I’D LIKE TO BE A COCK BUT I’M AFRAID THAT I’M A CHICKEN

This time I write as a punter. I have played Horse and Sports Betting already more than 40 years. When I started it in 1970’s there was no discussion about responsible gaming issued so I was allowed to make my own bets with few marks (the Finnish currency those days). At the age of 16 – 17 I realized that I was much better Horse punter than an average customer and could make some money from betting. Finally there was period when I just made bets and lived with that. So, I have been serious, almost professional, punter but that was many years ago before I joined in Horse Betting company. I have understood already many years ago than I’m not able to spend enough time to analyze horses and other sports to make big money in Sports Betting. Despite of that I’m still spending lots of time, too much according to my wife, following sports and thinking about Sports Betting.

I was following some football matches yesterday evening and one of those matches was Ligue 1 game Reims – Amiens. Actually I’m not expert of the French football at all but based on my knowledge I noticed that home team Reims was better team and they were unlucky in the first period. The match was 0-2 after the first period and I just thought that there was quite high possibility that it would change during the second half. Based on my analyze and “feeling” I made bet on behalf of draw with odds 8,50 which I thought to be too high odds. I admit that it happens too seldom that I could beat the market and normally market is right and I’m wrong.

Anyhow what happened after that is the reason for this blog. The match went exactly in the way how I was expecting about that. Reims scored 1-2 in 70 mins and finally again in 84 mins. So match was 2-2 and there was about 8-9 minutes time to play. I was getting my money back with odds 8,50 – quite good win for me. I was happy but then for some reason I became a little bit worried and got “an idea” that Reims has so good spirit that they could score one more goal and then I could say goodbye to my potential winnings. As you know there is nice feature in Sports Betting called “cash out”. I think that it’s one of the best innovations in Sports Betting but I’m not normally using it because I think that I should trust on my analyzes and use cash out only in cases where I think that my live analyze is better than the market has – in practice that’s not a case almost ever. But yesterday I was too nervous and thought too much about short term money and made cash out. I won good money anyhow but of course match ended 2-2 and by waiting 7-8 more minutes I would get much more…

The gambler’s way of thinking is strange! I probably made good bet and won not only expected value but also real money, but I wasn’t so happy than I should be. Why? I think that I made stupid move when I used cash out and didn’t trust on my knowledge. I would like to be “cool guy” who knows what he is doing in Horse and Sports Betting and is ready to take risks when they are based on good analytics and will bring results in long term. Yesterday I wasn’t that kind of “cool guy” – a cock and that caused me almost sleepless night. My cash out wasn’t based on any analyze, it was made due to wrong reasons. I’m afraid that I’m rather chicken than cock and that disturbs me a lot!

Sports Betting gives at its best excellent excitement to customers. I have already earlier tried to describe how different customer groups there are in that business. I’m mentally used to be among those “sharks” but in practice I’m already far away from that group. I should admit that I’m not so talent anymore or if I think that in a little bit more positive way, I don’t have enough time to make analyzes. So, I could be better one IF I would have time… That IF causes always too many problems. You could explain many things with that and at the same time refuse to admit the realistic situation. When you are doing that you will probably make more mistakes and finally you will be totally out of business. It doesn’t mean that you couldn’t enjoy in Sports Betting, of course you can. You should know how capable you are and balance your stakes to that level not to the “wannabe-level” or in my case to the level where I used to be 20 – 30 years ago.

I would like to be young talent cock and I’m afraid of being a chicken. Instead of that I now trying to think about new way – maybe I’m old cock who was in old way really capable and now I have became older and not so capable anymore. At least I know what it is needed to be a cock!

SHARKS – DANGEROUS ANIMALS?

I wrote about different customers in my previous blog. I’ll now continue with the same theme and will concentrate on Sports and Horse Betting.

I divide Sports and Horse Betting customers to four groups: “sport fans”, “habit players”, “wannabe experts” and “heavy punters”. The motivations of those different types of customers vary very much and Sports Betting companies should understand that, or they won’t manage well.

“Sport fans” are really interested in different kind of sports. The size of that group is big – in Finland about 50 % of adults are watching when our team is playing in World Championship final in ice hockey. Those “sport fans” are probably playing some money games but they are not so familiar with Sports Betting products. “Habit players” is smaller group but from Sports Betting customers it’s the biggest group. They are gambling every week and know Sports Betting products well but are not using lots of money. “Wannabe experts” is active group who could say that Sports or Horse Betting is their main hobby. They are trying to win money from gambling but won’t manage to do that in long term. “Heavy punters” is real small group of experts who are in practice professional gamblers and Sports or Horse Betting is their job. There are all the time movement from lower group to upper group and sometimes also to another direction.

Let’s assume that there are only three main business goals for betting company. The most common goal is to get profit. The other one is to achieve sale and market share. The third quite common goal is to increase the number of customers. If you are not running giant size company with lots of resources, you can’t do everything and can’t concentrate on all customer groups seriously. Normally we are in the situation where we must select which business goal will be our primary one. Of course that goal could be different in short term and long term – big market share will help you to earn more money in long term etc…

If I should try to get as much profit as possible in next quarter I would target my offering and marketing to “wannabe experts” and partly to “habit players”. Those groups are losing more money than the other two groups. Of course that would be irresponsible way to act but don’t care about that here. If my goal would be to achieve more sale I would concentrate on “heavy punters” and also “wannabe experts”. Heavy gambler could use about 1000 times more money to gambling than an average normal customer. So, it’s the easiest way to increase your sale with them. You should understand that if you are concentrated on that professional group you will potentially face serious problem with your profit because those customers will win in long term. If my goal is to increase the number of customers, I’ll have just option left and it’s “sports fans”.

I think that all sports betting companies are willing to get “wannabe experts”, “habit players” and “sport fans” but not “heavy punters”. Why that is the case? Sports Betting companies seem to be afraid of those professional customers and call them “sharks”. I’m not sure that is the wisest way do business although in short term it might look like that.

When you are willing to make a bet, you should find out another person who is also willing to do that and who is ready to accept odds you are offering. So, we always need two parties to make a bet and both should agree with the conditions of that bet. The interesting question is why I should accept bet from one customer with fixed odds but don’t accept bets from another customer with same odds or even don’t accept any bets from that customer? That’s how most of sports betting companies are doing nowadays. They make their decision based on data of those different customers – bets are ok from customers who are losing in long term and not ok from winning customer = SHARKS. According to rules there is nothing wrong with that but why those companies are so afraid of sharks? The responsible gaming reason is not at all valid when we are talking about those professional punters. They are spending huge amount of money but that won’t cause problem gambling when they are winning in long term. The real reason is of that companies are willing to make money / profit and they won’t do that with those customers or will they?

I agree that those sharks are dangerous “animals”, but would it be possible to act towards them in different way and even utilize them in your business? Yes, I think so! I have three ideas about that. The first one is to make your odds better. When your odds compliers know that there are talent customers against them they will do their work even better than would do against normal customers. When you have better analyzes your fixed odds sports betting will be better business. The other benefit would be better reputation. At least here in Finland those “sharks” are quite famous among “wannabe experts” and when your company accepts bets from them they will speak on behalf of your company and “wannabe experts” would value your company much more. The third thing is the profit which will come from another products. If you are offering pari mutuel sports or horse betting products you will get bets to those games too from “sharks” and that will utilize you in two different ways. You will get higher turnover to your game which will be even more attractive game after that. There is no business risk from company point of view in pari mutuel games, so you will get also profit from those “sharks”. Finally they might be even profitable customers as such or at least via the other customers.

It depends on your business goals how much you should be afraid of sharks. Sometimes they are not dangerous animals at all!

Motivations of gambling

As I wrote in my previous blog it is extremely important to know your customers and understand their needs. Customers and their needs unfortunately vary quite a lot and that makes our business complicated but also interesting.

Old-fashioned way to analyze customers is based on sex and age. I don’t believe on that method at all! All women or millennials are not same kind of consumers. I admit that there are some major differences between the gambling habits of women and men, but you can’t utilize that information because it doesn’t tell almost anything about them as gamblers. If you know that women are buying more scratch cards than men or men are playing more horse racing than women, what then? Just small percent of men are interested in horse betting and you should know who they are and understand why they are doing that.

There are now lots of talk about millennials and digitalization. That’s is relevant discussion but not in that way which seems to be the most usual way to do it. Digitalization is important change to everybody not only to young customers! Millennials are more used to use internet and mobile solutions, but also older customers have adopted those new channels. Millennials are playing more social games, but not all of them and there are more and more older people doing that too.

I’m not sure if it will be possible to understand all individual needs of your customers in the future. Anyhow, now it’s not possible due to so huge amount of data which we need to do that and it’s still expensive try to use all that data. Probably data scientists will find more effective and cheaper ways to take care of those analyzes in next coming years. At this moment companies like Google, Amazon and Facebook are utilizing that kind of knowledge already and other businesses should follow then as soon as possible.

Because it is in practice impossible to serve all our customers from individual basis we should find out other ways to do it. I think that we could analyze our big data of customer behavior and based on that categorize our customers to different groups which are based on motivation of gambling. In old days companies used to make customer surveys where they asked why people are playing games. Some companies are still doing that but that’s almost useless. It’s the fact that people give wrong answers when you asked about their gaming and gambling. They underestimate their consumption in that area and don’t tell the real reasons for gambling. It’s very common to say reasons which sound acceptable from public opinion point of view. I’m not saying that companies shouldn’t use customer surveys at all, but I’m saying that they should understand better the role of data analytics.

I try to describe my idea here in short way. It would be too long story to write is with all details. Let’s decide that there are just three main reasons for gambling and all other motivations are subsections of those three. Based on my knowledge those main reasons are: 1. dreaming, 2. to pass the time and 3. sports. It’s important to understand that one single customer could have all those reasons in different time and place. It means that we can’t say that customer X is “dreamer” and customer Z is “sport fan” but we could say that customer X’s main motivation for gambling is dreaming and that information we could use. That information we could find out from our customer database. I know that there are still some gambling companies who don’t have real customer database and they can’t use that method. To be honest, it’s not the biggest problem which those companies have…!

I’ll try to explain a little bit more my idea. Let’s take first “dreaming”. Quite many people are dreaming about the better life, but they don’t have practical ways to change it. Although almost everybody knows that it’s real difficult to win big money from gambling they are still willing to try. The main two subsections in “dreaming” are “daily dreamers” and “life change dreamers”. Daily dreamers are buying quite often scratch cards and playing Keno and that kind of games and they would like to win just some money. Life change dreamers are spending just some euros mainly to lottery games and not weekly basis. They might buy lottery tickets when there is big jackpot in that game. The big part of their playing is to dream about what I would do if I would win. Then there are lots of people who has “extra time” and they spend part of that to gambling. In that area social games have big part but also slot machines or even casinos are part of that life. The third main motivation is sport and there are two main subsections: sport fans and sport punters. Sport fans are interested in sports and they spend lots of time to watch sports and sometimes spend some euros for sports (& horse) betting. Gamblers are also interested in sports, but they are mainly keen on betting. They try to use their expertise in sports to make money.

It’s important to know what kind of motivations there are and what kind of moments and places might be favorable for different motivations – for example men might have some extra time in shopping centers. As a disclaimer I would like to say that gambling companies should take care responsible gaming issues all the time and shouldn’t misuse information based on their databases. I’ll write more about responsible gaming sometimes later.

And the winner is… – CUSTOMER!

Gambling companies have had very product centric strategies. The main business elements have traditionally been products and product related services. The basic idea has been that players will select us if our products are the best ones. This business model worked quite well about 10 – 20 years ago when gambling business was mainly based on retail shops and physical casinos and when internet and mobile gambling was not so big.

Consumption habits have changes and gambling business can’t be out that development. Gambling in retail network is going down and business has moved to internet and especially to mobile channel. When in old model there were just few retail shops in their own neighborhood now there are tens of alternatives in everybody’s pocket when mobile has become the main channel of gambling. Active customer could easily select his gambling operator among hundreds or even thousands of gambling companies. It’s not possible to operate with same business models anymore in this new world.

Successful company should understand the needs of their customers. It’s not enough anymore that product is good. It’s the fact that you can’t get permanent advantage with products in gambling business because we are living in “copy – paste” world. In practice it’s impossible to get patent for your new products and due to that the other operators could copy them in few months or even weeks. We have almost the same challenge with product related services which are also easy to copy if they seem to work in other companies. So with the traditional key elements you could get in the best case few months advantages compared to your competitors. One good example of that is bonuses. I don’t remember which company started that but it’s sure that it didn’t get very good benefit from that because all the others did the same very soon. Nowadays almost all companies have different kinds of bonuses and they are “new normal” which means that the only winner has been the customer who now gets a little bit higher payout percent.

The good gambling operator has to have high quality products and services and also trustable and flexible technology but you won’t win the game with those elements – you will just lose without them. I believe that those companies who understand more about the needs of their customers and could develop their service models based on those needs will win the competition. That’s why the importance of data will be extremely high. It’s not enough if you just collect data but don’t know how to use it. You should understand what the most important features are in that data. It’ll complicated task because those features will vary real much among different customer groups and could be even personal ones. More personalized service you could offer the better possibility you have to succeed. It’s not worth of doing personalization manually but machine learning and automatization will be useful tools for that. The goal is to give your customer feeling that he/she is important to you and you are offering him/her interesting products and services with “only for you” principle. The satisfied customer is for sure more loyal than unhappy customer and will probably be ready to spend even more money.

There are lots of talk about data and personalized customer experience. As an active gambling customer I would say that I have never get “wow” feeling from any gambling company. It’s of course possible that I’m too critical customer but the more likely alternative is that gambling companies haven’t yet understood what they should do. It’s sure that in long term the customer will be the winner because he/she is the king/queen which the companies will serve better than they have done earlier. Those companies who just optimize the profit of next quarterly will lose – hopefully! The companies who will invest in long term customer experience development will finally win the competition because that’s the only important area where you really could differentiate yourself from your competitors. You should try to find out the most important features by “test & learn”-method and utilize automatization and machine learning as much as you can. We are already doing that and there are tens or even hundreds of changes in our offering every day. We are all the time analyzing the results of those changes to the customer experience and have got excellent results from that. But there is still long way to go in that area…