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…