Bet, Then Bid

16 September 2002

Most online gaming operators will tell you that next to getting new customers, the hardest part of managing their businesses is keeping the users they already have.

This will change, though, if NetProspect Loyalty Auctions accomplishes what it's set out to do. The company is trying to turn customer retention into a passing thought with its new loyalty programs.

Under its system, NetProspect gives users specific points each time they gamble on a site. Regardless of the outcome, the player gets a certain amount of many points. The more times a player makes a bet, or plays a round of blackjack or poker, the more points he accumulates.

What separates the NetProspect system from the competition is what players do with their points.

Instead of cashing points in for cash-back bonuses or merchandise, players use their points to bid on a range of items. Auctions can be tailored to appeal to the casual users as well as VIP players who gamble more frequently. Items up for auction could range from CDs and DVDs to trips and tickets to sporting events.

Evelyn Bertolucci, NetProspect's director of loyalty programs, said the system was designed with three objectives in mind:

  • Increase the lifespan of memberships.
  • Increase the amount of money spent by users.
  • Increase the conversion rate from free players to paid players.

"The program includes a fundamental marketing piece, a unique and appealing merchandising plan and an attractive financial return that, combined, is unlike any other in the industry," Bertolucci explained.

In addition to increasing the retention rate for operators, Bertolucci said, the system enables operators to cut back on player acquisition costs and gives them a fixed cost on loyalty programs. Operators using the system will spend a defined amount each month for auctions because getting products to put up for auction can be pre-determined. The only variable is how many points players are willing to use to win them in the auction.

NetProspect CEO, Tony Luisi feels the auctions are a great way to give consumers choices and still increase profitability for operators.

"The loyalty auctions are not a quick fix marketing promotion, but a piece of the foundation for providing an ongoing value proposition," he said. "CEOs need to realize that customer defection is the real illness, there must be a value proposition that enhances their members' experience, while building brand."

Such a system is created with the cashless auctions, he said, because environment delivers and builds a brand.

"It's fun, it's competitive, it's sticky and it's free," he said. "What evolves is that companies build better relationships with their consumers, and the end result is a new profit center. The loyalty auction site now matures into the hidden strategy behind growth, profits and lasting value. This really is a perfect fit."

Bertolucci also said NetProspect can go a step further for sports books. The system has a built-in merchandising mechanism designed to create appealing auction items for sports bettors.

"Can you imagine coming to wager on your football team and having the opportunity to win Super Bowl tickets? It is a natural fit because of the sports merchandising opportunity to a database that can be pleased so easily with items that you know they will love," she explained.

She said the model was created as a solution for the highly competitive casino industry, where, due to no particular differentiation, players move horizontally as their interests wane; they have no reason to stick with a particular casino.

"However," she added, "when you provide them with a loyalty rewards program, where they can get a point for every dollar they gamble and convert their points for cruises, golf clubs, trips around the world or tickets to the Super Bowl, they will stay and play."

If the strategy is successful, not only will players stay and play, but they'll be drawn to spend more if they have their sights set on a particular item that they know they want. And if they're outbid or feel they haven't accumulated enough points for a competitive bid, they'll stay and gamble some more.

"When you provide members an opportunity to continue playing against each other and, no matter what, 'winning' with those points, an environment with additional emotional stimulus is created, increasing member retention and loyalty to your casino," she said.

NetProspect takes the approach that customer retention and loyalty plans should be focused on customer care, service and providing added value to frequent members.

Auctions, they feel, provide a high level of attention and excitement produced by the competitive nature of the game and the fact that they are playing for very unique prizes.

"Their constant point account balance and, thus, automatic playing power will tie them in to a place where they are already recognized and valued--to the casino," Bertolucci said.

Bertolucci said NetProspect is seeking clients in the online gaming business.

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