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What Startups Can Learn From Casinos

What Startups Can Learn From Casinos

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By Jonathan Lowenhar

You walk up to a blackjack table. The dealer greets you. You sit down. You toss your loyalty card Hollywood-style across the felt. The dealer hands you some chips and the fun begins. Soon after, someone taps you on the shoulder and brings you a complimentary beverage. Yet another person offers to make a restaurant reservation for later that evening.

Casinos are exceptionally complex machines. They never close. They require enormous numbers of people performing a wide variety of tasks and a richly architected set of systems to ensure they happen. They operate under intense regulatory supervision. And most impressively, they manage to generate real customer loyalty despite selling a product that often leaves you disappointed.

Startups can learn a lot from casino operators. Here are my top six lessons:

1. Dumb down the game.

Too many startups bombard their customers with conditions to buy or use their product or service. Obsess about removing friction for the customer. Do the hard work of adoption so your customers can just sidle up and play.

2. Customers are one of a kind, not two.

The best casinos personalize the experience. They bring you your specific drink. They know what game you prefer to play. They know whether you enjoy attending shows versus gorging at the buffet. They use that information to customize experiences. Startups often talk a good game about personalization, but without that attention to detail, it’s all just bluffing.

3. Always have a card up your sleeve.

Too often startups are so myopically studying metrics that they fail to realize that only wildly happy customers are loyal. Those who are “merely satisfied” are just waiting to be poached by the competition. Good casino operators know that extraordinary service results in intense loyalty. An unexpected glass of champagne, a free buffet coupon, an impromptu dance performance. Startups should examine the customer experience and expand their thinking beyond percentages to evoking passion.

4. Plan like you’re in Ocean’s 11.

Casino operators hear the term “design thinking” being used by technology companies and wonder what took entrepreneurs so long. Inside a casino, every step of the journey has been studied and optimized—from the handles on the doors, to the sounds playing overhead, to the aroma in the air. In their pursuit of minimum viability, startups often neglect examining every touch point—from the PPC landing page to the thank-you emails sent to suppliers. There is gold in the details.

5. Deal out automation.

Casinos are masters at delivering personal service where it counts, and automating everything else. From accounts payable processing to automated card shufflers, casino operators relentlessly look for ways to eliminate non-value added costs so they can better differentiate the moments that truly matter. Startups have the same opportunity.

6. Keep your cards close to the chest—create suspense.

Casinos don’t sell gambling, they sell adrenaline. They sell entertainment. In other words, they sell suspense. Humans love suspense. We’re drawn to it. From movies to new relationships, we are captivated by an unknown future. Casinos provide a thousand moments of suspense coupled with a thousand big reveals. Are there opportunities in your startup to create that moment of uncertainty? A lottery? A bonus? A leaderboard? Give the customer a momentary thrill, and increased engagement will follow.

About the Author

Post by: Jonathan Lowenhar

Jonathan Lowenhar (@jlowenhar) spent 15 years in the casino industry across Atlantic City and Las Vegas including serving as the first Corporate VP Loyalty Marketing for Harrah’s Entertainment. In 2007, Jonathan relocated to the Bay Area to begin his second career in entrepreneurship. He was the co-founder/CEO of Trooval (acq. ‘13), the former President/COO of Taulia, and currently is the owner of ETW Advisors with portfolio company stars such as Tipalti, Bloom Technologies, Enview, and Xeeva.

Connect with me on Twitter and LinkedIn.



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