Archive for the ‘Customer profitability’ Category

Odds: Are casinos really that smart?

December 4, 2014

Harrah’s is a poster child for “predictive analytics” … using hard numbers to make good decisions.

image

Why then – asks the IO Creative Group of tiny York, PA – did the Las Vegas big boy casinos lose over one billion dollars? (more…)

Odds: Are casinos really that smart?

February 21, 2014

Harrah’s is a poster child for “predictive analytics” … using hard numbers to make good decisions.

image

Why then – asks the IO Creative Group of tiny York, PA – did the Las Vegas big boy casinos lose over one billion dollars.

According to IOCG, casinos attendance is up, their hotel stays are up, their night club business is up, restaurant and bar sales are up.

How could their profits be down by one billion dollars???

It is because of their belief that new customers were in order – which attracted a lot more customers who are completely NOT PROFITABLE.

These new Vegas fans sleep all day, party all night and do not gamble. They don’t shop nor do they utilize the services and amenities of the buildings.

Vegas became married to the idea that their money should be invested in attracting new younger, hipper, sexier customers and they achieved that.

What they failed to do was to invest in their current very profitable customers who were actually making them money.

Casinos got caught up in the “shiny object syndrome” —  the need to go after something new when their most profitable market was already right in front of them.

When they were going after completely new markets, they should have been further investing in the one they already had.

* * * * * *

IOCG offers up a couple of ways to increase current customer “monetization”:

(more…)

Odds: Are casinos really that smart?

March 25, 2013

Harrah’s is a poster child for “predictive analytics” … using hard numbers to make good decisions.

image

Why then – asks the IO Creative Group of tiny York, PA – did the Las Vegas big boy casinos lose over one billion dollars.

According to IOCG, casinos attendance is up, their hotel stays are up, their night club business is up, restaurant and bar sales are up.

How could their profits be down by one billion dollars???

It is because of their belief that new customers were in order – which attracted a lot more customers who are completely NOT PROFITABLE.

These new Vegas fans sleep all day, party all night and do not gamble. They don’t shop nor do they utilize the services and amenities of the buildings.

Vegas became married to the idea that their money should be invested in attracting new younger, hipper, sexier customers and they achieved that.

What they failed to do was to invest in their current very profitable customers who were actually making them money.

Casinos got caught up in the “shiny object syndrome” —  the need to go after something new when their most profitable market was already right in front of them.

When they were going after completely new markets, they should have been further investing in the one they already had.

* * * * * *

IOCG offers up a couple of ways to increase current customer “monetization”:

(more…)

When was the last time you bought something at Best Buy?

January 6, 2012

For that matter, when was the last time you shopped at a Best Buy?

A couple of years ago, the company was brash and made headlines by categorizing its customers as angels or demons … and talking about it publically.

For example, from a Fortune article:

Best Buy concluded that companies are often oblivious to the fact that not all customers are profitable ones. Some are very lucrative to deal with, while others cost more to sell to than the business is worth.

They called the first group angel customers and the second demons.

By catering to the angels, companies can reward customers, employees and shareholders alike.

In short, here’s how it works: Figure out which customers make you the most money, segment them carefully, then realign your stores and empower employees to target those favored shoppers with products and services that will encourage them to spend more and come back often.

Sounds good.

Unless you’re slotted as a demon, in which case you get shunned as profitless instead of being cultivated for your potential.

Even at the time, critics argued that intentionally dissing a bunch of your customers was a bad idea for retailers.  Someday, you may just need those demons to keep you afloat

Well, it seems that those days have come for Best Buy.

A recent Forbes article is titled: “Why Best Buy is going out of business gradually”.

In a nutshell, the author points out that a nimble  Amazon is cleaning Best Buy’s clock, that killer electronic products are few and far between, and that having money tied up in brick & mortar isn’t where you want to be these days.

He forgot to mention the demons … maybe they’re getting their revenge.

Thanks to AY for feeding the lead

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