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Case Study: Gaming Company: Loyalty Program Design


Gaming Company: Loyalty Program Design

An interview with Stefan Boedeker

The Company

A casino and gambling boat operator.

The Challenge

The operator was using an outdated reward system for its loyal customers. The operator self-assessed that the system suffered from incomplete information about the spending patterns and spending potential of its customers. As a result, it felt that it was overproviding comps to undeserving customers, while not adequately rewarding potentially more-deserving customers. It also wanted to figure out how to differentiate between its casino operations, mainly in Nevada, and its riverboat operations, which were along the Mississippi River in Alabama and Mississippi.

The Solution

Experts were put on the ground in all locations to do survey work and look at data. The first step involved segmenting the customer base into local versus non-local, repeat versus non-repeat, and high- versus low-spending potential. In the next step, an econometric model was developed to estimate the sensitivity of different comping centers, which provide rewards to frequent and high-spending gamers. That work included creating campaigns, collecting data in real time, and statistically analyzing the data. The ultimate goal was to allocate budgets optimally for comp rewards into the different customer segments based on statistical decision criteria.

The Results

Our experts provided a model that enabled the client to upload data continuously, thereby capturing immediate changes in customer segmentation and customer behavior. That was an innovation; previously, segmentation and rewards policies had been written in stone and never really changed, because no one felt that they could make the changes properly. The client also realized significant cost savings by ultimately taking into account actual customer spending and segment-specific customer sensitivities. Additional advantages included eliminating the comping of undeserving customers and improving customer retention by giving the right customers the comps they deserved. The ultimate benefit was the realization of increased sales among this loyal customer segment.