As I opened the annual CRM & Retention Seminar I moderated during the last iCE conference in London, I quoted a fantastic online article that linked CRM to the thoughtfulness demonstrated by the grocer on Sesame Street, Mr. Hooper: “Mr Hooper paid attention to customer behaviour even beyond their purchases to know how to adjust his stock,” the article said. “Would he have had birdseed milkshakes on the menu had he not listened to Big Bird? Certainly not.”
Another speaker pushed the idea further, saying that his analysis of a leading brand’s activity shows that it’s no longer enough to act based on customer comments, commenting: “because online operators own all the possible data, they should already have everything in place to respond to any player-initiated scenario, before the player even thinks about it.”
As a retention marketing executive, who wants to predict your users’ future desires (and thus extend player’ lifetime values) you need business intelligence tools to track your players’ current behavior. But you also have to be systematic about how you act with the information you’re gathering. You want to ensure your resources are being efficiently targeted to those players most likely to boost your revenue. Whether they are still loyal, or in case they have churned out and you need to reactivate them. To do so, you need to segment your players based upon Key Performance Indicators (KPIs).
In modern CRM, there are three major KPIs to follow to best understand your business and highlight those players most worthy of your attention:
- NGR & LTV
After you deduct all associated operational expenses (mainly bonuses) from an operator’s gross gaming revenue (GGR) you get the net gaming revenue (NGR). Over time, this is your players’ lifetime value. So when analysing your day/week/month, you first calculate the total NGR you have had during the relevant period and then calculate the contribution made by each player or cluster of players to that NGR. Over time, the pattern that emerges from these repeated analyses show each player’s lifetime value.
- NGR / Deposits
From time-to-time, check on the NGR/deposits ratio. Essentially this is the burn rate of your customers’ funds, as the house advantage/hold gradually consumes their chips with every wagering/betting event. In online casinos, games like slots would, of course, blaze through the customers’ cash quickly. Table games eventually create the same result, just over a longer period of time. But speed of incineration is critical. If this NGR/Deposits ratio is too low, this specific game might have recently provided too many winnings or is possibly being abused, and you surely want to look into that. Too high? Your player might be losing faster than s/he should, which can be a bad thing in the long run. When analysed for the entire activity over a period of time, it might be, though, that such a seemingly high burn rate is just what you wanted it to be, based on your pre-determined calculations on what the desired strategic loyalty levels should be. If your ratios show you’re in no danger of missing your optimal loyalty levels, then indeed, you can have the rest of the day off.
- Bonus / NGR
As you segment players by profitability, the most important indicator to keep track of is their bonus/NGR ratio. This is the mathematical equivalent of your appreciation level and represents the cost of your paid-back rewards to your players as a percentage of your net revenue from your games. As shown earlier about tracking NGR and LTV, you can calculate this ratio for each player segment. Still, you should have in each tier of your loyalty scheme both the standard rules of minimum/maximum and the ‘out of standard’ exceptions for those unique ‘whales’ we all love so dearly.
There’s two ways of looking at these KPIs. The bad news is that you can’t just do the calculations once and move on. You need to continually monitor statistics and act on the results. But by correctly micro-segmenting your players from a financial perspective you can zero in on the potential high rollers and tailor your offering and services. And when they’re happy, you’re happy.
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