A few weeks ago, I spoke about the dangers of falling into the coupon trap. You can read it here.
Today, I read an interesting email from Dennis Conrad at Raving Consulting. If you don’t know him, you should. He’s president and chief strategist at Raving and very wise in the ways of casino marketing. His email asked if Groupon-type offers are driving incremental visits or if they’re just layering on top of incentives we’ve already put out there.
I’m a little torn on this. I see the benefit of these types of channels to acquire new customers, but like most acquisition programs, we need to proceed with caution.
– Anchor pricing – If you discount the first price a potential customer sees, what makes you think they’ll ever pay anything higher?
– Overinvesting in an unknown – You don’t know what the value of a new customer is until they spend some money. Did you over-invest to get that one buffet visit?
– Layering on top of existing incentives – Are you already upside down on a visit? How many of these coupon users were already planning a trip because you had already sent them an offer based on their known value to your business.
– Forgetting what our business is – Come on folks! We’re in the casino business. We built hotels as amenities for our gamers. We built restaurants to nourish their tummies. We developed these concepts to appeal to gamers. Why are we suddenly in the hotel or restaurant business? When we forget our business, we stop realizing how much more profitable that room or table can be to us when a gambler is in it. Cash sales are great. Don’t get me wrong. They just have to be balanced for the good of increasing revenue across the board, not just in one outlet.
Here’s Dennis’ email in case you’d like to read it and give me your thoughts.
Are you in the entertainment business or the discount business? Are you giving everything away just to bring people in through your doors?