In the first instalment of an extensive two-part blog, Xtremepush Senior Account Executive Brandon Asgeirsson talks about how igaming is rapidly increasing in popularity across the US, with more states deregulating and presenting new markets for operators.
Similar to the gold rush of the 1800s, there’s an air of excitement throughout the country and the land of opportunity is experiencing an influx once more. The growth potential of the industry, just like the gold rush, is massive. According to analysis by Data Bridge Market Research, the market in the US is growing with a CAGR of 8.9% and is expected to reach $54.3bn by 2030.
But given the market opportunity, competition is high. Companies are chomping at the bit to get share of the market and acquire as many players as possible. But this presents a problem in itself.
The focus on acquisition is causing a lot of players to jump from one operator to another rather than remaining loyal to brands. Operators are forking out a lot of money when it comes to getting players on board with their app or website. We’ve seen companies offering deposit match-ups of $300, or sign-up bonuses and free bets of up to $3,000.
Although it’s still a relatively fresh market, operators need to shift their strategy from aggressive acquisition to nurturing existing relationships and building brand loyalty to avoid leaving money on the table and to increase profit margins, efficiencies and returns.
The current state of marketing within igaming in the United States
The US market is one that is still opening new doors on a consistent basis. The gradual deregulation of gambling across each state means that there is always a new opportunity on the horizon.
As new markets open up, new audiences enter the arena. These audiences will be made up of different types of players. Some might already be well-versed in the industry and have gambled on numerous occasions. Others might be more seasonal players. And you’re also likely to get an influx of brand new players who are yet to make their first bet.
In episode five of the Experts in the Room podcast, we were joined by Siska Concannon, Co-founder and Chief Marketing Officer of Affiliated Sports Fans. When chatting about how companies should engage with customers in different markets, Siska drew an interesting comparison:
“When it comes to trying to get a foothold in the US market and engaging customers, I liken it to Coca-Cola. In every single country the recipe for the drink is slightly different. We can all agree that we like drinking Coke, but it becomes very relevant to that market. Even the advertising and messaging is relevant to the cultural elements of that market.
And it’s no different in the gambling industry, particularly in the US market. There are nuances in how you address and acquire customers, but also how you retain them.”
Each new state that opens its doors to gambling regulations will come with a new market that needs to be communicated with in a different way.
Operators will be trying to get these players onto their app at the first opportunity they get. However, what’s happening within the US right now is that there’s a massive emphasis on acquisition and not enough on retention, which could come back to bite operators.
According to Forbes, the cost of acquiring a new customer can be up to seven times that of retaining a customer. Brands would be remiss to forget about their players once they’ve got them onto their website or app. If anything, that’s where the journey is just beginning.
Of course, acquiring new users plays a key role in growing any business. But player retention is where you begin to build that meaningful relationship with your players and drive more predictable revenue whilst minimizing your costs.
A challenge for some igaming operators in the US is nurturing players continuously through the funnel when they use your website or app for one particular sport.
You may experience a spike in player activity throughout big dates in the sporting calendar, like March Madness. But it’s important to figure out how to keep them loyal to your brand beyond the major events.
This is where acquisition and retention teams need to work to align within iGaming companies. It’s all well and good getting players on your app, but if you’re losing them as fast as you acquire them then there’s a problem.
Currently, the acquisition mindset in the US market is winning. But for long term gains, operators need to switch to a more retention focussed mindset.
Why Concentrate on Retention?
When it comes to running any business, acquisition plays a major role. Without new customers you won’t get a foothold in the market and companies will struggle to survive.
But, acquiring new customers isn’t cheap. Offering bonuses and getting your brand out there through advertising comes at a hefty price. And that price is continuing to rise. So operators need to look beyond acquisition into building stronger relationships with their customers to drive marketing efficiency. Operators need to shift their mindset to retention to win in the long run.
Currently, only 4% of bettors are loyal to a particular operator for longer than a year. And, only just over 50% of players make more than two deposits. With these numbers in mind, there is a lot of work to do when it comes to nurturing players to become loyal to your brand.
In a market where competitors are around every corner, having a loyal player base is imperative for success. By providing a positive user experience and offering incentives and rewards for continued play, operators can increase loyalty and the likelihood of repeat business.
Repeat business means that those players will continue to spend with you and not someone else. Operators who are willing to put in the work on retention will reap the rewards. Retaining your players can help boost revenue as they continue to place bets and participate in gaming activities on your app or website. In fact, even just a 5% increase in retention can lead to a profit increase of 25%.
An increase in revenue can seem like the best possible outcome for operators. In a lot of cases, it is. But there is an added benefit of having a loyal player base that shouldn’t go unrecognized. That is having easier access to, and a higher quality of customer data. Operators will have access to valuable data insights that give them a deeper understanding of customer behavior and preferences. In turn, this allows them to create stronger, more personalized campaigns. The ability to offer tailored communications and promotions is a highly important aspect of retention, so understanding your customer is crucial. To get a truly deep understanding of your customer, you need to have a rich source of data that can be effectively analyzed and segmented.
It’s no secret that satisfied customers are much more likely to recommend products to their friends. The same goes for operators in the sports betting industry. Providing your players with an experience that keeps them loyal means they are more likely to recommend that operator to a friend too. Brand reputation becomes a lot stronger this way and attracts new players at the same time.
It’s always best practice to get an understanding of your rate of retention. This will give you an indication of how much value you’re driving for your players. And at the moment, driving value to players in the US market needs to be priority number one if operators are going to win in this growing market.
If you’re not retaining the players being acquired, or they’re not growing within your business, that implies there’s something off with your retention strategy.
When it comes to your retention rate, the higher the better, obviously. But generally if your rate is sitting below the 68% mark then there’s an issue that needs to be addressed.
How to Engage in order to Retain
When you are building out your player communication campaigns you need to be thinking about retention. You may be communicating with players that are only with you for a specific sport or casino game and nurturing them through the funnel to avoid losing them can be a challenge.
But that challenge can be overcome with consistent and, most importantly, relevant communication.
CRM and marketing expert, Siska Concannon said: “In the US market, whether it’s for casino or sports betting, operators need to realize the nuances in not only how they address, speak to, and acquire their customers, but also how they retain them. From the promotional approach, to the messaging, and how they look at sports a whole. They need to understand the prominent focus of their audiences and how to speak at a personal level that will resonate with them.”
So when it comes to player communications in the US, there’s a lot to understand before you hit send.
Make sure you stay tuned in to SBC Americas to catch part two of Brandon’s blog.