July 26, 2012
Loyalty Lessons for Retailers from the Casino Floor
At last week’s Shopper Insights in Action conference run by IIR USA, Jeffrey Boorjian, VP marketing for Caesars Entertainment, gave a presentation entitled "De-Mystifying the Allure of Casino Floor Merchandising" that offered insights useful to the retailing industry.
By way of background, Caesars has 52 properties in 17 countries and has such brand names as Caesars, Harrah’s, Bally’s, Horseshoe and Planet Hollywood. Caesars has over 70,000 employees and was recently named by Computerworld magazine as one of the best places to work in IT for the fifth time in seven years.
First, Mr. Boorjian attempted to put to rest some of the more popular myths that have been attributed to the casino industry over the years:
- Casinos (at least those run by Caesars) do not pump extra oxygen onto casino floors to keep gamblers energized.
- A slot machine that hasn’t paid out recently is no more likely to hit than any other machine — everything truly is random and done by a number generator.
- If someone leaves a slot machine and the next person wins right away, it doesn’t mean that if they had stayed, they would have won — again, back to the random number generator.
- In roulette, if red hasn’t hit for x number of times, it doesn’t make black more likely to win.
- And becoming a member of a casino loyalty program doesn’t lower your odds of winning a jackpot. (Evidently, the conspiracy theorists figure if the casino can track you and know you are still spending without winning a jackpot, they will make sure you don’t get it.)
As far as what Caesars does do to market to gamblers on the casino floor, a lot of it revolves around its "Total Rewards" program members, which number about 40 million. The program caters to this group in a variety of ways, depending on how valuable a customer is deemed to be. And it is able to link activity in all the various casinos and brands it owns into one master database.
Over 75 percent of Caesars’ total revenue is currently tracked via "Total Rewards" and the company uses the data to incent behavior changes. Caesars constantly runs tests to see what works and what doesn’t. In terms of incentives, a "good" customer might get a free room, limo or buffet, while a "great" customer might get escorted to and from the casino in a private jet and/or treated to a private villa with a personal chef. And the very top customers might be escorted around the properties by a casino guide who acts as a personal concierge.
Caesars uses surveys, focus groups and social media to track behavior. It learns from in-casino data, plus input from casino hosts, who write reports on the "mega" customers they accompany. Then, strategies are deployed depending on what stage the customer is in their "journey." Most survey takers are not given a personal response unless they are a high value customer who gives the casino a low rating, which could require follow up or an apology.
The newest effort is called PRISM, which stands for personalized real time interactive slot marketing. What it means is that slot players can receive personalized offers while gambling, have their beverage preferences stored so their drink of choice will arrive "automatically," and can access their Total Rewards account directly from the slot machine.
Overall, Mr. Boorjian says Caesars strives to offer a world class entertainment experience, with a differentiated experience for each guest where greater spending equals more rewards plus personalization. Its marketing efforts revolve around acquiring new customers, driving trips, stimulating play, and strengthening loyalty.
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Discussion Questions
Discussion Questions: Are most retailers leveraging their loyalty programs as much as they can/should? What can retailers learn from a casino operator such as Caesars?
Poll
The gaming industry has always been driven by ‘comps’ — complimentary rewards designed to keep patrons engaged in the gaming experience at a particular property. VIP rooms, dinners, shows, and rounds of golf are all part of the arsenal of ‘rewards’ that gaming companies have to keep their valued patrons from leaving the environment. The science of ‘comping’ has come a long way and allows the ‘house’ to monitor, track and reward their loyal patrons in near real-time. The retail community would do well to understand the art and science of ‘comping’ along with understanding the value of a multi-sensory environment designed to keep the patrons immersed and engaged in the overall soothing and comfortable experience.
FINALLY! Someone besides me stands up and asks about the 800 lb gorilla in the room! “Are most retailers leveraging their loyalty programs as much as they can/should?” Are you kidding me?! NO!! 99% of retailer “loyalty” programs are nothing more than mass, untargeted discounts for frequent shoppers. My wife has the frequent shopper cards of the three grocery chains in our area. Is that “loyalty”?! Let me say it again: NO! She just doesn’t want to pay full price without using the cards.
Don’t be fooled about your stores having 95% penetration with your member cards. People know they have to use them in order to get the discounts. That doesn’t drive loyalty.
Look to the hospitality and airline industries for true loyalty. Travelers try to stick to one airline and one hotel to amass points for free travel. Do exactly the same thing in retail, and … prepare yourself … you’ll drive true loyalty!! Amazing! 😉
The answer to whether most retailers are fully leveraging their loyalty programs for their benefit has to be “no.” There is a gap between recommended best practice and innovation and the ability or willingness of retailers to invest to make recommendations become reality.
The ongoing needs to maintain solid operations, deal with staff turnover and meet sales targets always take precedence and even the most well-intended retailer marketers often have no choice but to defer some otherwise good ideas as a result.
The casino industry, in particular Caesars and the Harrah’s program are top-flight examples of what can be accomplished if the brand has the time, resources and willpower to connect with customers.
We of course continue to recommend this level of execution to our clients and hope to see wider adoption of similar practices by retailers.
Retailers can learn a lot of how to treat your top customers from Casinos. When is the last time you saw someone getting escorted around a Best Buy because they were one of the top spenders in that store?
It would be ideal if retailers used the loyalty information to proactively recognize and treat their top customers when they walk through the store’s doors.
Casino operators and jewelry chains along with Hotel and Airline operators have always been best practitioners in leveraging loyalty programs to drive incremental return. The foundation of strong IT support, plus in-depth tracking/analytics and predictive modeling is a consistent profile for all four enterprise types.
Most retailers are not leveraging their program insight optimally. Many are jumping into the loyalty game without a plan for what to do with the information and how to turn it into “what’s next” to lift business metrics.
Those programs operating today with a weak segmentation, predictive modeling and analytical foundation need to engage trusted advisors to build a roadmap for 2013, otherwise they will see their enrollment slow down, frequency of visit decrease and average ticket/margin lift from member transactions decline. The best operators are the ones who commit to insight/analytics and build a bridge to informing both the marketing/advertising side of the house as well as merchant planning/analysis.
Most retailers use their loyalty programs as a tactical marketing lever rather than a strategic tool that enables a loyalty approach across the entire business and supplier ecosystem. The insights can be a lot more powerful than just the loyalty effect if done right.
Many of the challenges that retailers face are organizational, and casinos don’t face quite the same dysfunction. Many retailers struggle to align even within marketing let alone across merchants and stores, and the customer lens is not always seen as impotant.
I think retailers could look at the customer-centric alignment at casinos as generally a better example to follow (which I know some say is ironic given what casinos encourage!).
Casinos also have done a good job at using very granular-level insights to understand traffic patterns and hot spots of activity and using these to optimize the layout and “merchandizing” where retailers still mostly use out-dated sample/research-based methods for this. Casinos have learned how to invest in the customer and consider what they do beyond the casino. They know their best customers as “best friends” and try to be loyal to them.
PRISM is a sneak peek into the future, where retailers will know and instinctively deliver on each customer’s needs, wants and desires.
What Caesars has done is to create its own consumer loyalty plan and marketed it to the public. Almost all retailers buy whatever is in vogue and force it into their own system. Kind of like what we saw with the “Six Sigma” junk box of gimmicks, if the whole world has a black belt you would still have winners and losers at random.
Caesars’ executive management team has recognized the value and responsibility of differentiation in the retail industry. When this responsibility is recognized and accepted, a plan of action is built and maintained to support corporate goals. There are never any guarantees but when the rewards for both company and the consumer are truly valued and appreciated the businesses stability and growth are in a forward momentum. This is truly a win/win formula for all to see and monitor as time goes on.
What a discussion question! I read it and am amazed at what casinos can do with their tracking and loyalty programs. First, let’s be clear. Casinos have a huge profit margin that allows them to do what retailers can’t. That is, offer rewards to their better customers in the form of perks. The fact that casino’s put so much of the profit back in to building a bigger customer base is telling how smart their leadership is.
I have long thought loyalty programs by retailers was a title only. I have seldom seen anything I could buy as a “loyal customer” that the person next to me could not get for the same price. I am sure retailers can learned from casinos. But can, or better stated, will they implement anything?
The first mistake most retailers make is in believing that their frequent shopper programs generate anything resembling loyalty. Induced behavioral patterns may include re-patronage or offer redemption, but these are not based on affect (or feelings of affinity toward the retailer).
Once we put that naive belief aside, we can focus on the real tactics of frequent shopper programs, which are to offer relevance and value in exchange for shared personal information. Deliver on your end of the promise, and some feelings of trust, preference, even recommendation may result.
The folks at Caesars seem to understand this well. They focus on the “whales” the most when it comes to offering personalized incentives and experiences. Sizes of these investments are certainly in proportion to the relationship values. Collecting information via the Total Rewards program enables the company to set reachable reward goals for more casual customers, manage margins and “merchandise” the slot machine aisles and gaming tables.
The biggest lesson I’d take from Caesars for other retailers is to methodically “work the numbers” and apply the frequent shopper insights to create the best possible customer experience. Show loyalty to your good customers in this way and they will reward you with a larger share of wallet.
Retailers can learn a lot from casinos in terms of customer experience as a whole. Casinos understand the gaming experience is omni-channel, from a catch perspective to get customers to the gaming floor, and when they are on the gaming floor is when you keep your customers. From the casino host structure (equivalent to personal shopper in retail) to rewards for loyalty, casinos have most retailers beat. The retailer that comes closest to having a casino type loyalty model that I have seen is Nordstrom.
One of the several interesting things about the Caesars’ loyalty program is how comprehensive it is, especially the research and data collection aspects. Over 40 million individuals are in the program covering three-quarters of the company’s revenue. And, the data is coordinated across brands and sifted carefully to identify where a patron is on his or her “journey.”
Admittedly, Caesars very likely has a much greater reservoir of funds than the typical retailer (even mega-retailers) that allows it to be aggressive in its loyalty program. And also, admittedly, the difference between a casino high roller and the typical gambler might be more than the differential between the high and average spenders in a supermarket, so it pays off to fete the casino high roller. Nonetheless, that fact that data collection is comprehensive, it is studied and obviously acted upon are certainly things that retailers could well emulate for their own loyalty program.
Supermarket loyalty programs now appear to be no more than cards that get the shopper a select number of discounts. A program with the reach and dedication of Caesars’ should be a goal for all retailers.
It’s a lot easier to do this if you are a casino company, when most of your “customers” are going to lose money on most every transaction. When you are dealing with narrow margins, it’s a lot harder to offer the kinds of sweeteners that casino companies can. The problem is that consumers don’t think about this in terms of margins, just about deep discounts. E.g., before supermarkets did loyalty cards, people said they would only give that kind of info out if they got 20-40% (!!!) discounts on their purchases. Every sale would be at a loss.
In our recent survey of the wealthiest 10% of U.S. households, we found the affluent have membership in an average of 10 different customer loyalty programs among the 14 types of loyalty programs listed. This total includes an average of 2 department stores, 2 grocery stores, and 3 other retail stores. The influence of these programs on spending varies by type of program sponsor.
With most casinos’ loyalty card system, they know more about customers’ behavior than any retailer.
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The gaming industry has always been driven by ‘comps’ — complimentary rewards designed to keep patrons engaged in the gaming experience at a particular property. VIP rooms, dinners, shows, and rounds of golf are all part of the arsenal of ‘rewards’ that gaming companies have to keep their valued patrons from leaving the environment. The science of ‘comping’ has come a long way and allows the ‘house’ to monitor, track and reward their loyal patrons in near real-time. The retail community would do well to understand the art and science of ‘comping’ along with understanding the value of a multi-sensory environment designed to keep the patrons immersed and engaged in the overall soothing and comfortable experience.
FINALLY! Someone besides me stands up and asks about the 800 lb gorilla in the room! “Are most retailers leveraging their loyalty programs as much as they can/should?” Are you kidding me?! NO!! 99% of retailer “loyalty” programs are nothing more than mass, untargeted discounts for frequent shoppers. My wife has the frequent shopper cards of the three grocery chains in our area. Is that “loyalty”?! Let me say it again: NO! She just doesn’t want to pay full price without using the cards.
Don’t be fooled about your stores having 95% penetration with your member cards. People know they have to use them in order to get the discounts. That doesn’t drive loyalty.
Look to the hospitality and airline industries for true loyalty. Travelers try to stick to one airline and one hotel to amass points for free travel. Do exactly the same thing in retail, and … prepare yourself … you’ll drive true loyalty!! Amazing! 😉
The answer to whether most retailers are fully leveraging their loyalty programs for their benefit has to be “no.” There is a gap between recommended best practice and innovation and the ability or willingness of retailers to invest to make recommendations become reality.
The ongoing needs to maintain solid operations, deal with staff turnover and meet sales targets always take precedence and even the most well-intended retailer marketers often have no choice but to defer some otherwise good ideas as a result.
The casino industry, in particular Caesars and the Harrah’s program are top-flight examples of what can be accomplished if the brand has the time, resources and willpower to connect with customers.
We of course continue to recommend this level of execution to our clients and hope to see wider adoption of similar practices by retailers.
Retailers can learn a lot of how to treat your top customers from Casinos. When is the last time you saw someone getting escorted around a Best Buy because they were one of the top spenders in that store?
It would be ideal if retailers used the loyalty information to proactively recognize and treat their top customers when they walk through the store’s doors.
Casino operators and jewelry chains along with Hotel and Airline operators have always been best practitioners in leveraging loyalty programs to drive incremental return. The foundation of strong IT support, plus in-depth tracking/analytics and predictive modeling is a consistent profile for all four enterprise types.
Most retailers are not leveraging their program insight optimally. Many are jumping into the loyalty game without a plan for what to do with the information and how to turn it into “what’s next” to lift business metrics.
Those programs operating today with a weak segmentation, predictive modeling and analytical foundation need to engage trusted advisors to build a roadmap for 2013, otherwise they will see their enrollment slow down, frequency of visit decrease and average ticket/margin lift from member transactions decline. The best operators are the ones who commit to insight/analytics and build a bridge to informing both the marketing/advertising side of the house as well as merchant planning/analysis.
Most retailers use their loyalty programs as a tactical marketing lever rather than a strategic tool that enables a loyalty approach across the entire business and supplier ecosystem. The insights can be a lot more powerful than just the loyalty effect if done right.
Many of the challenges that retailers face are organizational, and casinos don’t face quite the same dysfunction. Many retailers struggle to align even within marketing let alone across merchants and stores, and the customer lens is not always seen as impotant.
I think retailers could look at the customer-centric alignment at casinos as generally a better example to follow (which I know some say is ironic given what casinos encourage!).
Casinos also have done a good job at using very granular-level insights to understand traffic patterns and hot spots of activity and using these to optimize the layout and “merchandizing” where retailers still mostly use out-dated sample/research-based methods for this. Casinos have learned how to invest in the customer and consider what they do beyond the casino. They know their best customers as “best friends” and try to be loyal to them.
PRISM is a sneak peek into the future, where retailers will know and instinctively deliver on each customer’s needs, wants and desires.
What Caesars has done is to create its own consumer loyalty plan and marketed it to the public. Almost all retailers buy whatever is in vogue and force it into their own system. Kind of like what we saw with the “Six Sigma” junk box of gimmicks, if the whole world has a black belt you would still have winners and losers at random.
Caesars’ executive management team has recognized the value and responsibility of differentiation in the retail industry. When this responsibility is recognized and accepted, a plan of action is built and maintained to support corporate goals. There are never any guarantees but when the rewards for both company and the consumer are truly valued and appreciated the businesses stability and growth are in a forward momentum. This is truly a win/win formula for all to see and monitor as time goes on.
What a discussion question! I read it and am amazed at what casinos can do with their tracking and loyalty programs. First, let’s be clear. Casinos have a huge profit margin that allows them to do what retailers can’t. That is, offer rewards to their better customers in the form of perks. The fact that casino’s put so much of the profit back in to building a bigger customer base is telling how smart their leadership is.
I have long thought loyalty programs by retailers was a title only. I have seldom seen anything I could buy as a “loyal customer” that the person next to me could not get for the same price. I am sure retailers can learned from casinos. But can, or better stated, will they implement anything?
The first mistake most retailers make is in believing that their frequent shopper programs generate anything resembling loyalty. Induced behavioral patterns may include re-patronage or offer redemption, but these are not based on affect (or feelings of affinity toward the retailer).
Once we put that naive belief aside, we can focus on the real tactics of frequent shopper programs, which are to offer relevance and value in exchange for shared personal information. Deliver on your end of the promise, and some feelings of trust, preference, even recommendation may result.
The folks at Caesars seem to understand this well. They focus on the “whales” the most when it comes to offering personalized incentives and experiences. Sizes of these investments are certainly in proportion to the relationship values. Collecting information via the Total Rewards program enables the company to set reachable reward goals for more casual customers, manage margins and “merchandise” the slot machine aisles and gaming tables.
The biggest lesson I’d take from Caesars for other retailers is to methodically “work the numbers” and apply the frequent shopper insights to create the best possible customer experience. Show loyalty to your good customers in this way and they will reward you with a larger share of wallet.
Retailers can learn a lot from casinos in terms of customer experience as a whole. Casinos understand the gaming experience is omni-channel, from a catch perspective to get customers to the gaming floor, and when they are on the gaming floor is when you keep your customers. From the casino host structure (equivalent to personal shopper in retail) to rewards for loyalty, casinos have most retailers beat. The retailer that comes closest to having a casino type loyalty model that I have seen is Nordstrom.
One of the several interesting things about the Caesars’ loyalty program is how comprehensive it is, especially the research and data collection aspects. Over 40 million individuals are in the program covering three-quarters of the company’s revenue. And, the data is coordinated across brands and sifted carefully to identify where a patron is on his or her “journey.”
Admittedly, Caesars very likely has a much greater reservoir of funds than the typical retailer (even mega-retailers) that allows it to be aggressive in its loyalty program. And also, admittedly, the difference between a casino high roller and the typical gambler might be more than the differential between the high and average spenders in a supermarket, so it pays off to fete the casino high roller. Nonetheless, that fact that data collection is comprehensive, it is studied and obviously acted upon are certainly things that retailers could well emulate for their own loyalty program.
Supermarket loyalty programs now appear to be no more than cards that get the shopper a select number of discounts. A program with the reach and dedication of Caesars’ should be a goal for all retailers.
It’s a lot easier to do this if you are a casino company, when most of your “customers” are going to lose money on most every transaction. When you are dealing with narrow margins, it’s a lot harder to offer the kinds of sweeteners that casino companies can. The problem is that consumers don’t think about this in terms of margins, just about deep discounts. E.g., before supermarkets did loyalty cards, people said they would only give that kind of info out if they got 20-40% (!!!) discounts on their purchases. Every sale would be at a loss.
In our recent survey of the wealthiest 10% of U.S. households, we found the affluent have membership in an average of 10 different customer loyalty programs among the 14 types of loyalty programs listed. This total includes an average of 2 department stores, 2 grocery stores, and 3 other retail stores. The influence of these programs on spending varies by type of program sponsor.
With most casinos’ loyalty card system, they know more about customers’ behavior than any retailer.