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Take a Gamble with EDM

James Taylor – great fount of EDM truisms, from whom all rules- and analytics-based wisdom flows – likes to ask a question.  It sounds like it should set up the punchline to a joke, but unfortunately it doesn’t.  “How do you know when you’re ready for EDM?” he says.  “You can segment your customers 30 ways—but you deal with them 3 ways.”  Or words to that effect.

As such, James is likely to be extremely pleased by this example of EDM in action that I found in The New York Times: From the Back Office, a Casino Can Change the Slot Machine in Seconds.
If you believed that somehow you weren’t being exploited when playing slots at the casino, then perhaps these excerpts from this intriguing article will change your mind:

From his small back office in the Treasure Island casino, Justin Beltram may soon be able to change the wheels of fortune instantly…  With a few clicks of his computer mouse, Mr. Beltram can reprogram the 1,790 slot machines on the casino floor, adjusting the denominations required to play, payback percentages, even game themes…

In the past, changing out a slot machine was a complicated operation and entailed opening it, replacing the computer chip inside, then changing the glass display that markets the game's theme.   The alteration usually took a day and could cost thousands of dollars, from ordering parts to modifying the machine…  Casino operators will be able to centrally adjust the slots to cater to different crowds — older players and regulars during the day and younger tourists and people with bigger budgets at night…

It always seems that casinos are among the early adopters of powerful new technologies: advanced surveillance systems to spot possible cheating at a Blackjack table; face recognition systems to spot patrons who have previously been banned; and CRM systems to keep up with the high rollers that deserve special treatment, to name but a few.

Apparently, Enterprise Decision Management is no different!

Mr. Beltram has discovered the promise of EDM: almost instant control over the customer experience and the ability to vary a customer’s environment to suit their tastes and preferences.  Just think about how Treasure Island’s experience could apply in your business:

  • You’re an online retailer, and you see that your shoppers vary their browsing and buying habits according to the time of day, so you vary the nature of the merchandise that is presented throughout the day to make the most of their behavior
  • You’re a credit card company, and you know that your competitors are running special promotions targeted at certain metropolitan areas, so you relax or tighten your credit line guidelines to suit the location of customers calling into your call centers
  • You’re  an insurer, and a large number of your policyholders have been hit by a hurricane, so you give them preference in claims handling to live up to your promise to be a conscientious underwriter

As a “punter” (English English for gambler), you can perhaps draw solace from one comment in this article: “By law, Nevada casinos must on average return at least 75 percent of slot machine wagers,” it says.  “The reality is they return more than 90 percent, casino operators say, though they do not publicize the figures."

Well, it’s good to see that competition is at least driving them to return a higher proportion of your money.  But even so, remember two things:

  1. Until the casinos starting paying out 100%+, you’re still going to lose!
  2. And if the effect of a 90%, rather than 75%, payout is that you put a disproportionately greater amount of cash at risk, then you’ll probably lose even more!

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