I personally wouldn’t play in a casino that doesn’t have a members reward system. Those plastic cards have become ubiquitous and pretty much every reputable casino has them.
The benefit to players is obvious—we earn perks as we play more credited games. But what’s in it for the casino? Why do they want us to use their member reward programs, which cost them money?
Some of the rewards can be substantial. Just to illustrate my point, the Caesars Total Rewards program promises room discounts, waived resort and parking fees, and “special access.” They’re sacrificing potential income to get you to sign up.
Since these companies are in it for the money, how do they expect to profit from giving away free stuff?
The obvious answer is that they expect you to lose your money gambling. But not everyone who benefits from rewards programs loses money on the games.
1 – Branded Rewards Programs Build Customer Loyalty
Being a “member” makes you feel exclusive. Having a rewards account you can check online and a card to use at the brand’s facilities enhances that feeling of exclusivity.
If you don’t live in a city with major casinos, the chances are very good that your neighbors and friends don’t join many rewards programs.
For any company that wants to build a long-term relationship with its customers, this feeling of exclusivity creates goodwill. That’s treated like money in the bank.
Loyal customers are more likely to recommend the companies they do business with. People ask for and recommend good casinos all the time. The rewards club experience plays into those recommendations.
2 – The Casino Analyzes How You Use Your Rewards
This helps them identify who is most likely to take advantage of special offers. In every industry offering a rewards program, members are flooded with special discounts and offers all the time.
Knowing which offers lead to the most sales, a company adjusts their pricing and discounts to remain profitable.
If a company normally makes $1 on a chicken sandwich, but can sell another 10 million chicken sandwiches per year by offering a 50-cent discount to reward members, they’ll make a huge profit. Those are sales that wouldn’t happen otherwise.
It works the same way with casinos. By offering discounts on rooms and services, they entice people into spending money they otherwise wouldn’t have spent. As long as the sales are profitable, or lead to other activity where profits are generated, it’s all good.
The risk for any company managing a rewards program is that it may mistakenly offer discounts that harm profits. According to some financial news sources, these losses are usually identified by analysts during or after corporate earnings calls.
3 – The Rewards Program Tracks Your Gameplay
By now, everyone who studies gambling industry practices knows that these rewards systems track every play you make in every game. Even online poker players can see their history reports.
Every game choice, bet amount, and playing decision is recorded and analyzed. The casinos decide what games are available for play, where to place them, and how to promote them based on the data they collect.
This falls into the “creepy corporate behavior” class of things privacy advocates hate. But players love free stuff and they habitually sign up for rewards programs at restaurants, stores, and other businesses.
Everyone is tracking what we spend money on.
4 – They Know Who Isn’t Collecting Rewards
One of the less obvious benefits to any rewards program is that the business can see how many members act on every offer. Very few people do take advantage of every benefit.
The ratio of users to non-users affects how discounts and promotions are determined.
Companies may decide to enhance their offers and discounts if they conclude too few people are taking advantage of them. This might happen if they see a strong correlation between new members and growth in sales (or gameplay).
5 – It’s Easier to Use a Rewards Program Than Offer Verbal Comps
Conventional wisdom says that if you spend enough time and money at a casino, you should ask for casino comps. Some players still do this, but the best comps are reserved for “whales,” the high rollers expected to lose a lot of money.
Since not every whale loses every time they come into a casino, comps can be expensive propositions for the house. And the typical player isn’t going to lose enough money to make it worth the casino’s while to offer a lot of free high-value comps.
The rewards program allows the casino to offer discounts and free room nights on a clear, transparent basis. This is more equitable for players, too, since the rewards points are earned from gameplay not losses.
For the casino, the comps are more manageable. They are less likely to lose money on the comps. The typical member rewards program brings the casino and patron as close to an “everyone wins” scenario as possible.
A digital rewards program prevents people from cheating the system. Whether it’s lying to a floor manager or desk clerk, or counterfeiting stamped cards, someone is always trying to steal comps. Digital loyalty programs stop that practice cold.
6 – Loyalty Programs Are Cheap to Come By
The cost of developing a custom loyalty program is considerable and beyond the means of most companies. The demand for these programs among businesses in the entertainment, food and beverage, lifestyle, retail, and travel-related industries supports an industry of program managers.
But once a company makes the investment in rewards program technology, they need to justify the expense. And to get the most benefit from everything the rewards program offers, the business needs to sign up as many customers as possible.
Smaller casinos and businesses can offer similar perks to the largest competitors in their fields. This increases competition between casinos but contributes to their growth.
7 – Some Rewards Programs Offer Something to Sell
It makes sense when you think about your own personal experiences. Many rewards programs allow customers to “buy up” to a higher tier of rewards. By handing money over to the business just for more points, the customers contribute to the bottom line.
For a casino, the cost-risk equation is simple. Take a risk of paying a handsome jackpot to a member who only earns points, or collect a fee from someone who wants to “buy up” to the next tier.
When people are willing to hand over their money without any chance of winning more money, the casino wins. The discounts that the rewards program offers will pay for themselves in other ways.
Customers should only buy up on rewards programs when they intend to use the points soon. I’ve done this with a couple of hotel rewards. I saved money by buying up but only because I had already earned some points toward the next level.
Customer loyalty programs have made life easier for companies in many fields, including casinos. Both land-based and online casinos benefit from offering loyalty programs.
Despite a few scandals where some loyalty programs were cheating people out of money, the technology is now stable and well-trusted. Consumers earn good benefits and feel empowered to choose between brands.
The net gain favors the business side of the relationship. Casinos and other businesses wouldn’t offer member rewards programs if they were really money losers. The markets are not so competitive that businesses must take losses in order to protect revenue.
By all projections, the gaming industry is still in a strong growth trend and will be for years to come. They’re competing for as large a piece of a growing pie as they can get. As long as that remains, customers should reap good benefits from digital comp programs.
And as long as the players are happy and the casinos are making profits, everyone feels like a winner.