F E AT U R E A R T I C L E
Casino Performance
Optimised with
Total Guest Value
T
he gaming industry is certainly a profitable
one. According to the 2017 American Gaming
Association’s annual report, the casino industry
hit $38.96 billion, yielding more profits than the
revenues of the four major U.S. sports leagues ($31
billion total) combined. The Asia-Pacific casino
industry is even larger, and growing faster.
Big data analytics play a key role. Businesses draw
from multiple sources to gain valuable customer
information which must be carefully managed and
utilized in myriad ways to help an organization grow.
For a casino operator, high-quality, detailed player
data is pure gold. The more that’s known about
the players and their behaviors, the better casinos
can serve their needs by creating more personalized
experiences, as well as earning repeat visitors and
improving profitability. When it comes to gaming
establishments, one of the most beneficial uses of
customer data is for developing “total guest value.”
For one entertainment group that has casinos
throughout Australia and New Zealand, the ability to
calculate total guest value proved a deciding factor in
choosing their revenue management solution provider.
In most industries, determining total guest value
is essentially an accounting exercise that requires
subtracting customer acquisition costs from revenue
gained through purchases. But establishing total guest
value in the gaming industry is not quite so simple.
Key Data Casinos Use in Determining
Total Guest Value
Segmentation & Profit Margins
Multiple elements come into play when calculating
total guest value, and one of the most important is
player segmentation. Within a casino database, players
can be divided into a series of tiered statuses, such as
high frequency, part timers, machine players, high
rollers, or VIPs. Careful analysis of the costs, expenses,
and revenues associated with each segment helps
casino owners establish a value for each segment.
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When player segment data is evaluated, true
customer worth may be surprising. Often the biggest
customers are not the most profitable. A 2001
study of high-roller Baccarat players revealed that
14,981,640 hands needed to be dealt before the casino
realized a win rate between 1.25 and 1.35 percent.
The game’s volatility combined with its accompanying
credit risks and high-cost incentive demands proved
that the total guest value of Baccarat junkets may not
be as profitable as imagined.
Recency, Frequency, & Spend
Casino operators also examine data concerning the
recency, frequency, and spend (RFM) of customers.
RFM scores are calculated by analyzing how often a
player visits a casino over a specific time period, along
with their spend, which includes wager amounts, and
products or services purchased whil