What Gaming Can Learn From A Big Box
What is Omnichannel?
Omnichannel is the idea that we live our lives within and between something that’s digital and something that’s physical. We do this in countless places in our lives—from shopping, to dining, to watching sports. Why should our experience with the gaming industry be any different?
Retail and restaurant chains have led the way in providing improved customer experiences by connecting the in-person experience with mobile apps, loyalty programs, and personalization. Sam’s Club is a great example of this migration:
The traditional channel for a Sam’s Club trip meant a drive to the store. A customer would dig their Sam’s Club card from their physical wallet and show it for entry before loading bulky items into their cart; the customer would then unload the same items onto a belt at check-out before presenting their Sam’s Club card and payment method to the cashier, and then load all items back into their cart and head for the door where they show their receipt to an employee and place the items into their car.
In 2014, Sam’s Club introduced its “Scan & Go” method (mobile channel) to its customers. Using a mobile app on their phone, customers can present their Sam’s Club card for entry, scan items they put into their cart, and check out via a credit card stored in their digital wallet, skipping the long lines and additional waiting and head right to the door where they present their digital receipt and go.
Other customers may choose to order items online (platform channel) and pick them up curbside, foregoing entry into the store, or have items shipped directly to them, eliminating the in-person visit to the store altogether.
Not all customers want to take full advantage of the convenience of the mobile and platform channels; some may choose to use the app to store their membership card (loyalty channel) but forego the scanning and head to a point-of-sale for payment with their physical credit card or with a stored card in their digital wallet. Still, others may choose to follow the traditional channel for some items but use the mobile and platform channels for others.
In addition, Sam’s Club allows customers to personalize their experience through features on their mobile app, including shopping lists, placing frequently purchased essentials on a customized home page, and directing customers to instant savings on items that may interest them. Through the app, a customer can search for a product, check its availability, and be directed to the item’s location within the maze of aisles. Sam’s Club’s omnichannel experience allows customers to interact with the business in the way that is most comfortable and convenient for them.
Growth Through Digital Technology and Payments
Large retailers like Target and Walmart not only invested in digital channels but also leveraged payment products as part of their innovation strategies. In 2022, Walmart mentioned omnichannel 48 times in its earnings reports. As part of its strategy, Walmart created a subscription delivery platform called Walmart+. This platform provided subscribers free delivery, free shipping, and member prices on fuel. Walmart combined its Walmart+ effort with a trio of payment methods—two credit cards and a reloadable debit card—to drive increased loyalty. These cards offered customers 5% discounts on purchases and rewards earnings.WALMART HAS BECOME A TRUE OMNICHANNEL ORGANIZATION THESE PAST THREE YEARS… – Walmart U.S. President John Furner
In addition to the increased loyalty that Walmart saw from customers who used these payment platforms, it also saw tremendous savings on interchange fees. The three payment methods associated with Walmart+ could be processed as closed-loop transactions. A closed-loop transaction does not go through the major card network rails. As such, merchants do not pay network interchange fees for the transactions, resulting in material savings.
Target focused its efforts only on one payment method. Target created its RedCard as a reloadable prepaid card that allows customers to load funds via the automated clearing house (ACH), a substantially cheaper load than credit or debit cards. Target offers customers a 5% savings on all purchases for customers who use their RedCard for purchases at the store and online. Target has reported that customers who use RedCard increased their purchases by 50%. A full 20% of Target’s revenue now comes via RedCard purchases, amounting to nearly $20 billion in 2022. The savings on interchange fees using a closed loop like the RedCard would be roughly $500 million on those transactions. Target is expanding RedCard’s capabilities to offer cash back at eligible restaurants and gas stations. In addition, the Target Circle app can be used in stores for additional savings and bespoke promotions.
Target, Walmart, and other big box retailers have successfully used digital payments tools as part of an overall strategy to increase customer satisfaction through omnichannel convenience. FisGlobal reported in 2021 that “digital wallets accounted for nearly half (49%) of global e-commerce transaction value,” outpacing credit cards. Customers are linking their bank accounts, debit cards, and credit cards to their digital wallets.
Gaming can and should use these same digital payments strategies to increase patron satisfaction and engagement. Closed-loop wallets allow customers to fund their wagering accounts (internet and sports betting channels), load credits on a machine and buy chips at a table (cashless gaming channels), and load their winnings back to a digital wallet. Patrons can then use their wallets at a spa, hotel, valet, restaurant, or entertainment venue, providing the full omnichannel experience.
Leveraging Mobile Apps to Drive Loyalty and Personalization
No one is better than the gaming industry at rewarding loyalty, but there are lessons to be learned from the restaurant industry. In the service sector, restaurants have led the way in omnichannel interaction. Nation’s Restaurant News reported that in 2021, nearly one-fifth of restaurant chains grew their same-store sales by double-digit percentage increases. Meanwhile, their store counts either remained stagnant or shrank. Investment in digital technology was the key. Innovation increased ways for restaurants to reach their customers when not in their stores through various channels such as a well-timed text message, social media campaign, or a notification through an app.
According to the Loyalty Report conducted by Paytronix, “top loyalty customers are foundational to a restaurant’s” bottom line; loyalty members visit more often and spend more than non-loyalty members. The 2022 Restaurant Friction Index, a PYMNTS and Paytronix collaboration, showed that 57% of restaurants offer rewards and loyalty programs, and 41% of consumers say these loyalty programs encourage them to dine with these restaurants.
Within the first six months of the launch of McDonald’s loyalty program in 2021, nearly 30 million customers enrolled and 21 million active users earned rewards. Their “secret sauce”: personalization. The personalization for McDonald’s was enabled by a review of a customer’s prior order to build individualized experiences for that customer. The in-app personalization increased digital customer frequency by 10%, and loyalty members showed higher satisfaction with the brand. Building experiences based on a patron’s prior history is not new to the gaming industry; many top casino resorts have made it an art form. Gaming companies are now taking the loyalty concierge model developed over decades of service and offering it to customers through a mobile app, customizing offers and experiences based on the customer’s preferences.
LOYALTY IS THE SINGLE BIGGEST DRIVER OF DIGITAL ADOPTION… – McDonald’s President and CEO Chris Kempczinski
In 2022, more than 80 million Americans visited casinos. Data from Sightline’s Mobile+ apps, which are live at more than 100 properties, shows that roughly 4 million casino visitors use apps while visiting their favorite properties but aren’t typically engaged with the property once they leave. By better understanding individual customers’ habits through the data provided through a mobile app, gaming operators can deliver a customized experience to increase loyalty and retention.
Tying Loyalty and Money Together
Borrowing the successful templates for payments and convenience created by retail and combining them with the loyalty and personalization of restaurants will be the next phase for gaming innovation. Engaging with gaming customers at every level through all available channels personally, meaningfully, and conveniently will drive loyalty and retention. An omnichannel gaming experience will allow a patron to move seamlessly from a table to valet to check out and everything in between for an optimal experience.