My work colleagues; Anne Butler and Jill Solomon, for providing all the knowledge and assistance regarding the Most Valued Guest loyalty program at Sibaya Casino and Entertainment Kingdom, and to my general manager, Melville Vogel, who supported me throughout my MBA. The empirical findings provide a useful starting point for recommendations to improve the effectiveness of a casino loyalty program in South Africa; and for further research in this field.
List of Tables
List of Acronyms and Abbreviations
INTRODUCTION
- INTRODUCTION
- MOTIVATION FOR THE STUDY
- FOCUS OF THE STUDY
- PROBLEM STATEMENT
- RESEARCH QUESTIONS
- OBJECTIVES
- RESEARCH METHODOLOGY
- LIMITATIONS OF THE STUDY
- OUTLINE OF THE STUDY
- SUMMARY
A customer loyalty program is a valuable and essential mechanism for creating customer loyalty in the casino industry. A literature review is conducted in chapter two to determine the effectiveness of a loyalty program in the casino industry in South Africa.
THE EFFECTIVENESS OF A LOYALTY PROGRAMME AT A LEADING CASINO IN KWAZULU-NATAL
INTRODUCTION
DEFINITION OF CUSTOMER LOYALTY
Both factors are critical in assessing the nature of customer loyalty and the effectiveness of customer loyalty programs. The theory of customer loyalty extends to service organizations, such as casinos, which typically offer more intangible products.
WHY IS CUSTOMER LOYALTY IMPORTANT?
Zeithaml and Bitner (2003) stated that loyal customers can be even better customers if they buy more of a company's products and services over time. Loyal customers not only provide a solid foundation for an organization, they can represent potential for growth.
WHAT IS A CUSTOMER LOYALTY PROGRAMME?
Gustavsson and Lundgren (2005) confirmed that customer loyalty programs offer financial and relationship rewards in order to make customers brand loyal. All of the aforementioned research directly or indirectly demonstrated the mutual benefit of a customer loyalty program for both the organization (customer loyalty) and the customer (additional benefits received).
TYPES OF CUSTOMER LOYALTY PROGRAMMES
Gustavsson and Lundgren (2005) noted that the purpose of loyalty programs was to create a high level of customer retention by providing satisfaction and value to particular customers. Berman (2006) describes a typology of customer loyalty programs based on various characteristics of the programs, as shown in Table 2.2 below.
WHAT IS THE IMPACT OF CUSTOMER LOYALTY PROGRAMMES?
Dreze and Nunes (2008) examined the impact of status on customer loyalty programs and the benefits of having a tiered reward system. The study further revealed that customer loyalty programs have a direct positive impact on customer loyalty.
CUSTOMER LOYALTY PROGRAMMES IN SOUTH AFRICA
Loyalty programs in the 'Value in Loyalty Programs 2005' survey were evaluated according to 19 criteria, including cash value, reward choice and appeal, and achievable rewards. Based on the fact that the 'Value in Loyalty Programs 2005' study has been one of the few studies conducted on South African loyalty programs, it can be concluded that South Africa is very active and successful in the loyalty arena.
CUSTOMER LOYALTY PROGRAMMES IN THE CASINO INDUSTRY
Baker (2008) validated that the unique nature of loyalty programs in the casino industry is the use of behavior tracking software technology to assess the data generated by loyalty program members. Due to the fact that there is minimal product differentiation in the industry, the loyalty programs are also structured very similarly, based on a tiered system, with segmentation based on the value of the member's play in the casino.
CUSTOMER LOYALTY PROGRAMMES IN THE CASINO INDUSTRY IN SOUTH AFRICA
Available WWW:www.pc.parnue.ee/~htooman/EuroChrie (Accessed February 2, proved that reward type has a direct effect on both satisfaction with a loyalty program and customer loyalty (H1 and H3 ); Sun International has an MVG Tiered Loyalty Program which rewards members with points for playing slots and tables at any Sun International casino (Sun International, 2013). As members earn more points, they advance in status MVG card, from Chestnut (entry level) to Silver and Gold to Platinum, with benefits and rewards increasing along each level.
Based on available information on the Sun International Loyalty Program (Sun International, 2013), MVG cardholders are entitled to “free membership, earning MVG points for slot and table play, redeeming MVG points for accommodation, food and beverage and merchandise or by gaming . redeem them on slots and tables, exclusive accommodation discounts, discounts on playing fees at Sun International golf courses, selected invitations to special Sun International events, exciting MVG offers and discounts delivered straight to your door, MVG Lounge and Privé Privileges ( where available) for Platinum and Gold cardholders and additional MVG benefits at each casino." None of the casino loyalty programs in South Africa are based on an online loyalty rewards program; with loyalty members redeeming their own rewards either on the company's website or at kiosks in the casino itself.
SUMMARY
RESEARCH METHODOLOGY
- INTRODUCTION
- DEFINITION OF RESEARCH METHODOLOGY
- AIM AND OBJECTIVES
- Objectives
- APPLYING THE RESEARCH METHODOLOGY FRAMEWORK
- Selection of variables
- Selection of type of study
- CONSTRAINTS
- RESEARCH DESIGN
- PARTICIPANTS AND LOCATION OF STUDY
- SAMPLING
- DATA COLLECTION
- Questionnaire design
- PRETESTING AND VALIDATION
- QUESTIONNAIRE ADMINISTRATION
- ANALYSIS OF DATA
- Descriptive analysis
- Inferential analysis
- ETHICAL CONSIDERATIONS
- SUMMARY
The purpose of the study summarized the characteristics of the current NMDS program and current gamblers. After completing the research design, the next step is the selection of an appropriate data collection method. The data is pre-coded. The questions limit and determine the nature of the answers.
Pretesting and validation are important steps in the design of the research instrument to detect and eliminate weaknesses in the questionnaire before it is administered. The details of the research instrument used in this study, an online self-administered questionnaire, its administration, data collection and validity were discussed. Chapter four will detail the presentation and discussion of the research findings obtained from the completed questionnaires.
CHAPTER FOUR
ANALYSIS AND DISCUSSION OF RESULTS
INTRODUCTION
MOST VALUED GUEST TIERS
Once promoted to Silver, they become more attractive customers to keep. Therefore, the sampling frame consisted of only three levels of MVGs who were in the database in May 2013 and who chose to receive email communication. The 503 respondents who completed the questionnaire consisted of 11% platinum, 44% gold and 45% silver MVG members, which is a fair percentage of the total population size.
A substantial analysis of the research that follows refers to the individual levels in the form of cross-tabulation calculations.
DEMOGRAPHICS
The segments were also further analyzed according to relationship status, whether the MVGs have children and if they answered that they do have children, the age of their children. The ratio of males to females is fairly equal which is consistent with both the gender population of the MVG database as well as the 2011 KwaZulu-Natal Census data. According to the Census 2011 data (Statistics South Africa, 2013), population distribution figures in KwaZulu-Natal show that the province still has the highest Indian/Asian population in South Africa, making up 7% of the province's population.
This confirms the high number of Indian MVGs in Sibaya, which constitute 71% of the sample size, followed by white MVGs, which comprise 22%. While the African population is the largest in the province, it is interesting to note that they constitute only 2% of the total respondents. According to Riley (2012), psychographic segmentation or behavioral segmentation divides the market into groups according to customers' lifestyles, as a person's behavior may change as they pass through different stages of life.
OBJECTIVES OF THE STUDY
- Objective one: To determine which rewards are most valued by MVG members A variety of rewards is offered on the current MVG reward programme and was outlined
- Objective two: To establish customers’ satisfaction with the casino loyalty programme
- Objective three: To determine what factors influence brand-switching among MVG members
- Objective four: To identify additional rewards that are not currently offered to casino loyalty programme members
- Objective five: To establish whether casino loyalty programme members would continue to play at the same level in the absence of a loyalty programme
- Objective six: To establish whether casino loyalty programme members are sufficiently incentivised to achieve a higher reward level
- Objective seven: To determine whether casino loyalty programme members will support an online rewards system
- Objective eight: To identify how to effectively communicate with casino loyalty programme members
A total of 99% of respondents believed that the points they earned should not expire. Based on the evidence presented in Figure 4.4, the MVG program has a positive influence on 77% of respondents' gambling habits. About a fifth (23%) of respondents said their playing level was unaffected by the MVG programme.
This confirms the findings of the 23% of respondents who said their playing level is not affected by the NMDS program in Figure 4.4. Although most respondents were satisfied with the frequency of NMDS communications, the content of NMDS communications also needed to be assessed (Figure 4.11). Respondents were asked to rank the importance of the NMDS content and the results are shown in Table 4.16.
SUMMARY
Respondents were asked to select their preferred communication media and the results are presented in Figure 4.12. A small percentage of respondents chose social media as a preferred communication medium, and this could be mainly attributed to the age group of the majority of MVGs, who are older people who are not exposed to social media. The results from this study have validated that a casino loyalty program increases customer profitability as MVGs are motivated to play more due to being part of the program and also motivated to reach a higher reward level.
The survey found that there is overwhelming support for an online reward system as a preferred option over the current manual reward system. Finally, this study revealed a lack of awareness in key areas of the NMDS program due to limited communication and identified improvements to the current NMDS communication process. Limitations of the study are also identified and suggestions for further research are completed in chapter five.
CHAPTER FIVE
CONCLUSIONS AND RECOMMENDATIONS
- INTRODUCTION
- KEY FINDINGS
- The demographics of Most Valued Guests
- Objective one: To determine which rewards are most valued by casino loyalty programme members
- Objective two: To establish customers’ satisfaction with the casino loyalty programme
- Objective three: To determine what factors influence brand-switching among casino loyalty programme members
- Objective four: To identify additional rewards that are not currently offered to casino loyalty programme members
- Objective five: To establish whether casino loyalty programme members would continue to play at the same level in the absence of a loyalty programme
- Objective six: To establish whether casino loyalty programme members are sufficiently incentivised to achieve a higher reward level
- Objective seven: To determine whether casino loyalty programme members will support an online rewards system
- Objective eight: To identify how to effectively communicate with casino loyalty programme members
- RECOMMENDATIONS ARISING FROM THIS STUDY
- Lifestyle segment marketing strategy
- MVG communication strategy
- Online rewards system
- Additional tier
- Additional rewards
- LIMITATIONS OF THE STUDY
- RECOMMENDATIONS FOR FURTHER RESEARCH
- SUMMARY
Based on the findings of objective two, it can be said that the majority of MVGs are satisfied with the Sibaya loyalty program and are likely to recommend it to others. The findings from this study have provided empirical evidence that certain gaps exist regarding the effectiveness of the current casino loyalty program at Sibaya. This is the only study specifically focused on the issue of the effectiveness of a loyalty program in a South African casino.
Researchers could investigate whether there are significant differences in the effectiveness of casino loyalty programs in different geographic areas. Such a study would provide empirical evidence on the effectiveness of customer loyalty program membership in the gaming industry. This information would be useful for organizations considering introducing a customer loyalty program in the KwaZulu-Natal market.
- Informed Consent
- Questionnaire
- Gatekeeper's Letter
- Ethical Clearance
- English Editor's Certificate
Awareness, perception and effects of customer loyalty programs in the Durban Metropolitan retail sector. The confidentiality and anonymity of records identifying you as a participant will be maintained by Sibaya Casino and Entertainment Kingdom, and the survey results will be maintained by the Graduate School of Business and Leadership, UKZN. Which statement best describes your knowledge of the MVG awards listed in the previous question.
You have selected that you are not aware of some/most/all MVG rewards. I would make more use of an online reward facility than MVG desk and MVG kiosks.
