iGaming 2023: Is Retention More Valuable than Acquisition?

Operating in such an exciting but competitive environment means that iGaming operators face the constant battle of acquiring new players to boost their market share.

CRM and Marketing teams across the industry are notorious for prioritising this objective over everything else, often meaning retention–regrettably–becomes more of an afterthought than a priority.

Against this challenging backdrop, Dan De Souza, Director of Partnerships at Optimove, believes that with the right tools and knowledge operators have the ability to reverse this negative trend and, finally, bring retention to the forefront of their marketing strategies – thus generating larger player lifetime values and sustainable growth.

We caught up with him to hear more about his thoughts on the best way to leverage one’s CRM processes and, most importantly, hear how operators can create maximum value from the data they already have at their fingertips.

When it comes to player communications, segmentation is a useful tool that helps with engagement. Do you think, as an industry, we are making the best of this? How can it be improved?

“Everyone always claims to be doing “enough” segmentation. But what, really, is “enough”?

“In many job descriptions for CRM-related roles, we often find the promise of “ensuring messages are relevant and timely.” However, the reality once in the role is usually different; as segmentation is often rudimentary and limited by the available tools and team resources. To truly improve player communications, the global CRM community must shift towards a data-driven approach.

“Companies that fully embrace data-driven insights will allow their CRM teams to create more sophisticated segments based on player behaviours and preferences. This continuous and ongoing process can be enabled by advanced machine learning algorithms that automate segmentation and provide real-time updates based on player actions. Only then does this ensure that messages are relevant and timely.

“It should not be forgotten that continuous testing and optimization are crucial in refining communication strategies. Sometimes this is overlooked. Utilising A/B testing and multivariate testing can help identify the most effective messaging and offers for different segments, leading to improved campaign performance and better customer experiences in a highly competitive market.”

The main focus of marketing teams has traditionally been acquisition first, leaving CRM teams to worry about retention. Should marketing teams pay more attention to retention? How can this shift in mindset be encouraged or better facilitated?

“It’s a bit strange to still see the gulf between acquisition and retention strategies and programs. 

“Having sat on the operator side I know these divides are real. Different tools, different staff and sometimes even different bosses, they all create the silos which can be detrimental to overall business success. For example, the acquisition team’s most common KPI is bringing players through the door and their main day-to-day tool would be an Income Access-like platform. Whereas retention teams will use a tool like Optimove and look at player KPIs, separate from the cost of acquisition. Most of the CRM teams do not have access to their counterpart’s systems and subsequently, they struggle to marry up the data.

“Breaking down these silos and promoting collaboration between marketing and CRM teams is crucial.

“It’s true that acquisition programs have been the go-to move in the iGaming industry, as new customers are essential to kickstart a business. But with rising acquisition costs, regulations and competition, operators are realising the importance of retaining and nurturing their existing customer base from the get-go.

“Cross-functional teams should have access to data on the cost of acquiring individual players, in addition to the more usual transactional data – such as deposits, wins, and losses. This allows them to accurately assess the true net profit per customer and identify the most valuable customer segments. To this end, utilising Optimove–which consumes the player’s cost from Income Access (or similar tools), and additionally employs a black-box algorithm to calculate Future Lifetime Value scores on a customer level–can be highly beneficial. 

“By purposely combining retention and acquisition as part of a standardised marketing strategy, brands will achieve several benefits:

  1. Enhance acquisition efforts with rich customer data, identifying high-conversion probability and valuable customers.
  2. Target high-value customers.
  3. Increase ROI on retention activities by incorporating acquisition data and calculating ROI for each customer.
  4. Create customised retention programs based on CPA to maximise profits.

“Encouraging marketing teams to focus on retention, alongside acquisition, enables a balanced approach that optimises the customer lifecycle. This shift in mindset and cooperation between departments can drive sustained growth and profitability for iGaming brands, leading to long-term success in the competitive market.”

Most CRM teams, usually judge and categorise players based on their deposit value. Do you think this is comprehensive enough? Should they be looking at other factors and why?

“Businesses typically focus on profitability, which has led most CRM teams to concentrate on players’ deposit values as a way to determine potential expenditures. 

“Let’s take two customers whose lifetime deposits sit at £1k, for example. Customer A deposits £200 once a month and has had a generous 50 per cent bonus to date, as compared to a nominal Customer B, who deposits £25 a week, never takes a bonus and has been a loyal customer for a longer period of time. If these customers received the same £20 bonus, it wouldn’t be optimal for either of them, as player A would be receiving a 10 per cent kick-back vs. Player B who is getting an 80 per cent incentive. As this example demonstrates, it’s important to take into account more factors than just players’ deposit values to determine customer value.

“Working alongside CRM marketers for many years I saw the shift towards ‘smarter’ marketing. For example, adopting RFM models (recency, frequency, and value) to segment players more effectively. Whilst this manual approach had its merits, using a tool like Optimove allows marketers to automate customer segmentation (without the need of having a BI team member assisting you), offering a more comprehensive view of player behaviour. Instead of only looking at deposits to categorise customers, marketers can consider factors like GGR, favourite type of game, day of last activity, average bet size and other key metrics, which may be more indicative of a player’s total and comprehensive value. 

“With compliance laws like deposit limits and others on the horizon, customer retention will become even more critical. 

“Every player holds a unique value. Gaining insights into player behaviour, and ensuring a retention long-tail can be a differentiator. By overlaying data on the likelihood of a customer returning with acquisition costs and future value scores, CRM teams will better categorise players and facilitate further segmentation. However, it’s essential to strike a balance between the number of segments created and the value they provide. Even using automation, creating too many segments without a proportionate increase in value can lead to higher content creation costs without significant returns.”

How scary could AI be for CRM marketers?

“The answer lies in understanding the tasks marketeers assign to AI. AI excels in providing information and suggesting potential solutions, but still requires human ‘engagement’ for decision-making and bringing forth cross-functional strategies.

“I’ve worked in multiple teams where the volume of manual tasks connected to CRM is prohibitive. This is where AI can help by optimising marketing campaigns and simplifying marketing ops workflows, while at the same time boosting team and employee performance and interest. 

“But think of it this way: At Optimove, AI plays a significant role in predicting future value scores, creating new segments, and mapping customer journeys which are constantly changing. So AI is already changing the game and becoming an increasingly valuable tool for marketing teams, revolutionising the way businesses understand and engage with, and target, their customers. 

“AI has massive potential to elevate marketing productivity. Instead of replacing marketers, AI should make them better. While AI can be a powerful tool, it should be used strategically and in conjunction with human expertise.”

Editor’s note:

After speaking with Dan, it’s clear that most iGaming operators typically focus on profitability, which has led the majority of CRM teams to concentrate on players’ deposit values as a way to determine potential expenditures. 

In a key factor, Dan believes that this needs to change as it takes focus away from retention-related activities and only shortens player life cycles in the long term.

Through better segmentation, building robust player profiles and–most importantly–taking full advantage of the latest AI technology emerging on the market, Dan believes we, as an industry, can finally start to reach our true player engagement potential and ensure the sustained growth of our iGaming sector.

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