Gaming Establishments Use Research to Competitive Advantage

Gaming Establishments Use Research to Competitive Advantage

As gaming establishments have increased in number, so has the competition between them. As competition increases it becomes vital to a gaming establishment’s survival to gain an advantage over the competition in attracting customers. Just how can this be accomplished?

Through research.

Scientific research provides a competitive edge over the competition whether you own a gaming establishment or any other business that faces competition for customers. Through research insight is gained into three types of information that can be used to an advantage over your competitors. The three types of information are knowledge of:

1) customer attitudes

2) customer perceptions, and

3) customer behaviors.

Wesley Roehl’s research illustrates the importance of customer attitudes. Roehl, in an article published in the Journal of Travel Research, stated that research has shown that users of casino amenities (i.e. gourmet restaurants, coffee shops, and large- and small-scale shows) spend substantially more money gambling than do non-users of these amenities. According to Roehl, as competition between casinos increases, information on the role amenities play in attracting customers and keeping them on-site becomes more important in maintaining a competitive edge. Surveying customers regularly can keep you abreast of their attitudes toward such amenities and the role they play in a customers’ choice of casino.

Knowledge of customer perceptions is also valuable. How a customer evaluates a casino is heavily influenced by the contrast effect. Psychologists tell us that how we judge a stimulus, whether it is a person, place, object, or service, is influenced by other similar stimuli we have recently been exposed to. A customer judges a gaming establishment by comparing it to other casinos he or she has recently patronized, rather than by comparing it to a fixed standard.

You can experience the contrast effect in a dramatic way by exposing yourself to three physical stimuli: three buckets of water at different temperatures. Take one bucket and fill it with very warm water. Fill a second bucket with very cold water and a third with lukewarm water. Simultaneously place one hand in the bucket of very warm water and the other in the very cold water. Keep your hands in these buckets at least 15 seconds. Next simultaneously remove your hands from these buckets and place them both in the bucket of lukewarm water. Even though the hands are being exposed to the same stimulus, they will not perceive the water temperature in the same way. The lukewarm water will feel cool to the hand that has been in the very warm water. However, the hand that has been in the very cold water will perceive the same lukewarm water as being quite warm.  Now imagine two customers coming into your business, whether it is a casino, restaurant, service provider, or retail store, the same phenomenon applies. These two customers, each with their own unique experiences, will perceive your business differently because each will compare it to other businesses they have experience with. Thus, the same two customers patronizing your business during the same time period may form two very different perceptions.

It is critical to have both knowledge of the customer’s attitudes and knowledge of the customer’s perceptions of your business. When you use scientific research to learn about the customer’s attitudes, you gain powerful knowledge about the drivers of the customer’s behavior. Learning the drivers of customer satisfaction and intent to return to your business enables you to tailor your business to the needs and desires of your customers. For example, if you own or operate a casino, you need to know whether customers are driven by a fun and exciting environment, a good mix of slot types, or the comfort of the chairs in the casino, among many other possibilities.

Once you have identified these drivers you can then look at how customers perceive your casino based on these drivers. You can get a limited view of customer perceptions by simply looking at the mean (average) scores for each of these drivers on your survey. However, mean scores are completely subjective. You will be able to derive objective meaning from your survey scores only if you can compare your scores with benchmarking data. If you utilize a consulting firm to conduct your customer surveys, a good firm will have a large benchmarking database to compare your scores to. A benchmarking database is based on the responses of many other customers to the same survey questions and informs you how customers typically perceive each item. This provides you with objective information on whether a particular score is good or bad.

Take, for example, two items often used on customer surveys, “I would recommend doing business with the company to others.” and “Sales representatives are responsive to my needs.” Let’s say that each of these items received an average score of 3.99 on a six-point balanced scale ranging from “strongly disagree” (with a value of 1) to “strongly agree” (with a value of 6). A score of 3.99 would put each item just barely below the “slightly agree” point which is valued at 4.0. Although the two mean scores are the same, their meanings are quite different as benchmarking data clearly illustrates. As it turns out, 3.99 is a poor score for “I would recommend doing business with the company to others.” as 3.99 is only at the 38th percentile for this item. That means that 62% of individuals surveyed gave this item a higher score. However, for “Sales representatives are responsive to my needs.” a score of 3.99 is at the 96th percentile which tells us that most customers give this item a lower score. Thus, 3.99 is an outstanding score in this case. Benchmarking data provides the objective information you need to make profitable changes in your business.

We have examined the importance of investigating customer attitudes and perceptions. Next let’s look at the importance of examining customer behaviors. Ultimately, it is the behavior of the customer that a business owner is most concerned with. Knowledge of attitudes and perceptions are important because they influence behavior. In an article entitled, “The Science of Decision-making: Behaviors Related to Gambling” published in the journal International Gambling Studies, Edmund Fantino and colleagues report that a behavioral perspective can be very useful in understanding the factors involved in a customer’s gambling. For example, for a gaming establishment it can be helpful to know about behaviors such as how often customers gamble, how much money they typically spend when they gamble, etc. Even more important is information about a customer’s “percent of wallet.” That is, how much of their gambling money is spent at your casino and what percentage is spent at other casinos. This information gives you vital knowledge of your customers’ behavior. Combined with the information you have about customer attitudes and perceptions, you can use this knowledge to gain a competitive advantage over your competition.

The National Business Research Institute (NBRI) has combined knowledge of customer attitudes, perceptions, and behavior in a powerful way to help gaming establishments increase their advantage over competitors. In a unique customer study, NBRI conducted a comparative analysis between two customer bases: those customers who spent a high percentage of their wallet at one particular gaming establishment with those who spent a low percentage of their wallet at one particular establishment. NBRI was able to identify the drivers of customer satisfaction, intent to return to the establishment, and willingness to recommend the establishment to others in these two groups. For those customers spending a high percentage of their wallet at one particular establishment, drivers included customer perceptions that the casino was fun, had lots of action, and was exciting. Comfortable seating in the casino was also a driver for the high percent of wallet group. In addition, the perception of the quality of the food and beverages sold at the casino was a driver. Finally, the customers’ perceptions of how friendly the casino staff was drove behavior as well.

NBRI found some similarities when comparing the high and low percent of wallet groups. Like the high percentage group, those who spent a low percentage of their wallets at a particular gaming establishment were also driven by their perception of the casino as a fun place with lots of action and excitement. The perceived quality of the casino’s food and beverages was also a driver for the low percentage group just as it was for the high percentage group. However, there were also drivers that were unique to the low percent of wallet group. These included items related to the player card program and the casino slots. For the player card program drivers included the customers’ perception of how simple and easy to understand the program was and the value of the program’s benefits. For the slots, customers were driven by their perception that there was a good mix of slot themes and a good mix of slot denominations.

A gaming establishment can use this information to influence the behavior of both the high and low percent of wallet groups. Since they have some common drivers, taking action to improve customer perceptions of those drivers will increase satisfaction, intent to return, and willingness to recommend in both customer groups. In addition, addressing the drivers that were found to be unique to the high percent of wallet group can help ensure that these customers continue to spend the majority of their gambling money at that gaming establishment. Taking action to improve the perceptions of the low percent of wallet group on the drivers that were unique to them can lead to a change in the behavior of this customer group. As their perceptions of their drivers improve for that gaming establishment, they will want to spend more time at that gaming establishment and will increase the percentage of their gambling money spent at that casino. In this way the gaming establishment gains an advantage over its competitors.

Whatever business or industry you are in, scientific survey research can give you a competitive advantage. To learn how you can gain an advantage over your competitors, contact NBRI at 800-756-6168.

Ken West
Chief Operating Officer
National Business Research Institute