Currently casinos are dealing with occupancy constraints, so a focus on the right guests is critical. Once these constraints are lifted though, continuing to focus on the right guests will continue to protect your margins.
Who is the “right” guest? There are two pieces to this answer.
- Guests who are profitable
- Guests who are gamers
Why profitable guests?
Some guests are more profitable than others. Some of your “best” guests are more expensive to have in your casino. These guests may have a high average daily theoretical and be high frequency, but if they use all their comps, redeem all their coupons and free play and take up a lot of staffing resources, then these guests are expensive and less profitable. Below is an example from our Raving Dashboards that shows several guests with a similar daily worth, but their profit margins are significantly different. Calculate as much expense and revenue into the net profit formula as you can access from your database or warehouse. The more you can capture, the cleaner your margin percentage will be.
Once you have created a profit margin percentage, you can start to understand who you want to focus your player development and database marketing efforts on. Think about how you may approach some of your programs differently with this information. You do not necessarily want to remove less profitable players from your marketing efforts. I would recommend scaling back on your reinvestment for those guests. Or maybe use a tiered reinvestment based on profit margin to increase profitability.
Why start with gamers?
Every database has a point where the ratio of guest to theoretical flips. Meaning that in the lower tiers there is a higher percentage of players making a lower percentage of the theoretical. The average daily theoretical level where this flips is called the sweet spot, and this is where you move from retail players into gamers. This is the point where players demonstrate that they have a gaming budget. The gamers make up the heart of your business and loyalty programs, make money and drive the bulk of your trips.
As you can see in the chart from Raving Dashboards, the ADT level for this demo data is at $100 ADT. The gamer cohort contains 13.5 percent of the players and 45.2 percent of the theoretical for this property.
Focus your marketing efforts on promotions and events that drive the cohort of gamer and above at your property. You should still include promotions for the casual and retail guests. These should be earn and gets, point promotions to manage your margin on the lower segments. Make sure that your point program is strong to keep your retail players engaged at your casino and move as many promotions as possible to the kiosks to maximize your staffing resources for higher value players.
A subset of these groups would be to look at locals within the gamer, experienced player and VIP cohorts. Looking at locals with lower frequency is a great place to drive incremental trips. Generating more trips in these cohorts can significantly drive revenue.
By managing the profitability of your guests at an individual level, especially in the higher segments, and focusing your marketing efforts on the players who come into your casino to gamble, you can increase your revenue with fewer guests.
This does mean some changes though, and it will take a bit of effort. However, this is an effort that is worth it. The results from making these changes will not only impact your revenue now, but if you keep these processes and programs in place as occupancy constraints are lifted, you will continue to drive profitability and revenue.
Take a tour of Raving Dashboards and transform your host model to a revenue-generating sales force – just call 775-329-7864 or email email@example.com to find out more.