Loyalty: Not Just for Royalty

Both smiling

Webster’s definition of Loyalty:  “State, quality, or instance of being loyal; fidelity.”  We tend to throw this word around a lot, usually in reference to a significant other, political party, sports team or even our favorite coffee shop.  In the casino world, with increased competition it seems on every street corner, the word has never been more relevant, and operators are finding it necessary to attract and retain more loyal patrons, at an ever escalating cost.  And while the focus is often on the higher ranked players, these are fewer in number, higher in cost and maintenance to keep happy, and perhaps not where you should focus the majority of your marketing efforts.

If you talk to enough casino marketing executives you’ll hear many different opinions on the merits of loyalty programs, from a “necessary evil” to a trip driving force.  These mixed feelings fuel the heated discussion as to whether loyalty programs create loyalty, or encourage customers to shop around, thereby discouraging it.  One of the most comprehensive studies on the subject titled “The Effectiveness of Casino Loyalty Programs – Their Influence on Satisfaction, Emotional Connections, Loyalty and Price Sensitivity” by University of San Francisco Professor Jonathan Barsky admits to a certain degree of inconclusiveness in his results.  He breaks loyalty program members in to three main segments:

  • “Elder Elites” – Roughly 11% of the market these are predominantly older male, higher income earning patrons that spend an average of 17 room nights per year in  a casino.  This group gives high marks for friendliness and helpfulness of staff, and writes more online reviews than it reads.  “Clearly, the elite membership creates a very engaged group of customers”.
  • “True Blue” – About equal in size to Elder Elites, this group is more balanced in terms of gender, income and age.   While they take fewer trips they consider themselves just as loyal, making them desirable to casino operators, though they value their membership less than Elite Elders.
  • “Unmoved Members” – At roughly 1/3rd of the market, this huge group represents the largest segment and represents both significant risk and opportunity.  They give consistently more mediocre scores on their casino experiences and report the lowest likelihood to return to a property of all three segments.  They tend to place the least amount of value on their loyalty program membership.

While this last group may not represent the high roller segment so coveted by many operators, it is the largest. So how do you move those unmoved members?  First off, you must know your product.  Why would you want to frequent your property if you didn’t work there?  The answer is easy in the case of the destination resort casinos/racinos.  In the MGM Mirage “M life” Program, or the Caesar Entertainment “Total Rewards” program there are a myriad of dining, entertainment and shopping experiences to draw you in if the gaming alone can’t do it, or you need something else of interest for a spouse or significant other.  But what if you don’t have a 5 star hotel, award winning spa or championship golf course?  Then focus on what you do have!

  • Property Amenities –  You may not put too much stock in your parking garage, buffet or casino lounge, but there should be a tier in your program that gets you free or discounted access to all of them or a free drink or cup of coffee now and then.
  • Special Events – Get creative with your tournaments and events to draw these mid-level players in.  A purse party for the ladies around Mother’s Day, or a tailgate themed giveaway during football season might do the trick.
  • Power of Partners! – You may not have a retail outlet or event a gift shop but that shouldn’t stop you from partnering with neighboring businesses or a vendor that can offer you a merchandise or travel rewards program that honor your patron’s points.  Patrons love choices, so give them options as to how they can use their points like real currency and they will appreciate the relationship more.

Luxury vs. necessity rewards.  Sure, cruises on the Rhine are nice, as are Rolex watches and Louis Vuitton hand bags which are highly sought after and fun to fantasize about.  Your elite players may only be interested in those trophy type items or experiences. But more often than not it is the more utilitarian awards that are appreciated by your average players.  Think function over form and watch them perc up when they see a Keurig coffeemaker or iRobot vacuum that they can purchase with their points or is their gift of the month offer based on their level of play.

We all know the power of word of mouth endorsements and in the casino world these can often be tied to the reciprocity theory. Human nature makes it likely that a patron is likely to respond to a positive action with another positive action.  If you properly invest in them they will invest in your property.  This will come in the form of repeat visits, increased spend, and recruiting family and friends to share in the experience with them.   Negative reciprocity is the inevitable result of a bad experience or the perception that the casino was not concerned with their level of player.  And while this person may never make their way to your high limit gaming area, you would be hurting if a few hundred or thousand of them took their loyalty elsewhere.

Gary Galonek


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