As I’ve shown in the last four posts Las Vegas does a good job of catering to all levels of gamers, from the high roller to the low rollers. But how do they do it?
I always imagine the high rollers in James Bond tuxedos with monocles and expensive canes. That would make them easy to spot, except it isn’t that easy. The guy in the high roller room betting $10,000 is nine times out of ten dressed the same as the guy at the $5 minimum table. Maybe he has nicer shoes.
What’s the secret? It turns out casinos are some of the most advanced CRM users in the business world. Whenever you use a player’s club card or receive credit with the casino, you’re being tracked. How much you bet and for how long are extremely important. The more you bet and the longer you do it, the more money the casino makes.
The casino takes this information, compiles it in their CRM system and breaks their customers into many different tiers. At the very least your business should break down your customers into the three tiers we’ve discussed this week.
- High Rollers (Your Top Customers)
- Low Rollers (Regular Customers)
- Customers You Need to Fire (Bad Customers)
As we’ve covered before this should be done by profitability and not solely on revenue. Alice Dragon in “How to Do Customer Segmentation Right” explains:
“A lot of companies segment customers by revenue, intuitively assuming that revenue is a good indicator of profit. But, Selden argues, that's hardly ever the case. He maintains that an effective segmentation strategy should begin with a profitability analysis, divvying customers into 10 deciles ranging from most to least profitable. When he segmented one major retailer's customers by revenue, some that had the largest revenue generated among the lowest gross profits.”
Taking on this segmentation task will yield the greatest Return on Investment (ROI), but there are many other ways to segment your customers so that you can properly market to them. Why? Dragon continues:
“Precise, needs-based customer segmentation is time-consuming and difficult, and very much in its infancy. But it's worth doing because it enables cost-effective targeting of customers with product and service offerings that match their needs. That kind of precise targeting obviates spending a bundle on largely ineffective mass mailings—and alienating customers with irrelevant offers. It's the quintessential win-win: Customers get what they want and subsequently buy more; companies waste less money and increase sales and profits.”
A basic Customer Relationship Management system can help you with both these tasks provided you can compile and keep current data. Segmentation is difficult, but the pay off is huge!
Hope you have enjoyed the Vegas themed posting. Next week we go back to a closer look at the technology enabling good Customer Relationship Management.
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