Bonus Whoring
Posted by Bill @ 11:19 amIf you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
It seems my recent post on bonus whoring has set off a industry-wide chain of events resulting in many players being booted from online poker sites. Ok, maybe I’ve got delusions of grandeur (actually, I’m quite sure of it). Anyway, it looks like Empire and UB have sparked widespread panic in the online poker world by cutting off people who are generating negative rake. Don’t get me wrong here but . . . GOOD!
4Flush discusses the foolish decisions that have brought us here but I think this is more of an issue of churn. It would appear that the industry is turning away from growth and looking at firming up the books. The list of industries where high-churn rates don’t have a negative fiscal impact would fit on a postage stamp. Churn is a killer on the bottom line.
The Dotcom industry learned, the hard way, that growth purchased with high churn is suicide. As a friend of mine who ran Sony’s online operations once told the CEO of (now defunct) DEN, “I could generate tons of popularity if I stood out on Hollywood Blvd. handing out $100 bills. Problem is, it’s not much of a business plan.”
Despite the fact that eToys is no longer with us, we really understood this concept. We didn’t give free shipping. Even if it meant losing sales, we knew that was not the kind of customer we wanted. We measured our marketing campaigns to determine what kinds of customers certain types of campaigns generated. Did they make repeat purchases? Did they only purchase when another offer was sent? What is the lifetime value of this customer?
Our focus on cultivating profitable customers showed up on the bottom line. We had huge customer loyalty even if our prices were higher than our competition. We also had gross margins of approx. 28% - 30% while our competitors were selling products at half those margins and some were even losing money on sales trying to nip into our sales. Our average order size was also much larger which meant we were making more per transaction than any of our competitors.
Why might this be good for the online poker industry? Because they might finally be recognizing that the real money is keeping their regulars happy rather than chasing bonus whores with reload bonuses. In my post linked to at the beginning of this post I note how bonus whoring is a likely -EV practice for all but newbies but now it seems the poker rooms have finally figured out it’s -EV for them as well.
Based on some of the emails I received on that post I think that some folks got the wrong impression and thought that I was against trying to clear bonuses. No, if you were already playing at that site and they send you a reload bonus email, hey, free money! If you’re bouncing around a new site every month because someone is dangling $100 in front of you then it’s -EV for you and -EV for them. Now that some poker rooms are starting to realize this, hopefully they’ll figure out that it’s much more profitable for them to offer me more perks to boost my loyalty than it is to chase after every doorknob with $200 trying to grab a 50% new account bonus. I generate thousands of dollars in rake every month but most of the money they could be using to keep me happy has traditionally been spent on attracting bonus whores. So now that they’ve presumably figured out this Business 101 concept I’m hoping to see a little more of the perks flowing my way.
License
This work is published under a Creative Commons Attribution-NonCommercial-NoDerivs 2.5 License.
If you enjoyed this post, please consider getting our free RSS feed so you can be notified of other posts like this.
- BROWSE / IN TIMELINE
- « Am I The Last To See This?
- » Beating the RSS Feed Cheats
- RELATED / YOU MIGHT FIND THESE INTERESTING
COMMENTS / 10 COMMENTS
Maudie added these pithy words on May 08 05 at 3:49 pmUp until reading this post, I thought I was perhaps crazy for not pursuing bonuses earnestly. It was never that profitable for me and I hated getting stuck on a site I despised just to clear the bonus. Any way - your anlysis is dot on - take care of the customers you have and you will cultivate a healthy garden of loyal consumers. I hope you are right that the big sites are beginning to realize this.
Joe Speaker added these pithy words on May 08 05 at 10:53 pmI’m with you (and Maudie). I’ve never had the time, nor the patience (nor the results) to justify chasing bonuses. It’s not a “perk” that appeals to me.
Great analysis. And I like the new look!
Mourn added these pithy words on May 09 05 at 5:01 amAmen.
Imagine if Party took all the money they pay out in bonuses in one month and put it towards a project to fix their software. Here’s hoping.
Drizztdj added these pithy words on May 09 05 at 8:03 amI am a die hard bonus whore. I admit it.
But recently I’ve had second thoughts about 4-5 tabling just so I can clear a bonus, rather then really look at what I’m actually playing!
While I love to chase bonuses… I very much agree to your statement about “rewarding consistent play on a certain site”. True enough, if there were such loyalty programs out there besides the free tshirt/book swag, I would probably stop chasing and start playing at one site.
Easycure added these pithy words on May 09 05 at 8:05 amI totally agree with you….the best businesses put as much energy or more to customer retention as to customer growth. If you can’t keep the current customers happy, how in the hay are you supposed to keep the new customers? It’s pretty simple, actually.
Mike added these pithy words on May 09 05 at 12:42 pmI certainly won’t miss the bonus whoring. Maybe they can concentrate on making rake back something official.
I like the new site design. Its good to know you can still find uses for your reg.
Grinder added these pithy words on May 11 05 at 2:09 pmI believe you are slightly wrong. Doing the Party bonus all the time and $1/2 is only SLIGHTLY worse then doing them at $2/4. IN fact it’s only $21 worse and I am not taking into account that play gets better the higher you go. Well, actually 2/4 has worse players then 1/2 but I glaze over that problem.
Perhaps I’ll talk about that in MY blog with the numbers I’m using
BTW - feel free to show I’m wrong - I have been in the past!
Bill Rini added these pithy words on May 11 05 at 2:29 pmGrinder,
Well the premise isn’t to show an exact dollar figure loss per se. It was more of a general illustration of one of the many reasons why bonus whoring can be -EV. The losses in EV, IMHO, are in the fact that people could get into the trap of chasing bonuses intead of becoming better players. Go check out some of the bonus whore sites and you’ll quickly see a pattern of players jumping down to .50/$1 play (and lower) just to clear a bonus on a site. I read a funny thread the other day about the Empire account closures and and one guy said he had been clearing bonuses playing $1/$2 for 3 years. In three years he should be playing $5/$10 - $20/$40 not jerking off trying to catch another $100 bonus.
Viscant added these pithy words on May 11 05 at 11:53 pmChasing bonuses is only -EV if you change your normal routine to get the bonus. You assume that everyone is going to drop down to .5/1 or 1/2 to clear the bonus when this isn’t always the case. I figure that if you’re going to play these hands anyways, why not be paid to play the hands?
In your examples you use a 5/10 player as your example. Let’s say that I want to sign up to Empire or Intertops or whatever Party skin that is offering a 5x signup bonus. Let’s be very conservative and say that it takes 750 hands to clear the bonus. That’s still more than 1 BB/100 to add to my overall winrate. Turning down that extra BB/100 is silly, IMO.While I agree with you that concentrating more on bonuses and less on improving your play and moving up levels when it’s time is -EV, that’s just not always the case. For many bonus whores like me, I’m doing exactly what I would do anyways. Playing the sites I would play anyways, playing the hands I would play anyways, on the tables I would play anyways, playing the limits I would play anyways. I’m just getting paid prop wages to do it. Sounds like a good deal to me.
john sucewolec added these pithy words on Jul 21 06 at 3:00 amHey, you’re fat
SPEAK / ADD YOUR COMMENT
Comments are moderated.
