The Importance of Avoiding Churn
If you do not measure Retention then you are at risk of enabling ‘churn’.
Churn is a term used across all industries that basically asks, “Are you busy generating new customers but losing so many existing customers that you don’t really grow?”
For example, an Executive Host acquires 20 new players during the Quarter but somehow 60 coded players slip away and do not play during the Quarter. Overall the Host is down by 40 valuable players by the end. But this won’t become visible until you measure it.
Why does this matter?
- First, it is harder and more expensive to acquire new players than to retain existing ones. Your PD team spends more time and Comps on trying to attract or identify valuable new players, and have to invest in someone that may not become a loyal guest.
- Second, there may be some underlying issues with guest satisfaction that you are not identifying and resolving. These were valuable enough players to be coded to a Host; so why have they declined? You need the PD team to reach out, find out what is happening, and get resolution.
So how you measure churn and give the Hosts a solid goal?
Here is a simple example of a Retention Goal. “You must retain 95% of your Active Players”. If the Executive Host had 300 coded players on April 1st, then 285 of them must play at least once in April/May/June.
Why isn’t the Retention Goal set at 100%? Well, you have to make some allowance for the ‘inevitable shrinkage’ of guests moving away or having dramatic changes in their lives.
If you think about your market, you can come up with your own logic. E.g. With 300 coded players, you might expect 2 Deaths, 10 move-aways, 1 becoming restricted, and 5 life-style changes e.g. loss of income. 2+10+1+5=18. So, you expect an inevitable shrinkage of 18. You can round it up to 20 and say the Host must retain 280 of 300 coded players.
This Retention Goal requires some support from the Database team or your Host Software provider. This is what you need at a minimum:
- At the start of the Quarter, a list of coded players for each Host
- At the end of the Quarter, an updated list of trips for each player on the list.
- A way for the Host to know who has not played. This may be a weekly list from the Database team, or it may be built into your Host Software.
Advanced Retention Goals
Over time, and if you have the reporting capabilities, you might want to have a more elaborate Retention goal that uses trips and Theo to ensure the Active players are not only playing but playing at the same pace or better.
Here are two examples. The first definition ensures the Active players are not falling off in trips:
A host retains a player in a quarter if that player makes at least as many trips as in the previous quarter.
This second definition ensures the Active players are not falling off in trips and play:
A host retains a player in a quarter when that player makes at least as many trips as in the previous quarter, and total Theo is 50% or more of the total Theo in the previous quarter.
These goals have gone beyond measuring simple Retention to measuring whether Active players are ‘declining’ and the PD team is held to a higher standard.
This may be appropriate if you are in a highly competitive market, or you find yourself in competitive situation for the first time. However, this requires more sophisticated reporting from your Database team or from your Host Software vendor.
In conclusion, KISS, and keep it simple initially with something like Host must retain 280 of 300 coded players.
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