Enhancing Operational Intelligence via the Integration of (Real Time) Patron Data (and Application of Behavioral Economics Based Policies and Procedures)

Wednesday, June 8th, 2016 8:30 am - 10:00 am; Session 2-1-E

Presenter: David J. Paster, Principal© All Rights Reserved

This is the Dental Health Conference, Right?

Hey kid! That is a blow dryer. Not a tooth brush. There is your first mistake.

Swell! Now Let’s Explore the Not-So-Magical World of Oral Hygiene (As a Somewhat Clumsy Allegory) For The Detriment of a Provider not Possessing Informational Immediacy and Consequently Being Unable to Utilize Temporally Effective Calls to Action Cues.

Contemporary Dental Health Maintenance is Normatively Predicated Upon Periodic Inspections

The typical patient does bot visit his or her dentist every month. Most often “check up” appointments are only established bi-annually, with little to no contact between the dentist and patient during the de facto void of an approximate six month contact period.

Unless one happens to be a member of the Osmond Clan, a constant monitoring of one’s oral health in an information sharing relationship with the dental health care provider would be almost considered abnormal. Of course, a little too close brother-sister musical team who are both “a little bit Country AND a little bit Rock N’ Roll” might also seem less than ordinary.

A Six Month Dental “Check Up” Cycle Is, Due to Systemic Lack of Patient-Doctor Interaction, by Default, a Patronage Scenario Which Evolves that is More Transactional than Relationship Oriented (Limiting the Benefits of CRM).1) A snapshot of a patient’s oral health is literally and figuratively only created during scheduled examinations.

2) Sporadically scheduled appointments organically degrade the effective universe of patient data.

The Legacy Client/Patient and Provider/Dentist Relationship, Inclusive of its Inherently Constant Requirement of Compilation of Refreshed Descriptive Data, Maintains an Historically Established Status Quo.

The Whole Family Should Brush Together (as it is Rumored the Osmonds do).

And, As a General Life Tip, Do Not Forget to Floss

Warning: DO NOT LOOK DIRECTLY AT THE OSMOND SIBLINGS’ GLEEMING TEETH!

The Data Cavity• As the Osmonds’ Dentist Does Not

Necessarily Keep Tabs on Donny and Marie When Either or Both are Not Scheduled for a Visit (all though he might). Even the Osmond’s hard working Dentist, As a Derivative of the Legacy Dental Health Process, Is Doomed to Developing Informational Cavities Compounded by Systemic Temporal Data Lapses.

• Another friendly warning - one might literally suffer a literal cavity after drinking too much “Tab” soda; a popular, and possibly carcinogenic, soft drink, most consumed during the era when D&M ruled ABC during the late 1970s – albeit still mysteriously contemporarily available.)

Yes, It is Difficult but Possible to Not Be Transfixed

The suspicion of decay confirming X-Ray, the means to update the oral health data after the passage of six months, might indicate the presence of a need-to-be-filled cavity. The cavity revealing X-Ray serves as an impetus for the dentist’s intervention.

Yes Indeed…A CavityTime to bring out the tools of the trade

Unfortunately, this cavity, like a certain early 1980s prime time television broadcast slot, needed to be filled.

The Dental Call to Action• A cavity is an indicator of a

change in a patient’s holistic dental health. This (unwanted by the patient and summer house paying for the dentist) literal “pain point” requires remedial intervention by a dentist.

While new technologies such as Panoramic and digital X-Rays are an improvement in terms of more efficient and effective visitation insight provided, the established protocol of establishing only periodic check-ups with a patient, in lieu of real-time, constant monitoring of a patient’s oral health, has not truly evolved.

The Scale But Not the Scope of Comprehension is Increased

Unlike in the lower expected degree of contact world of dentistry, a lack of Immediacy Connecting With (known / tracked) Active Casino Guests is Potentially Detrimental to Forming

with opted-in guests Substantial Relationship.

With the notable exception of viable, real-time, under roof, mobile push market solicitation, other traditional means of contacting casino patrons ((e.g., direct mail, e-mail blasts, even follow-up calls made by hosts when they came on duty and review action etc.) are too delayed to INFLUENCE (House Desired) Actionable Behavior(s) of an under-roof casino visitor via “live”, on property, behavioral economic (theory based) policy and practices, manifesting in today’s example with system based incident cued property personnel intervention techniques .

As an example of a failure to harness and process traditional CRM system providing player data in a time-effective manner, please see below a Direct Mail piece that arrived on 1/22/2016 via USPS, 1 day AFTER the promotion commenced and 4 days PRIOR to the intended incremental visitation promotion incentive effort concluded.

By the Way, Even When a Patron is Contacted by “Snail Mail,” the Offer Cannot be Disingenuous

Aggregated (Post Hoc Analyzed) Monthly “CRM” Data is Essentially Worthless for Evaluative Purposes. Weekly weekly or even daily evaluation post an individual’s

visitation is limited in the potential to “manipulate” an independent gamer’s activity. By default, the operator is forced to wait for the next player visit’s incremental action (if a follow-up occurs at all).The Context and Immediacy of Individual Observed Activity Are Sorely Absent

The right question is not only how the aggregated group performed, but how have consistently contributing guests gamed and continue to wager (at the moment they are “under-roof”?

Examples of real time anomaly identification

Customer Usage Monitoring

With a HMO

WARNING: Real Time Data Examination and Consequent (Casino) Operational Intelligence Based Reactionary Ability to Implement BEPP Based Efforts, Such as Will be Soon Introduced, Can Be a Proverbial Two-Edged Sword

(Non) Authentic Behavior Creates Organization Credibility and Subsequent Service Expectation Gaps

Thus, In the Wrong Pair of Hands

“I Want Losers”

“Player Developers”

Can Transform Into Vulnerable Guests Preying:

Predators

“You cannot kill time, but time is killing you.” ― Debasish Mridha

Patrons May Be Observed Both Manually and With Automated and Parameter Established Assistance to Provide the House Effective, Efficient, and (Most Importantly) Actionable Reactionary Insight.

An Organic Venus Fly Maintains a Process to Trap and Gestate Prey

The Casino Operational Intelligence Collecting, Reflecting and Alerting to Certain Parameter Based Activities Integrating “Live” / “Real Time: Data Emulates the Multi-Processing Venus Fly Trap

WKRP in Cincinnati's Venus Fly Trap

Sartorial Note: Satin Jackets are Timeless!

The harsh reality is that unincorporated knowledge bases, no matter how efficiently collected, constructively analyzed and disseminated are inherently valueless. Yet, Real Time Observable Patron Activity Data Integrated Application Can Enhance Operational Economies. The next step, for a firm for which the ultimate goal is to create profit for its shareholders, is to monetize empirical findings and thus create marginal returns.

Reminder: Purpose of This Presentation

• The unadorned word, “manipulation” can posses a negative connotation; yet the practice of both covert and explicit directive influence serves as the core of the marketing craft. Superior sellers judiciously maneuver guests’ expectations and experiences; driving potential and established patrons from transactional to loyalty relationship based.

• The propelling fuel is operational intelligence. This knowledge-

based energy is essentially inert until sparked by application. Therefore, the focus of this session is maximizing customer marginal contribution via the leveraging of Operational Intelligence pep through the integration of BEPP - Behavioral Economic (Theory Based) Policies and Procedures.

A Brief Introduction to Behavioral Economic (Theory Based) Policies and Practice

The Essence of BEPP

Does a “Rational Man” (AKA, Homo Economicus) Exist Within a Casino Gaming Environment?

Maybe Maybe Not

An Initial Text Source for Reaching Erroneous Economic “Logic” Conclusions

The Core Foundation of Economics for Nearly Two Centuries Was (a Probably Erroneous Assumption of) an Existence of Tautological

Rationality (Supposed to be) Inherent Within Human Nature

• Adam Smith expounded upon how, at a fundamental level, assuming laissez-faire, rational self-interest and competition can lead to economic prosperity.

The Basic Premises

Rational Choice

The Pre B.E. Approach • In an ideal world, defaults,

frames, and price anchors would not have any bearing on consumer choices.

• Our decisions would be the result of a careful weighing of costs and benefits and informed by existing preferences.

• We would always make optimal decisions.

(Essentially a Revisiting of the Ideas of Jeremy Bentham and “Utilitarianism”)

The Contention for This Presentation is that the Alleged Species of “Homo Economicus” Has Always Been and Continues to be, for All Intents and

Purposes, Non Existent.

Irrationality, Marked by Implicit and Explicit Espoused Beliefs and Observable Actions Might Be Considered as the De Facto Norm

• “I suppose it's too bad people can't be a little more consistent. But if they were, maybe they would stop being people.”

• ― Sammy Glick

The Fundamental Ingredients of Behavioral Economics

Reconsidered Psychology Revisited (Influenced) Economics

The Major Tomes and Field Contributors

The First Genuinely Contrarian Perspective Was Offered During the Conforming 1950s

Psychologically (Relativist) Informed Economic Decision ProcessesHerbert Simon’s “Bounded Rationality”• Decisions are not always

optimal. • There are restrictions to

human information processing, due to limits in knowledge (or information) and computational capacities (Simon, 1982; Kahneman, 2003).

Minds must be understood relative to the environment in which they evolved

A Compendium Attempt

Influence as a Primary Factor

Continuation of the Constructs of Misdirection and Imbalance

B.E. Within the Context of the Decision Making Process

Understanding of Errors Grounded by Mythic Magical Thinking

The “Zone” Construct; Purposeful or Unintentional Environmental Dissociation

Empirical (Valid and Reliable) Studies of Non-Expected Irrationality Exhibition

The Admission of the Strength of Visceral Effects

Select Topical Writings Including Case Studies of Similar (to be) Suggested Scenarios of Applied BEPP

• Chen, S. C., et al. (2013). "Segmenting slot machine players: a factor-cluster analysis." International Journal of Contemporary Hospitality Management 25(1): 23-48.

• Johnson, L. (2012). "Using the critical incident technique to assess gaming customer satisfaction."

UNLV Gaming Research & Review Journal 6(2): 1. • Kale, S. H. (2012). "CRM in gaming: It's no crapshoot!" UNLV Gaming Research & Review Journal

7(2): 4. • Lee, H., et al. (2006). "Harrah's Entertainment Inc.: Real-time CRM in a service supply chain."

Harvard Business School Publishing. • Narendra Agrawal, Morris A. Cohen, Noah Gans, (2009) Case—Revenue Management at Harrah's

Entertainment, Inc. (Augmented with David Norton correspondence) • Repetti, T. (2011). "Recent Research Trends in the Gaming Industry: A Content Analysis of Research

Literature on Casino Profits." UNLV Gaming Research & Review Journal 15(2): 91-108. • Shoemaker, S. (2003). "Future of revenue management: the future of pricing in services." Journal

of Revenue and Pricing Management 2(3): 271-279.

Prospect Theory

Perspective Matters• Amos Tversky and Daniel

Kahneman published a number of papers that appeared to undermine ideas about human nature held by mainstream economics.

• They are perhaps best known for the development of prospect theory (Kahneman & Tversky, 1979), which shows that decisions are not always optimal.

• Our willingness to take risks is influenced by the way in which choices are framed, i.e. it is context-dependent.

Framing / Anchoring

Graphical Representation of Prospect Theory

Endowment Effect and Loss Aversion

The Gain and Loss ParadoxIndividuals dislike losses more than we like an equivalent gain

Giving something up is more painful than the pleasure we derive from receiving it.

Nearly an Appropriation of Freudian Id and Superego

The Hot-Cold Empathy Gap

Lowenstein Definition• There is an inability to appreciate

fully the effect of emotional and physiological states on decision making is known as the (hot-cold) empathy gap, a term coined by George Loewenstein, one of the founders of the field of behavioral economics.

• Hot states include a number of visceral factors, ranging from negative emotions associated with high levels of arousal (e.g. anger or fear) to feeling states (e.g. pain) and drive states (e.g. thirst, cravings related to addiction, or sexual arousal) (Loewenstein, 2000)

'Cause you're hot then you're cold / You're yes then you're no / You're in then you're out / You're up then you're down – Katy Perry

Heuristic and Cognitive Bias

Heuristic• A heuristic is a mental shortcut

used to solve a particular problem; it is a quick, informal, and intuitive algorithm your brain uses to generate an approximate answer to a reasoning question. For the most part, heuristics are helpful, because they allow us to quickly make sense of a complex environment, but there are times when they fail at making a correct assessment of the world.

Cognitive Bias• When our heuristics fail to

produce a correct judgment, it can sometimes result in a cognitive bias, which is the tendency to draw an incorrect conclusion in a certain circumstance based on cognitive factors.

Key Decision Making and Behavioral Biases 1

• Choice-supportive bias — the tendency to remember one's choices as better than they actually were.

• Confirmation bias — the tendency to search for or interpret information in a way that confirms one's preconceptions.

• Contrast effect — the enhancement or diminishment of a weight or other measurement when compared with recently observed contrasting object.

• Endowment effect — "the fact that people often demand much more to give up an object than they would be willing to pay to acquire it".[2]

• Framing — drawing different conclusions from the same information, depending on how that information is presented.

• Hyperbolic discounting — the tendency for people to have a stronger preference for more immediate payoffs relative to later payoffs, the closer to the present both payoffs are.

Key Decision Making and Behavioral Biases 2

• Loss aversion — "the disutility of giving up an object is greater than the utility associated with acquiring it”.

• Neglect of probability — the tendency to completely disregard probability when making a decision under uncertainty.

• Omission bias — the tendency to judge harmful actions as worse, or less moral, than equally harmful omissions (inactions).

• Selective perception — the tendency for expectations to affect perception.

• Status quo bias — the tendency for people to like things to stay relatively the same

• Von Restorff effect — the tendency for an item that "stands out like a sore thumb" to be more likely to be remembered than other items.

Pre Application of Operational Intelligence Cautionary Declaration• I cannot guarantee

systematic success, but I can promise systemic host property philosophical and operational failure if the following three approaches are organizationally, collectively adopted:

1.Not being authentically concerned and consequently vested about an immediate or general guest environment / experience2.Predatory Positioning Against Potentially Vulnerable Players – Player monitoring for the express purpose of enticing (as will be proposed), via real-time intervention, guests to play beyond identifiable Pain (loss) Point Thresholds.2a) Secondary effects / negative externalities may be mitigated / significantly alleviated by systematically identifying through data analysis significant demonstration of known unhealthy gaming relationship traits or alert providing algorithms identifying potential “problem gaming” behavior and, in real time, activating a “kill switch” on the player duration BEPP method to be discussed.3. Expressing oneself either personally or professionally with Inauthenticity and not purposefully ensuring the credibility of the casino gaming hospitality field.

An abundance of Caution and Practice of Restraint is Recommended when Integrating BEPP Methodologies within a Casino Gaming Environment. Is Marginally Increasing A Property’s Share of Wallet from Players Playing Past Their (to be showcased) Pain (Loss) Thresh holds economically and / or ethically justifiable?

Demonstrable Potentially Problem Gambling Patron Activity (e.g., playing faster, making greater value wagers per decision or engaging in gaming activity significantly longer than individually and / or aggregately typical)

Should Systematically Predicate a vigilant type of BEPP (automated, programmed) “Kill Switch”.

A Beneficially Functioning Tool

(FINALLY) A Proposed BEPP Methodology (Casino) Operational Intelligence Enhancing Utilization

• Leveraging (Casino) Operational Intelligence provided, known player base aggregated and individual historic and real-time data, establish a BEPP method to systematically promote extended duration of gaming wagering based on BEPP grounded parameters.

The Process

Data Driven Cues for House Personnel Intervention Might Lead to a Consequent Recalibration of a Guest’s Proprietary Time Spiral (Intended to Derive an Increase of player) “Time on Device”

Purpose: Mental Process Interruption (e.g., I usually leave at this point on the slope of diminishing returns); The “Reset” of Continuing

(Durational) Wagering Consideration

Atari ResetBack in Negative Expectation Engineered “Action”

The Player Effectively Self Convinces (With Assistive Framing) to “Stay and Play” Adhering to the Principles of BEPP

Example Framing Means to Create Situations When Choosing to Leave Is More Difficult than “Satisficing” to StaySticky Marketing• Add Banks Image

Maximizing Switch Costs

The Trigger Contributing ElementsIdentifies a Point on an Historic Versus Real-Time Behavioral Continuum

Examples of Quantifiable and Comparable Individual and Comparable Player Base Behaviors

• Last six visits wagered “X” amount per decision, but today wagered “y” amount per decision.

• Last six visits gamed consistently on the same device for a duration of an average of 210 minutes, while the average time on device for that particular machine was 90 minutes.

• KEY: Last six visits, ceased gaming upon reaching an aggregated loss amount of between $1000 and $1050.

InterventionIntent: To Thwart Gaming Activity Cessation

Prior to a pre-determined, estimated, individually respective quit thresh hold.

• In the prior data extraction, the system can identify that this specific gamer has, with a high level of consistency, ceased wagering after an aggregated loss of between $1000 and $1050 per historic gaming session.

• Is there a correlation or a demonstrable causality between loss level and cessation of wagering?

Identify Conceptual and Emotional Comprehension and Ranges to Thresh Hold of PlayerPain Point Terminus Bliss Point Limitation

The Promised Leveraging of (Casino) Operational Intelligence Data is Realized When the System “Predicts” a high probability of gaming cessation when the player is at a total loss of $950.

The Trigger for Personnel Player Intervention Manifests

The Casino Personnel Are Off to the BEPP Inspired Intervention Races

The (Casino) Operational Intelligence System Creates a “Trigger” Call to Action for the Optimum Timing for Personnel InterventionLimited Window of Opportunity for Personnel to Intervene and via BEPP Alter the Decision Making Process and Subsequent Behavior(s) of the patron

Before the player historically has ceased and ceased a gaming session.

Effective Purpose of Pain Threshold Cessation Intent Action by Property Personnel Intervention

Deliberate DisorientationDisarming Disassociation (through BEPP of Reciprocity)

Allocated Resource for Most Effective Duration Extension – Provision of a Lagniappe

Comps and Other Compelling Incentives to Remain “Under Roof” Are Usually More Effectives Than a Proverbial (or literal) Extra Doughnut

Creating Optimal Diversion During the Intervention / Providing a Continuance Rationale

Round About Diversion Straight Technique

Re-Establish Player Equilibrium as Predicator to Extended Gaming Session Duration and to Create Potential Incremental VisitationMission of Gaming Durational Extension Accomplished

Thank You For Your Attention

David J. Paster• Principal• Yarborough Planning, LLC• 4599 North Washington Street• Suite 20D• Stillwater, OK 74075-1299• United States of America• david.paster@hotmail.com• (702) 813-5062• LinkedIn ™ David Paster;• http://www.linkedin.com/

pub/david-paster/48/234/190

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