Inside Asian Gaming

27 26 hose of you who follow my series of articles on casino marketing have heard me repeatedly stress that the casino business to- day is not about making money, but rather, about creating value. This is because people are not stupid. We are all motivated by basi- cally the same things. Value is one of the top motivators when it comes to selection or shopping. Creating “value” will help bring custom- ers to your casino, but not all customers are good for your casino’s overall well being. For example, I don’t think anyone would ever dispute firing a customer or excluding a cus- tomer that is abusive to your staff. We value our employees and want them to be treated fairly and appropriately by both fellow em- ployees and by our customers. We operate with a zero tolerance for any type of sexual, racial or physical abuse of our staff by cus- tomers as well as fellow team members. We also look very carefully at verbal abuse and warn customers that we do not tolerate inappropriate behavior towards staff. We place customers on our exclusion list every week for such behavior. They are given a formal warning that if they return to the property we will consider it criminal tres- pass and they will be arrested. Once again, we view this seriously and arrest individuals who try to test our warnings and exclusion process. There are also times when a casino may want to end a relationship with a customer. “Ending a relationship” sounds so much bet- ter than “firing” a customer, but it basically amounts to the same thing. So, when does a casino want or need to fire a customer? The answer is only after every method has been tried to salvage the customer, but the prob- lem persists. Most of these problems are related to cheating or questionable behavior, though some of them are also related to profitability. Cheating is not always clear cut. Sometimes a player may simply make a mistake. In those situations, it is up to the pit boss to speak to the customer and explain what is considered to be appropriate and correct.In other words, issue a warning.We document all such warn- Firing Customers Excluding cheats and troublemakers is obviously critical, but so is controlling comps issued to highly-skilled, non-profitable customers, as casino marketing guru Steve Karoul explains ings in our computer in the comments sec- tion of our rating system. This way we can track the patron to see if there is a pattern to his or her behavior. Next, we need to look at skill level versus patron profitability. The reality is that some customers are very highly-skilled blackjack, craps or roulette players, and/or they are excellent money managers and understand all of the advantages to their benefit. Please don’t misunderstand me – as long as a cus- tomer is not cheating, I really don’t have a problem with letting him or her play in our casino. Obviously we have protective mea- sures to counteract card counting, but other- wise, skill level is another issue that needs to be addressed separately. It was difficult to get our staff to ac- cept the idea of “firing” customers. However, through persistence and education we were able to teach them the value of different players to the casino. The easiest way to ex- plain a concept is to personalize it. I normally ask both employees and customers what they would want me to do if they owned the casino. Nobody wants to lose money and nobody can stay in business for long if they are losing money. Thus, while I do not have a problem with allowing a patron who is not cheating to play in our casino, I do have issues with rewarding skilled custom- ers with complimentaries (comps) or other giveaways. This is a huge problem in casinos today. Controlling comps is not easy. Controlling comps issued tohighly-skilled,non-profitable customers is critical. To do this, we formed a Comp ReviewCommittee that meets regular- ly to review such problems and patrons. We use internal reports to generate what we call our Red Flag Report. This report consists of a list of players whose play and profitability fall outside pre-determined criteria or variances. Customers on the Red Flag Report are then carefully and individually reviewed accord- ing to each variable.We find that many of our Red Flag customers are actually fine and the reason they fell outside of the variance was chance or luck. Remember, if every customer always lost money while playing at a casino, there wouldn’t be any casinos. Our best ad- vertising comes from word of mouth when someone wins big money. Once we begin to carefully analyze all data, we can quickly spot the highly-skilled players. Those are the silent few we want to look at more closely. One of the biggest sur- prises for us was that these are not all high- rollers. In fact, many of our most unprofitable players were the smaller players that always seemed to fly just under the radar screen, never being picked up by anybody.When we analyzed the revenue they generated versus the expenditure devoted to them – including promotion invitations, coupons, comps, etc – many of them proved highly unprofitable over the long term. We actually had history going back several years for many of these players, but they managed to go unnoticed because the expenditure related to them was quite low in comparison to high-roller expenses. However, these expenditures add- ed up in the long-run. Our Comp Review Committee further reviews and decides how to deal with these players.This is the hard part because nobody ever wants to fire a customer. We normally flag them for additional review and evalua- tion.However,just like any other business,we have to make tough decisions to safeguard our profitability.Sometimes we resort to half- firing the customer. You can’t be half pregnant,but you can be half-fired. Basically, if we decide to half-fire a patron we either limit the amount and types of comps that we extend to them, or we ad- just their ratings to reduce their theoretical per game to limit what they earn in Comp Points (comp dollars), which can be used to redeem comps or make purchases at the property. We view this as a drastic measure and therefore only use it when we agree as a committee that it is the best course of action for the long-term benefit of the company. Sometimes, we do actually fire a cus- tomer. We don’t exclude the customer from the property, but we don’t reward him or her either.In practice,if you tell a player that he or she will not be rewarded in any way and will have to pay for all services in full, the player will quickly realize that he or she is no longer welcome at our property. We usually opt for the “half-fired”method. It must be stressed that this process must be handled professionally.Proper com- munication is key. I normally deal with these situations myself for two reasons.First, I have the experience and title to deal with our big- gest players and still maintain a mutual re- spect. Second, things can change. I don’t like to burn bridges between potentially good customers and our sales people, whether it is a casino host or a player development executive. I always leave them out of the difficult processes and I play the role of bad guy. That way they may be able to salvage customers at a future date after the custom- ers have had time to reflect upon the issues and possibly change. We recently observed such a change. I made a comp-abusing customer pay for excess retail charges with his credit card. He was very upset and swore that he would never return. After a month or so, one of our player development executives was able to bring the player back with the up-front un- derstanding that any excess charges would be charged to his credit card. Everything has been fine since and the comp abuses have stopped. A critical part of the Comp Review Com- mittee process is evaluating the life-time value of the player, and that requires solid financial and analytical reporting. Ultimately, that will sometimes result in the decision to fire some customers in order to improve your overall bottom-line. Comps or free rooms and food and bev- erage are common enticements offered to players in casinos in the US and to some extent Australia. Comps are still rare in Ma- cau and the rest of Asia, but are likely to be- come more prevalent in the mass market as competition intensifies and foreign casino operators arrive on the scene. The primary incentive in the Asian high-roller market is the Dead Chip Rolling program, which pays a commission on chip turnover. Under the Rolling program, operators could reduce the amount or percentage of commission paid when faced with highly-skilled players. Steve Karoul is one of the top casino marketing consultants in the world today with almost 30 years of experience with top casinos both in the US andworldwide.He is a contributingwriter to several major casino publications, drawing on his own experiences and opinions. Steve can be reached at Tel. (1-860) 536-1828, Fax 536-1898 or by E-mail: skaroul@comcast.net In practice, if you tell a player that he or she will not be rewarded in any way and will have to pay for all services in full, the player will quickly realize that he or she is no longer welcome at our property T Who’s hurting your bottom line?