Using Comps the Right Way
by Kristian Nygaard
Comps are a component of any Casino marketing. They represent a very immediate and direct way of incentivising good customers. Comps can be many things. One of the most common comps are beverages served to any person who gambles for a long period of time.
Meanwhile the “sky is the limit” for comps designated for the high-rollers. Complimentary transport, suites and sumptuous dinners are among the favorites. A gambler often possesses a big ego and rewarding them with complimentaries which are not available to ordinary customers makes them stand out.
Any person who gambles alot but who does not win, will still feel some satisfaction from receiving appreciation from the Casino and thus feeling that he or she has at least received something. However, just like any other Casino expenditure, comps should be carefully monitored ensuring they will have the desired effect, and that effect, should always be that the recipient plays even more.
Just like in any other well-run capitalist company a cost should always be associated with an income at the other end. Thus good comps are characterized by:
1. Rewarding good customers.
2. Making good customers becoming even better customers.
At the same time, bad comps are money that just flows away from the Casino. Please see the figures below for an illustration of the flow of good and bad comps. In order to verify the quality of a comp, one should look at the ability of providing more play for the Casino. In this aspect some comps do this in an almost direct way while others do it more indirectly and then there are the comps that do not do it at all. So that is three different groups.
Below are examples of each:-
1st Group - Direct incentive to play more:
For example, complimentary chips, access to VIP areas or other restricted playing areas, transport to Casino etc.
2nd Group - Indirect incentives on behalf of the Casino:
For example food and drink at the Casino, social events at the Casino etc.
3rd Group - No incentive to play
For example a television, flowers, cinema tickets etc.
The first group are comps that are directly linked to gambling (eg.comp chips), that only have a value when they are being used for gambling.
The second group does not guarantee the Casino any play. However, they are strong incentives for the customer to enter the Casino and thus also to gamble.
The third group is not an incentive to gamble nor to enter the Casino. However it might create a positive feeling about the Casino as a whole. Be aware that it is difficult at times to measure this goodwill, therefore care should be taken when using this type of comp.
This is however only a schematic view of the different types of comps and should be dealt with only as a guideline of the pros and cons. My opinion is that comps should always follow the customer and be designed with the specific customer’s preference in mind. Therefore it is desirable to have a way in which to evaluate the cost of a comp against the income it provides the Casino.
In mathematical terms you can use the following equation to decide this economical quality of a certain comp:
Q = U / S
S = The cost of a comp.
U = The amount of play generated by the comp.
Q = The effect in percentage
An example:
A Casino spends $150 on bringing a client from his home to the Casino and a further $35 on complimentary food and beverages. In turn, the client uses $327 at the Blackjack table. Thus the effect is 327 / (150+35) = 1.77
Any comp which has a positive effect (>1) can in theory be used. However in practice it can be difficult to measure the exact effect. Therefore any Casino executive should calculate with an error margin of around 0.25 and subsequently aim only for comps which give an effect of more than 1.25.
Summary:
Comps are an important aspect of any Casino’s marketing and can be an effective tool if used in the right way.
Comps are basically used for two purposes:
1. Rewarding good customers.
2. Making good customers become even better customers.
The basic idea is to make as many as the comps come back to the Casino. This will happen when comps effectively incentivise the customer to play more.
Two figures show the process of making the comps end up as profit for the Casino.
Finally, different kinds of comps are being presented and analyzed.
Comps are being divided into 3 groups according to their direct and indirect abilities to make the recipients play more at the Casino.
A very basic equation is used to analyze the quality of the comps.
Date Posted: 01-Dec-2002
Kristian Nygaard
Senior Consultant
ITC
