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As operators look to transition from massive spending on customer acquisition to retaining those customers, some industry leaders argue that simpler approaches may be better.
Some operators, including many of the U.S. sports betting market leaders, have invested hundreds of millions of dollars annually in customer acquisition, to the point that investors have grown wary of the losses incurred in that pursuit.
“With how quickly these brands are trying to scoop up market share, at the end of the day, you are acquiring a lot of users that are eventually just not going to be profitable for you,” said Allan Petrilli, vice president of sales and growth for marketing platform provider Intelitics.
“And that makes this job even more difficult, because you're sitting with a group of players who at the end of the day will never be a good customer for you, and you need to figure out where are you putting your time to be able to extract most value from your database.”
“When I [say the gaming industry] is the best at acquiring, what I actually meant was to the detriment to the retention part of the industry, because the signup offers are so lucrative and so attractive, it makes loyalty almost impossible,” added John Gordon, CEO of free-to-play game supplier Incentive Games.
“I think the industry needs to really start looking at entertaining the customer, and I know we've had a shift in the way companies call themselves and such, but not just say it; do it.”
Gordon argues that online gaming companies should focus on product quality and pursue simpler methods of retention rather than grander loyalty programs.
“I think there's a bit of a misconception in the industry where we need this whole elaborate gamification and loyalty program plan, which has all different sort of massive beasts feeding into it,” Gordon said. “What we've found is exactly the opposite; make it simple and make it rewarding.
“When the user feels that they have been in some sort of elaborate loyalty scheme with a gaming company, they naturally want to break out of that, because they don't want to feel as if they have been in some sort of gamification mechanic in the long term with a gambling company.
“You could have the best daily free game in the world, or the best reason to come back to your site in the world, the most rewarding, simple, effective daily free game that we provide, for instance, but if your core product is not best in class, you will not retain that customer,” he added.
Marina Bogard, managing director for Betsson US, added that simplification can also be applied to product personalization.
“If you look at all the apps today, there's very little differentiation on what's on that app besides maybe colors and placement, but everything else pretty much looks the same,” Bogard said.
“I think as an industry, we need to simplify the ability to show only what players want to see, so when someone's a new player, and maybe they just want to bet on NFL and nothing else, let's get rid of that noise and just make it simple for them.
“I think that's where we're going to have to get to as an industry to allow a player journey to start off simple and then have them determine what more they want to see and what more they want to play on it.”
Petrilli said that companies also tend to look at retention as its own aspect of the process, while in reality, every part of the business is important to retention.
He also pointed out that some companies may have a tough time analyzing retention because of a lack of access to data.
“A lot of brands actually have difficulty being able to deep dive into their own data to figure out, you know, who are my most profitable players, what are they playing, what should I be offering them,” he said.
“I think that's a massive challenge because unlike a lot of other industries, where everyone owns their own product, there's so many brands who are white-labeling their product or white-labeling 10 to 20 different features within their product set, where they don't have full control over the product, and they don't have full control over the data.”
Gordon also said some operators should focus more on building customer long-term value than pursuing short-term gains through higher profit margin games.
“We work with operators, and we've we had some pay-to-play games, and they would say things like, can we increase the margin on that product, and it would really go against my grain, because what I like to do is keep them there for longer, entertain them, give them enjoyment, a new product, drop it to 2 percent, rather than 5 percent,” Gordon said.
“They want to go to 12 percent margin,” he said of the operators. “And it's just for me, those are the operators that burn out their customers and bleed them dry.”
Each of the three executives spoke during a panel discussion hosted as part of a Gaming Americas quarterly webinar on Thursday (August 25).
