How are customer loyalty schemes changing?

Loyalty reward schemes have long been used by businesses that understand the importance of retaining existing customers and increasing customer retention levels. The programmes differ depending on the sector, but the commonality is they offer reward points to loyal customers that can be exchanged for gifts, bonuses and discounts.

The leaders in this field are obvious. Think air miles, the competitive points system that offers customers free flights for each mile they travel with the same airline. Supermarkets are another innovative sector when it comes to loyalty reward schemes. Sainsbury’s, for example, offers the Nectar card, while Tesco has its Clubcard. Both are topped up with loyalty points whenever the consumer shops at the same supermarket chain, and slowly but surely, those points can be redeemed for discounted items supplied by more than 500 different partners, including the likes of ASOS, Apple and Odeon.

And the betting industry is no different. In the ultra-competitive clamour for customer affection, loyalty schemes can be an effective method of claiming market share by retaining customers with the promise of prizes and at the same time, stopping them from leaving for your competitors.

Finding a niche

Argyll Entertainment, the UK-focused operator behind brands such as SportNation and RedZoneSports, has become the latest online gaming firm to wheel out a loyalty rewards system.

On the operator’s website homepage it says: “We believe, from operator to operator, customers are routinely presented with the same gambling products, the same acquisition bonuses and the same loyalty rewards. Operators don’t seem to place much emphasis on differentiation or engagement, culminating in an all too often flat, bland and transactional experience for the customer.

“Argyll Entertainment wants to change all that by offering its customers a new online gaming experience that surrounds the traditional online gambling product with a fun, authentic and engaging entertainment layer. We’ll still be offering a market-leading sportsbook and premium portfolio of casino games to rival the very best operators in the market; it’s just our customers will have a lot more fun playing them.”

So what is different about the Argyll loyalty scheme? The most unique element of the operator’s rewards programme is the fact customer history data has been backdated, meaning punters who joined SportNation and RedZoneSports back in August will be rewarded for historical bets that were made before the loyalty points system had even gone live.

“We’re not aware of any other operators that are offering a turnover-based rewards scheme across all product verticals,” says Argyll CEO Stuart Tilly. “The rewards platform and points calculation algorithms have been developed in-house and integrated into SBTech’s platform.

“Each product, game or website that we launch from here on in, will be integrated into the rewards platform so that points earned on ‘Site A’ are universally redeemable across all our other sites and products, similar to how Nectar or AVIS operates across multiple partner sites,” he added.

Backdating historic player information sounds like an expensive and time-consuming operation, but when you consider the alternative would be to ramp up marketing spend in order to attract new customers while competing against the UK’s biggest operators, it has arguably saved Argyll money. According to Forbes, keeping an existing customer is, on average, approximately seven times less expensive than acquiring a new one.

Incentivising play

The format for Argyll’s loyalty rewards system is a more conventional one. The operator signed a deal with Initial Rewards, a well-known gaming industry provider of promotional merchandise and rewards technology.

Initial Rewards powers the rewards platform on Argyll’s SportNation and RedZoneSports websites and also supplies branded merchandise for gambling industry brands like GVC’s partypoker and Paddy Power’s exclusive Cheltenham Festival gear.

The gifts on offer to Argyll customers are extensive, ranging from fountain pens to games consoles to flying remote controlled drones, with the more high-end items, like an Apple iPad for example, costing upwards of 500,000 reward points. On the other hand, a book on poker strategy is 10,000.

The scheme has been incentivised by Argyll as punters will earn greater reward points for riskier wagers, so a five-fold accumulator, for example, will earn players 14x more loyalty points than a single-bet selection in the same vertical.

“In the current climate of increasing scrutiny from regulators in relation to the clarity and attainability of operators’ promotions, we wanted to offer our customers a simple, transparent and genuinely rewarding loyalty scheme that allows customers the opportunity to earn whatever their level of play,” Tilly says.

A bonus alternative

His comments raise some interesting questions regarding the Competition and Markets Authority (CMA) clampdown on gambling industry bonus practices that were announced in February.

Playtech, William Hill and Ladbrokes were among the first companies to sign up to the new initiative that pledged to stop operators from using misleading terms and conditions for bonus offers that meant customers would have to play multiple times before being able to withdraw their funds.

Instead of taking the risk of being caught out by newly implemented bonusing regulations, facing a potential fine and bringing further unwanted negative media attention on the UK gambling sector, a loyalty scheme may be the best alternative for attracting new players and retaining existing customers, as indicated by the Argyll CEO.

“We’ve not launched the programme as an alternative to bonusing, but given the recent criticism the industry has faced on traditional bonusing methods, we consider our ability to be able to offer our customers a clear, easy-to-use and genuinely rewarding alternative as a real advantage,” Tilly adds.

Of course, Argyll Entertainment is not the first gambling operator to delve into the retention-focused world of loyalty rewards. Nearly every facet of online gambling, be it sports betting, casino or poker, offers players in-play bonuses, free bets and exclusive offers which should be considered rewards in their own right.

The Argyll loyalty system is still in its infancy, and Tilly has indicated that despite an initially positive reaction from customers, it is too early to determine whether the scheme has sparked an increase in new customers and a subsequent rise in revenues.

The bottom line

One operator that can genuinely attest to the effects of a successful rewards scheme on finances at the bottom line is The Stars Group (TSG). The Canadian powerhouse reported an 8% constant currency rise in Q417 revenues to $360m, with the firm hailing the continued impact of its Stars Rewards scheme, launched in July 2017, as a major contributing factor.

To date, approximately 90% of customers have opted into the programme and engagement is strong, with approximately 97% of rewards claimed. TSG, like Argyll, has also received positive feedback from the vast majority of players.

In Britain, the Rewards4Racing scheme is the most popular with UK operators. Betfair, alongside bet365, Coral and Betfred, has become the latest big name to join the programme which offers punters the opportunity to attend horseracing meetings more often.

Betfair’s brand director Stephen Mault said the deal would help Betfair increase the reach of its flagship sponsorships during the racing calendar, it is further proof that rewards programmes are indeed rewarding, not only for bettors, but also for operators looking to increase brand awareness and gain an edge in the eternal struggle to attract new customers.

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