Loyalty still matters

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I continue to receive e-mails about casinos that are cutting benefits to their loyal players. I have to admit that I get these types of e-mails even when there isn’t a pandemic going on.

The reality is that almost any change that a casino makes in its loyalty program is probably going to be considered to be a negative by some segment of the population. Anyone who reads Yelp reviews will probably also notice that negative reviews tend to outweigh positive reviews very often. If we feel a company has wronged us, we want to let them have it. If they did a good job, we don’t tend to take the time to write a review unless someone really went above and beyond the call of duty.

When the internet bubble was going on a couple of decades ago, one of the metrics that many of these startup companies measured was “acquisition cost.” This is the cost to acquire a new customer. Back then, it meant running banner ads and/or buying e-mail lists and sending out e-mails to prospective customers.

In reality, this concept existed long before the internet. But the internet retail stores were about massive potential volumes because they could be everywhere at one time. It was also how companies like Amazon justified large losses in the early years. They were spending money to acquire customers. Clearly it is a concept that has some merit given Amazon’s market cap.

This coming week I will be changing cell phone providers for the first time in more than 20+ years. I have multiple lines on my plan. Two of the lines have been out of contract for at least two years and the third line is about to end. On the former lines, I have two very outdated phones that have almost no resale value. My existing company has literally not once tried to get me to sign a new contract or offer me any incentive to update my phone beyond the ones they offer to everybody else.

So, I’m going to a new company that is willing to give me newer phones at a lower price. This is the new company’s acquisition cost to get me. They will discount the phones to bring me in. It is possible that I might leave in two years or maybe I’ll stay for 20+ like I did with the prior one.

Quite frankly, there is no excuse for my existing phone company for allowing me to leave so easily. They have had at least two years to make me a reasonable offer to keep me. They did not bother to try.

This is what I am hearing about a lot of casinos. The number of visitors is obviously down in most of them. I understand that casinos need to squeeze more profits out of those existing customers to pay the overhead which now must be spread over those fewer customers. But, I strongly caution these casinos to not lose sight of the cost to go out and acquire new customers should you chase many of the loyal ones away.

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If these customers are willing to come out in the middle of a pandemic to play their favorite slots, video poker and table games, it might make sense to find a way to reward them with more loyalty, not less. I know I mentioned a few months ago that before the pandemic, I would generally play at two different casinos. Now, I only go to one because that one has managed to reward my loyalty while the other one has all but forgotten about me.

When the pandemic is over, one of these casinos is going to have to “reacquire” me, probably at a greater cost than if they had found a way to retain me through the pandemic.

About the Author

Elliot Frome

Elliot Frome’s roots run deep into gaming theory and analysis. His father, Lenny, was a pioneer in developing video poker strategy in the 1980s and is credited with raising its popularity to dizzying heights. Elliot is a second generation gaming author and analyst with nearly 20 years of programming experience.

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