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Curious about what drives the comp system? (Casino perspective link)

Discussion in 'Comps' started by Multifarious5, Jun 18, 2016.

  1. Multifarious5

    Multifarious5 High-Roller

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    If anyone else is fascinated by what drives the comp system in Vegas, who gets what, and why, I found this to be a really, really interesting read. (But I have a dork streak.) Notice, one of the sources is
    William J. Hornbuckle IV President and Chief Marketing Officer MGM Resorts International (2013).

    https://marketing.wharton.upenn.edu/mktg/assets/File/Paper-Nair-Harikesh 03-06-2014.pdf

    This is a long read, but it really gets into the nitty-gritty on what drives the upfront comp offers you get. More freeplay, less RC, better rooms with no FP/RC, etc. It even sheds some light on "why does player A get better comps than Player B, when player B spends more?" It touches on corporate offers vs. individual property offers, why the lower properties aren't more competitive on their offers than the 5 star hotels, etc. It goes way past ADT, coin-in, win/loss...I personally found it very interesting.

    Building upon this, is the looming player problem of what exactly they can know/learn about individual player habits from a data analytics' perspective. I was really shocked to see, despite it being such a huge industry, most MGM casinos seem to still rely heavily on older software, such as Excel, versus bleeding-edge player analytics and gaming tracking tools, as of 2015. (See below)

    "Granular analysis of machine and player data is the ultimate goal. Right now, MGM relies heavily on workhorse enterprise software like Microsoft Excel and SQL Server. The switch to slicker, more sophisticated cloud apps is still on the horizon. One reason why is the regulatory nature of gaming: Casinos tend to organize data in spreadsheets to report to regulators, who review the accounting and verify that slots perform within legal specifications. But those reports are not ideal business intelligence sources"
    (Source)
    http://rewrite.ca.com/us/articles/management-cloud/big-data-is-big-money-at-mgm-casinos.html

    So many people on this site are super technical on the mechanics of comps, so I thought the two articles might be an interesting read for some!
     
    Last edited: Jun 19, 2016
    Sooooo far away still...
    Cosmo, always our favorite part of our trip!
  2. Chuck2009x

    Chuck2009x VIP Whale

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    Interesting, thanks for posting these. They can't really be using Excel for customer analytics though, it's not robust enough.

    I only read about half of that paper so far cause it got into the weeds, but there were a couple of things that stood out:

    They say both that customers are comp-sensitive, and that "Moreover, there is also an
    overarching concern that targeting more promotions to those who have played a lot in the past may
    be ineffective, because those consumers may already be the flat or declining part of their promotion
    response curve.
    " It can't be both. I'd agree that you don't need to continue to sweeten the pot if you have someone hooked, so it has to come down to, what percentage of players are comp shoppers.

    An interesting footnote:
    "A relevant question here is what explains any observed variation in xit within bin r, if binning has controlled for the promotion allocation rule. To understand why there could be variation in marketing allocation within bins, note that the binning rule only makes a consumer eligible for a particular bundle of promotions. Whether a consumer actually receives the promotional bundle in the mail is essentially random. In several situations, the firm chooses to allocate only a random subset of agents within each bin its promotional bundle because it faces margin or cost constraints that prevent it from blanketing everyone in the segment with the bundle. It is also the case that different properties face different margin or cost constraints based on their priorities and competitive situation, and this generates variation in the number of consumers picked within each bin."

    The paper makes it seem like their plan was tested in 2012 and actually implemented at MGM, but it sure doesn't feel like it to me. My offers are still based on my last trip and they still haven't caught on that I blow all my freeplay on high denom slots and hardly use any resort credit.

    I mostly agree with their premise that at least at the beginning of a player's relationship, you shouldn't market to them based specifically on what they did on a past trip, you should use probabilities based on what their whole demographic did on its next few trips.
     
    Last edited: Jun 19, 2016
  3. KellyLovesVegas

    KellyLovesVegas certified personal trainer/retired space nerd

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    Thanks for posting the link. I found the article very interesting. However, I'm not at all surprised that government regulators expect casinos to provide required reporting in a simplistic format.
     
  4. JeJas

    JeJas VIP Whale

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    Interesting articles. Thanks for sharing!
    I am kinda in the big data business, so I know roughly what they were talking about.
    I would say many of the concepts were already implemented by those big casino companies.
     
  5. VegasSchemer

    VegasSchemer Low-Roller

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    I only got a few pages in (I'm sitting in church lol) but the challenge of getting people what they want is real. I like variety in hotel stays, and so their approach that gives me similar FP/RC offers but very different hotel terms is close to driving me away. I'm only going to stay where rooms are free, so BOGO Aria Vs 3 at Monte Carlo/2 at Mirage means I'll never go to Aria/Bellagio even though I'd like a change.

    Last trip I went to Cosmo on a match, and now my first post-trip offer was 2 free nights and about as much free play as MGM offers, so I'm close to gone. If they had offered free rooms at the high end joints w/o the freeplay and food, I'd be all over that (my favorite spots to eat are off-strip).

    I know I'm a small fish but I thought I could relate.
     
    • Informative Informative x 1
  6. Chuck2009x

    Chuck2009x VIP Whale

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    How hard is it to ask me specifically what percentage of available freebie value I want as freeplay and how much as resort credit? How hard is it to ask me specifically how important room type is vs freebies? And then adjust my offers based on the overall comp value they put on me?
     
  7. leo21

    leo21 VIP Whale

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    The white paper for Total Rewards is out there too, if anyone wants to try a do a google search and find it.
     
  8. Multifarious5

    Multifarious5 High-Roller

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    HI all! Yes, I also think they've gotta be using some data analytics' software (especially since the paper was 2013, which is ancient in the tech world), but im still not sure theyre utilizing the tools to their fullest capacity....and im not looking forward to the day they do! :)


    Totally right Chuck, on the fact they seem to be contradicing themselves on comps for player longevity....it can't be both that players lose interest in comps and don't respond, but that they also become comp shoppers.

    Personally, I think they're trying to figure out how to target a player that is more mythical nowadays....the newer player that has no idea about comps, but who spends as liberally as a more veteran player.

    Many people might spend less their first trip, and don't even think about comps---pure profit for the casinos---but spend less on gambling and have shorter trips than a veteran player.

    As players become regulars, they spend a good chunk more money gambling than a newer player, and they like longer, and/or more frequent trips, but they've learned how to shave some off on the incidentals through comps....thus, spending more on gambling, but less on the rest. (Though, still usually spending more overall, even with comps.)

    I think they're looking for the players that "spend" like a veteran player, but haven't successfully mastered "comp shopping," as you put it.

    The casinos basically"trained" the veteran players to adapt to the new pricing structure and the regulars (they very players they DO want, due to consistent spend and higher play levels), found a work around on the crazy fees/prices.

    Now they're (casinos) are trying to figure out how to get players back to playing lots, but without expecting as many comps, but the more fees they tack on, and the more expensive everything gets, the more it just makes veteran players (the spenders) even more sensitive to comps. Definitely the snake eating it's own tail. :D

    JeJas, very cool you're in big data---doesn't surprise me, you all are so so analytical, that totally fits!!!

    Again, glad you guys liked it. I know that article is dated, and it just captures one angle of a very complex system, but I still enjoyed it and am glad you did too.

    Happy Vegasing, and Chuck...you're getting closer!!!!:poker:

    P.S. this was NOT knocking the casinos on looking to lessen comps. Casinos are trying to maximize player spend and minimize marketing/comp costs, whereas players are trying to minimize their spend and maximize what they get back, just conflicting goals.
     
    Last edited: Jun 20, 2016
    Sooooo far away still...
    Cosmo, always our favorite part of our trip!
  9. Multifarious5

    Multifarious5 High-Roller

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    Hey Schemer, trust me, I totally get you! Cosmo has been really savvy, and is a gorgeous hotel.

    I've been hardcore mlife, but I stayed at Cosmo on my last trip, and actually will be basing my next trip a little more around Cosmo, with mlife on moving to the back-end. Great hotel (Cosmo), REALLY like their player program...and fyi, they do NOT cap out at 3 nights like mlife.

    I'm sterling now at cosmo which equals one free night, on top of promos. If I break gold, it gives two free nights annually PLUS two free nights annually for the inlaws, PLUS no resort fees, PLUS unlimited BOGO at Wicked Spoon. All in all, a great program in my book, at a great hotel. Those are some great perks where with mlife gold, promos are based on play, not tier (which means as long as I maintain play-levels at my preferred hotel, tier doesn't matter that much to me on mlife), the gold perks at mlife are definitely weaker than Cosmo in my book.

    For gold, really the only thing I use on mlife is the line pass. Identity Gold (Cosmo) gives a lot more for their gold tier, at least to me....

    Don't get me wrong, I still love my go-to mlife hotels, but I'd rather have gold at Cosmo and even drop down to pearl at mlife (but still play enough at a my preferred mlife property to get good promos at that one property.)
     
    Last edited: Jun 20, 2016
    Sooooo far away still...
    Cosmo, always our favorite part of our trip!
  10. Chuck2009x

    Chuck2009x VIP Whale

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    Just a tip on the Sterling free night - use it BEFORE you cross the threshold to Gold, or you lose it. I'd recommend using it on your next trip.
     
  11. Multifarious5

    Multifarious5 High-Roller

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    Thanks a million Chuck, I didn't know that about use it or lose it.

    I'm using our November trip to get CLOSE to gold, and then planning on converting in March, so I'm really glad you tipped me off---
    I absolutely will use it on my next (November) trip.

    Thank you for great advice, yet again...that's why I call you king of comps! :D
     
    Sooooo far away still...
    Cosmo, always our favorite part of our trip!