Convergence, the joining together of their online and live players has been one of the key goals of the major casino corporations that have launched online poker sites in the three legal U.S. markets.
Thus far the creation of the fabled multi-channel customer has not come to fruition.
There are multiple reasons for this failure.
Operators have failed in their marketing efforts, particularly in cross-promotion of their online and brick & mortar brands, and online players and live players are rarely motivated by the same marketing and promotional efforts, with very little crossover between the two demographics.
Here are some thoughts on what mistakes have been made and what can be done to bring about these multi-channel customers.
Old habits die hard
The current model in place at most online poker sites around the globe is to reward the highest volume players at your site with progressively better rewards, and this is precisely the model legal online poker sites in the U.S. have decided to follow as well.
They are trying to attract players with a slow-clearing deposit bonus that is released in small increments, instead of free, up-front cash. What they are finding is they are attracting online players and not potential brick & mortar customers.
My biggest complaint isn’t the use of deposit bonuses though, that can be forgiven as it’s an attractive marketing tool. My biggest complaint is that the rewards programs and promotions offered are almost exclusively geared towards the best players, and almost without exception are paid in online currency.
Online poker sites are using the highly targeted marketing methods the online industry (and brick & mortar for that matter) has employed for several years now – namely, targeting high volume players with increasingly better rewards.
“Win a tournament or make a final table and receive this prize!”
“Finish atop our leaderboard and receive this amount of money in your online account!”
“The more you play the higher you’ll rank on our rewards program!”
This model, as I’ll now explain, is the absolute worst way to create a multi-channel customer.
The idea that “the more you play the more valuable you are to us” is a great mantra to follow, but it can’t operate in a vacuum.
Oddly enough, brick & mortar poker rooms use flat rewards systems (for the most part, there is usually two tiers based on stakes) and this is certainly something online sites should explore as well. I’m not saying they need to do away with progressive rewards, but they might want to considering flattening them a bit, raising the rewards of the lower tiers and reducing those of the higher tiers.
If you don’t offset the rewards being handed out to your best players you will alienate potential new customers, and potential multi-channel customers.
Eventually, an overemphasis on your top players will slowly degrade your ecosystem, and create a player base continually taking bites out of your already small margins.
I certainly understand the benefit of rewarding your best and seemingly most loyal customers, but in the new world of online poker run by casino corporations this can lead to very bad long-term consequences – consequences online-only companies never had to worry about as they were more than happy to keep customers out of casinos and didn’t care one way or another.
These players, the online grinders, are there for one reason only, to make money.
Yes, they play more and possibly for higher stakes, but when you factor in what it takes to make them happy, rewarding these high-volume players can actually cost your company money. This is even more of a factor in regulated markets like New Jersey where a sizable chunk of your revenue goes straight to the state in the form of taxes so you have even smaller margins to work with.
Another problem with being focused on high volume players is you have to constantly do better to bring back players that have stopped gambling or were lured away by a better offer from a competitor. These players are constantly trying to increase their margins while decreasing yours and will not hesitate to jump ship if a better offer is presented to them from a competitor.
Yes, these players are the low-hanging fruit, and everyone should go after it. But, we also need some risk-takers in the online poker sphere. People willing to grow the player base by finding creative ways to collect the higher, untouched fruit, even if it means passing over some of the low-hanging fruit.
Right now it seems like we are simply watching a race to gobble up all the easy pickings.
So far, there is little being done in the way of cross-promotion between land-based and online poker rooms / casinos.
There are some examples of cross-over promotions:
But by and large, most of the rewards players earn online stay online and vice versa – another byproduct of progressive rewards where the top online grinders only want online-based rewards.
In order to turn land-based gamblers into online gamblers and online gamblers into brick & mortar customers the casinos will have to be more assertive, and essentially hold their hand and lead them straight to it.
What casual players want
Before I delve into some ideas to create this convergence I want to explain what the typical casual poker player’s motives are, because this seems to have been lost in the shuffle ever since the Poker Boom, when people started to realize poker was a game of skill.
First and foremost, in order to bring in these new players the current marketing campaigns will have to be adjusted, since unlike the money-hungry grinder, the reason the average person gambles is precisely that: To gamble and have fun.
Yes poker is a game of skill, and most of these players understand this, but it’s also fun and entertaining at the same time and that, not the skillfulness and competition, is what brings most of them to your tables.
Since they are not gambling to explicitly make money, the current rewards being offered are anything but fun or enticing to them. The current promotions are generally slow (with incremental payouts), highly structured with lots of fine print, and clearly benefit only a small group of players. A group that even most causal players know they have no shot of joining based on their skill and the amount they play.
The idea that they will ever finish atop a rake-chase leaderboard is preposterous, even to them.
If you were to ask the average casual poker player if he’d rather lose $100 and have a great time, or only lose $80 but have a blasé experience, I would bet most would choose option A.
Ask that same question to grinders: Would you rather win $100 and have a blasé time, or only win $80 but have a blast, and the overwhelming majority are going with Option A.
For the casual player it’s about the experience, and for the grinder it’s simply about the money. But all the rewards are geared towards the “money” players.
Marketing efforts are bringing in more Grinders
By exclusively rewarding the people who use online poker as a source of income (designing all your promotions and rewards around their motives), online poker sites are also rewarding the players who are least likely to visit their brick & mortar properties and give them the multi-channel customer they so desperately want.
Anecdotally, we have known this to be the case for many years; winning online players poo-poo live poker. They find it boring and surprise, surprise, less rewarding monetarily due to its lower rewards, higher rake, and other factors like tipping.
Online players look down on live poker as -EV.
It would seem to be a given that in order to create convergence an online poker site should seek out casual players, but data is now starting to show that the targeted marketing that is currently being used is attracting more of these grinders, and less casual players who might visit an online poker room’s corresponding casino.
In their Wave 2 study (page 25), Commercial Intelligence asked the question, what promotions have influenced you to register with an online site, and found that Registration Bonuses and Free Spins (online specific rewards) have increased by 8% since January, and Hotel Stays and Comp Dollars (convergent rewards) at the brick & mortar properties have decreased by 10%:
||Wave 1: January 2014
||Wave 2: June 2014
Most people would say this simply demonstrates what online players want, but when I see that data I see it more as a byproduct of the current marketing.
What this indicates to me is the player base in New Jersey is becoming more online specific, and part of the reason is quite likely the targeting of online players over casual gamblers by the sites, as most promotions follow the “reward high volume players” dictate.
We know online and live customers start out differently, so if you don’t make your online site appealing to a non-online player they will never join, and vice versa. If the sites had pushed their Comp Dollars and Hotel Stays online (instead of deposit bonuses and free spins) would we have seen the appeal of those increase because the player pool would have more multi-channel customers?
Caesars has been quoted as saying 91% of their online players were not rated in their Total Rewards Program, and the Borgata has indicated that 80% of their online customers were also unrated for at least two years.
The fact of the matter is, offering gambling online does not automatically appeal to brick & mortar customers, and adding online to your list of products does not guarantee your new online customers will visit your brick & mortar property.
They need a push.
An idea for those empty hotel rooms
Earlier I stated that several sites have engaged in some cross-promoting of their online and brick & mortar products, but even in these isolated cases it’s more ancillary in nature. The online sites are not sending players to their Brick & Mortar properties so much as they are sending them to sporting events, or to a tournament with no guarantee of being a hotel guest or doing any further gambling.
My advice, especially in New Jersey but also in Nevada, is to give away those empty hotel rooms like they are, well… empty hotel rooms.
More importantly, give them away to virtually everyone, from the lowliest micro-stakes grinder to the whales. And give them away randomly.
The sites should randomly award a free night stay for every $x amount collected in tournament fees for every tournament.
For instance, if you determine the number to be a 1-night stay for every $200, and a tournament rakes $800, you hand out four free nights immediately. If another $200 is raked during late registration another night is given away when late registration closes.
Taking this even further, online tourneys could have mystery rewards based on “hidden objectives” players are unaware of until they accomplish them. We could balance rewarding grinders and casual players by having both good and bad objectives:
- First to be knocked out
- The bubble boy
- Worst bad beat
- The highest hand
- Most knockouts
What could the rewards for these be?
- Exclusive parties at the brick & mortar property
- Free gifts that need to be picked up at the brick & mortar property (these can range from a six pack of Pepsi to mini kitchen appliances to cruise tickets)
- Slot-play and match-play coupons
- Personal host service, so even the micro-stakes people can know what it feels like
Imagine being eliminated on the first hand when your Aces are cracked and seeing a message that says, “Congratulations, you just won a free night stay at the Borgata!” Or, being eliminated in 18th place but seeing, “Congratulations you’ve won personal host service at Caesars for having the highest hand during the tournament!”
Yet another potential way to bring online players to your property is to run a bounty tournament where instead of money, each bounty is worth a random prize draw at the brick & mortar casino (again, these can range from a six pack of Pepsi to mini kitchen appliances to cruise tickets).
Keep the Grinders happy too
And not to leave the better players out, why not give the winner of the Sunday Major a two night stay with other special comps, such as a $200 food voucher and host service at your Brick & Mortar casino? And perhaps one month, award every tournament winner a free night stay?
In order to have a convergence of live and online play you need to get these online players to your properties, and giving away a free hotel stay and other land-based casino prizes to a player that has never considered spending a night in your hotel is a good start.
After a few months some players are likely to have banked five or six nights, which means five or six nights of gambling in your brick & mortar casino, which if I’m not mistaken, is one of the main reasons why these casinos wanted when they got into the online poker industry.
The same idea could be used for event and show tickets. Basically, give every player a chance at them, and then reward your high-volume players as well.
If they have a good experience at your property you probably have created a multi-channel customer on the cheap.
An idea to create new online players
On a similar note, why not give all hotel guests a scratch off card where they will receive either $10, $25, $50, or $100, deposited directly into their online account for each night’s stay?
Most of that money will never be cashed out so it would seem like a win-win. This would also be a great lure for online players who are on the fence about visiting your property.
You could have a designated person at the front desk help set up their online account with them, and bingo, you have a new online customer.
Final thoughts on convergence
The fact of the matter is, convergence isn’t going to simply “happen,” which seems to have been the thought process when these casino corporations launched their online gaming sites: If Player x likes to play blackjack at the Borgata, Player x will also like blackjack at BorgataCasino.com online.
What we’ve seen so far is Player x needs a serious push to play online in addition to his brick & mortar visits, and the best way to get him to play online is to reward him with promotions that he can use at your brick & mortar property.
Casinos could then track the amount of play these players give, and tweak their hotel giveaways and free online money giveaways accordingly.
Yes, players seem to prefer deposit bonuses, but let’s not only give them deposit bonuses, or tiered VIP Programs. In order to grab the fruit that it is out of reach we need a different plan and it’s this out of reach fruit that has the best chance to become the valuable multi-channel customer.