Debit Card Systems
The Innovation Adoption Progression
by Howard McAuliffe, Partner, Pinnacle Entertainment Group
Everett Rogers, a professor of communication studies, popularized the theory called “The Diffusion of Innovations” in his book by the same name. Rogers argues that diffusion is the process by which an innovation is communicated over time among the participants in a social system. Debit card systems in the modern arcade fit his model. For Rogers, the categories of adopters are: innovators, early adopters, early majority, late majority and laggards (see graphic.)
Our industry is in an interesting place in this lifecycle. While I believe we are in the beginning of the “Late Majority” phase in terms of implementing debit card systems, society has fully adopted these technologies. In other words, we are lagging the technology adoption of the marketplace. Furthermore, actual usage of the debit card systems by businesses who have them is lagging. The capabilities of the system are rarely fully used, which diminishes the profitability of the business, as well as limits the user experience. But perhaps the most important benefit of debit card systems is that they are a platform designed to build onto as future technologies evolve. The speed of technology evolution is increasing and the ability to adopt new technology quickly is growing in importance.
In the developed world, and certainly in the U.S., customers are used to scanable cards. Customers have very few problems understanding and using e-tickets, and 75% of Americans have at least one credit card. We see several of the locations we aggregate numbers for where credit cards account for 50% or more of the sales.
Furthermore, technology is evolving and mobile payments will become more prevalent. TechCrunch estimates that 70 percent of all mobile users in the United States will make a mobile payment in 2017. Surely, there will be a way to retrofit a token changer to take mobile payments, but that will cost time and money. Plus, about the same time mobile is fully adopted, a mobile phone will be an option to purchase game play and store tickets. Instead of debating ticket vs. ticketless, we may eventually be debating card vs. cardless. As technology progresses and new innovations arise, debit card systems are positioned to implement these technologies.
Top Features Not Used
While preparing for the future is important, maximizing existing technologies –– in this case, the significant investment in a debit card system –– is essential. Here are the top features available in debit card systems that owners often don’t use:
1) Targeting promotions to maximize profitability of the facility. These promotions need to be comprehensively marketed online, using in-store signage, and by staff. In addition, their impact needs to be studied for effectiveness. The debit card systems makes implementing and tracking accurate and relatively easy.
2) Targeted bonus features. There are a variety of ways to drive sales using bonus play, but testing and finding the optimal offering and method of offering is key.
3) Key Performance Indicators (KPIs). Regularly using reports to manage Key Performance Indicators (KPIs) such as price per play, payout, tickets redeemed, and most importantly the ratios of these KPIs.
4) Using reports and data to identify which prizes to carry. Ideally, this should be done with a supplier that can aggregate prize data from multiple locations so you know what items you don’t have that you should.
5) Creating a VIP program based on data and incorporated into the operation.
The Future of Debit Card Systems
Here are innovations I see coming in the next few years that debit card systems will be key in implementing:
1) Mobile payment solutions. Debit card systems will be the first step to receiving mobile payments. However, consumers will eventually be able to purchase credits, activate games, and redeem prizes bypassing the kiosk and point of sale purchase.
2) Personalization will grow in importance. Customers will be recognized by their card, and games will recognize the player. When the customer scans their card to play, the game can recognize who they are, what level they are on, and what status or features they have earned.
3) Omnichannel strategies will grow in importance. Facilities will be interacting with customers on social media, online, in store, and through mobile offerings. Debit card systems will be instrumental in implementing and tracking many of these strategies.
4) Increased use of data. Data is increasingly important when making decisions, especially regarding inventory management, merchandise selection and profitability by categories such as program, clients and machines. Debit card systems are essential for identifying and tracking data to make decisions based on facts.
While our industry is hitting its stride in terms of being a mainstream out-of-home entertainment option, we have a long way to go technologically. Currently, there are business models that are profitable even when operations are mediocre. However, as competition increases, and/or macroeconomic pressures stress profits, the facilities which operate at the highest level will survive.
A debit card system is essential to maximizing profits, and will only grow in importance as new innovations are adopted. The Rogers innovation curve restarts for each new technology innovation. For many of these, a debit card system will be essential to adopting these new technologies quickly. Those who don’t have them or don’t properly use them will be left behind.
Howard McAuliffe loves to imagine and implement new products, business models, and ideas, and is a partner in Pinnacle Entertainment Group Inc. He’s an industry veteran who got his start in the business when he was just 16 and has 20 years of expertise in product development, as well as FEC and route operations. Howard’s wife Reem and young son Sami are the center of life outside of work. When he’s not working, Howard can be found enjoying the outdoors, hiking, fishing and mountaineering. Traveling anywhere new or to old favorites like the American West is a passion. Readers can visit www.grouppinnacle.com for more information or contact Howard at [email protected], he welcomes positive as well as constructive feedback and counterpoints.