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Internet sales, these things will come. Even if you get past
the question of distribution, making it available on a mobile
phone or over the Internet, the question becomes whether the
games themselves will appeal to your target market. Both have
to be in place for the right games to be at the right place for
the player to buy them. Distribution and game design. So it’s
a two-fold problem.
I noticed that Michigan is implementing a program of rewarding
top retailer performers and actually penalizing underperformers.
When retailer sales fall below $1,000 a week, they
are charged a $70 penalty. That would mean that the retailer is
literally losing money on lottery.
J. Scroggins: Again, I think that may be a function of how old
an individual lottery is. Michigan is a mature lottery. They’ve certainly
got a different financial situation and distributional landscape
than Oklahoma does. For us, we can’t afford to do anything that
might result in losing retailers. We have lost some retailers because
of the economy and we have gained some new ones. But for us, we’re
just working hard to keep our retailer count at a consistent number.
Isn’t there a point at which if they sell less than a certain amount,
that it’s literally not worth keeping them on; that it’s literally costing
the lottery money to maintain them as an account?
J. Scroggins: The short answer is yes. In my opinion there are
two basic reasons to maintain low volume retailers. One, you don’t
know if or when a low volume store might succeed at increasing their
volume. That can happen in some unpredictable ways. Like a casino
being built in a place that creates traffic in an otherwise rural setting.
Or border business or successive field sales initiatives. All kinds of factors
contribute to a store’s volume. So you never really know when
a retailer may improve its sales. Two, I for one feel an obligation to
make our products available to everyone in our state. There are rural
locations that may not sell much, but we want to maintain a relationship
with the customers there just as we do everywhere in the state
of Oklahoma. Our lottery was approved in every county in this state.
So I believe we should make it available to people in all areas even if
some locations are less profitable. Along the same lines, retail availability
and the POS in all stores are an integral part of our branding
efforts. Regardless of how much the store sells, our presence there gets
exposure for the lottery, grabs mind-share of the general public, and
contributes to the brand awareness that is so vital to long-term success.
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We can analyze the information that is available, but we need
to remember that we never actually have complete information.
And maybe what we’re missing will turn out to be the most important
piece of the puzzle.
J. Scroggins: It’s like trying to design a good scratch game. You
don’t know exactly what will work until you try it. Obviously, you do
everything you can to research and gather the data that enables you to
make an informed decision. But we must also assess the performance
in progress, adjusting our business plans as we go along, and never forget
that reality does not always conform to the best-laid plans. It’s a bit
like the old definition of insanity, “continuing to do the same things
and expecting different results.” The economy has changed, the lottery
environment has changed and will continue to change. For lotteries
to continue to be successful we have to gain an understanding of
these changes and adapt our business model accordingly. u
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Fax: +43 732 730910, E-Mail: keba@keba.com