Over the past decade there has been phenomenal growth in gaming and specifically in commercial casino gaming. According to the American Gaming Association, in a recent 10-year period total gaming revenues nearly doubled, going from $45.1 billion to $83.7 billion. Revenues from commercial casinos increased from $16.1 billion to $32.42 billion in one year alone.
While this growth is a positive phenomenon for those in the gaming industry, one must remember that there is no guarantee that this growth trend will continue. The best way to encourage growth in any business is to deliver what the customer wants. The importance of knowing your customers cannot be over-emphasized. In addition, human behavior is dynamic; it is always changing. Ensuring that you are delivering what your customers want requires a commitment to scientific research. Regularly surveying your customers gives you valuable knowledge of the changing drivers of customer satisfaction and their intent to return to your business.
Successful gaming companies are well aware of how vital a commitment to customer research is to their future growth. In recent years it has also become apparent that not only is customer behavior dynamic, but customers are also very diverse. A gaming company’s target market can be broken down into numerous segments. As casino gaming spread from two states to nearly three dozen states, new marketing needs were identified including learning the differences between customers who are local and those who are tourists and, a related segment, the differences between casino customers who are staying at the casino’s hotel and those who are not. Research in these areas is still in its infancy. Although many sources have reported on the attributes of “locals,” these reports tend to offer anecdotal evidence and conventional wisdom, rather than information based on empirical research. However, scientific research on these segments is beginning to emerge.
One scientific study, conducted by Stowe Shoemaker from the University of Houston and Dina Marie V. Zemke of Cornell University, focused on the “locals” market and identified it as an important emerging gaming segment. The sample for this study consisted of 637 participants who lived in the Las Vegas metropolitan area and who gambled at least once every two months in a legalized gambling establishment. The results of the study indicated that much of the conventional wisdom about the attributes of locals was in reality only popular misconception. For example, many sources had emphasized marketing issues such as sending out mailings from the casino, the benefits provided by the slot club, and the types of promotions offered. However, the research by Shoemaker and Zemke indicated that these were of relatively low importance to locals in their sample compared to the casino being an easy drive from where the local customer lived and the customer’s perception of being safe at the casino. These results illustrate the importance of relying on scientific research when tailoring marketing efforts to specific segments of the target market. Many marketers intuitively believe that gaming customers are attracted to a casino by promotional materials and thus, may allocate large funds to such marketing efforts. However, this study revealed that the actual customer decision making process indicated the operational aspects of the property were more important. What profit will marketing efforts yield if the casino does not offer the operational benefits that customers are looking for? None.
Marketing efforts must rely on specific information from customer research on each segment of the target market in order to be effective. The study by Shoemaker and Zemke looked only at “locals;” no comparisons were made to tourists. The study focused on identifying the attributes that are important in the decision to visit one casino over another. While this information provides some insight into one segment of a casino’s target market, additional information is also important, such as the factors driving the attitudes of tourists, a group whose drivers may be completely different. We can gain some insight by looking at a similar segmentation; the differences between customers who are staying at the casino’s hotel and those who are not. There are subtle differences in the experiences of hotel and non-hotel customers at a casino. It is also crucial to know what drives overall satisfaction and intent to return for these customers.
When it comes to satisfying customers, a casino quickly gains an advantage with the customers who are staying at its hotel. Psychologists discovered decades ago that familiarity breeds liking. We often like people, places, and things better than others simply because they are familiar to us.
Have you ever heard a song on the radio for the first time and thought the song was “not bad” or “just okay.” But, after hearing the song repeatedly did you find yourself thinking the song was “pretty good” and perhaps even singing along? Maybe eventually even deciding that the song was “great!”? This increasingly positive attitude toward the song is due to greater familiarity, a phenomenon known in psychology as the “mere exposure effect.” The same effect can impact the perceptions of casino customers who are staying in the casino’s hotel. By virtue of the fact that they are spending more time in the building compared to customers not staying in the establishment’s hotel, they may have a greater liking of the hotel’s casino. However, there is a potential downside. Psychological research has revealed that negative information stands out more in our memories than positive information and thus, has a greater influence on our attitudes. Since a hotel customer has more interactions with property staff and services, there is a greater potential for a negative event to occur. Any negative experience will lead to a more negative evaluation of the hotel and of the hotel’s casino (guilt by association). It is important to survey hotel and non-hotel casino customers so that you can uncover the specific issues driving their satisfaction and intent to return.
In addition to knowing what drives intent to return for casino customers, it is also helpful for hotel/casino establishments to know what drives intent to return for their hotel customers (some of whom, for whatever reasons, may not patronize the hotel’s casino) since customer loyalty is a key to success in the hotel industry. Anna S. Mattila, from the School of Hospitality Management at Pennsylvania State University, has stated that hotels, like casinos, have special programs aimed at increasing customer loyalty. Many hotel companies offer frequent-guest programs. Mattila’s research has found that reward programs are not enough to induce loyalty in the absence of an emotional bond with the brand. An emotional bond is necessary to ensure repeat business. Once again, customer research is necessary in order to determine the drivers that will improve customer perceptions of the hotel and of its frequent-guest program.
Since there are differences in the experiences of casino customers who stay in the hotel and those who do not, it is logical to assume that there will be different attributes influencing the satisfaction and intent to return for these customers. A recent scientific study, conducted by the National Business Research Institute (NBRI), provides the first empirical look at the differences between casino players that stay at the casino’s hotel and those casino players who are local or staying elsewhere. This groundbreaking study of 50,000 customers provides a detailed look at the differences between these two groups in factors driving overall satisfaction and intent to return.
The NBRI study found three factors driving both customer satisfaction and intent to return for casino customers staying in the casino’s hotel. The first driver was perceptions of the player card program. Hotel customers were more satisfied with the casino when the player card program was perceived as simple and easy to understand. Their perceptions of direct mail cash bonus rewards and offers and the fairness, based on play, of the comps earned were also important issues. The second factor influencing the satisfaction and intent to return of hotel customers was the wait time for food and beverages at the casino. Hotel customers reported a greater intention to return to the casino if they perceived the wait times for food and beverages to be short. Thirdly, the hotel customer’s perceptions of the slots were important. Specifically, they were more satisfied when they perceived there was a good mix of slot themes.
NBRI found very little overlap between the drivers of casino customers that stayed at the hotel and those that did not. The one common driver had to do with the slots. Casino customers who did not stay in the hotel, like those who did stay in the hotel, also wanted a good mix of slot themes. In addition, those customers not staying in the hotel were also more satisfied if they perceived the mix of slot denominations to be good. Other drivers of casino customers not staying in the hotel included the perceived friendliness of the casino staff and the perceived value of the food and beverages. Another factor driving satisfaction and intent to return was how comfortable customers perceived the seating in the casino to be. Finally, customers not staying in the hotel were more likely to be satisfied with the casino and intended to return if they perceived that the casino was safe, both inside and outside.
The results of this study provide further evidence of the uniqueness of different segments of a target market. Based on these results, NBRI was able to provide specific recommendations to this hotel and casino chain which can be utilized to increase repeat business in both of these important target market segments. NBRI also found that if customer perceptions of these drivers improved, it would also increase their willingness to recommend the casino to others, another important avenue for increasing business.
NBRI has helped numerous gaming establishments gain detailed knowledge of their hotel and casino customers. Using the most sophisticated research and statistical techniques available, NBRI has identified segmental differences in target markets between locals and tourists, generational differences, differences between winners and losers, and differences between new and repeat customers, among many others. This knowledge gives NBRI clients the power needed to influence customer behavior. If you would like to know more about how NBRI can help you discover the drivers of the various segments of your target market, contact us at 800-756-6168.
Chief Operating Officer
National Business Research Institute