I have written this text for http://www.lotterydaily.com, and Conor Porter has partly edited it.
I’m sure you know the t-shirts sold in tourist stores, the size of which is stated as “one size fits all”? I’ve always wondered how stupid people are when they buy shirts that don’t look good on anyone. Similar examples of selling the same product can be seen in all industries. The selling company focuses on lowering the cost level and seeks large economies of scale by keeping production in one or a few products. However, such a business strategy can only produce bulk products that are not of great importance to customers.
I have written several times in my previous columns about how important it is to understand customer needs. With the data collected from customers, companies can offer even better products and services which, in turn, increase business profits. When successful, customized products are an actual win-win situation where the company receives more revenue, but at the same time, customer satisfaction increases.
Lotteries, especially in the field of lottery games, sell their products to such a large number of customers that, at least in theory, one product fits all thinking might even work. Such a product suitable for everyone should be developed with the average customer in mind. If the customer base is large enough, then the average product may be of interest to a sufficiently large customer group. A lotto game focusing on the jackpot could be such a product, for example. The smaller and more heterogeneous the customer base, the more difficult it is to develop a single product that suits everyone.
However, the actual topic of this column is not the products and services that lotteries offer to their customers. Instead, I would like to highlight the challenges of action between gaming technology suppliers and gambling operators. Based on my previous experience with lotteries and now through additional information obtained through consulting, I argue that some kind of “interpreters” would be needed between operators and technology companies to understand each other better. It may be that there should be similar “interpreters” within gambling companies between business and technology people.
I admit that I see the situation perhaps too much through the eyes of the lottery. In any case, it seems that a large percentage of gaming technology companies are looking to sell the same product and the same technology solutions to all gambling operators. Like in the B2C business, customers are different in the B2B business; clients are different and have specific businesses. The understanding seems to be enough for casino companies, betting companies, and lotteries to belong to different series. Instead, it seems surprisingly difficult to understand that lotteries are a completely heterogeneous group of companies. Sure, some lotteries resemble each other more than others, but a business-oriented, stock-listed lottery needs something other than a lottery like a state office.
I’ve talked a lot about the need for lotteries to develop their digital business and, on the other hand, the need to add new product verticals. As such, an excellent digital platform may be too complicated for a company starting a digital gambling business, while the same solution may be far too simple for a lottery that has been running digital operations for years. Technology companies should understand the levels at which different gambling operators are in different areas. Based on this understanding, it could be easier to tailor individual solutions to companies. The situation is thus quite similar to B2C, where the aim is to offer players personalized products and services. In reality, those products are not made individually for each customer, but the goal is to create a feeling for the customer that this is just for me.
Take, for example, the product area of betting. A technology supplier seeking to sell its betting solution to lotteries must understand at least the legal situation in that target country, the current state and strategic importance of sports games in the entire operation of the lottery, and the technology architecture of the gambling company. The legislation affects many issues and may impose specific requirements that make basic solutions impossible in that country. The needs of sports games are different for start-up companies than for a company operating in this product area for a long time. It is also possible that some lotteries just want to offer sports games to serve their customers, while other lotteries strive to make the maximum profit out of sports games as well.
For a lottery that wants to add betting to its product portfolio but still intends to focus on running lottery games, the full-service solution is perfect. The technology must meet the requirements of the country’s legislation, but it does not have to have any specific business specialties. The reliability of technology is a crucial element. In addition to the basic technology, there is also a need for ready-made odds, usually obtained from large companies focused on them through a revenue share agreement. Selling such a total ready-made package to large lottery companies running sports games, on the other hand, is entirely pointless. Many lotteries operate in sports games in the license-based market, where they compete openly against other operators. In a situation like this, you can only succeed by doing things differently, better than your competitors. That requires tailored services and also, at least in some sports, different odds from other companies.
Understanding IT architecture is an exciting area. Traditionally, lotteries have purchased their technology solutions from a single supplier. Lottery technology solutions have been based on a model where the central gaming system has been at the heart of it all. However, the situation has changed, at least for more advanced lotteries. The companies source the best solutions for different areas from different technology suppliers. Therefore, system integrability is of great importance to such companies. Instead, traditionally operating lotteries still want to buy all the technology from one supplier. It goes without saying that it is not worth trying to sell the same solutions to such lotteries.
As more and more lottery companies have switched to a multi-vendor model, technology companies have also changed their operating methods. However, I believe that suppliers still have a lot of opportunities to improve their service if they better understand the situation and needs of their customers. As I said above, the result of such action is, at best, a win-win situation where the technology company gets more sales, and the lottery is even more satisfied. In fact, there is still a third win in this model, as lottery players are also likely to be happier than they are today with better products.