The Green Stamp Paradox

Today’s player points and free play are poorly suited tools to attract new customers to our casinos. Due to ill-conceived marketing practices, these aging concepts are becoming increasingly devalued in our current customers’ eyes, and that makes these tools extremely poor foundations on which to base our industry’s sustainability.

Originally conceived to allow casino operators to give something back to their best customers, awarding points has become a competitive necessity used to keep our most profitable customers loyal. When exclusively a performance-based reward, using points to reward a player’s time and spend is sound, profitable and easily understood by our player base.

Sadly, I don’t believe I have ever witnessed this tool used correctly, and that is where the problem lies. In the casino industry, there is a tendency to follow the adage that if a little is good, more is better. To entice established players to our property, casino marketing departments offer double, triple and five times point awards that dilute the intrinsic value of the awards to those players who matter most to our bottom line.

When I was a boy, I remember my mother collecting and redeeming S&H Green Stamps. Sperry & Hutchinson (S&H), distributor of S&H Green Stamps, was arguably the most popular of a number of competing stamp companies. The idea behind awarding stamps for purchasing goods or services was simple and brilliant. The retail organizations bought the stamps from S&H and gave them as bonuses with every purchase. Your bonus was based on the item or amount purchased. The more you bought, the more stamps you received. Eventually you saved up enough stamps to trade them for merchandise.

Several things made this program both efficient and profitable. S&H made a fair profit by selling the stamps to retailers. The trade-off to retailers was in customer loyalty. Customers flocked to stores that gave stamps, often changing their purchasing habits based on the stamp offerings. This extremely successful program regulated both the prizes offered and the redemption rate, providing a stable and predictable loyalty program that people trusted.

According to a publicist for S&H, when the program reached its zenith in the mid ‘60s, the company was printing three times as many stamps as the U.S. Postal Service, and its catalog was possibly the single largest publication in the country. It was estimated that 80 percent of U.S. households collected stamps of one sort or another, creating an annual market for S&H of about $825 million.

Stamp programs faded away during the 1970s, due to the recession and inflationary tactics used by stamp companies. The companies overestimated their significance to consumers and reduced the value of the rewards substantially. They began requiring far more stamps to get a worthwhile item or forcing a consumer to spend money for an item barely discounted from the price at regular stores, creating a general downward spiral as fewer and fewer people saw them as worth the trouble.

Does this sound familiar to anyone?

Awarding points, which started as a model to reward customers for their play, was quickly redesigned as an incentive to lure high-value customers from the competition. Management assumed high-value players would quickly grasp the “Green Stamp” model of high-spend clientele migrating to the more lucrative rewards. If this tool had been stopped from morphing further, it would have retained its value, but that didn’t happen.
Someone must have thought it would be a fantastic idea to offer the same advantages to our standard customer base under the assumption that it would increase revenue. Even though this concept did not significantly increase revenue, competing casinos didn’t wait for the results of this experiment; they fought back by offering point multipliers and paid for it by discounting the points’ value.

While rewarding our bread-and-butter customers is extremely important, devaluing the tools we use to reward the 20 percent of the customers who produce 70 percent of our revenue was the equivalent of stepping over a dollar to pick up a dime. Attempting to create a single reward and recruitment solution to fit the needs of all players is impossible and any attempt to cross-utilize a great tool to accomplish’ it only reduces its overall value.

Casino rewards as structured today are costly to administer, difficult to use and subject to inflation. Let’s be clear—player points and free play are not, and have never been, free. There is a real and definite cost to these tools that the average marketing team doesn’t understand because it has never been adequately explained. Increasing the game’s hold percentage funds the cost of free play and points, lowering both playing time and player satisfaction.

To add insult to injury, the term “free play” devalues the concept with our player base. Have only a brief discussion with your customers about their points, and you will quickly realize they believe the term “free” refers to the casino’s cost. Most customers can’t understand why we are so stingy with the points we award or, worse, don’t even know what they received or why.

The most basic rule of rewarding loyalty is to make sure the customer knows you gave them a reward. Too often a customer will get an offer in the mail or a non-personalized reward via the card reader without a reason from the casino.

Your staff should create an environment where reward distribution becomes a meaningful interaction with customers that makes them feel special. Instead of the standard point download from the player card, we should strive to make it a more of an experience rather than a process.

From a management perspective, figure out which customer relationships are most important and design a rewards program that cultivates them, and ask yourself these questions:

• What is the most valuable quality you want to attract?
• Is the number of visits per month the most valuable?
• What about time on device or average spend?
• Would you rather be a casino that a) rewards players with surprise bonuses and upgrades, or b) one that doles out standardized rewards in an attempt to placate the masses rather than reward the worthy?

Your regular customers come in to relax and forget about their problems for a short time. They want to believe you consider them a friend, and they want to be treated as such. They want a fair game, a safe environment and a square deal. If they could have anything from you, they’d want the opportunity to earn bonus spins on their favorite games and more opportunities to play.

Base their spin results on their average bet and time on device, and you’ve granted their wish, rewarding them during their sessions, not after the fact. Prequalify new players by comparing them to the habits of known players and reduce the cost of your rewards programs by eliminating costs associated with those advantaged players who troll casinos to redeem free awards.

Another inexpensive way to gain loyalty is through status rewards. Awarding virtual badges of recognition on social media sites, you can help celebrate customer wins while simultaneously marketing your property to the player’s friends and family. You can make it both an added value and a status symbol—an aspirational goal—for players.

It’s not too late for us to back away from the same mistakes that ended the reign of the stamp companies. If we design solutions tailored to a specific use and attract customers based on honest and consistent practices, we can reach a whole new demographic of players who simply wish to be rewarded according to their patronage.

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