Thursday, Jan. 6, 2011 | 2:31 a.m.
For decades, gamblers could count on a free drink at the slot machine or, after an evening of gambling, dinner or a hotel room on the house.
This is how the joints kept their customers: Seduce them with perks.
But the recession has forced Las Vegas’ largest casinos to be more imaginative. Customers are harder to get, so the seduction has to be more potent.
MGM Resorts International is hoping this will cement their customers’ loyalty: Depending on how much you spend — not just gambling, but shopping, nightclubbing, dining and on shows — you might leverage a chance to mingle with celebrity chefs and world-class boxers, appear in a Cirque du Soleil production, swim in the shark tank at Mandalay Bay or dine alongside the Bellagio fountains choreographed to the song of your choice. (Cue the marriage proposal.)
Such are the rewards that will be offered in coming months by MGM’s revamped loyalty program, called M Life and which has nothing to do with life insurance.
“People won’t be redeeming points for toasters,” said Bill Hornbuckle, who oversees the program as MGM chief marketing officer. “Loyalty programs that work involve emotion.”
Las Vegas casinos pioneered the concept of comps — freebies, discounts or special treatment for gamblers to soften the blow of gambling losses and make regular folk feel like VIPs. As loyalty programs spread to nearly every corner of the consumer products landscape, Las Vegas and the gaming industry have been behind the curve in including all forms of spending in the reward equation, however.
And today, with 60 percent of Strip revenue derived from nongambling activities, tracking a customer’s spending off the casino floor has become vital to a rewards program.
“Shame on us for not doing this 10 years ago. But we’re finally doing it,” said Hornbuckle, a 30-year industry veteran who was charged with revamping the company’s outdated loyalty program after running Mandalay Bay.
MGM’s chief competitor, Caesars Entertainment, has been tracking nongambling spending for more than a year and nongaming businesses have long rewarded people for buying many products under one roof.
Playing catch-up was difficult for MGM Resorts, which had operated each hotel like a separate company. Rather than cross-marketing or pursuing companywide marketing initiatives, staffs at each hotel worked independently from one another, answering to the goals and directives of their individual property presidents.
The gambling component of the program launches Tuesday, although rewards for nongambling spending will be initiated later this year.
Like other programs that reward customers for spending more, M Life has “tiers” with increasingly rich offers such as hotel discounts, upgrades, presale access to show tickets and nightclub access. As customers qualify for higher tiers, they will earn rewards more rapidly, the company says.
And there is no waiting for a pit boss or a rewards clerk to tell you what you qualify for or hand you a comp; loyal gamblers can swipe their cards for free entry at participating restaurants, showrooms and the like, at any one of 15 MGM-owned resorts in the United States. Eventually, rewards will be earned and redeemed at company-owned or managed resorts worldwide.
Customers will receive rewards two ways — via personalized offers viewed by logging onto the program’s website and in the form of comps members can select for themselves.
By tracking what customers spend over many years the company will offer customers perks that will come closest to matching their tastes.
Your slot-playing grandma, for instance, isn’t likely to be offered an Ultimate Fighting Championship ticket.
By monitoring the M Life card, the company will know which slot machine you played, how much you spent, what you drank while you sat there, what you were doing before and after and what you’d like to do on your next visit — or even tomorrow night. If you spent more money nightclubbing or at a show, the company will catch on that an entertainment coupon, rather than the obligatory gambling offer, is more up your alley.
“Consumers like to have choices as opposed to being told ‘this is your reward,’ ” said Michael McCall, a research fellow at Cornell University’s Center for Hospitality Research who has studied the effectiveness of loyalty programs. Rewarding customers for what they spend rather than how they spend it also makes business sense. By contrast, airlines that pioneered loyalty programs long rewarded their best customers based on the number of miles flown rather than how much money they spent, a better indicator of their value to a company, he said. (Some airlines are shifting their loyalty programs to acknowledge money spent on tickets versus the number of flights purchased or miles flown.)
As the company gets better at targeting offers, MGM Resorts runs the risk of giving away things customers might have purchased anyway, such as a free room night, or attracting hordes of bargain-hunters that could turn off well-heeled customers at its upscale hotels, he said.
Handling decreased spending tactfully is key, as many programs demote otherwise profitable customers if they don’t spend enough within a designated time period and “people don’t like it when things are taken away from them.”
Giving customers meaningful rewards year-round will be challenging because the company probably has limited opportunity to offer in-demand perks such as tickets to must-see events on busy weekends, said Barry Shier, a former casino executive and marketing consultant in Las Vegas. Instead, the company might try to steer members toward shows it can’t fill midweek or other comps it can dole out in greater quantities.
MGM’s program is an aggressive move to leapfrog competitors in attracting new customers and grab a bigger share of what existing customers spend while they’re in town, casino consultant and “Comp City” author Max Rubin said.
It’s also a necessity.
“It’s good that casinos are starting to focus on customers and not just building new things,” Rubin said. “For years it was ‘build it and they will come’ and that doesn’t work anymore.”
The company has come a long way from the days of mass marketing, and expects to significantly cut down on the mailings typically sent to gamblers who qualify for a certain level of reward.
Under the old system, “the 68-year-old woman who could care less about UFC, or frankly might be offended by it, might have been offered a free ticket” just for spending enough on the slots, Hornbuckle said.
It’s enough to make the marketing executive cringe, and then smile wide.
“This isn’t easy to do for a company of our size. But there’s a lot of money at stake.”