North American Association of State and Provincial Lotteries Where the Money Goes

Issue 20 - November 1st, 2018

Trust the data, but use your gut and roll the dice!

How many times as an industry or perhaps within an individual lottery do we just attempt to 'plug in' solutions to problems in hopes of fixing things? Or better yet, identify something as a problem but maybe it really isn't a problem; perhaps our perception of the situation simply makes the issue appear problematic. For example, 'lottery players are dying out,' therefore we must focus on the millennials. Is this problem true or simply perception? Is the solution to refocus our energies on millennials a good or bad strategy to the identified problem? As a member of the NASPL Research Committee, I am well aware that data analytics, research, focus groups, surveys, trend analysis and so forth, all serve their distinct purpose and are key drivers to plotting out your future strategic course of action. But independent of these vital tools, some old-fashioned intuition, common sense and risk taking need to be deployed.

For example, I am sure many of you have used GPS to navigate around town, especially when trudging through territory foreign to you. However, you need to use your GPS with caution; you cannot take every GPS instruction literally or you might just end up in a ditch or worse. "Take a slight right turn," but there are three options ahead of me for a right turn, which one do I choose?! Have you ever missed your turn and your GPS reroutes you all away around a large neighborhood block for several miles, when you simply could have just turned around and headed back the direction you were coming from? You see, every tool has its limits, and the human brain coupled with experience and intuition, including taking some risks, needs to be part of the analysis as well.

Over 10 years ago we at the Ohio Lottery concluded that our long standing weekly television show, Cash Explosion Double Play, was getting tired. Sales were fatigued and it was time to re-energize the show. So we decided we needed to make extreme changes. We cancelled Cash Explosion and introduced a new weekly show. We sold $1.00 and $2.00 tickets for the new television show called "Make Me Famous, Make Me Rich." The $2.00 price point was sold being touted as a value proposition, giving more incentives to the player to upgrade their purchase from $1.00 to $2.00. The "Famous" part involved letting one lucky contestant become the host on future game shows. We also thought that we needed more contestants on the show, so we went from the previous eight contestants to thirty contestants to spread the wealth. We thought we needed new professional show talent to reach the younger demographic. We needed to make the game more "hip," with a modern vibe and quicker to play. Or so we thought!

You see, we identified what we thought were problems with the long-standing television show and easily had the solutions. I have always said the market will speak for itself. And the market spoke loud and clear. The show was too fast and confusing for the existing loyal customer base. Ramming thirty contestants through a thirty minute television show was a logistics debacle. The younger demographic couldn't have cared less about the modernized show and they certainly were not watching network television on Saturday evening. Marketing the difference between the $1.00 and $2.00 price point was challenging enough and explaining the "you can be famous part" was near to impossible. To make matters worse we had to explain to the millions of loyal Ohioans what happened to the Cash Explosion show which was another public relations project in itself.

Sales plummeted and the market spoke. Make Me Famous, Make Me Rich was quickly cancelled and Cash Explosion returned back in its place, but the damage was done. Players were alienated and serious damage control was necessary to bring back our loyal customer base. Cash Explosion sales have since stabilized, but certainly the learning lessons live on.

If you randomly asked a large group of people "Would you like to be healthier than you currently are and would you like to feel more energetic and younger?" overwhelmingly the majority of people would answer "yes I would." I would suspect nearly 100 percent would answer yes. Now we have identified a problem - people feel unhealthy and they would like to be healthier. So the problem is simple to solve, right? We've all heard the drill: eat more fruits and vegetables, cut out all processed foods, exercise more, drink eight glasses of water daily and get eight hours of sleep.

Nobody would dispute that these lifestyle changes can make you healthier. But now let's be realistic. How many people really and truly would be disciplined to incorporate these changes into their lifestyle for more than two days? Sure people want to be healthier, but people might not be willing to do anything different to reach this goal. Let's look at the real statistics. The average U.S. citizen consumes 3,400 milligrams of sodium per day, far surpassing the recommended daily allowance. Americans consume on average 170 pounds of sugar per year, drink 154 liters of soda pop per year and watch television five hours per day. They are sleep deprived with 6.8 hours of sleep per day and only walk 4,774 steps per day, a far cry from the recommended minimum 10,000 steps. The U.S. is not alone, as many other developing industrialized nations are following in our footsteps on poor nutrition and lack of exercise and sleep.

What does this all mean? Well, nearly 100 percent of people would likely want to be healthier, but realistically a large majority of people would actually do nothing to reach this goal.

We identified a problem, we identified solutions but forgot to drill deeper into the real question: "Are you committed to incorporating these solutions in your lifestyle?" If you are a greasy spoon, fast food burger and fries restaurant, how do you react to this question and answer that people would like to be healthier? Should you incorporate new healthier options on your menu? Or should you stick to your core values of selling burgers and fries. The answer is not so simple. A healthier menu might be embraced by the consumer but it could also backfire. You'd have to dig deeper into what model really would work best in your situation. What is the risk of doing nothing compared to trying something new? We face these same dilemmas daily within our lotteries. Remember the age old cry - players want to see more winners instead of large jackpots, but we know from experience that a large jackpot is the hook.

This article is not intended to provide the answers, because there are no real easy answers. There is no cookie cutter solution for executing new strategies for future revenue growth. There is no perfect plan, no perfect analysis, and sometimes good old fashioned experience and intuition can also backfire. The old saying in the gym, "No Pain, No Gain" can apply to our business. All horses don't run. Sometimes we need to just roll the dice. Do your due diligence, use all the tools you have in your toolbox, ask the right questions, try not to back into the answer or solutions to what you want to hear, be realistic, and don't be afraid to take some risk. We are in the gambling business!

In conclusion, I'd like to end with a quote: "If you execute everything perfectly, you probably aren't trying hard enough."

Dennis Berg
Director, Ohio Lottery Commission
NASPL President

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