Using Loyalty Programs to Create Preference and Increase Market Share - Dan White + Associates
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Using Loyalty Programs to Create Preference and Increase Market Share

About This Project

Casino A, a mid-sized property in a competitive market, saw a 30 percent decline in trips after a large property opened in their secondary market. Initial feasibility studies suggested a five-to-ten-year timeline for business level to return to normal. The increased competition forced the property to increase player incentives to protect crucial segments of their database, resulting in higher reinvestment rates and smaller margins.

 

The address this situation, we commissioned two studies to better understand gambler preference, behavior and attitudes in the primary and secondary markets. One of the most compelling findings of this research was the realization that Casino A’s location was a significant barrier to increasing market share; gamblers perceived the property to be remote and lacking in compelling reasons to visit more frequently. In other words, many gamblers in the primary market did not believe Casino A offered any distinct attribute that would overcome its location and create preference within the market.

 

The research findings helped us narrow our focus and efforts; overcome the perceived remoteness of the property by building a better rewards program that would mitigate that perception.
Through this process and much collaboration, a new loyalty program was developed that combined a unique mix of benefits not found anywhere in the primary or secondary markets. The collection of those benefits created real differentiation, or choice. This included re-vamping the point earning structure, significant dining discounts when paying with points and a cash back incentive for free play rewards.

 

To support this initiative, a new advertising campaign was developed to build awareness around the new loyalty program and its unique attributes. Additional research was used to reveal additional insights and helped fine-tune the messaging. A media plan was created that was hyper-focused in the primary market (which provided the greatest opportunity for immediate growth).
The results; after 12 months of the program’s launch, revenue had returned to prior levels and Casino A was experiencing growth for the first time in nearly three years.
This case study highlights an increasing trend amongst casinos; loyalty programs are often built very similarly across markets. There is often very little differentiation in the entry-level tiers. While this may make sense from an operational standpoint (aligning the best rewards for the best players), it can create commoditization, rendering the relative value of many loyalty programs ineffective.

 

The table below illustrates this further. The table highlights the entry-level loyalty program benefits for nine casinos located within about a two-hour drive radius. Between the nine properties, there are a total of only 13 distinct benefits offered. Only one casino offers a benefit that no other property does (Casino 8’s fuel discount).

 

Benefit C2 C3 C4 C5 C3 C6 C7 C8 C9 Total
Monthly Offers X X X X X X X X X 9
Casino Promotion X X X X X X X X X 9
Point Earning X X X X X X X X X 9
Points For Free Play/Cash X X X X X X X X X 9
New Member Bonus X X X X X X X X 8
Discounts – Dining X X X X X 5
Discounts – Retail X X X X 4
Tickets Pre-Sale X X X X 4
Free Valet Parking X X X 3
Discounts – Hotel X X 2
Eligible For Event Ticket Comps X X 2
Eligible For Food Comps X X 2
Fuel Discount X 1
Total 9 9 7 8 8 5 6 9 6

With such parity in the market, gamblers will tend to choose properties located closest to them. This marginalizes the effectiveness of loyalty programs. Casinos are investing precious resources in their loyalty programs but may not be creating preference.

In the case of Casino A, the unique mix of entry-level benefits and rewards helped to mitigate the perceived “poor” location and increase market share and profitability