by Andrew Cardno
The structure of your host goals program serves as the framework aligning your hosts’ priorities with the strategic goal of your casino by incentivizing hosts to build relationships with the players most valuable to your gaming operation in order to generate player behavior desired from the business. A casino’s patron database can have thousands and even up to millions of players, so it is crucial to the success of your property to strategically calculate host goals that incentivize hosts to communicate with the right players each day and maximize gaming revenue.
Time Periods for Host Goals
The goal time period is the period of time used to evaluate the value of the book (e.g., the prior month or quarter). The production time period is the time period that the host is being evaluated over (e.g., the prior month or quarter). The production time period is a membership calculation of which players belong to the host’s book of business and when they get credit for them. The examples set out below consider changes to a host’s book composition:
• What happens if a new player is added to the book for production time period?
• What happens if a player is removed from the book at the end of the goal time period?
• What happens if the book stays the same?
Types of Goal Calculations
Fixed Book Goals – In the fixed book calculation model, the value of the book is calculated based on the total revenue from the book for the goal time period. The value of a fixed book is based on a total value (e.g., theoretical win) for guests allocated to the host in the goal time period, and changes in the book size are not considered in the book valuation. During a current time period, new players may be added to the book to increase the results number without changing the goals; therefore, hosts benefit from growing their book and from growing revenue from individual guests. Examples of a fixed book are set out below:
• If a new player is added to the book at the start of the production time period, this player does not impact the goal.
• If a player is removed from the book at the end of the goal time period, the goal will include play from this player.
• If the book is the composition, the valuation and evaluation are simple calculations of the total value (e.g., theoretical) of the players.
Dynamic Book Goals – In the dynamic book valuation model, the value of the book is calculated based on the value in the goal time period of the guests in the book in the production time period. The value of a dynamic book based on total value (e.g., theoretical win) for guests allocated to a host at the start of the production time period and is adjusted daily as the book changes, so changes in the book size are considered in the goals. During the production time period, new players may be added to the book to increase both the results and the goals. Thus, hosts benefit by growing revenue from players instead of growing book membership. Examples of a dynamic book are set out below:
• If a player is added to the book in the production time period, the goals will increase based on prior play of the player.
• If a player is removed from book at the end of the goals time period, the goal will not include the total value (e.g., theoretical win) from that removed player.
• If the book is the composition, the goals and production are simple calculations of total value (e.g., theoretical win) of the players.
Fixed-Dynamic Book Goals – Fixed book goals will benefit your organization by incentivizing hosts to hunt for new players to sign up and grow the size of their book, whereas the benefit of dynamic book goals is incentivizing hosts to act more like farmers, developing the long-term value of their book through their ability to understandand build relationships with their players. If you want the benefit of both types of goals, you can combine a fixed book goal and dynamic book goal by allocating 50% of the goal to each type, and hosts will have a fixed-dynamic book goal wherein your player development team is rewarded across both goals in a meaningful way. Another way to get the best of both goals would be to have some hosts on a fixed book goal and the others on a dynamic book goal; this way, hosts are empowered to focus on a goal that takes advantage of their strength and offers your casino the benefits of both goal outcomes.
Rules to Consider
You may want to consider implementing rules for host goals to ensure there is an adequate system of management for your tribal casino. One reason to create rules around host goals is to prevent hosts from trying to manipulate their book in an attempt to increase bonuses; for example, an upper limit to the number of players allowed in a fixed book will prevent hosts from gaming the system by just increasing the size of their book. Other types of rules might deal with verifying that a host is, in fact, communicating with their players; for example, a requirement that hosts record a certain number of preferences to confirm they are interacting with players and continuing to build relationships throughout the customer lifecycle. Rules that are measurable, such as the previous example, can be separate from the goals math model to simply provide player development managers with insight to the hosts’ job performance. Alternatively, rules can be part of the host goals math model, or if the host doesn’t meet the rule requirement, you can choose to lower the host’s bonus even if the goal was otherwise achieved.
Host Goals Calculation Strategies
Building relationships with players is a crucial role of hosts by strengthening the brand-loyalty of players and ultimately maximizing gaming revenue; therefore, it is important to consider specific needs of the property when creating a strategy behind the goals. If the goal of a player development team at a property is to increase revenue, host goals are typically based on a total theoretical win of a book, or another metric most valuable to your casino. Other options to consider for your tribal casino’s host goals calculation might include aspects such as retention, player acquisition, active/inactive, reinvestment, growth, and visitation goals. Additional factors may play a role in structuring your host goals by assessing the current performance of your casino, how well your hosts are doing under the current program, what drivers are important for your hosts, and what creates the best responsiveness for your hosts. Furthermore, external factors like market position, competition in the market, the types of players driving revenue, and where players live may need to be considered when creating your host goals calculation.
Choosing a host goals math model is very specific to each property, and host goals can be as simple or as nuanced as your leadership desires. Although relatively simpler is better over complexity, there isn’t any ‘right’ way to calculate host goals. Hosts are often experts of navigating relationships with their players, interacting with players with strategic approaches that protect gaming revenue by keeping valuable players happy and loyal to your casino brand and increasing revenue by driving additional trips and player acquisition. A purpose goals model should guide your hosts towards prioritizing their time to carry out these strategic interactions with the right players to meet the goals of your organization.
Andrew Cardno is Co-Founder and Chief Technology Officer of Quick Custom Intelligence (QCI). He can be reached by calling (858) 299-5715 or email [email protected].