Keeping Them Playing Your Game: Strategies for Customer
Retention in the Online Gaming Industry
Executive Summary
While the Online Gaming Industry is growing at a phenomenal rate, and should continue to do
so across the world, customer loss rates are also higher than they've ever been, and
competition is more fierce than ever. Companies in the gaming industry are frantically working
to implement strategies that will stop the mass exodus, but many companies are missing a key
piece to the puzzle of customer loyalty.
It's no secret that it's more cost effective to retain a customer than it is to attract and convert
one, but recent research suggests that most companies are not spending a reasonable portion
of their budget on customer loyalty programs, and that those that are, are spending their
money in the wrong places.
In this world where global competition is growing by the minute, and where comparable
products and services are available to any customer who cares to look, encouraging customer
loyalty and cutting down on customer loss - or churn - is paramount to building your business
and growing your profits. Business literature is rife with suggestions that boil down to providing
good customer service and promotional rewards. However, these old-fashioned retention
strategies and others involving barriers to leaving and simplistic points and rewards programs
are no longer enough to guarantee customer loyalty, since customer service is not the number
one predictor of loyalty. Nowadays, it is imperative that business managers and customer
retention experts understand what makes customers come back for more and implement a
three-stage plan to maintain customer purchasing and activity.
In this white paper, I will examine the crucial role of customer loyalty in the online gaming
industry. But more importantly, I will discuss the steps to improve retention and loyalty that, if
applied to the right customers, will improve profits.
1. Understand the relationship between engendering habits in customers and excellent
customer service
2. Focus major efforts in customer satisfaction on new and recently acquired customers.
3. Use value propositions to satisfy their needs and reinforce playing/buying habits
4. Prevent dissatisfaction/churn from occurring with habitually committed customers.
Understanding these points and following these steps will turn your customer retention
program into a highly focused, highly effective strategy for growth and profit. You'll have a
better understanding of what makes your customers come back again and again, which
customers to target, and where to invest your money appropriately. This will enable your
company to grow faster and earn more profit.
The relationship between customer's habits, customer service, and customer loyalty has been
proven by the experts, now it's time for you to become the expert on customer loyalty in your
company. Read on to discover the key to making your loyalty program a success.
The Argument for Customer Loyalty
Experts in customer loyalty agree across the board that loyal customers stay with a company
longer and buy more frequently. Frederich Reichheld, author of The Loyalty Effect and Loyalty
Rules, reports that loyalty is an excellent generator of revenue and profit because loyal
customers tend to spend more, refer other customers to your product, and cost less to serve. In
fact, those companies who lead in loyalty tend to grow faster - almost twice as fast as the
industry average across a number of industries. Additionally, because of the costs of marketing
and promotions, keeping a customer costs substantially less than acquiring a customer;
according to recent market research, the average company has a 60-70% percent chance of
converting a sale with an active customer, a 20-40% chance of conversion with a 'lost'
customer, and only a 5-20% chance of conversion to a prospective customer.
Indeed, leaders in the loyalty industry claim that loyal customers are, perhaps, the most
important part of growing and improving your business. Besides increasing total profitability
and total revenue, loyal customers tend to refer friends and associates more often - thus
growing your total number of customers, and they tend to give feedback more often which
helps you improve your services and products.
It's not difficult to see that a company's best chances for more sales comes from customers
who are already active with your company, so there can be no doubt that focusing on
understanding these customers and their needs and developing a program to retain them will
be the most important factor in your company's growth and profitability over the long term.
The Role of Customer Service
It cannot be denied that excellent customer service is imperative to any customer loyalty
program; after all, with each phone call, complaint, or customer communication, your company
has the opportunity to shine with a customer in a tangible way that will keep them wanting to
work with you. Walker Information reported that factors that have a strong connection with
loyalty attitudes and behavior were:
•
Attitudes about the brand, quality, and focus on customers
•
Brand Images
•
Customer Experiences with product quality, purchase process, and support
Each of these factors is at play whenever you provide your product or your customer service,
it's obvious that sub-par customer service will only lead to customer loss and will certainly not
support attempts to implement a loyalty program. Now a loyalty manager might say, "We have
great customer service and our customers are happy with our product, so our loyalty program
is working." Not exactly. Since many customers report that they leave companies because they
feel they're not treated well or because they have been ignored, customer service should act as
your plan for doing two important things: keeping your customers' needs met and keeping
them from leaving your company.
But neither of these roles of customer service keeps them coming back to make more
purchases. What is it that makes customers return to your games or products again and again?
In a word: Habit.
The Role of Habitual Behavior
The simple fact is that people are creatures of habit. In 2006, Jolley, Mizerski and Olaru
published extensive research that closely analyzed the motivations and behaviors of online
gambling customers. Their research revealed that regardless of other factors including moneysaving promotions, newer games, and points systems for rewards, the number one factor that
determined whether or not a player would return to the same game was whether or not they
had played it at least once before. In cases where the player had played a game more than
once, they were even more likely to return to it again and again.
The chart below shows clearly that those customers who had played a game even once had a
higher chance of returning to the same game that they had already played, despite being
tempted with flashier games, monetary rewards, and points redeemable for merchandise.
Those customers who had played a game more than once showed a significant tendency to
return to that game, regardless of the same temptations; respectively they returned 61.5%,
54.24%, and 63.18% of the time depending on the reward for changing games. However, those
customers who had never played the game before were clearly more easily swayed away from
the game in question.
Obviously, if you've gotten a customer to play once, you've already won half the battle; if you
get them to play again, you are beginning to cement a habit in their subconscious minds, and if
you get them to play a number of times, you are well on your way to having created a loyal
customer who will not be swayed by another company's newer games, promotions, and
rewards. It stands to reason then, that an effective player retention program must strike a
balance between engendering customer habits on the front end and providing superior
customer service on the back end.
The Keys to Player Retention
The most effective customer loyalty programs thrive on a three-step process that determines
which customers to focus on, creates an atmosphere that encourages habitual use of your
website or game, touches base with customers in a human way to meet their needs, resolve
complaints, and keep your company or game in the forefront of your mind. When you create
your company's ideal customer retention program, make sure that it includes the following
three key steps:
1. Find Them: Acquire customers and determine which are the most valuable.
2. Engender Habits: Implement tangible strategies for drawing back those valuable
customers - get them to click your button again.
3. Keep Them: Focus customer service strategies on meeting customer needs and
preventing them from 'churning.'
Find them: You've probably already got a system in place to do this; you're reaching out to
potential new customers through advertising, promotions, click-thru links, and any number of
other strategies to draw a new customer in. Obviously it's a good idea to keep this up, and once
you acquire these customers, pay attention to what they do on your website: How much money
did they spend? How long did they stay on your website? Which games did they play, and how
much were their bets. This information from initial customers will help you with the second
part of this key: determining your most valuable customers.
In order to determine which customers are most valuable, you will have to examine the
answers to the above questions and combine that information with your market research about
your most important demographics. Are your customers most likely to be professional males
between the ages of 25 and 35? Or stay-at-home Moms between the ages of 35 and 45?
Whichever demographics include your most important customers, when a customer from that
demographic appears on your website, put them on your MVC (Most Valuable Customers) list
and arrange them according to their spending and browsing habits. This list will become the list
of customers you are focusing on to engender habits that will be profitable for your company.
Engender Habits: This is the part your competitors are missing. When it comes right down to it,
the flashiest games, best promotions, or even the best customer service are not what it takes to
get your customer to 'click again.' The best predictor of future behavior is past behavior, and if
you can draw a customer back in to play your game even once, you'll be well on the way to
making them a customer again. Get them to play your game two or three times, and you've
earned yourself a loyal customer. Strategies for engendering habitual playing will be discussed
in more detail below.
Keep Them: Once you've targeted customers and have gotten them into the habit of playing
your games, it's time to focus on customer service. Is there a server problem keeping them
from getting to your game? Make sure to have plenty of phone lines and chat lines open where
customers can talk with a real, live person. Fix the problem as soon as possible, and make sure
to reward your customers for their patience with a free game or free currency so as soon as
things are up and running again, they can go back to your game immediately. Has a game
malfunctioned and reduced your customer's amount of currency or kept them from a reward
they earned? Make sure there's someone immediately available to talk or write to them, and
get their currency or functioning game back to them with interest. Whatever the problem is,
and whatever your solution is, do it quickly, courteously, and make sure to always keep in touch
with the customer, even if you're only telling them that you're looking into the problem and will
give them more information as soon as possible.
Remember: engendering habits keeps them coming back, excellent customer service ensures
that they won't leave if there's a problem.
The question remains, though, how do you go about creating habits in your customers?
Strategies for Engendering Habits
The goal is to the get them to log on, but you can't be right there with them encouraging them
to sit in front of the computer and log on to your website. Fortunately, you don't have to be in
the same room with them, if you've already gotten into their head. Whenever you reach out to
your new, valuable customers, you're planting a seed in their subconscious mind and creating a
feeling and attitude about your company. As long as the customer trusts and feels positive
about your company, they are more likely to type in your URL as opposed to anyone else's.
There are a number of ways to go about planting the seeds of trust that will grow into the tree
of habit:
•
Keep Your Company on Their Mind
•
Get Feedback
•
Use The Personal Touch
Keep Your Company on Their Mind! This is potentially the most important aspect of
engendering habits, and it's a two-fold process. First, you must make sure that your game, logo,
company materials, or anything that will remind customers of you is going to actually be in
front of them on a regular basis - this is where getting feedback and using the personal touch
come in. Second is to make sure that every time they interact with your company materials whether those materials come in the form of promotions, games, customer service or gifts that the customer has a positive experience with your company. This way, you are not only
embedding your company logo, name, and services into their subconscious minds, you are also
reinforcing that seed with a positive experience and encouraging a trusting, satisfied attitude in
the customer when it comes to your company. If you can get into their head this way,
customers will trust you more, like your company more, come back again, and tell their friends
about you.
Get Feedback! Any company that is truly invested in what their customers has to say, and then
acts on what they hear will create the feeling in the customer that the company is working for
them and meeting their needs. While online surveys and satisfaction emails can be effective,
the average customer is inundated with these things in their inbox and many pass right over
them. Make a real impression on your customer: have a human being pick up the phone after
your customer has made an initial purchase and talk to them about their experience: What did
they like, what could be better, and what would make them want to come back?
This strategy has a number of advantages: First, it feels like you're going above and beyond the
call of duty; you're making a human connection and you will impress the customer. Second, you
have the opportunity to receive valuable information about what your customers want so that
you can implement it on your website and in your games. Finally, at the end of such a call, you
have the opportunity to reward your customer with a free game or free currency that they can
use to play your game (with an expiration date, of course) - thus, giving them an immediate
reason to return to your game again, and starting them on the road to becoming a loyal
customer whose habit is to play with you.
Use The Personal Touch! In this era of electronic information, electronic customer service, and
touch-pads or emails to take complaints, customers appreciate and are impressed by a human
touch the most. Customers will feel like you're going out of your way if you provide follow-up
phone calls, hand-written messages through the mail, and gifts that make them feel important
to you.
The formula for keeping your customers coming back for more has a number of variables, but
the most important and impressive is the use of tangible, constant rewards that will make your
customers around the world feel like winners and keep your company name, logo, and
promotions on their minds. Every gift you send to a big spender, VIP client, or new prospect anyone on your MVC list - is an opportunity to make them remember you - even subconsciously
- to make them like you, and to make them want to keep paying to play your games.
Sending rewards such as birthday gift baskets, holiday hampers, and thank you gifts for MVCs is
a warm, human way to establish a connection with your customer. And any gift of this kind can
be stuffed with a free game, free points, or free currency - anything that will encourage them to
log on and start playing your game when they receive it. Remember, if you've gotten them to
play once, you've dramatically increased the chances that they'll play again, and if you can get
them to play twice, you've created a loyal customer, and only have to do the work of keeping
them happy.
Conclusion
In the online gaming industry, there is always going to be stiff competition - be it from newer
games with updated technology or tempting promotions that threaten to steal away your
valuable customers, there is always someone out there who wants to make all your hard work
for naught when it comes to attracting customers. But now, with the strategies detailed above:
targeting valuable customers, engendering habitual behavior, and meeting their needs through
superior customer service, you will be on the fast track to growth and profitability be turning
those one-time customers into loyal, returning customers. You'll save the money it takes to
acquire new customers, gain effective word-of-mouth marketing, and keep customers who will
continue to play your game no matter what other offers are on the table.
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GiftBasketsOverseas.com is an A-ranked, BBB-accredited company based in the United States
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References
Reichheld, F. F. (1996). The loyalty effect: The hidden force behind growth, profits, and lasting
value.
Boston, MA: Bain & Company, Inc.
Reichhelf, F. F. (2001). Loyalty rules! How today's leaders build lasting relationships. Cambridge,
MA:
Harvard Business School Publishing Corporation.
Jolley, B., Mizerski, R., & Olaru, D. (2006). How habit and satisfaction affects player retention for
online
gaming. Journal of Business Research, 59, 770-777.
Thompson, B. (2005). The loyalty connection: Secrets to customer retention and increased
profits.
Bozeman, MO: Right Now Technologies.