by Chad Carpenter
After a historic 18 months, the gaming industry is on the precipice of yet another drastic player spending shift that presents a unique challenge to casinos trying to maintain record revenue gains as “the new normal.”
The past year and a half has proven to be an extraordinary time for the casino industry. Mass closures and lingering restrictions resulted in a major shift in consumer spending behaviors. With casinos being one of the few entertainment options available, properties that remained open became the beneficiary of this shift, resulting in record-setting revenues and ADT levels previously unseen before the pandemic.
For many of these properties, players and trips were down significantly from pre-pandemic levels, but with more money in the marketplace due to government stimulus funding, tax returns, and limited spending options, ADT’s rose substantially with players spending more per trip.
For example, if the “average” player was spending $95 per trip pre-pandemic, but upon reopening in the summer of 2020 through present day, that number may have trended upward to $125 per trip, which is a significant increase. While this has been great financially for the industry, and as great as it would be to think these ADT levels could be maintained post-pandemic, with loosening restrictions and spent stimulus and tax return dollars, the possibility of yet another drastic shift in consumer spending could present a unique challenge to properties trying to maintain record revenue gains.
The lingering question is… will these ADT levels drop all the way back to pre-pandemic levels or somewhere in between?
Closing the Gap
To address the coming shift in player spending, proactive general managers, player development directors, and marketing teams are identifying and implementing solutions focused on two key components:
1) Bringing players back (and retaining them)
2) Increasing trip counts from players
Built with these goals in mind, outlined below are four solutions to explore and implement right now to prepare for the impending revenue gap and to drive player engagement post-pandemic.
Identify Opportunities in the Player Database
It all starts with identification – down to the player level – within all segments of the database. While many casinos have completed this step to a degree, it will be critical to understand every player’s behavior and movement on a deeper level to develop targeted strategies for those who have been engaging throughout the pandemic and those who haven’t returned yet.
For the players who have already returned, distinguishing who they are and what levels they are playing at will frame how to profitably engage with them over the next 3-6 months. For players yet to return, the identification of trends within certain types, geographies, segments, and tiers will prove beneficial, as segmenting behaviors will be more important than ever. Understanding these behavioral trends allows a property to more precisely nurture engagement based on the specific segment or demographic that the player falls into.
Reevaluate Newsletter Criteria
Changing the parameters that qualify a player to receive a newsletter can be an incredibly daunting task, specifically because that marketing medium is arguably the top driver of player engagement, as it is what alerts them of their offers, comps, rewards, and casino promotions.
However, to further drive player engagement and trips post-pandemic, the qualification criteria may need to change depending on how play data is evaluated. Players could now be moving through the various segments in ways that were unforeseen post-pandemic but are not going to drive the trips and play needed to sustain revenues.
Evaluating how player behavior has changed allows you to look at the whole picture and structure your player rewards in a way that meets the goals of not only bringing players back but also making sure their trips are working back towards to pre-pandemic levels.
Build Campaigns to Boost Trips
As more restrictions are lifted, venues that have been closed are reopening and people are becoming more comfortable coming back to the casino floor. There will be significant competition for players’ entertainment dollars. Strategically structuring campaigns to boost trips from existing players will be an essential component for a casino faced with bridging the revenue gap.
Built on the foundation of identification and segmentation noted above, once players are placed in the appropriate segments, campaigns such as boosters, supplementals, continuity and gifting programs, and player reacquisition campaigns can be launched to achieve the specific goals tied to each segment.
These targeted campaigns are proven to drive incremental trips and can be implemented to encourage continued player engagement.
Strategic Post-Pandemic Messaging
Before the pandemic, the general belief favored the idea that the further a player’s last trip became, the more incentivization was needed to return them to the floor. Post-pandemic, engaging an “inactive” player will need to be reevaluated because although they may be “inactive” on paper, that inactivity or decrease in trip count is likely due to an entirely different reason than it would have been pre-pandemic.
While incentives will still play an essential role in nurturing inactive players, after more than a year of lingering travel and health restrictions, casino-wide promotions and specials can drive as much play as a dollar offer within the dormant segment. This shift in behavior within the inactive/dormant segment allows a casino to alter their messaging with a greater emphasis on promotions and specials while being less aggressive in the dollar value of offers.
Marketing to the inactive/dormant segment with an offer consistent with a dollar value pre-pandemic has proven to be effective and helps to keep overall reinvestment down. For example, if a player’s return to the casino is based on their comfort level with respect to the pandemic, a more aggressive offer may not be the answer. When they become comfortable returning, meeting the increased demand for casino-wide activities with marketing that emphasizes information rather than dollar value offers allows for a less aggressive approach toward free play offers to nurture trips.
In the post-pandemic environment, continuing to market to players as ‘normal’ could prove costly due to substantial changes in behavior resulting in a drastic spending shift.
While navigating this challenge will not be any easy task, using the insight gained through an analysis of player behavior before, during, and after the pandemic will provide casinos with the insight to bridge the impending revenue gap and continue to drive player engagement coming out of the pandemic.
Chad Carpenter is Vice President of Casino Solutions with Teuteberg Incorporated. He can be reached by calling (414) 443-3219 or email [email protected].