Is it really a Marketing Blunder at Caesars?

There has been a lot of discussion about the new "marketing" at Caesars -- both pre and post bankruptcy. Many of us are critical of the cuts in comps and offers. Some call it a blunder when Caesars has cut comps and offers. But is it a blunder?

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Originally Posted by Dan Druff

These are all big marketing blunders.

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Let me take the side of "marketing" for a moment.

I can't imagine that they haven't got it all figured out. Most "offers" and "promotions" are set to reach maximum efficiency. In other words, if they want 100 players to show up, they will offer what is needed to get those 100 players. They have their computers, they know what the redemption rates are for various promotions -- and there is no guess work involved.

Yes, there will be those who will say that particular offers are not attractive enough for them to participate. I personally will not run off to Vegas for a $400 Macy's gift card -- because $400 is not a big enough "trigger" for me. But there are probably many hundreds of others who will gladly make the trip for that $400 gift card and that's all "marketing" cares about -- filling rooms at an expected cost.

Marketing is not about keeping anyone happy except the accountants.

Now, you can question whether or not they are losing certain bigger players by capping their offers -- and the answer is probably that they are. But maybe they don't give a damn because by cutting out certain "bigger players" they also can eliminate certain costs that big players have.

What do I mean by "costs" that bigger players have? Let's consider some of the little things: robes, shower gel, slippers, razors and shave cream -- over the past year they've been cut. Do any of you remember how, about five or so years ago, you could request "7 Stars Linens" in your room? These were special sheets and towels available on request only -- but they were also eliminated.

If marketing determines that they can obtain the same profit levels catering to lower level players who don't require the extras that bigger players get -- why bother catering to the bigger players?

Let me put it this way:

If Caesars can make $1 profit on a $1 player who gets comps for a $1 player, and if Caesars makes $1 profit on a $5 player who needs comps for a $5 player, why bother with the $5 player? It's the same $1 profit, isn't it?

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Originally Posted by Alan Mendelson

If Caesars can make $1 profit on a $1 player who gets comps for a $1 player, and if Caesars makes $1 profit on a $5 player who needs comps for a $5 player, why bother with the $5 player? It's the same $1 profit, isn't it?

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You are assuming that each group is equal in size and that the profits are equal (even though the comps expenses are not). Which group, in total, brings in more of a profit? Are there more "$5 players" than "$1 players"? If there are 3X the number of "$5 players" (even with their associated comp costs) and they bring in 3X the total profit of the other group, who would you cater to? The cost of doing business has a role as you have stated, but your analogy is purely a guess without some real numbers to back it up.

Alan, you are overthinking this.

The point of marketing is to bring in business that you would not have received otherwise.

Of course, any business you bring in will have an expected profit. You need to find the "sweet spot" of marketing expenditures which will bring in more business while not wasting marketing dollars on business that would be there anyway.

So here's a few examples, only dealing with freeplay. I realize there are other forms of marketing, and I am ignoring the associated marketing expenses such as mailing the offers.

Caesars offers $100 freeplay to bring in a customer who will lose an average of $300 (not including the freeplay), and that $100 is exactly what was needed to get him to come in: GREAT SUCCESS. Total profit after marketing: $200

Caesars offers $200 freeplay to bring in a customer who will lose an average of $300 (not including the freeplay), though he would have also come in on a $100 promotion: MODERATE SUCCESS. Caesars still profited, but overspent on marketing.

Caesars offers $300 freeplay to bring in a customer who will lose an average of $300 (not including the freeplay). He would have shown up for $100. MODERATE FAILURE. Caesars did not profit, but at least did not lose any money. They might have benefited a bit from building customer loyalty, but might have also hurt themselves by making the customer "expect" offers this large in the future.

Caesars gives the customer no offer, hoping the customer would show up anyway. The customer does not show up. MODERATE FAILURE. Caesars could have brought in a profitable customer if they properly marketed to him, but at least they didn't lose anything.

Caesars offers $25 freeplay to the customer, who is expected to lose $300 (not including freeplay). The customer feels insulted by this, believing that he deserves better freeplay than that, given the amount he typically plays. He actually gets angry and vows to play elsewhere in the future. EPIC FAILURE. Here Caesars actually did WORSE than not offering anything in the first place.

The moral?

Caesars has to be careful that they are not shooting themselves in the foot with their policies and offers. It's better to give nothing at all than it is to give something insulting and/or aggravating to redeem. This is especially true for Seven Stars players, as these players are highly profitable for CET, while at the same time have fairly high expectations for treatment. So if you piss them off with insulting offers, disorganized activities, or petty rules, they will get stressed out and never return.

I keep citing the Gas for a Year situation. I cite that because it is a perfect example of CET's incompetence and poor attention to what its customers want. They had an easy way to offer this free gas -- simply by giving the customer $960 in gas cards to use when he wants. This would have been a popular promotion, while honestly not very costly to provide customer who will run up 100,000 extra tier points to earn it. Instead, they cheaped out and went the "Fuel Rewards Network" way, which they obviously get themselves for much less than the $960 in gas cards. So they thought they were being clever offering "$80 in gas per month" while spending much less on that to provide it.

But was it worth the savings?

Absolutely not.

They made the whole thing incredibly difficult and cumbersome for the customer, especially given how few stations take FRN in some areas. The FRN system is confusing and not intuitive for the average customer to understand. There are many ways the customer can "waste" his $80 per month fill-up without getting anywhere near $80 in value from it, which just irritates them and makes them feel cheated. And laughably, even the CET-owned Shell station in Laughlin didn't take FRN!

Furthermore, they communicated the policies improperly to Total Rewards employees, who then made false statements and promises to the Seven Stars customers receiving it.

The result? Disaster. Instead of the customer walking away happy he ran those extra 100,000 tier credits, he feels misled, frustrated, and lied to. And THAT is the ultimate marketing EPIC FAIL.

You can say that this was just one area of failure, but it's all too common with CET. That's the way they approach too many things. They bend over backwards to save money and/or nickel-and-dime in stupid areas which aren't likely to result in big overall savings, while these cheap-outs cause an immense amount of bad will from their best customers. And in areas they are overspending where cuts could be made with little impact to the typical customer, they keep overspending anyway.

That's not spending smart.