Casinos Can Determine Improvement Program's ROI by Breaking Down Percentage Increase in Revenue, Says Robinson & Associates, Inc.

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Casinos that implement internal improvement programs to boost performance and then actually realize an increase in revenue can determine how much the program contributed to the gain and then calculate the program's return on investment.

Casinos that implement internal improvement programs to boost performance and then actually realize an increase in revenue can determine how much the program contributed to the gain and then calculate the program's return on investment, says Annapolis, Maryland-based Robinson and Associates, Inc. (http://www.advocatedevelopmentsystem.com)

"As casinos compete for market share, they pursue various strategies to accomplish their purpose and vision," says Martin R. Baird, chief executive officer of Robinson & Associates. "One strategy is to roll out an internal improvement program that enhances overall performance. From there, the casino should want to know what it got in return for its investment in the program. The ROI can be determined and is well worth the effort."

Baird offers the following tips on ROI and improvement programs.

Break It Down. Assuming the casino has an increase in revenue from one year to the next after implementing an improvement program, the property should break that revenue gain down to get at the program's actual contribution to the numbers, Baird says.

Take A Look At the Hold. Calculate the percent increase in hold from gaming machines and table games, Baird says. "Once you have that number, subtract it from the overall percent increase in revenue," Baird explains.

Talley Up Marketing and Promotions. Next, determine the percent increase in spending for marketing and promotions and subtract that from the new, lower number calculated in the first step, Baird says.

Normalized Growth. "After subtracting the increase in marketing and promotions expenditures, you have the casino's normalized growth," Baird says.

Now Determine the Program's Contribution. Subtract the normalized growth from the initial percent increase in revenue and the end result is the improvement program's contribution to revenue growth, Baird says.

Apply the ROI Formula. "Knowing how much an improvement program contributed to revenue growth is important information," Baird says. "The final step is to calculate the program's ROI. To do that, calculate the program's contribution in dollars. That's the benefit. Subtract the cost of the improvement program from the benefit, divide that number by the total cost of the program and multiply that number by 100. There's your ROI."

To help casinos understand and deal with return on investment, Robinson & Associates has published an ROI white paper. Those interested in obtaining a copy of the white paper should e-mail Lydia Baird, Robinson & Associates' director of business development, at lbaird @ casinocustomerservice.com or call her at 206-774-8856.

Robinson & Associates, Inc., is a global customer service consulting firm for the gaming industry. It helps casinos determine their Advocate Index, a number that indicates the extent to which properties have guests who are willing to be advocates. The company then implements its Advocate Development System in combination with the proven methodology of Advocate Index and best business practices to help casinos create more guest advocates and chart a course for growth and profitability. Robinson & Associates may be reached by phone at 480-991-6420, by e-mail at mbaird @ casinocustomerservice.com or via its Web sites at http://www.advocatedevelopmentsystem.com and http://www.casinocustomerservice.com.

Robinson & Associates is a member of the Casino Management Association and an associate member of the National Indian Gaming Association.

Contact:
Martin R. Baird
Robinson & Associates, Inc.
http://www.advocatedevelopmentsystem
http://www.casinocustomerservice.com
480-991-6420

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