Isle of Capri Casinos Inc. is embarking on a new methodology of evaluating and valuing customers as it intensifies its rivalry with industry giants like Harrah's Entertainment Inc.
The Biloxi, MS, company's aggressive approach includes attempts to move its offline database online, better modeling and clustering, and getting more in tune with the customer cycle.
“What we're trying to do is to build our loyalty and increase the share of wallet with our customers,” said Les McMackin III, senior vice president of marketing at Isle of Capri.
“The challenge we're trying to address is to win the long-term-loyalty battle with our customers, to give them rewards to be loyal to our brand [so] that I can protect my share of the market, my share of the customer's wallet, and to do it in a profitable way.”
Not just casino owners and operators have reason to be alarmed. In a recent poll of 237 respondents by Maritz Loyalty Marketing, consumers cited multiple reasons for ending participation in rewards programs. Forty-six percent did not want to pay a fee, 41 percent were not being rewarded appropriately, 32 percent had trouble redeeming points and 24 percent said rules changed frequently. More than one answer was allowed.
It does not help that the $1 billion Isle of Capri, like many in its industry, trails the financial services industry and direct marketers in using the vast amount of data available. McMackin certainly understands that imitation is the best form of flattery. He is employing some modeling techniques used by financial services and telecom companies.
Enhanced clustering and modeling are critical to better understand the customer. Gaming is a highly transaction-oriented industry. Casinos will know more about their customers and their behavior than many retailers would.
For Isle of Capri, its IsleOne loyalty card is the tool of such behavior. Typical card transactions available to analyze include purchasing at food and beverage outlets, retail shops, booking hotel rooms and gambling.
What helps casino operators is that U.S. law prohibits the use of smart or debit cards for gaming itself. This forces customers to use the branded loyalty card.
So Isle of Capri will model its base by taking those transactions and applying clustering to the results. It then will direct offers and Isle Miles rewards to those customers.
Isle of Capri's customer base is older than 50, more female than male, semi- or fully retired and living within 60 minutes of the casino location.
Modeling and clustering will help sway behavior. If Isle of Capri notices that a male customer plays blackjack on Friday nights, it can reinforce the behavior and get the person to spend more. Or it can offer incentives for him to also visit on Tuesday afternoons when there is capacity.
“So the more I start to learn about you, the more I can maybe try to influence your behavior that benefits me, the operator, and maybe give some additional reward to you, the customer,” McMackin said.
Until recently, the only segmentation done within the company was based on one dimension: value. It segmented customers for rewards on their gaming worth using the IsleOne card.
Sophistication in that area will help in Isle of Capri's marketing. The company drops 7 million mail pieces yearly to 1.5 million active customers in its 4.5 million-strong database.
“We have several fixed-frequency programs, and we're evolving those into a more behavioral-oriented program where, depending on how often you come and what you do, I'm going to tailor my rewards program to you,” McMackin said.
Isle of Capri previously did not necessarily take frequency into account. When it was considered, it was done in broad segments.
Visitation frequency is crucial for its loyalty program. In some regional markets, 60 percent to 70 percent of customers use the IsleOne card to gain Isle Miles for redeeming rewards. The average spend is $75, and the frequency over 12 months is six trips.
Tinkering with rewards hopefully will boost frequency and average spend. Isle of Capri traditionally has offered two types of rewards: Earn points for redemption that day or deliver a bonus through the mail.
A third type, the deferred-rewards program, is designed to increase the time spent gaming. The longer customers play or spend at the casinos, the more aspirational the awards. Shoes, crystal vases, cameras, handbags, vacation cruises and diamond bracelets are among the rewards.
Customers will not lose any current benefit they get with the card.
“What I've seen is a tremendous lift in the loyalty of these customers,” McMackin said. “Since we began to roll this program, there was an increase in revenue of more than 22 percent as opposed to a customer who's not enrolled in this program.”
Wallet share is the No. 1 battle, McMackin said.
“When a customer comes into a market, they traditionally go to two to three places,” he said. “They have their first favorite and second favorite. So if you can move somebody a little bit, it means a lot.”
Rosenfield Dentino, Jersey City, NJ, handles Isle of Capri's direct marketing, and Hill & Knowlton, Chicago, is responsible for public relations. Chess Communications Group, Baltimore, has general advertising and recently broke a 30-second branding spot featuring actor Ricardo Montalban.
Another issue Isle of Capri aims to address is persuading customers to volunteer e-mail addresses. It has roughly 150,000 in its database. Gathering more is tough.
McMackin said customers have no issue with relinquishing a telephone number and postal address. But the numerous campaigns offering incentives and addressing online privacy concerns do not seem to work.
“From our company's standpoint, an average customer skews a little bit older,” McMackin said. “It takes a bit longer to embrace new technology. But the more they use it, the more they'll become comfortable.
“I think consumers have really got more jaded and more frustrated, and that's why they're very reserved with giving up that particular piece of data,” he said.
The site at www.isleofcapricasinos.com lets them check accounts, look up rewards and undertake every activity bar gambling.
With the uncertain economy in the past 24 to 36 months, some markets the casino operates in have not grown into what was expected, McMackin said.
“As a result,” he said, “you've got to take care of the customers you have because the market isn't giving you any more in the current time. So it's even more critical that you harvest the customers that are in your base and try to develop those customers beyond what they currently are.”