Life Events
Spring Edition, 2012, Gaming & Leisure Magazine.
There are key dates on the calendar that impact the customer wallet, customer availability or both. Do you factor these annual Life Events into your Marketing Strategy?
In the gaming industry, we typically compare each month's results to both the previous month and to the same month last year. And I bet that when you compared your February to January revenue you experienced a slight increase. And when comparing March with February, the majority of you will experience a more significant increase. How can I place this bet with confidence? Because the data shows ups and downs in revenue in the same periods year after year.
Let's look at the gaming revenues reported to State agencies each month for the last three years, discuss why there might be such a predictable biorhythm in when people gamble, and then reflect on how we might adjust our marketing strategy to influence behavior and buck the trend.
(Figure 1: Revenue each year, for three years, as total for the States of Nevada, New Jersey, Pennsylvania, Illinois, Indiana, Connecticut, Mississippi, Louisiana, and Colorado.)
In Figure 1, you can see the Win/Loss reported by eleven states for the last three years. And, for the most part, you will see the same recurring uptick and downturn trend for each of the last three years. So now you can see why it was a pretty safe bet that your month on month Win/Loss from February to March would be up!
If you have been in the gaming industry for a while, you already know that there is seasonality in gaming results and, if you are a CFO, you know that you need to carefully manage cash flow through the lean months. For example, you expect a bump in revenue in May and you are not surprised by the drop in June. The trends in seasonality that I am referring to are not in the context of the weather, but suggest an annual lifecycle, or biorhythm, or series of 'annual life events' that influence the gamers' decision on where to spend their time and money.
As you execute your marketing strategy for 2012, you might want to consider the key Life Events that occur each and every year, because they impact the gamers' discretionary wallet, their available free time to visit your property, or both. Regardless of how the gamer is impacted, the results are less revenue for the organization. How we handle these inevitable Life Events can lessen the negative impact on the bottom line.
So let's follow the bouncing ball of monthly revenue trends! In January, gamers are anticipating receipt of credit card bills or plan to replenish their savings from all the expenses associated with the December holidays when your gamers were spending time with their families and spending their discretionary income on gifts. So this sense of low funds will be reflected in fewer trips or less play per trip. You may experience a slight positive bump toward the later part of February with Presidents Day, the first 3 day week-end. Enjoy the upward trend in March because the inevitable 'taxman cometh' in April. Your gamers will have to file their tax returns in April and even if they do not have to attach a check to their tax return, they will be very focused on the true picture of their finances.
'April Showers Bring May Flowers' and after the dip in April, you will get a nice upward trend into May, including the three day Memorial weekend. Enjoy the positive results in May because you are about to slide into the June dip when it is time for the family's summer vacation. If you have the luxury of a summer destination location, the influx of seasonal gamers may make up the difference for your specific property but, if you look at the data, the overall US results for June will be down, month on month, in 2012! The impact of vacations on play is both financial because of the expense of the trip and also physical in that your gamers will be out of town, or spending summer weekends with the kids. And grandparents may join the family so don't just expect a dip in revenue from your 25-45 year olds.
July is up again but then you will see the dip in revenue in August or September that is associated with the financial impact of getting the kids ready for the school year. You should see another slight uptick in October and you should take full advantage of the three day Columbus Day weekend because you are about to face the inevitable multi-month decline in revenue for November and December! People are not only investing their discretionary income in food, spirits and gifts, but their free-time is absorbed by family, friends, and perhaps travel out of town. The data that shows retailers have their best months during the gaming industry's worst months indicates that your customers are spending their discretionary income elsewhere. This leads us to January, and the annual cycle begins all over again.
You can certainly debate my interpretation of the underlying reasons, and I welcome your ideas about the Life Events, but the data does not lie and the overall shape of the annual cycle is clear.
So what might you do with this information? Does your marketing strategy address these Life Events? Or do you ignore this recurring cycle of behavior and grudgingly accept the ups and downs? As you approach the down-turn in April, June and November, do you reduce your direct mail, promotional and entertainment expenses because people won't come anyway? This could improve your margins by reducing your cost. Or do you try to fight the trend and entice your patrons with creative offers that acknowledge these Life Events? For instance, if I am a gamer working on my tax return in April and you have a promotion that would pay my taxes up to a certain dollar value it may be worth a trip and a few hundred bucks to try and be the big winner. And in August, if I have a chance to win a shopping spree before my kids start school I just might consider risking a little of my budget. Why not team up with a local retailer?
Another surprising trend in the data indicates that very few properties manage to break away from their competition. Regardless of funds expended for direct mail, promotions, or entertainment, with few exceptions, properties maintain their position within their market with very little movement.
Figure 2 shows the Atlantic City properties from January 2009 through November 2011. Properties such as Showboat and Tropicana or the Atlantic City Hilton and Trump Plaza may change in terms of who has a higher win / loss in any given month, but you never see one actually pull away from the other regardless of direct mail, promotions, or entertainment. In fact, as you look at Figure 2, you will see that the properties fall into four distinct 'bands' of revenue and they don't escape them. And, of course, you can see the same cycle of Life Events reflected in the data for Atlantic City. Down in June, up in July and then drifting down to December.
(Figure 2: Revenue for Atlantic City casinos from New Jersey Division Gaming Enforcement)
If 'Knowledge is Power' then what can you do with this information? If you are new to the industry, this concept will help you to understand the fluctuations and to prepare your plans accordingly. If, like myself, you have been around for quite some time then it is good to have the data at hand to educate others and to challenge their thinking. Far too often, we apply the same logic to our offers all year round and, as I discussed in the Winter 2011 edition, we reward our players for past behavior and do not focus on the benefits of loyalty by keeping them informed that one more trip or a little longer stay may keep them in their current tier or move them up a level.
In this instance, 'Knowledge is Power' for your customers as well. Let me give you an example. You know that November and December will be low months so instead of offering Holiday offers for November and December and trying to compete for their attention with all the other activities in their lives, why not focus your direct mail on their points balance and what they have to do, in trips and play, to either retain their status or achieve the next level. And why not sweeten the pot with some sorely needed cash-back if they do indeed achieve that next level in December? And yes I am aware that some of these 'ideas' may not be allowed in your jurisdiction. The real message is be creative in your thinking.
What really drives loyalty? Your club, your club, your club!!!! I suggest you pull your own data, look for your cycles, and then lay down a marketing strategy for the rest of 2012 that uses the incentives of the Club to 'speak to your audienc' in a meaningful way that reflects the key events in their lives. Good luck with bucking the trends!
This article is published in the Spring 2012 edition of Gaming & Leisure Magazine.
Susan Kesel has spent the past 20 years in the gaming industry working across mainstream and tribal gaming. An Alumnus of the Board of Advisors for TribalNet and for Gaming & Leisure Magazine, Susan is an innovative and open-minded business technologist. Susan was instrumental in the development and implementation of Turning Stone Resort and Casino's patented Account Based Wagering System.
Read her other articles here or send Susan a comment at skesel@harvesttrends.com
Spring Edition, 2012, Gaming & Leisure Magazine.
There are key dates on the calendar that impact the customer wallet, customer availability or both. Do you factor these annual Life Events into your Marketing Strategy?
In the gaming industry, we typically compare each month's results to both the previous month and to the same month last year. And I bet that when you compared your February to January revenue you experienced a slight increase. And when comparing March with February, the majority of you will experience a more significant increase. How can I place this bet with confidence? Because the data shows ups and downs in revenue in the same periods year after year.
Let's look at the gaming revenues reported to State agencies each month for the last three years, discuss why there might be such a predictable biorhythm in when people gamble, and then reflect on how we might adjust our marketing strategy to influence behavior and buck the trend.
(Figure 1: Revenue each year, for three years, as total for the States of Nevada, New Jersey, Pennsylvania, Illinois, Indiana, Connecticut, Mississippi, Louisiana, and Colorado.)
In Figure 1, you can see the Win/Loss reported by eleven states for the last three years. And, for the most part, you will see the same recurring uptick and downturn trend for each of the last three years. So now you can see why it was a pretty safe bet that your month on month Win/Loss from February to March would be up!
If you have been in the gaming industry for a while, you already know that there is seasonality in gaming results and, if you are a CFO, you know that you need to carefully manage cash flow through the lean months. For example, you expect a bump in revenue in May and you are not surprised by the drop in June. The trends in seasonality that I am referring to are not in the context of the weather, but suggest an annual lifecycle, or biorhythm, or series of 'annual life events' that influence the gamers' decision on where to spend their time and money.
As you execute your marketing strategy for 2012, you might want to consider the key Life Events that occur each and every year, because they impact the gamers' discretionary wallet, their available free time to visit your property, or both. Regardless of how the gamer is impacted, the results are less revenue for the organization. How we handle these inevitable Life Events can lessen the negative impact on the bottom line.
So let's follow the bouncing ball of monthly revenue trends! In January, gamers are anticipating receipt of credit card bills or plan to replenish their savings from all the expenses associated with the December holidays when your gamers were spending time with their families and spending their discretionary income on gifts. So this sense of low funds will be reflected in fewer trips or less play per trip. You may experience a slight positive bump toward the later part of February with Presidents Day, the first 3 day week-end. Enjoy the upward trend in March because the inevitable 'taxman cometh' in April. Your gamers will have to file their tax returns in April and even if they do not have to attach a check to their tax return, they will be very focused on the true picture of their finances.
'April Showers Bring May Flowers' and after the dip in April, you will get a nice upward trend into May, including the three day Memorial weekend. Enjoy the positive results in May because you are about to slide into the June dip when it is time for the family's summer vacation. If you have the luxury of a summer destination location, the influx of seasonal gamers may make up the difference for your specific property but, if you look at the data, the overall US results for June will be down, month on month, in 2012! The impact of vacations on play is both financial because of the expense of the trip and also physical in that your gamers will be out of town, or spending summer weekends with the kids. And grandparents may join the family so don't just expect a dip in revenue from your 25-45 year olds.
July is up again but then you will see the dip in revenue in August or September that is associated with the financial impact of getting the kids ready for the school year. You should see another slight uptick in October and you should take full advantage of the three day Columbus Day weekend because you are about to face the inevitable multi-month decline in revenue for November and December! People are not only investing their discretionary income in food, spirits and gifts, but their free-time is absorbed by family, friends, and perhaps travel out of town. The data that shows retailers have their best months during the gaming industry's worst months indicates that your customers are spending their discretionary income elsewhere. This leads us to January, and the annual cycle begins all over again.
You can certainly debate my interpretation of the underlying reasons, and I welcome your ideas about the Life Events, but the data does not lie and the overall shape of the annual cycle is clear.
So what might you do with this information? Does your marketing strategy address these Life Events? Or do you ignore this recurring cycle of behavior and grudgingly accept the ups and downs? As you approach the down-turn in April, June and November, do you reduce your direct mail, promotional and entertainment expenses because people won't come anyway? This could improve your margins by reducing your cost. Or do you try to fight the trend and entice your patrons with creative offers that acknowledge these Life Events? For instance, if I am a gamer working on my tax return in April and you have a promotion that would pay my taxes up to a certain dollar value it may be worth a trip and a few hundred bucks to try and be the big winner. And in August, if I have a chance to win a shopping spree before my kids start school I just might consider risking a little of my budget. Why not team up with a local retailer?
Another surprising trend in the data indicates that very few properties manage to break away from their competition. Regardless of funds expended for direct mail, promotions, or entertainment, with few exceptions, properties maintain their position within their market with very little movement.
Figure 2 shows the Atlantic City properties from January 2009 through November 2011. Properties such as Showboat and Tropicana or the Atlantic City Hilton and Trump Plaza may change in terms of who has a higher win / loss in any given month, but you never see one actually pull away from the other regardless of direct mail, promotions, or entertainment. In fact, as you look at Figure 2, you will see that the properties fall into four distinct 'bands' of revenue and they don't escape them. And, of course, you can see the same cycle of Life Events reflected in the data for Atlantic City. Down in June, up in July and then drifting down to December.
(Figure 2: Revenue for Atlantic City casinos from New Jersey Division Gaming Enforcement)
If 'Knowledge is Power' then what can you do with this information? If you are new to the industry, this concept will help you to understand the fluctuations and to prepare your plans accordingly. If, like myself, you have been around for quite some time then it is good to have the data at hand to educate others and to challenge their thinking. Far too often, we apply the same logic to our offers all year round and, as I discussed in the Winter 2011 edition, we reward our players for past behavior and do not focus on the benefits of loyalty by keeping them informed that one more trip or a little longer stay may keep them in their current tier or move them up a level.
In this instance, 'Knowledge is Power' for your customers as well. Let me give you an example. You know that November and December will be low months so instead of offering Holiday offers for November and December and trying to compete for their attention with all the other activities in their lives, why not focus your direct mail on their points balance and what they have to do, in trips and play, to either retain their status or achieve the next level. And why not sweeten the pot with some sorely needed cash-back if they do indeed achieve that next level in December? And yes I am aware that some of these 'ideas' may not be allowed in your jurisdiction. The real message is be creative in your thinking.
What really drives loyalty? Your club, your club, your club!!!! I suggest you pull your own data, look for your cycles, and then lay down a marketing strategy for the rest of 2012 that uses the incentives of the Club to 'speak to your audienc' in a meaningful way that reflects the key events in their lives. Good luck with bucking the trends!
This article is published in the Spring 2012 edition of Gaming & Leisure Magazine.
Susan Kesel has spent the past 20 years in the gaming industry working across mainstream and tribal gaming. An Alumnus of the Board of Advisors for TribalNet and for Gaming & Leisure Magazine, Susan is an innovative and open-minded business technologist. Susan was instrumental in the development and implementation of Turning Stone Resort and Casino's patented Account Based Wagering System.
Read her other articles here or send Susan a comment at skesel@harvesttrends.com
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