Casino executives have a lot on their plate, but nothing more important than driving EBITDA by setting organizational priorities. It is easy to see why one of the top priorities for most general managers has been to foster relationships with their top patrons. However, what’s not as clear is why so few casinos have implemented dedicated programs for target-setting and performance tracking with patrons from this group. In this blog, we establish the need for such top patron programs, and how to approach setting growth targets with these patrons.

Take for example regional casinos. Looking across most casinos greater than 100 slots in the USA, we have seen 3% of the total patrons active in a given year generate about 41% of total cash withdrawals in these casinos:

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The casino data tells a similar story. For each of the three regional casinos we surveyed, the top 3% of the players generated between 33% and 45% of total theo:

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Casinos devote hosts, loyalty programs and executive resources to fostering these relationships. But this begs a number of questions –

  • How does a GM measure how much incremental opportunity exists within the top patrons in the market? How much of that can the casino capture?
  • Assuming the GM can measure the above, what metric should the GM target? For example, a wallet share metric is easy to measure, but may lead hosts to only focus on their best patrons and ignore high value patrons with whom the casino does not currently have a relationship.
  • How much improvement should GMs ask for given that metric? Set goals that are too easy and you pay incentives for nothing, stretch the team too much and you will risk de-motivating them.

In the sections that follow, we’ll see how to go about answering these questions.

What Metric Should You Use?

Focus on market share as your primary metric. This metric includes the number of patrons you have in the market, the value of those patrons and your share of wallet of those patrons. Track share of wallet as well, but not exclusively – it only tells you how well you’re doing with patrons you already have.

What Is Your Current Situation – Market Growth, Market Share and Wallet Share?

You can make market share and wallet share improvements happen. For example, Caesar’s marketing program over the last 15 years increased its average share of wallet from 36% to 45% by systematically driving improvement through actionable analytics (read the original article here).

We suggest starting the target-setting process by looking at the market and your share of it today.

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As you can see from the diagram above, the market, consisting of the top 400 payments patrons within 150 miles of this casino, has grown nearly 25% from April of 2012 to April 2013. But, if you dig into the withdrawals at this casino during the same period, you will notice they have risen only about 8% over the same time period. In other words, the casino has been losing share relative to the overall market growth:

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Based on the simple analysis presented above, this casino’s YoY Market Share growth target should be at least 25% in order to simply grow with the market, and even higher to out-perform it. This of course begs the simple question, why has the casino not been able to achieve at least the same growth performance as the market? Using the payments data in Casino Share Intelligence (CSI) in the charts below, you can see the falling trend in market share and wallet share with the top 400 patrons in your market at the click of a mouse.

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The casino’s market share has declined, but only part of this decrease came from a decline in wallet share. Some of the loss must have come from capturing fewer top patrons in the market overall.

What should the casino do in this case? Stay tuned for our next blog post where we will explore how to develop the right targets and strategy to get your casino’s performance to the maximum potential with the top patrons in your market.