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After the gold rush

Bill Mooney and Miles Carroll explain why, after the stampede for new sign-ups, retention is now key.  And that means understanding the customer.

For years casinos have offered perks to gamblers.  Free drinks, free food, cheaper accommodation, tickets to shows, these all depend on how much money was being staked.

      This process is a little more faceless online.  You cannot judge your gambler by their clothes, their company or the suit they choose.  All you have is the information they gave you when they signed up and, if you have the correct technology, a record of their gambling habits.
      But in the ‘gold rush’ phase of the egaming industry – much like any other new sector experiencing a massive boom - the focus was on signing up as many customers as possible.
      This meant getting them ‘through the door’ and getting their name down as quickly as possible in order to let them start gambling.  Operators barely bothered with the details as long as the player had a legitimate credit card  to sign up with.
      When it came to valuing these growing business however, financial experts began to see through boasts that each customer was worth £ 1,300 (US$ 2,340), a claim that simply cannot be substantiated without collecting and analyzing valuable customer data.
      But analyzing customer data simply wasn’t a priority for businesses as they fought to sign up as many customers as possible to reach a critical mass, which would release the next phase of funding.

“Not understanding who the customer really is means the future
growth of the business is severely limited and any future
valuation of the business will reflect this”

Keeping active

With the aggressive land-grab phase now largely a thing of the past, the sector is moving rapidly towards recognition of the need for customer retention.
      While acquisition remains important, the focus is now on marketing effectively the focus is now on marketing effectively and efficiently to ensure those customers who were won at great cost do not simply lapse into inactivity.  It is estimated that it is 10 times more cost-effective to retain an existing customer than to sign up a new one.
      Operators that fail to understand this will begin to lose their competitive advantage.  By taking customers on a journey through a business and monitoring their behavior as they go, gaming companies can extract more profit from an individual, predict when they might leave, sell additional services and improve customer relations – particularly with ‘high rollers’ – in much the same way the casinos always have.

      This is where a robust verification procedure can help the business get off to a good start by providing an accurate view of each customer.  Some gaming operators see compliance as a costly regulatory headache, but it can actually pay for itself in more ways than just protecting a business from money laundering, fraud or underage gamblers.

Accuracy from the start

Technology such as GB Group’s id3, which  powers the award-winning URU ID verification service, means a business starts with an accurate profile of each and every customer as soon as they are cleared to play.
      Compare that with a business whose market value was based on several hundred thousand customers about whom they know very little beyond a name and, perhaps, email address.  Not understanding who the customers really is means the future growth of the business is severely limited and any future valuation of the business will reflect this.
      The UK’s Gambling Act does not dictate that operators check specific criteria, so there may be temptation to do the minimum to claim compliance with social responsibility requirements.  The Gambling Commission, however, will very likely look to the Financial Services Authority (FSA) for guidance on how to ensure gambling does not become a vehicle for money laundering and other financial crime.
      And FSA regulations state clearly that organization must know your customer (KYC) to combat money laundering, and be able to prove what checks have been made on customers.

Secure verification

Establishing a sign-up procedure which verifies that the customer is exactly who they say they are, that they live where they claim to live, and they are using a payment method that is legitimately theirs is crucial.  Identifying a customer also validates their age and immediately establishes solid social-responsibility credentials, producing a valuable asset – a legitimate and fully verified customer.
      Not doing so is the equivalent of a land-based casino valuing itself according to number of people that come through the door, regardless of age, affluence or previous activity – not how many of them actually spend money.

Follow the customer journey

Once you have the initial data on each customer you can look back and see where they began their journey.  Which channel did they arrive from?  Is there a pattern?  Are you attracting enough high rollers?  Should you be re-distributing your marketing spend?
      The same technology that helps retailers achieve one-to-one marketing through loyalty schemes is now available to gaming operators to establish a close understanding of what drives their players.  Having followed – and guided – each customer’s journey through the business it is possible to begin to segment the customer base by value.
      Which customers are the most profitable?  What percentage of the business annual profit is derived from them?  Where do they live?  What is their preferred channel for communications?

      Again, taking the comparison to a physical casino, these are the customers who get personal treatment from the management team.  In the faceless world of egaming this is harder to emulate but if you have captured data such as telephone numbers accurately you can make personal contact, offer preferential odds and extend your customer relations activity at key times.
      It may seem a relatively simple process but trying to do any of this without accurate, verified, screened data is a waste of money.  Customer data is the lifeblood of any business – not collecting it properly or simply allowing it to decay while continuing to acquire customers through unproven, untargeted  marketing will ultimately affect the true valuation of the entire business.

*  Track and field

Most gaming customers are creatures of habit- they will stick to sports or events they are comfortable with, bet on regular days and largely stick to the same amounts wagered.
      Once a system is in place to track and analyze this behaviour, operators can truly understand the annual, or even lifetime customer value to the business.  Far-sighted operators should be looking to mechanisms such as ‘predictive lapse’ models for each customer to understand when they might stop spending money with the business and move to a competitor.  The same technology enables them to sport opportunities to increase customer spend with carefully targeted offers.


      For example, Joe B is a 34-year-old football fan.  He bets on average once a week, logging on each Saturday morning and spending the same amount of money spread across a few games.  He rarely, if ever, bets on anything else.
      He may be persuaded to bet a similar amount on a mid-week UEFA Champions League match or international if he prompted by a highly targeted and relevant email on the day of the match.  By analyzing customer data on other players who match Joe’s profile the business can predict whether or not this is likely to generate an increase in Joe’s activity, and spend with the business.


      Similarly Joe typically stops betting when the season ends in May and does not start up again until August.  Summer 2006 offers an excellent chance to re-engage with this relatively loyal customer, to maximize his spends.  The 2006 FIFA World Cup offers an additional month of opportunity with dozens of games to tempt any customer with the slightest interest in the sport.

      By analyzing customer data through GB Group’s technology, automatic alerts are set up to generate contact to key customer groups with timely relevant offers, not just in 2006 but for any major sporting event as far ahead as football’s European Championship in 2008.

 

 

 

 

 

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