| In today's entertainment market, existing businesses continue to see more and more competition. The residents and visitors in Hong Kong have an enormous range of divertive choices and the Hong Kong Jockey Club competes directly and indirectly with rivals for the discretionary spending of current and potential customers. In order to compete for their share of customers' "fun money" they must seriously evaluate the variety of recreational activities they have to offer.
"It's always important to us to keep a competitive edge by making sure our venue and products are attractive enough from the standpoint of sports and racing," pointed out Mr. Steve Beason, Executive Director, Information Technology for the Hong Kong Jockey Club.
So how does a company become more innovative and proactive in providing products and services which interest their customers, in order to effectively increase wallet share?
Information Technology, on the inside of every transaction
The Hong Kong Jockey Club believes that information technology (IT) is crucial for their business. It is impossible to satisfy the great number of customers that the Club serves by manual calculation of wagers. "For every transaction we make with customers, we need IT, which serves as a backbone. We use IT to enhance the entertainment value in many ways, like introducing a new line of business or a new wager type, as well as providing more information through more channels such as the use of the Internet, mobile phones and two-way pagers," Beason stated.
Today, the Hong Kong Jockey Club performs extensive segmentation analysis of its customer data, because information about services can be provided to these customer segments via many different channels and choosing the right channel can be crucial. Recently, the Club has undertaken projects such as the introduction of the Sectional Timing for Racing Information and Dynamic Entertainment (STRIDE) system, an integrated horse tracking and multi-media presentation system for delivering individual sectional times for each and every horse in every race. The ability to determine within 1/100th of a second the position of each and every runner in a race will emerge as a powerful analysis tool. All the information tracked can be provided to customers for getting them to be more involved in the race and to get more accurate information in real-time.
To understand customers' preferences, the Club began by analyzing vast amounts of customer data from their data warehouse. The Club's data warehouse has been in place for 3 years and has consolidated customer databases, transactional information and demographic data of customers from millions of accounts, smart card holders and 150 loyalty programs. This information is generated by the betting system, the administrative terminal and membership services essentially any system where customer data is generated. In order to enrich the quality of customer information, the Club did invite customers to join focus groups and surveys, so they could then analyze the survey results to determine what type of product the customers like or dislike.
First OLAP, then data mining to explore a jackpot of new business opportunities
The Hong Kong Jockey Club began the general analysis by doing OLAP reporting; several data warehouses have been done in the gaming areas. An OLAP is considered to be the right way to start because it can slice and dice that data in many different ways. To proceed to the next step, there is a need to do more data mining and more analysis further for creating certain ways to view the report. For instance, when the Club looks at how much money made on different classes of race, the management would like to find out how to improve certain classes that lag behind in profitability. "It's much easier for us to use the data mining tools to tell us what other factors are significant to these changes," Beason continued, "It is crucial to get down to some of the root causes, then we know what we have to work on and what plan to put in place. Currently, we are making changes based on some analysis we did with the data mining software from SAS, which we knew would be a useful addition to OLAP. Data mining can help find significant factors that are not obvious by simply running the OLAP alone."
After investigating their available Business Intelligence (BI) vendor options, the Hong Kong Jockey Club chose SAS® Enterprise Miner for data mining because, as Beason said, "SAS is a leader in the field of data mining and analytics." The Club had done some pilot research work with some local universities, such as City University of Hong Kong who also used SAS software. Some of those studies with the universities were on race betting, customer churn rate and customer life-time value. The Club was happy with the results; when the management decided to start using data mining software, the Club chose SAS as they found the software to be the most supported locally. "SAS suited our needs very well from a product standpoint. It is also important to us that SAS received good worldwide reviews on data mining. The support from the local office gave us the confidence we need."
Tracking the performance and business benefits
The Hong Kong Jockey Club then trained business analysts to perform the data mining tasks using SAS&Reg; Enterprise Miner and the OLAP tools. Beason has moved some of the tasks formerly assigned to IT to the business analyst's field, because this could get the Club even more information. Those business analysts worked with Beason to make sure that the template and the analysis is done correctly with the data from the data warehouse. Then the analysts were able to run the reports by doing some configuration layout, some programming, using the data dictionary, manipulating and what-if analysis scenarios on top of the data. After the reports have been run, they would be distributed to operational executives and management level executives to keep track on the performance. Beason added that, "For what we need to do, we found that SAS&Reg; Enterprise Miner is user-friendly. The users and analysts with only basic statistics backgrounds could use it easily. It is good that a user doesn't need to be an engineer, as that is already taken care of in the software which is able to logically set up what we need it to do."
When looking at some instant benefits, the Hong Kong Jockey Club is now able to conduct more targeted marketing campaigns and surveys. Different campaigns have been done to entice customers back by providing personalized services when their activity level dropped off. Satisfactory results were seen with very good increases in customer retention in the range of double-digits. Without bothering certain customers with the products that they are not interested in, at the same time, the Club can even provide better services as well as being able to offer the products that the customers might not be aware of by fitting their profiles or demographics. "By delivering the right information and products to the right customer, ultimately, we have more satisfied customers, lowering our costs and saving time." Beason explained.
Whenever the Hong Kong Jockey Club makes an investment, it will need to generate ROI in a time period ranging from a year to five years. "In this business case, the data warehouse, the data mining software and OLAP are all parts of one much bigger project which is expected to have a 5-year ROI. We believe we'll have no problem in getting that back in the view of cost-savings and additional revenue. Throughout the project, we've found it easy to justify using SAS," Beason explained.
What's next?
The Hong Kong Jockey Club's next strategy will involve a two-fold plan. From the racing product side, one plan will be in the area of providing more in-depth racing information at different levels for different users. For some categories of races, the Club hasn't been offering as much information as the customers want. Regarding this, the Club will be targeting different customers for different types of races. From the customer service side, different theme areas will be offered to different segments. "We'll be putting in place different betting types such as football betting, the legislation for which is being introduced by the government. It is very important for us to use OLAP and data mining to be able to examine and target our customer database to see who might fit into these areas." The Club keeps itself to be responsive to the market. Thus, when they goes out to new business areas and new betting types, they will be able to do more targeted marketing, and provide more personalized services and contact with customers at every touch point. "Our goal is to build more one-on-one relationships with customers. Personalization is always the big issue for the Hong Kong Jockey Club," Beason concluded.
ABOUT THE HONG KONG JOCKEY CLUB
The Hong Kong Jockey Club is one of the largest racing organizations in the world, and the third richest in terms of betting turnover after Japan and the United States. The Club contributes 10% of the total tax revenues collected by the Government. A unique feature of the Jockey Club is its not-for-profit business model whereby its surplus goes to charity. In the past decade, over HK$11 billion has been donated to support some 180 charities and community projects. The Hong Kong Jockey Club combines world class racing with world class giving.
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