42 Computerworld Hong Kong October 2011 www.cw.com.hk

BACKPAGE andrew pearson

Gambling—the wagering of something valuable on an event of an uncertain outcome with the prima-ry intent of winning additional money or material

goods—has been with us since ancient times. Greek mythol-ogy tells the story of Poseidon, Zeus and Hades dividing the world between themselves in a dice game; Poseidon won the sea, Zeus the heavens and Hades the underworld. The land, I presume, was left to the rest of us.

This intriguing beginning has rise to the opulent gambling temples of today: Las Vegas’s Bellagio, Palazzo and Wynn, Atlantic City’s Taj Mahal, Tropicana and Caesars, and Ma-cau’s Venetian, Grand Lisboa, and, ironically we come full circle, to the clumsily named casino ‘Greek Mythology’ in Taipa.

Just like executives in every other industry, today’s casino executives are faced with an inherent question—how do I differentiate myself from my competitors when the tools I have are basically the same industry-wide? The answer lies in business intelligence, customer intelligence, data modeling

and predictive analytics. Companies now have to be smarter than their competitors in understanding and attracting their customers. Although marketing is best when it’s subtle and taps into a customer’s desires and needs, the goal of market-ing is anything but subtle. Its sole objective is to generate revenue. ROI trumps all and nothing else matters.

There is an old adage in marketing circles that says it’s far more cost effective to keep a customer than to acquire a new one. Technologies like business intelligence, customer intel-ligence, data modeling and predictive analytics help to retain customers, as they are not just about analyzing data. They are about creating a predictable relationship with the customer. These tools help predict future customers’ behaviors by ana-lyzing their basic demographics and the psychological traits of their desires and needs, thereby bringing them offers that are more enticing and irresistible.

In the casino industry today, analytics are used to identify the optimum offer for specific customer by projecting likeli-

From dice to predictive analytics

hood of his or her response to an offer based upon spending history. For example, if a customer has a history of dining at the casino’s finer restaurants, he or she may not respond to—or even be offended by—an offer for a buffet.

One key thing that must be factored into these models is to look beyond the redemption rate, but into the additional revenue generated from these offers. If the patron received an offer, redeemed it and hit the tables to gamble extensively, he or she is obviously being valued over other customers that take the free food and don’t gamble. Models that include fac-tors of overall spending can help casinos to target their most profitable customers, instead of gambling their promotional offers—and valuable hotel rooms—on customers that gener-ate less revenue.

Campaign optimizationModels such as these aren’t unique to the gaming indus-

try. The financial services, telecommunications, retail, insur-ance and healthcare industries can all benefit from using such data modeling and analytics techniques. Through matching marketing offers with the customer profile, a company can project the anticipated redemptions and potential revenue to be generated from a campaign. This gives the marketing de-partment enormous leverage, as they can review an antici-pated campaign and make adjustments to achieve the desired results, before it even started.

Casinos all have a daunting weekly task: to fill thousands of hotel rooms and hundreds of gaming tables. But the lessons learned here are not unique to the gaming industry. Customer relationship management is important to almost every indus-try and the lessons learned in the gaming industry should be heeded by all. 3

Note that the views expressed by BackPage contributors do not necessarily reflect the views of Computerworld Hong Kong or its editorial staff.

ROI trumps all and nothing else matters

Andrew Pearson is a consultant at Qualex Consulting Service. His expert includes business analytics in the gaming industry and mobile marketing. Contact him at andrew@qlx.com.