Building Loyalty for a Lottery Program


Golden Casket Lottery Corporation Limited is a world leader in providing innovative lottery games. It has offered entertaining lotteries in Queensland, Australia, for 85 years and today operates the popular games of Wednesday and Saturday Gold Lotto, Oz Lotto, Powerball, The Pools, Casket, and an extensive range of Instant Scratch-Its tickets. The games are sold through an agency network of approximately 1150 retailers.

Golden Casket’s loyalty program is called Winners Circle. The program has more than 1 million unique Winners Circle members, or 38 percent of the adult population of Queensland. Players use the Winners Circle card to register their Lotto purchases for the benefits of security (unclaimed prize checks are mailed to them), convenience (the card can store up to 20 sets of their favorite numbers), and reward (every $1 spent gives them another chance to win the weekly $10,000 bonus draw). The loyalty program captures 80 percent of all Lotto revenue and provides Golden Casket with invaluable marketing information. The gaming market in Queensland is very competitive, with scores of gaming options available—casinos, gaming machines, horse racing, sports betting, keno, and so on.

Analysis of Golden Casket’s customer database showed that its approach to branding was eroding player loyalty. The brands were competing with one another for the same customers, which undermined player loyalty to the corporation as a whole. Golden Casket asked Acxiom to build computer models that would assist Golden Casket in building customer loyalty.

Acxiom built three customer models, which are now rescored every quarter. They are

  • Future value model

    • Using a neural network, 2 years’ worth of data, and 133 variables, Acxiom built a model that predicted the combined future value of 96.2 percent of all customers on the database with 96.8 percent accuracy.

    • Acxiom allocated the customers to low, medium, and high future value bands. Using these segments, Golden Casket:

      • Created a retention strategy for customers whose future value was likely to decrease.

      • Continued the current strategy for those whose future value was not likely to change.

      • Took a stronger focus to build a relationship with customers whose future value was likely to increase.

  • Behavioral segmentation model

    • Acxiom clustered Golden Casket’s customers within value bands.

    • Thirteen behavioral clusters emerged. Acxiom found that six of these variables accurately defined customer behavior:

      • The number of games played

      • The number of certificates used

      • Brand

      • The total amount spent

      • The number of games played per week

      • Methods of play chosen

    • This model told Golden Casket which customers could be influenced to move to a more desirable cluster.

  • Cross-sell model

    • Using a neural network to track historical behavior, each customer was scored with a percentage probability of playing another of the seven games. Table 10-11 shows the way it worked (all names are fictional).

      Table 10-11 : Lotto Results

      Likelihood of Playing These Games

      Saturday Gold Lotto

      Wednesday Gold Lotto

      Tuesday Oz Lotto

      Thursday Powerball

      Jane Smith

      95.0%

      2.0%

      2.0%

      1.0%

      John Brown

      23.0%

      25.0%

      27.0%

      25.0%

      Pat Johnson

      65.0%

      31.0%

      3.0%

      1.0%

  • Since Jane Smith is 95 percent likely to play Saturday Gold Lotto, the strategy is to reinforce her behavior. Trying to cross-sell other brands to Jane would waste marketing dollars, create annoyance, and undermine her loyalty.

  • 232

  • John Brown is a good candidate to purchase all brands. His behavior is always reinforced to retain his loyalty.

  • Pat Johnson prefers Saturday Gold Lotto, but Golden Casket should try to cross-sell her on Wednesday Gold Lotto at every opportunity.

How the Program Worked in Practice

The entire loyalty program was restructured and relaunched around the cross-sell model. When players purchased an entry, each receipt gave them a chance to win a free surprise game instantly at the point of purchase. Which free game they could win was determined using the cross-sell model (e.g., Jane Smith would win a free Saturday Gold Lotto game, whereas Pat Johnson would win a Wednesday Gold Lotto game).

The terminals at the 1150 retailers were linked to the central Golden Casket database. When any of the 710,000 active Winners Circle players purchased an entry, a personal message was printed at the top of the lottery receipt. If the cross-selling model indicated that the player was likely to play Powerball, the message would promote Powerball.

The personal message was also used to alert flag players to outstanding prizes. Before this system, Golden Casket had mailed more than 10,000 checks a week, at a cost of $520,000 per year for the mailing alone. With the new system, special messages printed on the receipts alerted winners to their prizes, which could be claimed at the retail agent.

A screen message on the agent’s terminal also used the cross-sell model on each customer, prompting the agent to either cross-sell the appropriate game or reinforce the customers’ Winners Circle buying habit. If the player was to be cross-sold Powerball, the agent would be prompted to mention the Powerball jackpot for that week.

The cross-selling recommendation was put on the call center screens as well. When a player called, a screen would prompt the call center operator as to what game to suggest. The model was also used to develop direct-mail cross-selling offers. One example was a letter and promotional premarked certificate that was mailed to 50,000 players identified by the models. Of those who were sent the offer, 21 percent played the game identified by the certificate, compared to 1 percent of the control group (10 percent of the file). Interestingly, the promotional certificate was available in the store to the control group. Prior to using the model, Golden Casket averaged response rates of 10 to 12 percent. The company now consistently achieves direct-mail response rates of over 30 percent by using combinations of the models.

The Golden Casket Web site was upgraded to allow Winners Circle players access to their personal information. Players can check for outstanding prizes, update their details, and opt in and out of various offers such as, “Email me every time the Powerball jackpot reaches $5 million.” Additionally, when a Winners Circle player visits online, the cross-selling table is used to populate the banner ad and promotional fields.

Selecting Media Using the Model

Every television program, radio program, newspaper, and magazine in Australia is profiled by the Roy Morgan research survey. The survey provides Australian companies that buy mainstream media with the Mosaic geodemographic profile of customers of each media type and program.

Golden Casket used the behavioral models to select target markets by media zone. These target segments are geodemographically profiled against the Roy Morgan survey to create a ranking that gives a “best fit” to “worst fit” portrait to assist Golden Casket in media buying. Using this system, Golden Casket determined that radio station B105 in the 9:00 a.m to noon hours was the best geodemographic match for a Powerball ad. For every 1 percent increase in media-buying effectiveness, Golden Casket was able to save about $100,000. This new approach changed the way Golden Casket bought advertising. The company determined that in regional areas, less expensive off-peak television could be purchased without compromising reach goals for specific brands.

Results of the New System

Golden Casket is now more focused on managing customer relationships. Instead of casting a wide net, customer models have enabled Golden Casket to focus on customers who are more likely to purchase its products. The Web is used to reduce costs via self-answered queries, where normally it would cost Golden Casket more than $7 to answer each call. Web visits are virtually free.

Using the models has tripled Golden Casket’s incremental revenue from direct mail with cell sizes of 50,000. It is anticipated that going to smaller cell sizes and using email will continue to increase these response rates.

Golden Casket’s original rewards loyalty program was complex and generic, with an annual fee of $2. Only 486,000 of the 723,000 active players participated in the program. Using Acxiom’s computer models, the rewards program was restructured and the annual fee was increased to $3. Additional features, including weekly $10,000 bonus drawings and surprise games, were added, and check fees were abolished. There are now 710,000 players participating in the program, and the relaunch generated $1.1 million in incremental income, which was equivalent to gross profit, as no cost of goods sold resulted from the change.

Overall, customer modeling and database marketing have allowed Golden Casket to be more targeted in its communication, to strengthen player loyalty, to increase the efficiency and effectiveness of media buying, and to reduce costs in the business.




The Customer Loyalty Solution. What Works (and What Doesn't in Customer Loyalty Programs)
The Customer Loyalty Solution : What Works (and What Doesnt) in Customer Loyalty Programs
ISBN: 0071363661
EAN: 2147483647
Year: 2002
Pages: 226

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