Casino operators in today’s competitive environment rely heavily on their loyalty programs to inspire repeat business and differentiate services in a highly competitive marketplace. Casino loyalty programs encourage players to have their activity tracked by offering points that can be redeemed for comps and/or cash back. Casinos use information regarding the players’ activities to offer additional free or discounted products or services, such as free slot play. Gaining loyalty creates value for companies via an enduring bond between a product, brand or company and its consumers, but all too often casinos struggle to establish a bond in their loyalty program that reaches beyond simply being a frequency by which to communicate with and reward players with discounts and perceived entitlements.
Points and cash back simply reward frequency rather than establishing loyalty; these are simply a continuous reinforcement process to encourage usage of the player’s card. Challenges associated with this approach are: 1) these rewards have a tremendous amount of similarity in the market place, as they are easily duplicated; 2) they are predictable in their delivery; and 3) there are very low switching costs for the player. These components of the loyalty program are necessary but should be balanced with other activities that are fun, entertaining and surprising to gain player loyalty.
Loyalty programs have become predictable. A casino provides a certain amount of points for every dollar wagered. Each point is worth a fixed amount of comps or cash back. Players figure out how much they need to gamble in order to receive free slot play in the mail and other promotions. Gamblers by their very definition prefer greater variability in their experiences in the casino. At the end of the day, they enjoy gambling due to the variable ratio schedules inherent in the games they play. These variable ratio schedules leverage unpredictable patterns that create emotional responses, such as excitement, anxiety, thrills and escapism. Yet our marketing efforts respond with fixed schedules that reinforce player behavior in predictable patterns.
Casinos can improve the loyalty of their patrons by leveraging game mechanics to incentivize and reward player behavior. A game mechanic is a set of rules that define an objective or the goal, has a means of keeping track of progress toward accomplishing the goal, and has a mechanism for awarding the player a value. A game mechanic is best designed with an element of unpredictability in the outcomes for the player. The player will enjoy the game of chance and the casino is comfortable with the expected value of the outcomes, which are no different than the casino games that are offered every day.
In contrast, there are many examples of objectives that can be used in a casino loyalty program, including points, challenges, sets, levels and collections. These are defined in Table 1.
Table 1
It may not always be clear how to accomplish the objective or goal defined in the game mechanic. For example, what is the best way to accomplish a challenge of hitting four aces? Do you hold every ace regardless of the other cards? Should you wait until that random event occurs? Or some combination of both? This level of ambiguity is how the game mechanic adds an element of fun to the loyalty program, and it inspires the imagination of the player who attempts to accomplish the objective.
Points
Loyalty programs already have a game mechanic called points. Points are a key component that can be used to create and define other game mechanics. Points help us keep score and communicate with players. For example, you can create a challenge promotion that rewards a player if they earn X number of points on Wheel of Fortune. Another example, Gamblers Bonus, a video poker game commonly found in bars and taverns in Las Vegas, allows players to record winning a four-of-a-kind on an electronic scratch-off card.
Challenges and Sets
Once you create a series of individual challenges like the ones above, you can create a promotion that rewards the player for earning a set of challenges. Gamblers Bonus rewards players who win each four-of-a-kind that is possible. Winning all of the various four-of-a-kinds completes a set and Gamblers Bonus pays the player a bonus. Another example might be challenging players who like playing large progressives. Call the promotion “Dreaming of a Big Pay Day.” As a player earns a certain number of points on each game type that qualifies, they complete a challenge that leads to the completion of a set. Each challenge can have a random prize awarded by a game mechanic, such as a promotional wheel or scratch-off cards. Be sure to include a losing outcome in the game mechanic so that the promotion remains unpredictable.
Rewards can be a fixed amount or a variable amount. Variable amounts are promised where there is an opportunity to win a lot, but the expected value is within a defined comfort level for the casino—for example, entry into a raffle for $500 or the promise of spinning a wheel where pieces of the pie have outcomes with or without awards. Station Casinos used to run a promotion that offered a win of $5–$500 when a new member inserted their card. Rarely did the player win $500, but the anticipation was fun. Scratch cards would also be a non-technical means of awarding players while creating anticipation as to what the reward will be.
Levels
Another way points enable game mechanics is the development of levels. Levels reward players for mastery of a game. Let’s take a game like Cleopatra, for example. The game has been a great performer for some time. If you examine the ratings of guests who have played Cleopatra a lot, you can then use the data to create a promotion that encourages those players to move through levels. Each level can have a name and the next level can be triggered by earning a certain number of points. The promotion can target those who have played Cleopatra a lot or those who have not. You can tailor the levels to the unique play of the player or player segments. At each level, a player can be given the opportunity to win a prize via a game mechanic similar to the ones discussed above. And be sure to include a hat or T-shirt that informs the world that they have achieved mastery of Cleopatra—people love to brag about their accomplishments. (A cautionary note if you give out hats or T-shirts to individuals that do not earn the achievement: You will undermine the power of the game. Scarcity helps the player feel the positive emotion associated with mastery.)
Collections
With challenges, sets and levels in place, you can design a collection. A collection rewards a player for completing a defined mix of these objectives. For example, a mix-and-match collection: Earn a challenge of Wolf Run, complete the “Dreaming of a Big Pay Day” set, and become a Level 4 on Wizard of Oz. Once a player completes the collection, a casino can use different mechanisms to reward the player.
A mix of these various game mechanics built into the promotional structure of a casino’s loyalty program will provide players with a fun, entertaining and surprising experience. The deeper the design of these features into the loyalty program creates a richer engagement with players and increases the players’ switching cost if they are thinking about playing at another casino. (The switching cost is the loss of participating in promotions based on these game mechanics.)
Developing the internal competencies to create and execute these promotions requires a change in the mindset about the type of talent that occupies the marketing department. The department will need staff members that can be creative, are good with math and are thoughtful about communication and execution. In addition, the technology is not readily available to support the execution of many of the promotions that these individuals may come up with, so executives will have to make decisions to build their own or encourage suppliers to develop supporting applications.
Jeff Jordan most recently served IGT as a Director in several roles—product strategy and marketing research, corporate strategic planning and strategic business development. Prior to IGT, Jordan worked at Bellagio as the Executive Director of Slot Operations and Marketing. He is a Principal at Jordan Gaming Consulting Group and can be reached at jjordanlv[at]gmail.com.
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