The Changing Frontier of Poker Machine Gaming


For those who have been in the industry since the inception of gaming into the QLD market will no doubt have many stories to tell in relation to the evolution of changes over the years. When gaming commenced in Qld in 1992 venues rented machines off the Government under the following structures;

  • $210 / machines 1 to 10
  • $240 / machines 11 to 20
  • $270 / machines 21 to 250

The following article highlights the items to consider when renovating your gaming venue and the drivers of gaming and customer loyalty.

Poker Machines Gaming

Following the 1996 Review of Gaming Machine Regulatory Arrangements the Government negotiated a package of changes with industry. Two of the most significant changes were the introduction of third party Licensed Operators to take over the electronic monitoring of gaming machines in licensed clubs and hotels, and for the Government to cease the ownership of gaming machines. The first stage of the agreed changes was implemented on 1 July 1997 through the Gaming Machine Amendment Act 1997. The second stage was subsequently broken into two parts, with the first part given Assent on 30 March 1999.

 

The industry as it stands is vastly different to the early days, now more than ever the competition for the leisure dollar has greatly intensified and coupled with the decline in per capita gambling expenditure the challenge to increase market share is greatly affected by a large number of areas, the following graph shows the gaming trends encountered by the industry over the last 26 years.

 

Roy Morgan Gambling Chart
Source: Roy Morgan Research

The challenge faced by many venues in today’s gaming environment is to increase market share of the venue, in doing so there are many areas that may need to be looked at which may include an up-front capital investment to not only attract new customers but also maintain existing customers.

 

Before heavily investing in projects, a venue operator needs to consider the market scope, revenue, costs and cash-flow associated with their proposed gaming business. Some of the factors that operators need to consider and evaluate to make an informed decision about should consider, in terms of demand:

  • What local population does my venue service and is the population likely to grow?
  • What are current participation levels in gaming in my region?
  • Is the demographic profile of the area likely to change in the future?

 

In terms of the supply side:

  • Who are my local competitors?
  • What is the current supply of gaming machines in my local catchment?
  • Do I think there is a potential undersupply/oversupply of machines?

 

 

It is vital that venues understand gaming can not exist in a vacuum, it relies heavily on many factors which include some of the following;

Smoking Area

  • Food and Beverage
  • Customer Service
  • Promotions and loyalty
  • Marketing
  • Services
    • Toilets
    • Smoking areas
  • Atmosphere
  • Decor
  • Layout of gaming products

 

When renovating a venue it is vital each and every area is closely looked at, missing an opportunity can impact heavily on the overall offer. Coupled with venue renovations and decor one of the largest growth areas surrounds loyalty programs. In today’s environment competition is enormous not only are we under attack from the land based arena but we are also facing increasing attacks from the online aspect.

 

Rewarding customers for “Choosing Us” has evolved over time and whilst the greater industries such as Woolworths, Virgin and Qantas just to name a few have been offering such problems for a number of years the Club industry is fast following suite and understanding the benefits of rewarding customers who use their product

 

What Is Gaming Loyalty?

In some cases, customers continue to do business because they have no other alternatives or exit barriers are too high. It’s important not to confuse these “trapped” customers, with “truly loyal” customers, who have a positive attitude about the business relationship and will give recommendations to friends and colleagues. Think “free marketing.”

 

Drivers of Gaming Loyalty and Defection

In customer loyalty, there’s no substitute for good research and planning. No matter the size or type of your business, you must start by understanding why customers stay and why they leave. Taking this customer-centric view will enlighten management on why customers behave the way they do so that you can create a profit-generating loyalty strategy. It is, of course, possible to acquire and retain unprofitable customers. Some companies make this mistake by constantly acquiring new customers with price promotions and then wondering why these same customers flit to the next deal offered by a competitor. The resulting high-churn, low-margin customer base is unlikely to ever be profitable. Keeping the right customers is crucial to effective CRM.

 

It’s the Service

Monopolies aside, the odds are that today’s customers can acquire similar products at similar prices, from an array of local competitors. Emotion plays a much higher role than quality and price in the decision to defect and poor customer service is the most likely culprit in creating negative feelings that will motivate a customer to bolt.

 

Most people leave a company because they feel they’re not treated well. They feel that, for some reason, they have been ignored or not treated properly. Management usually thinks the reason for leaving is price, and of course, that’s true in some cases. But it’s usually because they feel that they’ve been neglected or somehow abused. They write a letter, and no one answers the letter. They send an email, and no one answers the email. They telephone the company, and they’re put on hold for two hours.

 

Retaining the right customers or winning back defecting customers can be accomplished by following these steps:

  • Identify potential defectors.
  • Communicate with customers.
  • Listen to front-line people.
  • Treat valuable customers well.
  • Use exit barriers, carefully.
  • Win the right customers back.

 

When you’re determining how to retain customers, you also want to determine which customers to focus on: Which ones are the most valuable for your business and would be the most costly to lose?

 

In summary venues have a challenge to maintain existing customers and continually grow the business and whilst at times we might find it daunting it is imperative we remember the challenges we have faced and these speed bumps have been overcome with positive management and the desire to continually improve.

 

To discuss your gaming strategy, contact Danny Nixon-Smith on (07) 3878 9355.

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