Ageing customer base – ticking time bomb?
I admit to regularly being critical about betting operators and I am probably not endearing myself in the process but the concern is not with what they are doing, but rather with what they are not doing, writes Leon Smuts.
It is extremely hard to look at racing from a marketing perspective without being critical as it is obvious that the efforts going into it are misguided, superficial and ineffective. The people directly involved can perhaps not be blamed though as it is very difficult to be creative on a limited budget and with so few decision makers truly believing in the ability of the sport to bounce back.
From a business perspective our local operator is doing a wonderful job which is to channel resources and efforts into areas considerably more promising than local racing and it is clear that this strategy is paying dividends. Thankfully this success is allowing local racing, which is a loss making operation to continue, but given the growing enormity of the task cannot be good for the long term wellbeing of the sport or be best for Phumelela.
The operator must be very frustrated with this reality as successful initiatives have to increasingly subsidise an ailing operation which is robbing the company of much more impressive results and will continue to cause suboptimal annual performances and ongoing bottom line disappointments.
It is helpful that the sport’s greatest attribute is the annuity income that it provides through the loyalty of skilled patrons and when matched with churn gains and per capita spending improvements can remain turnover positive without growth in customers for a very long time as witnessed over the last few decades. We have however already passed the point where meaningful further gains from this source would be possible and as such the situation is dire, and more so than most would admit.
Racing, It’s A Rush was launched some time ago
There is seldom a substitute in any business for sustained customer growth and it is no different in our sport which is crying out for a new generation of players to bolster the ranks of the old guard. Knowing what talent the local operator can draw on I find it incredible that no longer term racing growth initiatives are being put into place to ensure that they can unburden themselves from the ever growing subsidy demands.
If presented with an opportunity it would not be tough to prove that local racing can be financially self-sufficient and capable of producing profitable contributions to the group, which has to be a preferred option over the uneconomical current strategy.
Given a sound marketing background and a number of years of passionate research into racing I am convinced that there is a yet undiscovered opportunity for racing to re-popularise itself and become either a primary or active secondary pastime for many new players, both young and old.
The masses make it happen – but innovation is needed
Too often we hear only of the sports multiple problems which have been analysed to death rather than looking at what opportunities exist to take the game forward. Everything in the research that I have done suggests that a viable solution is near and will come from innovative product developments in future and not from a traditional outreach.
This is an area of opportunity where operators have made no effort to introduce designs specifically created to generate and retain extended interest from new players. It is one of the most crucial aspects in any marketing campaign that you should have something exciting to offer that has real benefits to all concerned and that marketing personnel can believe in to make selling easier and more effective.
Looking at successful wagering and leisure products the following list of elements should be some of the main ingredients for any winning recipe in no particular order of importance:
- Entertaining
- Affordable
- Value for money
- Life changing rewards
- Fairness
- Competitive involvement
- More winners
- Equal opportunity
- Skills based
A game with some or all of these elements will offer a very marketable product which is what racing needs if it is to reach out to a more diverse and new customer base. The art is in how elements are combined for maximum impact to produce an effective acquisition tool for racing. It is like a recipe where a world class chef will produce a culinary delight while most of us will make just another forgettable meal from the same list of ingredients.
Prawns On The Lawns – attract crowds, but…
Direct participation in wagering activities should be the number one priority in promoting our sport over the less important attendance figures which is an unsuitable benchmark currently used for measuring the successful promotion of racing. Successful events from a numbers perspective has yet to produce a growing customer base. Forget about growing participation with racings proven traditional array of products as these will continue to fulfil the promise of their design which excludes acquisition capability.
A turnaround strategy for racing is completely realistic, although admittedly not without a financial commitment, but where longer term gains will be significant and well worth the unavoidable and necessary expense. The start-up costs of a new venture might be seen as undesirable given historic results but this is absolutely essential to get back on the road to recovery. Money would have to be spent but only on projects offering measurable objectives and a realistic chance of delivering on key outcomes.
For racing to be a jewel in the crown again an investment in a technology driven platform is very necessary to provide critical management information, future cost savings and flexibility in reaching out to a more diversified and future proof customer base.
The stub based tote model is woefully inefficient at providing the critical information needed to drive any meaningful marketing efforts.
The current system can amongst other provide the following:
- Total turnover
- Turnover per outlet
- Growth in turnover
- Turnover per product
- Average stub value
- Number of stubs issued
It cannot provide measurable individual customer data, which is minimum requirement for an effective expansion drive and management of the customer base. It is incomprehensible that a leading company can have no idea of the exact number of customers that it has at any given time or who they actually are and what their preferences and habits are.
Shaheen Shaw – local legend – and he can forecast pool sizes with his eyes closed
Local presenters often wax lyrical about the ability to accurately predict the size of the expected pool when carry over amounts are added to it, but this should actually be alarming as it clearly suggests a forecast based on extremely static customer interest.
With an online based model aimed initially at new customers and later also the conversion of the existing customer base the following key information would become available which would also include the information mentioned above.
- Number of customers
- New customers
- Active customers and level of activity
- Product preferences
- Average spend per customer
- Essential personal information
- Increases or decreases in spending per customer
An online model would provide access to essential customer data over and above purely turnover data and make the available information far more useful for decision making and monitoring of the effectiveness of programs and products introduced.
Betting operators could do considerably more for racing and themselves by making a strategic investment in online technology and products. They could start off fairly inexpensively by offering a single new product concept on a ring fenced platform to contain costs and to monitor the impact of the program. If as successful as I am confident that it would be the initiative would pay for itself in a short period of time and would be well worth the money spent. From there the program can be expanded further as progress is achieved along the way and with the added benefit of providing a growing source to reach out to with the traditional product offering, which would be exponentially turnover positive.
The young ones
We have developed an extremely viable concept with which racing can be marketed to a more youthful customer base and the design will expose players to everything that is good and enjoyable in the game and wagering in general. It has a very strong social character with which to promote either a casual or more active wagering interest and will make skills acquisition enjoyable and rewarding.
Equine X will go way beyond any fantasy style offering as it will introduce racing as an exciting sport with a very distinct wagering component that will create up to 50% or more winners per game whilst simultaneously offering life changing prize money potential.
Racing and operators could have a buoyant time ahead despite the prolonged period of disappointing customer trends and results, but it needs to rush before the growing burden completely outweighs the profitable gains that could be had and clouds the thinking even more.
