Betting on better business

It’s official – the country is not going to the dogs. Instead, it is going to the card table, roulette wheel, slot machines and even bingo. Online gaming continues to boom through the economic trough, with global revenues of $22 billion this year due to rise to $25 billion next year.

This growth curve began as the organic surge typical in any new market that unlocks pent-up demand. We have seen it before in technology markets, like mobile phones, and other services, such as Internet access. In the early days, companies in boom markets need to do relatively little, except put their collecting bowl into the flow of money gushing from customers.

As markets mature, however, the first challenge is to keep that bowl ahead of the competitors. The second is to ensure that customers continue to direct their cash into your bowl, especially when they are facing hard choices about whether to spend or not, rather than where to spend.

That is where online gaming companies find themselves right now. And they are waking up to the same issue that other sectors have had to confront at similar points in their maturity – what do we actually know about our customers and how do we use it to keep them transacting?

Just like every other emerging market of the last two decades, gaming companies did not start out by building a customer-centric infrastructure with integrated data about their players. Instead, they have rushed to market with new products (bingo, rummy, etc), each of which gets supported by its own applications and databases.

Only when the initial flood gets to the point where it needs to be actively pumped out do companies start to think about managing their data asset. The same has been true historically of mail order companies, banks and credit card issuers.

So why is that business owners and senior managers always find themselves in this same position? Business schools must take much of the blame. They propound two basic models that get followed regardless of the sector – build a better mousetrap and borrow to build. Product development and financing are what most concern the board of directors.

Nowhere does the customer get considered. Yet it is the customer who buys the mouse traps and that revenue which secures the borrowing to build more. Everything a company can do is ultimately rooted in the information that it holds about a customer and which does everything from inform interactions to predict future revenues.

Is it too much to hope that MBA courses might get rewritten to adopt this focus? Or is that as likely as seven straight wins on black?



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