strategic cost of loyalty bonuses
DESCRIPTION
How to calculate your Loyalty / Promotional Bonuses, and their impact over the company\'s cash flow and bottom line, from a strategic perspectiveTRANSCRIPT
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One of the most significant tools Loyalty
Managers uses in order to increase their
turnover (or wager, bet) is bonus offering
By providing a promotional bonus to
players, they present an option to
extend their customers game play
entrainment, “on the house”
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Your Gross Gaming Revenue (GGR), is
calculated differently by different
software providers
Your customers Life Time Value (LTV), is
in fact based on their GGR minus Costs
(or Bonuses)
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When attaching Wagering Requirements
(WR) to Bonuses, you in fact ask your
customers to meet a certain play
through condition, prior to redemption
Obviously, when the House Advantage
(1 – {win/bet}) is higher, more money is
being kept, as you decrease the players’
WIN value out of the BET figure
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This is why games with low House
Advantage (HA), such as Blackjack, are
sometimes being disqualified when it
comes to Wagering Requirements
Another factor is Taxation, which in
regulated markets can completely
revolutionize the way we reward players
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The common mean to budget a
promotion is by calculating how much
money is kept, after the WR were meet:
Bonus = 10
WR = x 20
HA = 2.7%
1 – (10 x 20 = 200 x 2.7% = 5.4); so
according to this, the cost was 4.6
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This perspective is limited to game play
“on the table”, and doesn’t provide any
actual understanding of the true impact
on the bottom line
In order to do so, I suggest to look at the
promotion as a wagering event that was
caused due to the campaign, and check
the effect on physical money cashed out
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Periodical Withdrawal, as a
ratio out of Wagering,
provides an indicator to
estimate the factual amount
lost due to the campaign
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By looking at this ratio, we can know
exactly how much money is expected to
leave the system, due to the extra
money inflated in during the campaign
Of course, you can also estimate the
generated LTV due the to this bonus
Note: those ratios are markets-specific,
and are affected by previous campaigns
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