Targeting the Top

by Charles Anderer
July 6, 2012

The slot business at the property level has always depended on a relatively small number of high-volume players. But that was before increased competition, decreased economic vitality and improvements in the quality of marketing solutions on everything from merchandise to software that provides intelligence on where your best players are on-site and what they’re doing, even if they don’t happen to be in your casino.

The combination of heightened focus on high-end players and technology that brings operators closer to them has resulted in a big win for players, who are eligible for better returns on their often stratospheric losses all the time. It has also put increased pressure on operators to deliver on the high-end, a segment of the business that has held up better than expected through tough economic times.

It starts with recognizing VIPs as a segment unto themselves.

“There’s been a new awareness created as to the relative value of VIPs,” said Michael A. Meczka, president, Meczka Marketing Research Consulting (MMRC). “Operators used to market to them in the same direct mail fashion, with promotions, and maybe allow them to have a host. One of the biggest things on the VIP side is understanding how important they are in the scheme of things. Too many personnel at the casino think that all casino patrons are equal and deserve to be treated equally, when in fact they’re not. Frequency of visits and spend varies greatly. That awareness is helping operators get a better understanding of the customization that’s required for VIP programs.”

What constitutes a VIP varies by region and by market, but ask the experts and $500-per-visit is the number that comes up most frequently.

“Everybody answers the question differently,” said Randy Fine, managing director, The Fine Point Group. “If you would ask Steve Wynn, he would say somebody who’s coming to the casino with $50,000 or more. Your average tribal casino might say someone who’s coming with $300. Some people focus on how much they’re worth when they come; some focus on over a month or a year. For me, it’s somebody with $500. If somebody is showing up expecting to lose $500 that, to me, is a lot of money.”

Fine added that it’s important to look at people across multiple dimensions; not just look at how much players are worth when they visit, but how often they visit. “If someone shows up every day with $100, one could argue that he’s worth more than the person who shows up once with $500,” said Fine. “The flip side is the guy who shows up with $500 probably shows up at casinos elsewhere. Most people who gamble $500 at a time like to do it relatively frequently. You have potential upside with that customer. The customer who shows up every day, you’re probably getting most of what they have to gamble.”

Fine is also a big believer in focusing marketing efforts on getting that $500 player to play at your casino, as opposed to encouraging players with lower levels of spend more. “It’s a lot harder to get the $200 customer to play up,” he said. “People don’t tend to go to more than one casino a day. When you get a customer to play up, you’re actually getting them to gamble more than they otherwise would. But when you get a second or third trip, you’re actually taking that trip from somebody else. So you’re not actually expanding the gaming wallet, you’re shifting it around. That’s why we focus on market share reallocation. I’m not trying to get people to gamble more; I’m just interested in getting people to gamble more with me.”

Understanding who those people are is obviously of enormous value. No surprise, then, the level of interest in products that help answer the question. In Las Vegas, DiamondStream’s new Casino Share Intelligence (CSI) Vegas-oriented product has generated a lot of interest, said Brian Flynn, co-founder. The regional version of CSI looks at all patrons who live within 150 miles of the property and have made at least one attempted withdrawal in the past 12 months. The Las Vegas version allows the operator to look at any jurisdiction in the U.S., by state, by three-digit zip, individually or in combination, so that they can zero in on whatever market they want or they can look at the entire country.

The Las Vegas Most Valuable Patron (MVP) version identifies someone who has made $5,000 cash withdrawals in Las Vegas and/or someone who has taken out $1,000 a day every day they have gamed, regardless of where they have gamed, and there are currently more than 55,000 people nationwide who meet those criteria. The product, using that definition, then rank-orders people based on withdrawals across defined geographical areas set by the user of the system.

“We can let the operator see exactly when the person took out how much money and whether they took that money out at one of their competing peer properties or if it was taken out at a non-peer property in Las Vegas or if it was taken out at some other regional property,” said Flynn. “We have classified all of the casinos in Vegas into one of 14 categories based on location and quality level. It’s based on your hotels.com ranking, whether you have high-end restaurants, meeting and convention space, etc. The operator can then evaluate withdrawals that the player is making and eliminate withdrawals from non-peer properties and regional properties so that they’re only looking at Vegas withdrawals by, for instance, people who have been to their property at one of their competing properties.”

Of course, your top customers just might tell you they’re hopping around, just for the fun of it. “You have to know that your high-end business will be offered every offer that comes along,” said Linda Gordon, director of marketing, SCA Gaming. “They are not loyal; they have cards in multiple locations. They are promiscuous, and they’ll let you know it.”

Gordon added that the 80/20 rule, “is more like the 90/10 rule now,” meaning an exceedingly small number of players accounts for the lion’s share of slot revenue by property.

Within that 10 percent, said Meczka, there’s going to be another 10 percent that provides 60-70 percent of that revenue. “There are very few people who make a dramatic impact on the casino property,” he said. “It is not uncommon for a casino that I do work in to have a $200,000 to $400,000 to $600,000 annual player who comes in with frequency throughout the year. These guys now are finally being recognized and being secured to the casino; they are doing everything they can to enhance and maintain their loyalty. Four years ago or more, they didn’t do the required accounting, or didn’t pay attention to them, or didn’t have a host department, or opted not to identify them.”

Customization is a buzzword in casino marketing these days, and nowhere more so than at the top. At the same time, high-end players want some of what everyone else wants; fun, more time-on-device, and more time at the casino. And it doesn’t have to all cost money.

“What VIPs are looking for to some degree is a service experience,” said Fine. “They want to feel valued; they want to know that people know their name. These are not necessarily financial things, but service and experiential. On the offers and rewards side, these customers tend to be a little more sophisticated in terms of understanding what they get at one casino vs. another. “Aspirational rewards matter, too. One mistake that most gaming operators make is they see a VIP and they assume that this guy’s gambling a lot, he must be giving it all to me. And that’s usually not the case. There’s usually a lot of overlap between Property A’s VIPs and Property B’s. Giving them reasons to consolidate their play is still a good idea.”

Recognition is essential, and can also be accorded in multiple, low-cost ways. Gordon said that 90 percent of SCA’s loyalty kiosk business is tiered and, of those tiers, the VIP segment is rewarded separately. “Operators are very interested in making sure that the VIP guests when they swipe their card at our kiosks receive awards that are appropriate to them, and the number of VIP customers who are rewarded separately has gone up significantly.”

VIPs clearly like personalization and being kept informed, said Meczka, whose firm regularly interviews high rollers. “They want to make their own independent decisions for play but they often times are not as informed as they’d like to be about special events, changes in the players club, how the club works by tier level and why they should get to the next level. They do like the personalization of the host. They think it’s justified based on the level of their play; they get frustrated if they do not get their host. Those places that do well with a good host program keep those VIPs very satisfied.”

In the spirit of VIP satisfaction, Meczka gives high marks to programs such as Pinnacle’s mychoice with its Owners Club, which give high-end players the option to choose among several very attractive peak awards, such as a leased Mercedes or all-expense paid trips to Wynn Las Vegas or the Caribbean.

“If you want to lease 320E’s or 350E’s, you’ve got tons of guys standing in line willing to let you have that car for $650 a month,” said Meczka. “On top of that, the casino has to pay some insurance. So for $1,000 a month, if I can insure that I have a $10,000 a month player; I’ll do that every day of the week. That’s the kind of customization that puts an operator well beyond the Cheers syndrome of everyone knowing their name to, ‘Hey, they know what I like and they give me something.’ Within that, not everybody takes the car, but they had provisions for customization that were unique. There are so many things casino can do within the gaming side that makes the customer feel unique and appreciated and that’s what wasn’t being done five years ago.”

The non-gaming side can be leveraged as well, noted Meczka. San Diego, Calif.-based Pala Casino Spa Resort has a $200-a-week spa incentive for their red card holders, which is their highest card with several tiers within it, which is very cost effective. “A $100 massage is probably a $20 to $25 commission to the masseuse, so it costs them $25,” said Meczka. “The user is strongly recommended to tip 20 percent since it’s a comp. So the user spends $20, the casino spends $20-$25, the masseuse gets $40-$45, and they’re happy. Players think they hit the grand quinella because they got a $100 massage for 20 bucks and they can re-use it. And, the best part is it’s assignable; as long as the player is there and assigns the benefit to a peer a friend or someone else, the casino honors it because it makes out on the operations side. You can use it for a pedicure, haircut, facial, manicure. Women become endeared to the person who cuts their hair every three weeks and they want to make sure they maintain that status so they don’t spend $80 on a haircut that they could get for $20, even if it costs them a lot in the casino.”

VIP promotions follow the same basic rules as all promotions, sometimes right down to the way players respond to an old favorite like bingo.

“We ran a promotion with a major casino that decided it wanted to do a kiosk based collect-and-win bingo game,” said Gordon. “Who knew that VIP players would be very interested in participating in a virtual bingo promotion? When a qualified player swiped his or her card at the kiosk the program delivered the screen appropriate for that player. During the earning period, players returned to the kiosk in an attempt to create a bingo and their chance at the $25,000 grand prize. Not a very large prize, but each time patrons swiped, they had a chance at winning. Players couldn’t wait to play again; once they filled up their bingo card, they went back to the club and said they wanted to play again. There were casino sponsor prizes that went along with this as well, but, as a marketer who was formerly in this, I was surprised that bingo drove that kind of response on the VIP end but we’re seeing a lot more of that.”

Another popular promotion on the high end is shopping sprees, said Paul Gordon, vice president of gaming and reseller sales, Rymax Marketing Services, which recently produced one for Sands Bethlehem and will be holding upcoming events in Las Vegas, Atlantic City and many points in between. The sprees are primarily for slot players, in particular the high-end with rewards such as 60-inch Samsung TVs, Salvatore Ferragamo products and Breitling watches. The sprees can be supported by VIP receptions that are staged to highlight specific brands or product categories in, for instance, nightclubs, where waitresses will wear a David Yurman product or carry a Michael Kors bag and engage the customers.

“We’re trying to get more experiential with the products because these people need to be catered to,” said Gordon. “What works best in terms of redemption are programs where there’s a short period to earn and an expiration time because there’s a sense of urgency which increases play, coin-in and foot traffic. And the financial side loves it because it gets people to redeem quickly and gets that liability off their books.”

Rymax, which is the largest direct manufacturer’s representative in the incentive industry, started its gaming business four years ago, during which time the range and quality of name brands it has access to has improved.

“Once the economy took a bad turn and there were fewer retailers out there, brands that normally didn’t want to be in the premium and incentive space now very much want to be part of it,” said Gordon, who added the improvement in quality has come just in time to meet the demands of increasingly choosy, and informed, customers.”The biggest difference that has happened in the last year is smartphones. Five years ago, you could get away with stuff. With a QR code, they can inform themselves if it’s the right product at the right time.”

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