Rewarding the right players

♥The brief

Online poker rewards ran on a simple principle. The more rake a player generated, the more they got back. Players in a loyalty scheme typically received rakeback starting at 27% as standard.

The major poker rooms competed hard for the highest-volume players. PokerStars’ Supernova Elite status was the extreme example. Qualifying took 1,000,000 VIP Player Points in a calendar year, roughly $150,000 to $180,000 in rake depending on game mix, and the rewards were worth $100,000 to $135,000 or more.

That was simply how the industry worked, and few people questioned it. The biggest grinders, multi-tabling online, generated the most rake, so they got the biggest rewards. But was the industry confusing volume with value?

As Head of Player Marketing, I was asked to get more from a promotional budget that was consuming 35% of gross revenue. Cutting bonuses was the obvious answer. The hard part was knowing where to cut, and whose.

So, working with a talented team of poker room managers, modellers and analysts, all lovers of the game, we started with a more basic question.

Who were our most valuable players, and were we actually rewarding them?

♠Sharks and fish

The modelling challenged the conventional wisdom of the time. The players generating the most rake were not necessarily the most valuable.

Think of the poker room as a shark tank. The sharks were skilled, multi-tabling grinders who played huge volumes and generated plenty of rake. But sharks don’t bring food into the tank, and they tend to avoid playing each other. Much of the bankroll they played with had arrived through someone else, usually a new player who had just lost a first deposit to them.

The fish were the recreational net depositors. They brought fresh money to the tables, played for entertainment and kept the games running for everyone else. Without them the sharks are left playing each other, and the games soon dry up. Yet the rewards structure largely overlooked them.

Meanwhile, acquiring new players was getting steadily more expensive, and new player attrition was rising too. Inexperienced players with little bankroll management often lost their deposit before meeting the play-through needed to unlock their bonus. They left without ever receiving the incentive meant to keep them.

The business was paying more and more to put fish in the tank, then rewarding the sharks for eating them.

So the strategy was rebuilt around attracting, engaging and rewarding recreational players, starting with their very first session.

♦What we did

Move 01Look after new players first

Welcome rewards shifted towards tickets for ring-fenced tournaments, open only to players who had played fewer than a set number of hands. Player analysis set that threshold at the point in a new player’s journey where support and incentives did most to build loyalty and long-term retention.

The principle was straightforward. Losing your whole deposit in the first couple of hands is nobody’s idea of entertainment. The aim was to make those early sessions more enjoyable, help novice players improve and give them a reason to come back.

Move 02Rebuild the loyalty programme

The Players Club applied the same thinking to the wider player base. It moved away from rewarding rake above all else, adding randomised rewards and prize draws that gave recreational players a genuine chance at a bigger share of VIP benefits.

Move 03Promotions that spread the value

Promotions were redesigned to encourage participation and share value across the table.

• Gold Rush. Random cash prizes of $10 to $100,000 dropped into live Rush Poker hands. Half went to the winning hand and the rest was shared across the table, so everyone benefited regardless of skill.
• Build Your Bonus. The data showed players typically raised their play for about 10 days during a promotion, then drifted back to normal. Stretching the promotion across two weeks, with week one’s activity setting the bonus tier redeemed in week two, kept players going beyond the usual spike and generated more incremental revenue.

Move 04Time every offer

Underpinning all of this was a lifecycle approach. Richer player profiles and propensity models identified players at risk of churning, so incentives could be matched to each player’s needs and likelihood of returning. Offers went out when they were most likely to keep someone playing, rather than to everyone at once.

It was a fundamental change in philosophy. Instead of spending the loyalty budget on rewarding past behaviour, the business used it to encourage future play, improve retention and protect the flow of recreational money that kept the whole ecosystem going.

♣The result

Bonus costs fell from 35% to 20% of gross revenue. The loyalty programme cost 22% less to run, while the most valuable players received a larger share of the rewards.

New player activation rose 25% within six months, and each of the new promotions paid its way.

♥The takeaway

None of this needed new technology or a bigger budget. It needed someone to ask who the most valuable player actually was, and then act on the answer when it contradicted what everyone believed.

Rewarding rake feels fair, but it often means paying the players who need it least. The industry norm had been accepted for so long that nobody had checked whether it still made sense. Going back to first principles turned the most expensive line in the marketing budget into one of its best investments.

Most operators already hold the data to answer questions like this. What’s usually missing is the time to dig into it properly, and someone willing to ask the awkward question out loud. The answer is rarely the one people expect, which is rather the point of asking.

That’s where BetHeads comes in. We’re operators at heart. We’ve done this from the inside, at start-ups and at billion-dollar operators, and we know where the numbers tend to hide.