One of the KPI’s for a casino marketing team is to increase market share, which is the portion of the market controlled by your product. Cannibalization happens when new product “eats” the demand for a current product, reducing overall sales. Casinos experience this in a number of ways. In this blog, we’ll explain why and how you can look out for cannibalization as part of your casino marketing strategy.
Why Casino Operators Are Concerned About Cannibalization
We all want our numbers to look good on paper, but using an inaccurate calculation of ROI for your marketing campaigns won’t serve you in the long run. Savvy marketers use a data-driven process to strategize for upcoming campaigns, pivoting their strategy as new information is uncovered. Your previous campaigns become the data on which to base your current strategy. If that data is raw or inaccurate you will not be going into your next campaign with both eyes open. This will affect your ability to make great decisions regarding who to market to, what to offer them, and when to offer it.
Calculating ROI and other key metrics without accounting for cannibalization is like looking at your business through a pinhole. The best way to illustrate this is with an example. Let’s say Dan, a marketer at a small casino, tried to increase visits by sending an offer to seniors. Dan offered senior players $25 in free play on a Wednesday.
Last Wednesday, Dan had 993 visits to his casino. This is up 7.7% from the previous period. Dan wants to know whether he should repeat this promotion. Before he can answer that, more data is needed. He takes a look at the visits on other days of the week. He is looking for downward trends in visits on surrounding dates. He discovers that the casino had less visits than usual on Sunday of the same week. Dan uses an analytics tool with drill down capabilities, so he is able to view player behavior at the individual level. He digs into the data and finds that a cohort of Sunday players simply held off until Wednesday due to his free play offer. By accounting for these visits in his calculation, he discovers that the true incremental lift of the promotion was only 3.4%. Over time, Dan’s reported numbers will be more in line with the increase in market share, and he will make better offers at the right spend level for the return.
Signs Your Business Is Being Cannibalized
If your KPI’s are looking great after every promotion, but when you look at performance over longer time periods you do not see the expected lift there, something is amiss.
After players redeem an offer, your metrics are trending down. Generally, marketers offer something to their guests to incentivize them to spend more. If your metrics are trending down as a result of an offer then your players are redeeming the offer but not playing enough with their own money to generate a return. The offer did not motivate players to change their behavior.
You experience an increase in visits during a promotional period that is not offset by a similar increase in incremental revenue. The cost of the incentives you are offering counteracts the benefits created by the promotion.
Your data analytics tool reveals a shift in the distribution of player segments during a promotion that is disproportionate to the change in key metrics. This is most applicable to events. You advertised a concert that was held on a Friday night and experienced an increase in visits on that day. When you drill down with your analytics tool you see that the increase in visits came from the age segment 18-34. However your smaller but more valuable VIP segment experienced a decrease in visits on that day. Players who visit often and spend a lot actually avoided the casino due to the crowds.
Now you have the tools to reflect on your past promotions with a more critical eye. A casino data analytics tool can help you not only uncover cannibalization in your marketing strategy but then address this concern while planning campaigns. If you want to learn how to create true incremental lift and measure it with certainty, give us a call at (702) 355-5377 or email customersuccess@gaminganalytics.ai.
