The drive to innovate is not without risks, but is the path forward to provide customers with the products and experiences they want from a lottery organization.
By Kim Clark, VP of Lottery and Customer Success, Ontario Lottery and Gaming
Published August 20, 2024
In a world so full of change, how does a nearly 50-year-old lottery company evolve to not only embrace the change, but lead it? And how do you lead into brave new territories without alienating the loyal and core customers who brought you so much success in your past?
This challenge keeps many lottery leaders up at night and is the one that seizes OLG’s efforts the most. In OLG’s Ontario, Canada, market, the nearly 11 million adult population is changing rapidly with immigration growth from all over the world. We have a newly privatized market for gambling and sports, with over 40 competitors who actively market with big budgets to get their fair share of entertainment dollars and disposable income. We have competing lotteries and newly emerging 50/50 draws in many cities and towns across the province with rich prizing and compelling reasons to support local charities and hospitals. Of course, we also have changing retail traffic patterns, changing customer purchase patterns and preference along with most other markets in the world.
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Like most lotteries, we are also aging out into a very mature business with a lottery proposition that just isn’t as compelling to new and upcoming demographics.
All of this puts innovation squarely in the center of the solution. Moreover, at OLG it also means taking an entirely new approach to that innovation.
Over the years, we’ve favored running a separate innovation function. With a $4+ billion business and dozens of products, we find it’s best to have a dedicated innovation team to focus on future products. That team works in an inclusive manner alongside business leaders to ensure ideas are flowing and getting stronger all the time. Product managers at OLG also have innovation responsibilities for the ongoing evolution and improvements on active products.
To get at the best ideas, we start first with the target customer. Deep insights about their needs, what drives their behavior and what will excite them is critical to ideation. Today, more than ever, we use customer segmentation for our design efforts where we have not only identified core segments, but have now prioritized what we call “Player of the Future” segments to put greater emphasis on acquiring new customers with new products and experiences.
The business process is also rigorous. We use the “DVF” framework, which means carefully assessing Desirability (will customers buy it), Viability (will enough customers buy it to justify the effort) and Feasibility (what will it take to build it). We use customer research and involve many internal partners in our assessments.
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Recent Innovations
While our process evolves, our successes have been varied. In 2020, we launched a game called Lightning Lotto. Designed for the player who enjoys a chance to win more than the play itself, they can instantly win a progressive jackpot that starts at $125,000 and grows with each in-store lottery purchase without waiting for a nightly draw.
The daily Lightning Lotto winning numbers are drawn in the overnight hours before each day’s sales open. Throughout that day, players try to match those numbers with their Lightning Lotto ticket purchases.
This product has a very high customer satisfaction rate of 75%, which is based on a loaded prize structure that creates a lot of on-the-spot small-win excitement. That enthusiasm from players prompted Western Canada Lottery Corp. to license the game and launch its own version of Lightning Lotto at the end of April.
A new innovation in 2021 called Top Up was the first-ever instant spiel game. Game play takes place on the retail terminal for an extra $1 with any instant game purchase. It rendered well through our DVF process, and yet at retail it never achieved expectations. In this case, we underestimated the retailer and operational component required to actively sell a ticket across a large number of retailers we do not operate.
To catch that type of pain point and address it before we go to market, we now map every customer journey for a product. We start with how a player will learn about the product, right through how they will purchase it, play it, lose, win, check tickets, and get service if needed. We consider every angle and we make sure that everyone is ready to support that experience when a product goes to market.
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What’s changed the most in the last two years is our willingness and ability to test and learn new products. A new goal for us it to accelerate our speed to market and our learning given the landscape changes. So, we have begun to launch short-term/limited-time-offer games to see if we can generate new audiences and add excitement to the portfolio.
The first limited time “event” game was Merry Millions. Designed to capture high seasonal traffic at retail, we marketed the raffle-style game with its three guaranteed top prizes of $1 million and hundreds of additional prizes. We built a rich prize structure with a fixed payout, launched it with a significant marketing budget and took a risk on profitability in the hopes of achieving 100% sell-through. We also planned a robust customer research study immediately following to see if we achieved our true objectives.
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Merry Millions didn’t quite sell out, but we did garner great learning and small successes. The greatest achievement was in capturing 45% of its sales through customers under the age of 35. The game’s high $20 price point created more disappointment for players when they didn’t win. In a second, summertime, iteration of this raffle-style game called Triple Millions, we didn’t have the same success and will make more changes to this format in the next iteration.
We found the same results with a $100 Ultimate limited time product – which was a combined passive draw and instant ticket experience. We loaded the instant portion with $100 wins and marketed it on the basis of “best odds to win $1 million.” The proposition was exciting, but the loss was felt more greatly. We captured mostly core customers, and after two runs of the game, we are opting not to continue.
Moving Forward
Overall, we have learned that we can drive some acquisition for retail lottery with limited-time game tests, with a heavy lift. We also know that products alone will not change our business or our future. Understanding where and how customers consume products is equally important to creating the products themselves. We have to find and meet future customers where they are with experiences they value.
We’re inspired by that consumer journey. We now look to technology and other industries that enable customers to consume products when and where they want. We celebrate our past successes and our current learnings while we think about how to create a new lottery for our players of the future so that we can enjoy another 50 years of service to our province.
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