Strategic Cost of Loyalty Bonuses

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How to calculate your Loyalty / Promotional Bonuses, and their impact over the company\'s cash flow and bottom line, from a strategic perspective

Transcript of Strategic Cost of Loyalty Bonuses

Page 1: Strategic Cost of Loyalty Bonuses

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Page 2: Strategic Cost of Loyalty Bonuses
Page 3: Strategic Cost of Loyalty Bonuses

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”

Page 4: Strategic Cost of Loyalty Bonuses

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)

Page 5: Strategic Cost of Loyalty Bonuses

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

Page 8: Strategic Cost of Loyalty Bonuses

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

Page 9: Strategic Cost of Loyalty Bonuses

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

Page 11: Strategic Cost of Loyalty Bonuses