So this particular casino (Harrah's) has found that customers exhibit the behavior as displayed in the chart on left. The likelihood of them returning is not affected by a lot, until they lose a certain amount of money (called the pain point) at which point the probability that they will return takes a dramatic fall. So what would you do if you were Harrah's in order to maximize revenue potential from each customer. Well, ideally you'd like to take the customer as close to his/her theoretical pain point and then have them stop so that the likelihood of their return stays high to ensure future revenue. It's a little like the goose that laid the golden eggs, you don't want to get them all at once, otherwise you don't get much in the future. But how do you drive this customer behavior? Why would a customer lose just the amount of money you want and then stop? How does the casino know what each person's pain point is? I can assure you mine is pretty low - unless I've had a few drinks ;)
You know those reward cards at casinos that people get and are swiping all over the place? Yup, you got it. They are providing real time data to the casino's Customer Intelligence systems. This allows the casino to know by the moment how much money each customer is winning or losing. This tells them where the customer is on the x-axis above. To calculate the other dimension, the casino relies on other demographic, psychographic and past visit data points. All these data points are plugged into a regression formula to calculate each customer's personal and individual pain point.
So for example, if a certain customer who likes to play blackjack is a certain age from a certain part of the country with certain past visit behavior, the regression analysis may predict a $1400 pain point. As this customer approaches his pain point in losses, the casino sends in a "rescue team". These guys pull you away, they get you a free steak meal, comp your room, give you tickets to a show and much more. Guess what? Not only did that customer just lose $1300, but the next morning he's feeling really good about his entire experience. Six months later, you can already hear him: "Man, Vegas was fun! We should go back again!"
Gotcha!! :)
What happens in Vegas, is driven by Customer Intelligence.
And there is no reason why this sort of analysis and revenue maximization should only happen in Vegas. What are the missed opportunities at your company? Think of the data you probably already have that could be used in driving the effectiveness of your sales and marketing programs? Give it some thought, I promise you there are lots of opportunities you have not discovered yet.
Posts
