Tier Management in Casino Player Club and Loyalty Programs
Dusane is a gaming technology company having developed various gaming systems including a complete casino management system, online lottery , sports betting system , virtual sports & progressive gaming , solutions for casinos etc. We cater to around 20 customers around five continents.
Here is the transcript of the webinar which was conducted on Tier Management in Casino Player Club and Loyalty Programs,
Our aim today to conduct this webinar is to empower you with knowledge of making the right choice and asking the correct question when selecting a system for player tearing in your casino’s player club. We shall first show you some statistical figures to cement your resolve on not considering the loyalty system as just another cog to the wheel. We shall discuss evolution of player loyalty system in brief which will allow you to understand the downside of the past method.
Then we shall discuss about hard assignment & reflexive percentage assignment type of tearing logic. We shall then very briefly explain player based points & bonus points setup mechanism. Finally we shall closeout answering questions raised.
The pie chart that you see on the screen exhibits a typical average spent of a major casino , very clearly the largest portion of the spend is allocated to promotional allowances , marketing & admin.
Now if you further explore the previous 37% of marketing expenses we find that the players club / comps take the major piece of the expenses. Now observe that the 37% of the marketing budget is spent on player clubs / comps. This should be valid enough reason to invest in a system that can provide you with correct and vital information of those 20% of players that fetch you your 80% of revenue.
Now let’s discuss a bit on the Flat structure Player Loyalty & Its Challenges.
Now even today many casinos still adhere to age-old flat structure of tier allocation based solely on spent monetary value of coin in value. Now for example:- tier 1 allocated to every player with a total coin in value greater than 20,000 $ and tier 2 allocated to every player with a total coin in or spent value greater than 10,000 $ etc..
Tier 1 >= 20000$ Coin In
Tier 2 >= 10000$ Coin In
Now other parameters such as recency and frequency are totally neglected. Again player win loss is not taken into account here. This leaves you with a totally uneven distribution of players with little or no competitive advantage. A daily visitor in your casino will be ranked equal to a player who has just recently started visiting but has made just a one time large bet.
So we now move one step further to a larger & better system i.e the RFM analysis of player tearing. Now RFM would indicate recency , frequency & monetary. So when we speak of recency , how recently has the player spent in the casino. Frequency would suggest how frequently has the player spent in the casino. and monetary the most important question “how much”.
So unfortunately the win & the loss amount are still not taken into account here. Customers with low RPF scores may be ignored which actually can form the target audience for marketing promotions. Now low recency and high spending could be ranked lower similar to what we observed in a flat structure. So although RFM may be a good standard for the retail industry . now in a casino environment it still does not fit the bill.
Our research leads us to the development of two newly introduced parameters i.e. Bonusing & Discounting. So bonusing & discounting we call it that BD is added to RFM. So it will be the BD analysis. Now let’s look what is this BD analysis. Let me directly explain the difference between the RFM & BD combined.
Lets first consider the RFM analysis of tearing. Here , considered two players one in scenario A and the other in scenario B. In both the scenarios player A & player B have spent equal amount of 1000$ each. But player a loses to the casino and his feeling low, whereas player b has had a good day & wins. While running the tearing logic the casino will still consider the amount spent by both these players 1000$ each , and rank them equally.
So in this case both are on tier level 2. Now you can very easily understand the problem with retaining this player A, whereas if you now consider RFM plus bonusing discounting analysis, here the player who loses to the casino will be considered for an upgrade that will be based on his spent weight age. Hence there’s a probability that the player may get an upgrade to his tier. Similarly player B may just about manage to stick to his current tier. or even may be downgraded that shown here.
So now a word of caution here , please do not take these numbers at face value they have been demonstrated to simplify the understanding of bonusing & discounting. The actual process is bit more complex with percentage, weightages allocated to a per visit theo and total theo calculation. Now the greatest advantage of the BD system is an increase in your players retention & also encouraging the players to increase their spend.
So once the weightage has been calculated based on bonusing & discounting tiers can be allocated based on either percentage assignment or based on hard target assignment.
The hard target assignment is recommended for new startups. So that players do not get directly allocated to the highest tier as would have been in the case of percentage assignment. Once you have substantial data in the period of 3 to 6 months, the percentage assignment can then be adopted. Observe also how the percentage assignment distribution provides a reflexive bell curve i.e the majority of the players lying towards the center of the tier structure and thinning out the top and bottom. As you can observe rank 1 has the least amount of players that will be 2% of the players, then increasing towards the center & then decreasing against towards the bottom. The percentage assignment cause an extremely competitive environment in a casino. The players are not just playing against the casino but are also competing among themselves.
The increment of rank for one player will directly lead to the lowering of rank for another.
Because there’s only so much of 2% you can fit in the top layer. So any added or a better player trying to compete can move up into the rank 1 will definitely have another player move down into rank 2. Hence a competition to achieve a higher status will lead to more player spent and improve casino’s profitability.
Let’s now look at player base point setup. This is a generic player point setup with an added multiplier to take care of various point values. For example, if the coin-in percentage is the value that is returned to a player on every bet i.e wagered then according to this table for every 4$ played.
The casino will return 1 cent back to the player’s account. This value is returned to the player in the form of player point. Please note that players point allocation and tier allocation are two totally different separate entities here & tiering is not based on the point accrued.
They can always be a possibility that the player with a lower point score can land up in a higher tier finally a good loyalty and player club system should have bonus point setup. For more the parameters to choose from the better the marketing strategy for targeting audience.
For example:- You will observe in the table above a program called female fridays triple bonanza which will provide ladies triple points every friday starting from the 20th of April to 31st of May. Some other parameters mentioned are date , tier level , days , age , gender ,happy hours etc..
So to conclude, what have we learned today we have seen why investing in a good loyalty system makes sense we understand why RSM-BD i.e. bonusing & discounting gives you an upper hand over methods. And you now know, what parameters should exist in a good casino management player club programme.
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