Las Vegas Strip Recovery Under Way

Casino Stocks Rise from Recession Lows

The Las Vegas Sun reported that the gaming industry recovery on the Las Vegas Strip will continue this year and accelerate in 2012 according to a prediction by, Moody’s Investors Service in a recent market update.

Wynn Casinos, Las Vegas Sands and MGM Resorts have all shown huge gains in stocks from their March 2009 lows, outstripping even the solid performance by the broad market. Las Vegas Sands (LVS), Wynn Resorts (WYNN) and MGM Resorts (MGM) are up 3,299%, 722% and 546%, respectively, but they are still not close to their 2007 highs.

Does this prove that people are feeling better and ready to gamble again?

Brothers In Crisis: Earthquake Hits New Zealand

Our hearts go out to the people of  New Zealand

We were personally touched by this recent geologic event  as our VP of Sales Leland Rolling and his family  traveled to New Zealand to play on the U.S. Tennis Team.

We are so thankful that Leland and his family are home safely and had no serious injuries.  Fortunately, they were all together when it hit, but they were also in the center of town where buildings collapsed around them.

Its our philosophy to encourage our team to follow their passion and do what they love. For that reason Leland was strongly encouraged to play competitive tennis and follow his dream which lead him to New Zealand. Living in Southern California we are no strangers to earthquakes. The Stics family has escaped so many and yet our star tennis player goes half way around the world only to find his family in the middle of tremendous destruction caused by an earthquake.

Stics VP Sales Named to US Tennis Team

Senior World Team Championships

Ranked # 3 in the US, Rolling will Play Doubles in New Zealand

Our very own VP of Sales, Leland Rolling was selected as one of 40 players who will represent the United States at the 31st International Tennis Federation (ITF) Seniors World Team Championships in Christchurch New Zealand February 16 – 26.

Leland is ranked #3 in the US in his division and is playing on his first Cup team.  He is a member of the esteemed Dubler (45) Cup team with four time Grand Slam winner Rich Leach, Newport Beach CA, Mario Tabares, Miami, FL and Andy Stoner, Cave Creek, AZ.

ITF Seniors/Super-Seniors World Team Championships is the most coveted team event on the ITF Seniors circuit. This year, the ITF invited the top 4 ranked players for the Dubler Cup team.  The US team will be playing against 13 other countries including France who is the defending Dubler Cup Champs.

While it is strange to call an athlete in his mid 40’s a senior, we know Leland to be a fierce competitor and wish him and his team safe travels and victory in New Zealand.

The team matches start Monday and the finals are Saturday.

MGM M Life Utilizes Innovative Customer Loyalty Program

MGM Generates Complete Customer Profile Across the Brand

In today’s economy, brands are finding new ways to be smart about attracting customers. Las Vegas casinos have always offered marketing promotions and comps such as free drinks, hotel rooms or tokens to keep customers coming back.

None, however, have gone as far as the new customer reward program from MGM Casinos M Life.  This new customer loyalty program for MGM has found an innovative way to reward their customers and build brand loyalty.

Rather than focusing solely on customer’s gambling patterns, MGM tracks members of their reward program across all resorts and all facets of their hotels, including clubs, dining, spas, shopping and gambling. MGM then uses this information to offer its customers perks targeted to their personal interests. For more information on the program visit the M Life site or this recent Las Vegas Sun article about M Life.

Stics is pleased to have a number of MGM properties as Stics Predictive Analytics clients. MGM has a very strong marketing organization and they are always looking to improve their marketing strategies and tactics.  As marketing optimization experts, Stics understand the complexities in executing multi faceted marketing program and expect the M Life approach to further enhance MGM Casinos revenue retention while building stronger brand loyalty with high value guests.

Flat is the New Up

The Decline in Casino Gambling Leveling Off

Upon approaching the bottom of the market, we noticed that flat casino gaming revenues were being carried like a badge of respectability and even a harbinger of hope. Over the past year, Stics conducted three market surveys, of U.S. based casino, to better understand the challenges and needs of casino marketers and the gaming industry.

Our primary research confirms what you may have suspected:

• Fully 63% of the market finds their revenues down or flat.
• Pockets of actual “up” markets exist where geography and competition permit

While this is not good news, there is a general sense that the decline in casino gambling has leveled off.

One, of many current challenges, is how to effectively and efficiently re-engage profitable gamblers. Most properties are working hard at this problem, but sometimes that is not enough.  If you are looking for a new way to increase revenue at your casino property Stics predictive analytics has a proven track record for increasing ROI.

Feel free to call us for more information.

G2E 2010 Gets Serious

Stics back from Global Gaming Conference

In keeping with serious economic times, the Global Gaming Conference (G2E ) turned serious this year. Upon entering this year’s G2E in fun filled Las Vegas, many things looked the same but one thing had clearly changed. The suits were back!

Stics has exhibited at the G2E for many years.  In the recent past, the de facto dressed code was the business casual polo shirt. That fashion statement changed this year in keeping with the serious nature of business.

In addition to a sea of suits, we observed fewer booths, less giveaways, lean booth staffs and more earnestness. Next year the gaming industries marquee event will be moved up a month and have a new location at the Sands convention center.

So as the saying goes….everything old is new again. But I do hope that shoulder pads get lost forever.

Casino Marketing Trends

Casino Marketing Survey

Earlier this year, Stics conducted a preliminary research project to gauge the state of the U.S. gaming industry, from a marketing perspective. We contacted both senior level business executives as well as high to mid-level marketing department professionals to learn more about their challenges and perceptions.

Listed below is a high level summary of some of the more interesting observations.

Top 5 Casino Marketing Observations

1. Respondents felt their casino marketing efforts were performing well – despite the down economy.
2. Direct mail volume of was up by 10 – 20%.
3. Marketers put more value on the website and online programs while business leaders didn’t see value in the websites as compared to direct mail and analysis.
4. Business leaders are “likely” to “very likely” to invest in new marketing technologies but marketing teams were “very unlikely” to “unlikely” to invest.
5. Marketers were concerned about expenses.

While it is obvious that the economy has taken its toll on casino marketers and the gaming industry as a whole, Stics believes that today’s casino marketers are being asked to do more with less. As a result, they are executing on a large number of campaigns to a wider audience. This presents them with the new challenge of how to profitably reach this wider audience.

Stics is currently conducting a more comprehensive study as a follow up to our preliminary findings. We will keep you posted on other interesting facts when they become available.

Stics helps casino marketers reach a wider, more profitable audience through the efficient and effective use of predictive modeling. If you have any questions about predictive analytics for casino marketing, please give us a call. We look forward to speaking with you.

Probabilities and Statistics Pay-Off for Marketers

Conditioning Probabilities

When observing our customers, sometimes evidence can look pretty persuasive and sometimes it can be down-right compelling.  And yet, without proper attention to underlying statistical properties in the customer data, you might form an entirely false impression of your customers.  It is not uncommon for marketers to ask this question, at least once in their career.

“How did I make such a wrong conclusion from such compelling evidence”?

The answer lies in its numerical underpinnings, what statisticians call “conditioning”.  Conditioning can cause you to reach the wrong conclusions and send lots of marketing dollars down the rabbit hole and take you to the Mad Hatters Tea Party.

The unhappy results of conditional probabilities exist in all facets of animal and human behavior.  These are typically complex scenarios of layered assumptions, so I am using this simple example, of one type of casino player, to demonstrate how the application of incorrect assumptions can lead to lost revenue and profitability.

Casino Gambler Example

Let’s assume one percent of the casino gamers who played at your property were cheaters. That percentage might be high (Cheaters = 1%), but this is an example after all.  Let’s also assume that when a player is a cheater, he or she will decline to fill out a loyalty Rewards Club card application about ninety nine percent of the time.  (If cheater, 99% decline application.)

Now comes the interesting part.  Let’s say that you see a suspicious player, approach him or her, ask the player to fill out a rewards application, and the player declines.  What are the chances that that player is a cheater?

Intuition vs. Reality

Intuition would suggest a high likelihood of cheating.  But the reality is different.  There is only about a one in thirty-three percent chance that this individual casino player is a cheater.  So consider the statistical probabilities before you decide that the player is not worthy of a revenue generating comp or a coupon.

Here’s a table that describes the situation exactly.  You have total players showing up in green.  In red are the 1% or 100 are cheaters.  99 of those 100 cheaters were not willing to fill out an application, so your test was very good.  

Wrong Assumptions Equal Lost Profit

So here is the big question. If someone refuses to fill out an application (the red boxed group), should you refuse to serve them or market to them?  The answer is No for the following reasons.

• First, there is only roughly a 1 in 33 chance (more precisely 99 of 3,399) that the player is a cheater.
• Second, there is a 3,330 out of 3,399 chance that they are a good player who will be profitable.
• And finally, these 3,300 players are likely to be even more profitable than reward applicants.Even when making generalizations about customers, it is essential to understand the effect of your assumptions on your conclusions. Especially when formulating policy, it really pays to know your probabilities and statistics.

If you found this interesting or want to learn more about the power of statistics for marketing, feel free to contact Stics. We are happy to help.

How to Tell What Your Customers Want

Past Behaviors: Misleading Facts

When we make guesses about the future, we usually go off past behaviors. But people change their minds frequently. So even if you know what your customers bought in the past, you cannot necessarily predict what they will buy in the future ― from their past behavior alone.

To illustrate that point, let’s look at Bob, Carol, Ted and Alice. We want to know if we should be marketing SUV’s to these people. From our customer records, we know they bought an SUV in the past.

As you can see from the chart, the traditional SQL (Structured Query Language) answer correlates their past behavior with a recommendation to market to these people. But this approach falls short compared to the deeper statistical answer, because it only evaluates a limited set of the available data.

• For Bob, both the SQL and statistical answers are in agreement, telling us that he is worth marketing to because he is an SUV buyer.
• For Carol, the two answers lead to opposite conclusions. Perhaps she no longer needs one because her kids are grown. Maybe it’s something else that changed?
• Both Ted and Alice have some chance of buying an SUV having never done so previously.
• But Alice has a much higher probability of buying one. Perhaps she is starting a family or taken up a new sport that an SUV would be good for. Without statistical analysis, we would not know that Alice is worth marketing to.

Predicting the Future

The better way to make predictions about future behavior is to use a statistical model. A statistical model can take many complex inputs and produce outputs, like the probability of someone buying an SUV in the future.

The important difference here is that statistical models can respond to all the details within your data.  This is superior compared to using generalities or segments of your data, like the “previously purchased” example shown above. By using statistical models rather than a traditional SQL approach, your will gain a better view of your customers and better refine your marketing efforts with increased accuracy and profitability.

This is one of the reasons why Stics statistical models improve marketing performance above other methods.   Stics can provide customized statistical insight about your customers – and use less time than traditional segmentation models take to make. Plus, Stics has years of experience and the technological tools to quickly and reliably give you the information you need.

How Averages Can Be Dangerous

How Averages Can Mislead

We use averages in our business life all the time, and they are usually pretty straightforward. However, when it comes to making business decisions involving customer data, averages can be misleading.

Let’s say that we had a sample of 100 gamblers from your customer re wards system. From your current database analysis tool you can learn that their average income is $55K per year. So from that information, you might assume your typical customer has an income of $55K and act on that assumption, by building a marketing campaign targeting customers with an income of  $55K.  When you imagine averages, you probably think about a curve like this:

The problem is there are other kinds of curves with the same average as the one above, but they have wildly different distributions and implications for your marketing campaign. For example this chart shows a flat or what statisticians call a uniform distribution which would be bad news for your marketing campaign.

If you are an optimist about your gambling population, you might think you have a narrowly grouped base around $55K like this chart.

And if you are unlucky, some day you might experience this unfortunate distribution and none of them have an income of $55K as seen in this troth shaped bi-modal chart.

The important thing to note here is that all these graphs have the same averages, so if you were relying on averages alone to make decisions for your business, your success would be at risk. With misleading data, you may be spending thousands of dollars marketing to unprofitable customers and overlooking potentially valuable ones.

Distributions Matter

Averages don’t matter as much as the distribution around the averages, when it comes to finding ideal customers. Distributions give you a fuller picture of where your customers are and just as importantly― where they are not.

The way to the right people is to use more information, specifically, to use all of the distribution and not just the average. Predictive analytics is the clear winner for making more profitable decisions, because it uses all of the information in the distribution. Predictive analytics is a more complex way of looking at potential consumers, taking into account their past behavior and predicting whether or not they would be receptive to the product or service you have to offer.

To use predictive analytics, you could start studying distributions, send your staff to statistics classes or start benefiting immediately from Stics. The professionals at Stics have made it easy for people who aren’t knowledgeable about statistics to get the important information they need for their company. Stics has predictive models that can give you valuable information about your customer information― which will lead to more profitable marketing campaigns.