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Managing your risk landscape
Tue 24 Oct 2017 @ 12:02
Should lottery operators and the alternative lottery market turn to the experience of other sectors as they look to grow the industry by building more effective customer acquisition campaigns?
For years, lotteries have achieved market growth by using the same old promotional campaigns and techniques. Whether through focusing expensive spend on huge jackpots, offering 3-for-1 deals to first time players in the Alternative Lottery market, or dressing these same offers up as 70% off a £5 spend. It begs the question, how well do lottery marketers understand the needs of the new to market player in 2017?
In most cases, operators employ similar promotional strategies to each other, with only the gentlest nod towards branding. Customer volume breakthroughs have been reliant on big ad spend, heavy online budgets and even heavier jackpots. The result, a confused and noisy marketplace populated by multiple operators without clear differentiable propositions. There may be subtle differences in site design and product offering but for customers these are invisible.
The problem with a commodity market, characterised by a few big players, and many smaller players eager to gain a slice of the pie is that the quickest, easiest way to grow is to steal share. And that means cutting prices, offering deals and discounts. It’s expensive, cut-throat and everyone is doing it. From an existing player and customer perspective this is all very good news, competing operators offering brand switching deals. The result is everyone wins and everyone loses as players and customers shift from one operator to another and back again. Promiscuous customers in every market will switch all day for a better deal. But the worrying thing for the industry is that this does nothing to grow the market.
Why? Because new entrants aren’t excited by discounting. There are few potential new customers who haven’t considered buying a ticket. Those that want to play are playing. Those who no longer play have rejected current propositions because they don’t see the value in them. New entrants, at the younger end of the spectrum, are simply not excited by the propositions on offer. So, what’s to be done?
If operators start from the premise that they want trial from new players, then the very first thing to do is address customers’ attitude to risk. The biggest barrier to entry remains customer concerns around first purchase risk. The risk factors in this market are many, be it a lack of customer awareness of the branded operators, uncertainty around pay-out processes, or low levels of positive word of mouth.
New customers need the perception of risk taken away from them They want to know what they’re getting before they part with any cash. Which is exactly why sampling, free trial, money back guarantees and testimonials all work as effective trialling mechanics across a multitude of brands in many different sectors worldwide. Brand marketers recognise that customers don’t buy a product or service for the first time just because they’re going to get more of it.
So why aren’t new customers buying? Because the operators aren’t thinking about what the customers might want – not only reduced risk but clear, fun, engaging and impactful offers. Lottery marketers need to embrace change, and get out of their creative and marketing comfort zones. They need to start thinking about how they can add the 4 Is of Promotional Marketing to their current Marketing plans.
The 4 Is?
Impact; Information; Involvement and Incentive. Important as it is, for too long it has all been just about the incentive.
- Impact – The job of marketing must be to poke and provoke customers into action.
- Information – Make it easy for customers to engage by clear, simple promotions
- Incentive – make offers relevant. Look to reduce player risk by adding value, whether through gamification, experiential events, or just fun ways of generating interaction.
- Involvement – Customers are looking for more involved relationships with brands. The more involved they actually feel, the more willing they’ll be to recommend a new lottery and talk about it.
Lotteries need to start to learn the language of brands and embrace a new approach that is about building an involving relationship between customer and brand that stands apart from jackpot sizes and price offers. Carry on as is and the only winners will be those operators with the deepest pockets, those who hope to outlast their competition, and they’ll be more than happy to do so by buying market share. They can afford to play a long game. Most can’t.