In my previous columns I have presented my thoughts on the most important success factors of 2020’s lottery business. I have written about digitalization of the lottery business and the need for new gambling verticals to be added to product portfolios. These are topics that every self-respecting lottery should be interested in. Now I will continue my journey into a little “deeper water” with the third theme. I have noticed that many lotteries are lagging in one specific area which is data-driven management.
When I started in the gambling business almost 30 years ago, the only metrics to follow in the development of the business were turnover and the number of coupons played. Sometimes we tried to find out how many players we had through customer surveys.
My former employer, Veikkaus, has invested a lot in collecting and analyzing business data for the long-term. I took it for granted that all other lotteries also developed or purchased similar data management systems. I have learned that this is not the case after we established in the spring with my colleague the gambling consulting company which aims to serve lottery companies.
Unfortunately for the weakest positioned companies, the level of utilization of business data is still at the same level as we had it in Veikkaus in 1990s.
Why is it so important to gather data? I should use the term correct data because there is no sense to gather data which you can’t utilize. Gathering data is important so that we have the possibility to lead our company towards better business results.
Many companies have written phrases “the best customer experience in the industry” or “satisfied customers” as the goal of the strategy. But how do you lead your business to reach those goals? How do you monitor the impact of your own measures on the achievement of strategic goals? If the correct business data is not collected or analyzed, management or monitoring cannot succeed.
At this point, it should be noted that unfortunately in the case of many lotteries it is not possible to collect the correct data. If the digitalization of business that I wrote about earlier in my column has not been done – the situation is bad. An estimate of a company’s ability to leverage customer data is the proportion of turnover that it generates from identified customers. You can’t run a business based on data if most of gambling happens in a way whereby you don’t know who has played those games.
Let’s look at those companies that use some sort of customer authentication and collect the data. Many companies think the situation is in order because “we have CRM systems in place”. That’s only the first step towards data-based management. The main question is whether the most important components relevant to management have been identified, and whether this data is collected comprehensively and utilized all the way to operational operations.
The world is full of great theories about management by data. It is possible that the company has developed great segmentations and customer value calculation models to support management, but they still cannot be utilized.
In the big picture, the situation seems to be such that the base is built to a good or at least satisfactory level, but its use is deficient from the beginning and its benefits cannot be transferred to the operational level. Of course, in many cases, there are already fundamental shortcomings in the basis of the system, which makes it impossible for you to manage operational activities.
I challenge every lottery director to look critically at their own company. Do we know our customers and business? Can we predict at an adequate level the impact of our actions and reliably measure them? Do we have the ability to steer operational activity towards a better business? If the answer to any of those questions is “no”, it is now time to take a break and think about how to get the situation fixed.
When we carry out product renewal, marketing or actually any operational activity, each operation must have defined goals. What customer segments and profiles are we aiming for? How much is the measure aimed at increasing the customer values of different groups’ accounts and how much we reach new customers?
The numerical objectives must be clear and closely monitored. Based on what exists, you have the opportunity to learn and find and further develop more functional products and concepts. The amount of money customers spend on gambling is usually distributed among different gambling companies.
It is extremely important for lottery operators to understand whether the euro played on a new product has previously been spent on another of their own products, games from another gambling company, or whether it is a whole new gambling spend. If sufficient data on gambling is not collected, it is not possible to make such a reasoning.
With correct data, companies can achieve the benefits of both business and responsible gaming. With the help of data, it is possible to target offerings to the right customer groups and thereby generate more sales. On the other hand, the data can be used to better identify potential customers with gambling problems and to reduce or even stop their gambling.
I understand that getting to the optimal situation is an extremely long and challenging project. Sometimes, however, the first steps have to be taken. Without a sufficient understanding of the key data of your business, it is not possible to succeed in the fierce competition of the 2020s. The goal can be to make the data a tough and productive helper for you. The positive thing is that benchmarking information and other help is available to achieve this goal – also directly from me!
Jari has enjoyed a long and successful career in the gambling sector, having cut his teeth in the horse racing and betting business. He has spent the biggest part of that time with Veikkaus, the Finnish national lottery and gambling operator, where he was responsible for horse and sports betting business. While there he started digital sale channels, introduced the first customer based strategy and took care of international relationships and businesses. Having resigned from the lottery in spring 2020, he established The Finnish Gambling Consultants Ltd and is now helping lotteries and other gambling operators and suppliers to further develop their businesses.