Bonus Abuse II - the pain of no deposit free spins
Bonus Abuse II - the pain of no deposit free spins
I have a whitelabel casino on the SoftSwiss platform specialising in Bitcoin. I want to share one of my old ‘no deposit free spin’ war stories with you.
Just some background; I founded Oshi, a Bitcoin casino back in 2015 and we’ve always taken a product led approach. In other words, we have concentrated on what I describe as the ‘fundamentals’ of better casino experience. To me fundamentals are getting mobile right, having a fast website, game search, cashback, comp points and so on.
Our start-up bet was to build an awesome product and get more traction per marketing dollar than the next brand. The only catch was slower than expected deployment of site improvements and horrible realisation that customers demand free bonuses.
Psychology of free
If you’re in marketing, somewhere along the way you’ve probably studied some human psychology. You may have heard of Dan Ariely , who wrote Predictably Irrational, a notable book on irrationality of human behaviour. His thesis; we are human, were emotionally driven and overall we make decisions emotionally and justify them logically.
In one part of the book he talks about ‘free’ and how offering something for free is illogically persuasive.
In one experiment he offered two trays of chocolates for sale, one an upmarket Lindt chocolate and the other a Hershey kiss, a cheap chocolate. Lindt chocolates were sold for $.15 each and a Hershey for $.01.
73% chose Lindt and 27% chose Hersheys. The logic is; if you are going to buy some chocolate get something which gives you lots of satisfaction, so pay a little bit more. He then discounted each chocolate by one cent. Lindt: $.14 Hershey $0.00. Interestingly, 69% chose Hershey and only 31% chose Lindt.
Why would Lindt chocolates have tanked in sales? It was only one cent cheaper? The answer is we are emotionally drawn to free stuff.
Logically, if I say to you “here is some bonus money, and by the way if you win you have to wager your money 40 times in order to cash out. On top of that, there is a house edge of about 3%, so, you turn your money over 40 times you’re going to get a net return of -20%.” Doesn’t sound like a good deal to me…
Why do customers accept bonuses?! For the same reason they want free chocolate….”I’ll take it now and deal with the pain later.“
In this case, match bonuses and free spins generally make economic sense as long as you’re not too generous with them.
Okay, so bonuses keep customers happy… Do more bonuses make customers more happy? Would giving no deposit bonuses make them very happy and loyal to you?
That is an expensive question which I finally answered.
Before I get into all of that, I just want to ‘frame’ what am about to say with a foundation truth for gambling. Give customers what they want and they will love you. (Nothing obvious there)
But what do they want? That is the question which took me nearly 2 years to answer. Along the way I read a superb book by Nir Eyal; Hooked. In this he talks about trigger, action, investment and variable reward.
What’s important in the context of free bonuses are ‘investment’ and ‘variable reward’.
Investment, as in customers deposit money to unlock a bonus who then spend lots of time churning bonus money in order to eventually get a cash out
Variable reward is obvious, that’s gambling.
Once upon a time I figured match bonuses and free spins would eventually die, but now I think they’re just a consequence of the human condition around ‘free’.
No deposit free spin bonuses
Logically, you would think if match deposits and free spins work, then giving away stuff for 100% free would work even better! That’s what we thought when we started giving away free no deposit spins.
Last year as we were rolling out various improvements on the site, we were confronted with a choice: give away free stuff and get signups or hold back, keep working on the site and hope that we could get more traction once we improved the site a bit more. We chose to give away no deposit free spins. We had thousands of signups, a bigger turnover than ever before and we were haemorrhaging profit.
Theoretically everything looked fine as long as we could cut down the cost of bonuses. After a tense team meeting on a houseboat in Amsterdam during the affiliate Amsterdam conference, we decided to axe no deposit freespins and just hope the site would recover.
It took another nine months before we looked at freespins again. This time round we were being pressed by three different affiliates who wanted something to grab attention. Since our cash flow was reasonable and we had made a number of improvements on our email marketing, we figured it was worth another go as long as we could follow up and convert these customers later. And yes, you can guess how that turned out...
Instead of a rapid haemorrhaging of cash, it was just a slow drip, drip, drip of profit down the free spin toilet. As each month passed, we had progressively less and less technology investment capital, but a bigger and bigger database with some nice turnover numbers and a repeat of “if only we could cut down bonus costs”.
Once again we reached a point where we were running out of money for technology investment and if that happened, we would end up not fulfilling our core mission is a brand to make the fundamentals of gambling better. And once again we pulled the plug on no deposit freespins, and once again cash flow improved and profits started to accumulate again.
Who were the free spin customers?
Being a Cryptocurrency casino, many of our users come in via VPN so it’s very difficult to say where they came from exactly, but most of the free spin bonus abuse i.e. people registering 100 accounts at a time seem to come from technically savvy low GDP country territories.
We noticed around a 2% conversion rate from no deposit free spin bonuses, to an actual depositing customer. But based on my numbers, we have not broken even with this group and we probably never will.
Those who did convert seem to be from countries with higher GDP per individual and appreciated the opportunity to test the casino for real money before depositing their own cash. However they were in the extreme minority.
On the whole the no deposit free spins went out to abusers who reckoned their time was worth less than the opportunity to win a few dollars.
If I could go back in time
I certainly wouldn’t have done no deposit free spins, that’s pretty obvious. I would have done what I’m finally doing now which is concentrate on fundamentals like multi language, mobile friendliness, customer services.
All the while we’ve been adding a new layer of variable outcome to everything we do and that’s why we have tournaments, lotteries and even a randomised daily reload bonus.
Online gambling is very commoditised. Customers know this and that’s why the ecosystem so driven by free money. If the customer had a relationship with a brand and the brand gave them something free, then you would have reciprocation and then gratitude hopefully - that’s why were introducing anniversary bonuses.
Just randomly giving away no deposit free spins doesn’t build relationships, it just engenders abuse.