, optimize and operationalize their marketing campaigns over time and channels based on:

 Current and predicted customer value and behavior
 Contact optimization based on business rules, and in some cases mathematical optimization algorithms
 Real-time offers based on awareness of customer location and activity in the casino property

The goal here is to use all data that is available to develop models and an optimal contact strategy that meets the needs of the customers and the casino – a win-win situation.

Marketing strategies associated with current and predicted value were already covered in earlier stages, above. We will now turn our attention to optimization and real-time offer management.

Optimization

Optimization is a technology for creating an optimal contact strategy across campaigns over a given timeframe. It is based on a number of factors:

 Customer communication channel preferences
 Stated customer interests based on survey or web-form data
 Value of an offer/comp to the casino
 Channel capacity
 The probability of customer response to specific offers/comps
 Customer contact frequency constraints (to minimize contact fatigue)

Contact optimization approaches can be based on rules or by mathematically driven optimization algorithms. While both approaches are valid, it is difficult to understand and explain how optimization algorithms actually come up with their contact strategies. Business rules are easier to understand and explain, and are often a good first step in getting acquainted with contact optimization.

Here is an example of business rules used for developing an optimal contact strategy, “Over the next quarter’s planned campaigns, let’s only communicate with customers that have a 70% or greater likelihood to respond to various offers, while taking into account:

 The maximum number of communications per customer is four.
 Only extend one offer to each customer over this time period – the one with the greatest return for the casino.
 Direct mail channel capacity is1MM pieces.

Without optimization, the casino may send out 2.5MM offers (increasing costs and extending the campaign schedule due to capacity constraints), while communicating with some customers ten times with conflicting, lesser value offers. This is not good for customer loyalty or casino/property profitability.

Real-time Offers Based on Awareness of Customer Activity in the Casino

Some leading casinos realize that appropriate offers in real-time can keep customers in their hotel property. Imagine making a real-time 50% off spa-treatment offer to a woman that just lost $300 at Baccarat. It makes her feel better and increases her property spend and loyalty.

Harrah’s uses its Total Rewards Program to track customer behavior in real-time. A guest celebrating her birthday might insert her loyalty card in a slot machine and be surprised by a promotions manager bearing a birthday card and a cookie .

The key is to know where the customers are in the property (based on use of the customers loyalty card), and tying that to real-time offers that are developed dynamically or are pre-determined via the utilization of campaign management applications. Offer integration may be data-based for pre-determined offers, or real-time via web services for dynamic offer creation. Increased profitability, customer loyalty and share-of-wallet will result by getting the right offer to the right customer at the right time.

In summary, optimization is a process where customer preferences, customer value, and casino/corporate goals and constraints are managed to create an optimal contact strategy that increases the return on marketing investment. More specifically, optimization requires the identification of a goal (e.g., maximizing profits), as well as the identification of constraints (e.g., marketing budget, channel capacity, maximum number of contacts per individual per month, etc). Optimal contact strategies are then typically based on the development of and prioritization of business rules, or via linear or non-linear optimization algorithms.


Summary

The use of additional customer data, data mining, sophisticated segmentation schemes and contact optimization can lead to increased customer satisfaction, loyalty and spend in the casino. These benefits can even extend beyond the casino. Marketing strategies based on a 360o view of the customer can benefit the property (including Lodging, Spa, Meetings, etc.) as well as the enterprise in the case of a multi-property entity.

Casino’s not utilizing these strategies will fall behind and realize less and less share of wallet.

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Article Tags: analytical techniques, casino customer, cms systems, customer insight, customer profitability, customer segments, customer surveys, customer value, customer website, forecast accuracy, gender age, marketing strategies, operationalize, segmentation strategies, stage 5, text mining, unstructured data, value customers, web data, web mining



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