Casinos in crisis Part 2: Back to Basics

Aug 11, 2009 5:10 PM


Strategies to restore patronage

In part one of this series, casino marketing experts reported that the recessionary economy isn’t solely responsible for the drop-off in customer satisfaction, and the resulting reluctance of players to continually patronize Las Vegas casinos.

"Short sighted" strategies designed to extract more money in a shorter amount of time from gamblers have been a deterrence, they said, causing customers to reduce the frequency of their visits, cut back on the amount spent and could eventually result in them ceasing to come to casinos altogether.

These experts, who made their case at last month’s Casino Marketing Conference in Las Vegas, offered several corrective strategies to reverse this trend.

But before getting into their proposals, it would be helpful to review key results of recent player studies in Las Vegas.

According to research polls, about 20 percent of casino customers provide about 80 percent of the gaming business, which can probably be said of many businesses.

And the demographic of those core casino customers hasn’t fluctuated much over the past few years. The majority, about 54 percent, are over 55 years of age. Only 11 percent are under 35.

Thus, most are retired or nearing retirement. They often times have fixed incomes and, generally, well-controlled living expenses, which leave them with a substantial amount of disposable income.

"Casino entertainment is part of their lifestyle," said Michael Meczka, president of MM/R/C Inc., and a 30-year member of the American Marketing Association, who added that regular, long-time players don’t really expect to win. "Winning is a bonus, not an expectation," adding that these loyal players simply "want to be in action."

Meczka added that "short sighted" casino practices have "compressed" the players’ experience, shortening their time in the casino. The result has been players seeking other alternatives.

"These changes, particularly less time in the casino, are impacting casinos as much as, if not more than, the economy," he said.

In his presentation at the Casino Marketing Conference, Meczka outlined several "corrective strategies" designed to give casino customers what they’ve come to expect – a fun, exciting and positive experience.

First, the hold on slot machines should be reduced, so that players have "more time on the device."

Meczka believes customers will "give you all my money, if you give me machines that will tease me during my stay … It’s no fun to be at the casino for three days and lose my bankroll in the first few hours."

Another tactic would be to reduce the number of coins or credits needed to play a slot machine, which would slow down the rate at which players are losing.

In the pit, games need to be slowed down as well, by either reducing the minimum bet or going to more liberal pay tables, such as 3-2 on blackjack instead of 6-5 for a natural.

"Remember what strategies allowed the casinos to be successful in the ’80s and early ’90s," Meczka said. "Use all the casino’s gaming resources to operate a patron service-based experience offering extended time on the device."

Implementing these strategies will positively reinforce the player’s experience, resulting in greater satisfaction, a higher likelihood of returning, more visits and eventually more dollars for the casino, Meczka said.

"Stop being financiers, entertainment booking agents, hotel developers, golf course developers, resort developers or any other type of developer that takes resources away from operating a casino," Meczka said. "Do what you do best in an industry that affords operators the highest known (legal) return on investment – run a casino, nothing more, nothing less."

Perhaps a good illustration of Meczka’s points is poker play in Nevada.

According to recent revenue reports, the state’s poker rooms have been least affected by the recession, compared to any other area of the casino.

For the year to date, poker revenues are down just 5.8 percent, less than half the 12.5 percent drop off in slot revenue, and nearly a third less than the 15 percent decline in table game revenue.

One explanation is poker isn’t subject to any of the so-called "short sighted" strategies that have impacted slots and table games.

"Basically, the players decide what games are played and what the costs will be," said GamingToday columnist Joe Awada, a professional poker player and owner of Gaming Entertainment Inc., a creator and manufacturer of table games. "If the casino’s poker room tried to change a game from a $40 buy-in to a $100 buy-in, the players would stop playing or go elsewhere."

Awada added that poker offers a solid entertainment experience, depending on the skill level of the player, that isn’t easily manipulated through changes in house rules or hold percentages.

He said that many of Meczka’s suggestions suggest a "return to basics," a strategy he endorses.

"Now isn’t the time to see everything in black and white," Awada said. "Regardless of what the players’ club computer says, casino managers might want to be a little more generous with their comps and benefits.

"Also, floor people and casino managers should go back to an open door policy with players," he continued. "Get out on the floor and talk to the players, get to know them and what’s happening with them. Those little things add up and they help to build customer loyalty."

Next week, the third and final segment of this article will focus on player development tactics that help build customer loyalty, as well as effective casino marketing and advertising campaigns.