How can lotteries thrive in the digital age? For an industry still yet to fully embrace the digital revolution occurring in other industries, it’s a difficult, but highly relevant, question. Every lottery wants the same things: to increase operational efficiency, to expand its customer base, to increase the value of these customers – and above all, to increase net revenues.
Every sector has had its struggles with adapting to the digital era, which is why lotteries can learn a lot by looking sideways to those who had the most productive and profitable transitions in other industries. Even though the products and services the examples that follow differ strongly from a lottery’s offering, the principles behind their success are certainly worth consideration for any lottery marketing team looking to capitalise on the digital lottery opportunity.
UPS – Putting their data to work
The United Parcel Service (UPS) brought big data to the shipping and logistics industry in an attempt to improve productivity and minimised wasted time, energy, and money. The company implemented new processes to analyse information related to its operations and propose viable solutions: for example, if the UPS trucks were following a particularly congested route and wasting fuel stuck in traffic, an alternative route could yield high savings. Even if this only amounted to a quarter of a mile’s worth of fuel saved per delivery, that’s still 8 million gallons of fuel across all journeys made during the year. Overall, UPS saved around 30 million by harnessing the data already available to them.
Though their concerns and business goals may diverge, lottery companies are able to make savings and profits in a similar way with a digital lottery. Things such as site layout can be optimised to ensure visitors can find the information they require quirkily and easily, and also be encouraged to create an account or make a purchase. One of Lottovate’s sister sites managed to increase on-site conversions by 7% though a programme of measurement, testing and optimisation to find the most productive layout. When these results are used in conjunction with other improvements, the benefits could be even higher. For example, you can analyse your draw cycle and ticket sales to determine the ideal schedule for games with larger prizes – and convert more visitors to players.
Netflix – Putting physical media to the sword
Netflix has been an online streaming powerhouse for a while now, so it’s easy to forget that it came to prominence as an internet-based mail-order DVD service. In fact, it used to be in direct competition with Blockbuster, which was a stalwart in the rental industry: in addition to being a more widely-known and respected brand, the online rental experience was at such an early stage that many customers preferred to go to the video store than order online.
Netflix’s move to a streaming model – and Blockbuster’s hesitance to adapt and its subsequent collapse – is now part of digital media lore. A less emphasised part of Netflix’s success, however, is its stellar marketing, which creates a ‘data-driven feedback loop.’ Alongside Amazon’s “You might also like” feature, Netflix’s recommendation system is one of the most highly personalised around: it helps customers make informed decisions based on their viewing history, encouraging them to use the service for all their online video needs. It also applies this to its email marketing: based on previous searches, it sends advice right to the customer’s inbox. Netflix estimates that 75% of customers are influenced by its recommendations. The more they use their membership, the more they can justify the expense each month.
This model is highly applicable to lotteries: through collecting data on player behaviour, it’s possible to keep players apprised of a huge jackpot or a weekly rollover in their favoured game – incentivising them to play regularly in the hope of winning big.
Starbucks – Bringing the channels together
There’s no reason that your digital and retail channels can’t interact. In fact, it’s essential that they do: while more and more people are playing online – and prefer to – there will always be a market for the impulse buy, the behind-the-counter scratch card or Lucky Dip: the ticket a customer picks up with their groceries. It’s as important to understand their buying habits as it is to understand those of digital players.
Lotteries could certainly do worse than to use Starbucks as inspiration. While loyalty cards are commonplace among coffee shops, this particular chain uses them in a way that incentivises return visits – and gives them unique insights at the same time. Using point-of-sale technology, they can gather data about customer buying patterns and habits – if, for example, they buy a daily grande latte, they might receive a personalised discount designed to encourage them to return when they next feel a hankering for coffee. If a customer visits infrequently or stops entirely, they might get a text offering them a free coffee on their next visit to encourage them back.
As our research into the US lottery market revealed, there’s an appetite for multi-channel play in the lottery sector – but not all lotteries are satisfying it. While retail can’t match the growth of digital, it remains an important channel: one that can aid in driving growth and player retention even if it is no longer the primary force behind it. Digital marketing may be cost-effective and easy to optimise, but much of it is applicable to the retail channel as well. Striking the right balance between these channels – and it will be different for every organisation – will be a critical part of finding success in the future.
Download Lottovate’s research papers into the $17.5bn Digital Lottery Opportunity and The State of Digital Lottery Strategy and Marketing here.