How do lotteries attract new players and retain existing ones? Jennifer Welshons, Scientific Games’ senior vice president marketing, explains.
While there are many complexities, Scientific Games’ global Marketing & Insights team has experienced three core principles of marketing that led to their customers’ success: understanding the why behind behaviour, making sure the lottery offers and creates awareness of products that meet those whys, and implementing a robust mechanism to track and engage these efforts.
#1 Motivation ignites behaviour
In the US, 70 per cent of adults play a lottery game annually and 52 per cent play monthly. That’s an impressive number of engaged consumers. So, what’s different about non-players?
Jennifer Welshons, SVP marketing at Scientific Games, breaks it down. Why do some people buy lottery games and some don’t? What inspires that buying action? To motivate that action, we need to understand what happens BEFORE the behaviour takes place so that we can create and market game entertainment consumers want.”
On the surface, the difference between a player and a non-player is a behavioural act: either I’m purchasing a lottery game or I’m not. To understand players, Welshons uses a framework that makes sense of a lot of disparate information.
“Most in our industry look to classic groupings of players – or segments – like gender, age, life stage and behaviour. All have relevance in marketing, but they don’t get to the heart of the why,” she says. “Why someone buys a lottery game is grounded in their personal motivation of the experience they value from that product.”
“We cannot look at behaviour alone – purchase or no purchase – and assume non-buyers are a homogeneous group. There are lots of whys behind the act of not buying,” explains Welshons. “Lotteries trying to motivate less engaged players must determine the group’s whys, gauge their level of desire to fulfil those whys, and let them know there are games they’ll enjoy.”
Scientific Games uses motivational-based segmentation to guide lottery marketing programmes. One lottery’s segmentation study identifies eight segments of consumers whose behaviour to play or not play is driven by entirely different motivations.
Of these player segments, the four in blue represent significant opportunities for the lottery based on the whys of the people in these groups. The four grey segments represent more limited opportunities because of their whys, which are either less subject to influence or focused on other areas of life. To engage this group, the lottery must determine the cost of acquisition and likelihood of retention to assess their lifetime value.
A simple example of how motivations link to behaviour is comparing players in Segment 2 to Segment 7. Segment 2 dreams of a better life – not ideal or wealthy – that is more stable and consistent. They get more out of playing several types of lower-value games with the hopes of winning something that may pay off a bill or provide extra for that month’s budget. Meanwhile, Segment 7 is interested in winning, and winning big, it’s all about cash to fulfil dreams of a wealthy lifestyle. While both groups may spend $10, their motivations and product choices are different.
“With motivations as the main classification of segment grouping, behaviour should be layered in to see the non-playing behaviour in context,” shares Welshons. “Breaking out behaviour, we see how every segment is represented in what are considered lapsed and non-player groups. We can demonstrate why single-minded marketing tactics aimed at non-players may be futile.”
Looking at Segment 3, which was already identified as a valuable segment to this particular lottery, there are an equal number of people from the segment playing as not playing.
This shows there are consumers not engaging in buying behaviour who have the same desired experience from a lottery product – fun, small splurge for a little extra cash. For some reason, these non-buyers aren’t inspired to activate purchase. Once the lottery knows this, it can dig deeper into appealing to this segment.
Similarly, the highest-value player segment identified has 30 per cent of people engaged sometimes or not at all. Are they perhaps unaware that the lottery offers products they would enjoy? This leads us into Scientific Games’ second core principle.
#2 Behaviour a function of demand
Latent demand refers to demand for something that consumers cannot satisfy for three main reasons: they don’t have enough money; the item is not available; or they don’t know the item is available. If latent demand exists, the buying action does not take place.
Considering reasons two and three, does the lottery industry offer products for all interested consumers? Or perhaps there are plenty of spot-on products, but the right consumers don’t know they exist? Could it be that some of the non-playing behaviour is a function of latent demand?
There is no doubt that Americans are obsessed with instant gratification. It’s evident in the US instant game category, which crossed the $50 billion retail sales mark in late 2018. Growth has come because more products are available in the market, and there are products that satisfy highly engaged consumer segments.
For the industry as a whole, instant games launched and total units have remained static over the past five years. However, total games in market and retail sales have grown. Many lotteries have embraced a model of keeping staple games in market for consistent success. This means reduced game launches, which may mean reduced choices for certain consumer segments.
For lotteries seeking a mid-to-high investment experience, the industry has met expectations and it has paid off. “Instant products continue to flourish because they are relevant in an instant gratification society,” Welshons points out. “Understanding the instant win experience – whether print, digital or promotional – is what Scientific Games has spent decades studying.”
Welshons predicts that as instant gratification continues to permeate and digital dominates, lotteries must continue to push boundaries. But there are questions. When 87 per cent of daily instant scratch game players play video games, how do lotteries remain relevant and offer complementary products? And with eSports as the emerging rage in gaming, what can lotteries do to use this and enhance their portfolios to meet consumers at their why and drive behaviour?
You can’t reach everyone the same way, even if their motivations to play are the same. More traditional consumer views can be added to help create a solid process for product development and marketing planning to reach both current and lapsed/non-players. By understanding the ‘why’ being fulfilled when someone hands over money for a ticket, lotteries can understand what to offer, when to offer and how to communicate the offer. The final consideration is making sure all of these efforts worked.
#3 What got you here, won’t get you there
Measurement is the only way to gauge success and this requires change for some lotteries. “Even when a lottery understands the motivations of segments in its market – and offers products that satisfy those motivations – there still must be a mechanism to track and measure the resulting behaviour,” says Welshons.
Comprehensive players’ clubs have become crucial to success. The Maryland Lottery’s My Lottery Rewards™ (MLR) programme is a good example of value alignment. Prize offerings were improved with the addition of digital content like e-gift cards, bringing MLR in line with robust loyalty programmes in other industries, e.g. Starbucks. This resulted in upticks of daily active users and the retail values of tickets entered.
The Maine State Lottery is another example of solid measurement, as its Reward Me Lottery Club has brought in new users. Big jumps in player registrations occurred when the lottery added draw game entries and then again during a large Mega Millions jackpot period. The lottery continued to retain many of those new players from the jackpot well after the jackpot was hit, with record-high monthly active user rates for the subsequent several months.
This exemplifies that these new members have exhibited behaviour (joined the club) but for a different motivation than existing members (they engage during big jackpot runs).
“There will always be a need to adjust the ways that lotteries attract and retain players. What’s most important is understanding that the fundamentals don’t change, just the way you go about them,” Welshons points out.
After 20 years and thousands of consumer studies for lottery customers, there’s a reason her motivational segmentation approach to attracting and keeping players is working.