Webster’s definition of Loyalty: “State, quality, or instance of being loyal; fidelity.” We tend to throw this word around a lot, usually in reference to a significant other, political party, sports team or even our favorite coffee shop. In the casino world, with increased competition it seems on every street corner, the word has never been more relevant, and operators are finding it necessary to attract and retain more loyal patrons, at an ever escalating cost. And while the focus is often on the higher ranked players, these are fewer in number, higher in cost and maintenance to keep happy, and perhaps not where you should focus the majority of your marketing efforts.
If you talk to enough casino marketing executives you’ll hear many different opinions on the merits of loyalty programs, from a “necessary evil” to a trip driving force. These mixed feelings fuel the heated discussion as to whether loyalty programs create loyalty, or encourage customers to shop around, thereby discouraging it. One of the most comprehensive studies on the subject titled “The Effectiveness of Casino Loyalty Programs – Their Influence on Satisfaction, Emotional Connections, Loyalty and Price Sensitivity” by University of San Francisco Professor Jonathan Barsky admits to a certain degree of inconclusiveness in his results. He breaks loyalty program members in to three main segments:
While this last group may not represent the high roller segment so coveted by many operators, it is the largest. So how do you move those unmoved members? First off, you must know your product. Why would you want to frequent your property if you didn’t work there? The answer is easy in the case of the destination resort casinos/racinos. In the MGM Mirage “M life” Program, or the Caesar Entertainment “Total Rewards” program there are a myriad of dining, entertainment and shopping experiences to draw you in if the gaming alone can’t do it, or you need something else of interest for a spouse or significant other. But what if you don’t have a 5 star hotel, award winning spa or championship golf course? Then focus on what you do have!
Luxury vs. necessity rewards. Sure, cruises on the Rhine are nice, as are Rolex watches and Louis Vuitton hand bags which are highly sought after and fun to fantasize about. Your elite players may only be interested in those trophy type items or experiences. But more often than not it is the more utilitarian awards that are appreciated by your average players. Think function over form and watch them perc up when they see a Keurig coffeemaker or iRobot vacuum that they can purchase with their points or is their gift of the month offer based on their level of play.
We all know the power of word of mouth endorsements and in the casino world these can often be tied to the reciprocity theory. Human nature makes it likely that a patron is likely to respond to a positive action with another positive action. If you properly invest in them they will invest in your property. This will come in the form of repeat visits, increased spend, and recruiting family and friends to share in the experience with them. Negative reciprocity is the inevitable result of a bad experience or the perception that the casino was not concerned with their level of player. And while this person may never make their way to your high limit gaming area, you would be hurting if a few hundred or thousand of them took their loyalty elsewhere.