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    Loyalty programs and the economics and math behind them

    news thumbnail image

    Understanding the inner workings and mathematics behind the popular loyalty programs at online casinos.

    You may be thrilled by the games online casinos bring to the table, but often, the promotions they offer are the real cherry on top.

    With quality bonuses and promotions, players get to boost their gameplay and enjoy great games for longer. There’s one thing more alluring than the promotions, and that’s the loyalty programs casinos often run.

    CasinoWow looks at loyalty programs and the math and economics behind them to help you understand more about how they work.

    What is a loyalty program?

    An online casino loyalty program is designed to reward players who play repeatedly, engaging with all the platform has to offer.

    Most loyalty programs have several levels or tiers and a dedicated point system. As you play, you earn points, which help you climb the different levels or tiers to access better rewards and benefits. The latter often include exclusive offers, special bonuses and promotions, and access to personalised casino services.

    These programs enhance players' experiences and offer increased value, simultaneously leading to customer retention and increased player engagement.

    The economics behind these programs

    The main objective of these loyalty programs is to retain existing customers. In terms of economics, this is more cost-effective than acquiring new players, which says a lot because studies show that increasing customer retention rates by 5% can boost profit, with percentages ranging between 25% and 95%.

    The reality is that loyal players spend more as time passes, which means they play an active role in contributing to casino revenue. On top of that, the loyalty bonus programs help reduce the rate at which players stop playing, which is also referred to as the reduced churn rates. In terms of long-term profitability, this stability is crucial.

    And we can’t forget the fact that a good loyalty program can help a casino stand out above the rest, which is a very good thing considering the highly populated market.

    Let’s talk math

    Some of the biggest math goes into point accumulation, where players earn points based on their betting activity. With these programs, the more you play, the more points you collect.

    Then there is the rewards redemption, where you can redeem a number of rewards using your points. This includes things like bonus cash, free spins, and exclusive event invitations. All rewards have a value attached, which is calculated to make sure they are inviting enough to pull in players.

    We can’t forget the probability and randomness of casino games, which are determined by random number generators (RNGs). With RNGs, math is used to ensure all results are random and unpredictable.

    Of course, loyalty programs make use of psychological principles like the endowment effect, which is when one tends to place more value on rewards that have been earned rather than simply just received.

    Also, there is the sunk cost fallacy, where you simply keep playing in an effort to justify previous investments.

    With the combination of math and economic principles, these loyalty programs are not just appealing to players but also stand to profit the casino.

    A big pull for players is often the chance to get access to lower wagering requirements and faster withdrawal times or higher withdrawal limits. These rewards form part of the magic and benefits players experience with loyalty programs.

    Eager to experience the benefits of loyalty yourself? Head to the top online casinos with the best loyalty programs recommended by CasinoWow and enjoy the game!

    Leave us a review on Trustpilot!

    Published: November 18, 2024

    Anything incorrect or missing?

    Let us know
    Deni avatar image

    Article by Deni

    CasinoWow Contributor

    Hi, I’m Deni and I am here to ensure you have all the information you need to make informed decisions about online casinos and games and, of course, have fun while doing it. I do so through in-depth research and a keen eye for detail resulting in comprehensive reviews and engaging articles. Let’s explore the iGaming world together!

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