This month’s Viewpoint features a two-part interview where Dana Workman sits down with Shahar Attias of Hybrid Interaction and Marc Kenigsberg from Euro Partners. In the first part of the interview, they discuss the importance of customer acquisition vs. customer retention, how operators should balance their efforts between the two, and the operators’ responsibilities.
Dana: Operators face a battle when it comes to customer acquisition and retention and where to focus their efforts even more complicated is the question of who shares the responsibility of these or do they at all.
To find out more, I spoke with Shahar Attias of Hybrid Interaction and Marc Kenigsberg from Euro Partners.
Dana: I’m here with Marc Kenigsberg of Euro Partners, I’m just gonna go ahead into it. Which is more important, customer acquisition or customer retention?
Marc Kenigsberg: I think that they’re equally important as a concept. The question is, in our industry today retention has become more important because there was such a heavy focus on acquisition. The short answer is, it depends on the life cycle of the business. However far you are in the stage of your business, that’s what determines.
Shahar Attias: Well you cannot really have one without the other cause if you won’t have new customers then you won’t have any customers to retain. However that said (inaudible) estimates pencils down the cost of bringing a new customer up to five times more retaining an existing one. On top of that, if you would like to bring a new player to the same profitability levels of existing players, you would need to pay up to 16 times more. As such, it would be much more profitable and economical to just retain the good players rather than invest more resources into bringing new ones.
Dana: How should operators balance their efforts between customer acquisition and retention?
Marc: I think it depends on where you are as well. If you’re looking to build new brand then you need to focus very very heavily on acquisition. But the two are completely inter-related. If you don’t have retention you won’t be able to spend on acquisition and if you’re not acquiring you have nothing to retain so ignoring one or the other, you’re gonna lose both.
Shahar: First of all you need to differentiate between the types of acquisition. You’ve got CPA which is Cost Per Acquisition, those types of deals means that you fully pay for the player before you even started to make money for you or even register or deposit. And then you’ve got the Revenue Share Deals. With the CPA deals, it’s a lot of heavy weight on your budget when you just start your acquisition efforts. With Revenue Share Deals then it goes along the way according to how you develop with your business. As such, it might be more effective or profitable to new businesses to begin with Revenue Share Deals on the acquisition side and think less about the retention. That said you can have simple yet effective retention strategies that goes hand in hand with your business. Going together with it, you don’t need to have all the bells and whistles like the big operators but you could have something that is simply relevant and adequate to your database as long as you narrow players correctly.
Dana: What are the best ways for operators to acquire players and keep them playing?
Marc: Big question. Ultimately there are a lot of acquisition channels but I’d say the best way to acquire players is to work with channels that make sense but to have good retention. As ironic that is, the customer behavior that you have and the way you interact with people is gonna determine if they stay so treat people like people, treat each person like an individual and don’t look at them as numbers on a spreadsheet and that’s your best chance.
Dana: Of course.
Shahar: This is how it works, when you communicate messages to your players, to your existing players, you don’t go and say ‘We have the best acquisition efforts’ or ‘We have the hottest affiliate managers in our team’. What you do, you communicate your better success stories that you’ve had within your operation. You’re big winners, you’re VIP scheme, the perks you give in your promotions, all of those, you make them USP’s for your operation and then you utilize this in order to give them back to your affiliates as converted metrics. Meaning, you can tell them you do all of those stuff that you’ve done using your retention activities. You can have a better LTV or Lifetime Value of the player. You have an improved conversion rates, you’ve got a much better retention in terms of month-to-month attrition and stuff. This is how it works.
Dana: Is it the operator’s responsibility to retain good players or is it an affiliate’s responsibility to send good players versus bonus hunters?
Marc: I think both. If you’re working on CPA as an affiliate, then you don’t really care and if someone’s gonna pay for that if you want it to continue long term seeing good players. But if you’re not retaining the players as an operator then don’t expect affiliates to keep working with you. And I think that that’s something that’s been ignored a lot in our industry and we hear this balance always, ‘Which is more important, this or that? Which is more important, acquisition or retention?’ and I think as we’ve become more mainstream as an industry and margins have become important, we’re finally growing up and realizing that…
Dana: Everything works together.
Marc: Yeah we actually have to do everything.
Shahar: Operators fully own the players. Period. So, while affiliates end the traffic, once the player has converted and become a player, it’s the operator’s responsibility to take them from this point and onward through conversion and for retention and for depositing and all of the hustle. Therefore, you cannot as an operator say, you know, ‘just bring us the best players’. It’s your responsibility to know your players, market to them relevant messages and improve retention using tactics that you learned can fit your audience.