by Kevin Krauth | shared from Kontagent
I’ve never actually tried… and I imagine you haven’t either–with good reason. Robbing a casino is fraught with risk. Plus, chances are you’re a law abiding citizen with morals, a conscience, and a presiding interest in maintaining the rule of law.
Still, if you’re anything like me (read: an impractical day-dreamer with an affinity for Maseratis), then the thought has at least crossed your mind, thanks in no small part to Hollywood’s romantic portrayals of successful heists, à la Inside Man, The Score and, of course, Ocean’s Eleven, Twelve and Thirteen.
So when I started to think about the best way to make a lot of cash quickly, the first thing that came to mind was to rob a casino. But unlike my fictitious aforementioned predecessors, my plan wasn’t to actually go after their vaults. Rather it was to take what they already had lying around, unprotected without the need to bypass safes, guards, security cameras, and certainly without the use of bullets. I wanted to rob casinos of the very way they make money: their business model.
I know what you’re thinking: “How can taking a casino’s business model help me build more profitable apps?” It’s a fair question, after all our blog is all about data science and mobile design. But, as you’ll soon find out, the connection is more obvious than you think.
The Casino Model
Casinos are designed to make money, and they’re very good at it. How they actually do it should be familiar to anyone who has ever built or thought about building an app. Namely, they employ clever strategies across three key principles that should be familiar to any developer:
Acquisition: Attracting customers
When it comes to attracting new customers, casinos are a bit unconventional. For them, marketing dollars must do more than turn just heads. They aim to dazzle! And they do so by employing the three L’s: lights, location and limos. For mobile businesses, modeling your marketing spend after this methodology is an easy and effective way to grab new customers.
By lights, I’m referring to the far-reaching spectacle that typically characterizes a casino grand opening. As Sean Parker (made famous by Justin Timberlake) would say, “A light you can see from down the street isn’t cool. You know what’s cool? Lights you can see from SPACE!”
For mobile companies, lights are about generating buzz beyond your usual market, and then watching as customers come running to your app in droves. To do this, it’s important to not just spend the right amount of money, but also to measure the effect of your marketing campaign. By using tools like Kontagent’s acquisition tab, you can clearly track each of your different ad channels and monitor whether your “lights” are reaching the broadest audience possible.
Analyzing your revenue streams is also important. Doing so will let you know not only what attracts customers, but also how much they spend once they’re in your app.
Delta Airlines has spurred adoption of its app by promoting it across channels.
Ask any casino owner whether they would prefer to be located on or off The Strip and they’ll always pick the former. The reason is due to the “wander-in” effect. People are more likely to enter places that are close to them.
While the value of location in the real world is obvious, when it comes to apps, the analogy might not seem as apt. However, even in mobile it’s possible to take advantage of the “wander-in” effect.
How so? Take a look at Delta and Starbucks. Both companies are utilizing this concept to acquire a large mobile following by leveraging their Web and physical properties to drive customers to their app. For instance with Delta, the airline inserts relevant plugs for their app throughout their Web interface. Starbucks does the same thing, but through their actual stores instead.
In both cases, these companies are taking advantage of the property they have in order to push customers to their respective apps. Because they know that if they get you on your mobile device, they’ll be able to find out more about you and, in turn, create a more tailored user experience that will drive loyalty and extract the most customer lifetime value.
Every great mobile acquisition strategy should include a component of arriving in style. And for casinos, there’s no better embodiment of this than the limo. Limos are important for two reasons: the first is that they draw attention to the guests (and, in turn, the casino), and second, they encourage customers to bring their friends. You don’t need to be a mobile expert to see why these qualities are also good for driving acquisition in your app.
Smart incorporation of social media is vital to driving customer growth.
By offering promotions for customers to come in groups when they arrive in the app, they will already have a community of people to interact and build experiences with; this will make them more likely to stick around. In addition, incorporating social media channels (like Twitter, Facebook, Tumblr and so on) into your app and fostering activity, the extra buzz will also create a “paparazzi effect” that will generate more attention for your app. Before you know it, your mobile experience will be more crowded than the MGM Grand on fight night.
And once you’ve got all those people inside, you just need to make sure you keep them there…
Retention: Keeping customers inside
There’s nothing particularly mind-blowing about a casino’s basic strategy to make money. Getting users is logical and straightforward, as is retaining them. But what isinteresting about the casino model is the manner in which they retain users. And the first way they do this is through their atrium–something some mobile companies don’t always do well.
Build an epic atrium
Zappos’ colorful and intuitive interface is an example of a great app atrium.
If you’ve never been to Las Vegas, let me paint a quick picture: After downing a couple overpriced cocktails on the plane, you hastily grab your bags prior to being stampeded by a heavily perfumed man who just spent the last hour regaling you with stories of his previous trips to Sin City. You wander through the cacophony of slot machines and screaming babies in McCarran airport, only to arrive at a taxi waiting area that feels vaguely reminiscent of the Oakland DMV. In a fit of desperation, you agree to let a black car take you 15 blocks to the nearest casino, where you pay $65 only to be dropped off into the 110-degree heat of the Nevada desert outside your destination. And as you walk through the double doors, a wave of cool air greets you as your eyes adjust to the view inside.
As a general rule of thumb, if you want your users to stay within your app, impress them upon arrival. There is no single way to do this, but the principle holds: Make people feel free, refreshed and welcomed. If you throw a bunch of crazy ads and signup prompts at them, they’ll walk out faster than you can say “monetize.”
One of my favorite examples of a great app atrium is Zappos.
Their interface is clean, colorful, welcoming, simple to use, and easy to navigate. It immediately makes a great impression on me, and makes me want to hang out and stay awhile.
Like the Venetian’s atrium, effective apps guide customers on where to go next.
The next strategy casinos employ is something I call “strategic ushering.” Casinos are brilliant about using the architecture of their establishment to push people to the areas they most want them to go. If you were to revisit the image of the lobby at the Venetian, the only two options (aside from being awestruck, of course), are to check in to the hotel or walk further into the annals of the building, which leads you past myriad shops, restaurants, bars, and of course, eventually to the casino floor itself.
The same principles can be used when thinking about designing a wildly successful and engaging mobile app. The first step is to define your goals for the user:
- What causes a customer to monetize?
- What is the most likely feature or screen that will lead to them converting on a signup or a purchase?
- What do returning customers have in common?
By using tools like Kontagent’s newly reimagined kSuite DataMine or the recently released Cohort Explorer, you can better understand customer behavior to answer the above questions and design your app to maximize engagement by steering customers toward the features most relevant to them.
Monetization: Make customers pay big
By now one thing should be clear: Casinos know what they are doing. They are in the business of making money, and the best ones are great at it. It’s important to remember though that it’s not serendipity, but strategy that makes casinos so successful. Every transaction that occurs within a casino is the result of a very calculated, impeccably executed plan to maximize the amount of money that they get out of each patron on every visit. And that is at the core of the final principle of monetization: Casinos never miss an opportunity.
When you walk through a Vegas casino, it’s incredible what’s at your disposal. There are shops in the lobbies, slot machines in waiting areas, video poker at the bars. I’ve been to casinos where there was a reminder about their sports book next to the phone in the bathroom. You could figuratively flush money down the toilet.
So maybe that last image was a little over the line, but I think you get the picture. When it comes to app design, you may want to be slightly more discrete when it comes to keeping your users active, engaged and paying, but the ultimate goal is to understand what allows your app to earn revenue, and to make that activity as easy as possible.
Data is vital to app development, read our white paper to find out the best practices.
If you make money through advertising, you need to make sure to assess the screens on which ad clicks are the highest. If your app is predicated on customer growth, then it’s important to offer plenty of opportunities to share with friends using social media to help drive that growth. If your model is based on purchases within the app, then make sure you’re not making that behavior difficult to start, find or complete.
Of course, what’s central to answering any of the questions above is the measurement of customer behavior within your app. By employing tools like user funnels to look at conversion rates between steps in the purchase process or tracking movement between screens prior to clicking on an ad, you’ll have a better understanding of missed opportunities and drop-off points in your app. That’s where we can help.
At the end of it all, Kontagent is only successful if you are successful, and as such our entire organization is structured around helping our clients use data to build the most profitable mobile business possible. You may not feel ready to rob a casino just yet, but with the proper tools, preparation and training, we can help you get there. And when you are ready, we’ll even help you build a bigger vault!
* * *
About the author: Kevin Krauth is a customer success manager at Kontagent. A graduate of Duke University, Kevin has a passion for all things data and mobile. When he’s not tearing apart metrics in the office, he’s tearing it down the slopes of the Lake Tahoe Basin. Send him your thoughts and comments at Linkedin.com/kevinkrauth.