Over two years ago, we published a story about a lack of respect that vendors felt from operators. (The lines below in italics are from the earlier article). That story received more feedback at “Frank Floor Talk,” from both operators and suppliers, than any other story we’d ever produced – except when we talked about slot machines being too tight. Therefore, it seemed time to revisit the issue. We reached out to respected and experienced sales representatives to see if anything has changed.
The quotes below are verbatim from multiple anonymous sources. Generally, we avoid using anonymous comments because they lack the credibility of an on-the-record comment. However – and this is a critical part of the problem – any vendor who openly criticizes a casino operator risks being shunned or blackballed by that operator and maybe the entire industry.
Striving to obtain the best possible deal for your organization should always be a top priority. Admittedly some of the issues cited below – such as failing to honor contracts or demanding more for less – can produce savings. However, in our strong opinion, it is no excuse for illegal, rude or unethical behavior, even if you can get away with it. In the long run, such actions may cost your organization more than they save.
As we noted in the first story, you must realize that these same sales reps or organizations have discretion on availability, discounts, new releases, endorsements, customization, references and shipping. Do you think they would offer any preferential treatment to those who were rude, avoiding calls, late for appointments or violated contracts? Not likely.
With that background, we surveyed vendors again this month asking: “Are we doing better today than two years ago?” The results: a few gave a timid “Yes,” but the majority responded with an emphatic “No.”
One rep said, “In general, the level of professionalism from casino management continues to improve.” However, this same source added, “Returning calls has actually gotten worse.” The tendency is to reply with a text message rather than a call, but even that is often lacking. They also noted that “ghosting” is still a very common problem.
Ghosting continues
’Ghosting’ is when a contract or proposal has been submitted and suddenly the operator goes ‘radio silent’. They won’t respond to voicemails, texts, or emails. In some cases, it’s so bad that salespersons often became concerned enough to call the casino switchboard to check to see if their contact was still alive, and/or employed at the casino. More than a few vendors said, “No one answers their phone anymore and no one calls you back.”
Another rep had these wise words, “Sales professionals are big people. We have been told ‘No’ before. We can handle it. I would much rather have a customer be accessible and say ‘No’ than get drug along for a year and never have anything come out of the proposal.”
Several others chimed in, “Giving a positive or negative response promptly is the right thing to do. Some say they don’t answer vendor calls since it takes too much time from their day. However, it can be quicker to respond promptly, rather than ignoring multiple messages, tying up the receptionist and dodging invites, calls and texts. You’ll also free us to pursue other leads, saving both of us time and money.”
Honesty is best
Another offered this wisdom, “Be honest with us and tell us why you’re not interested. Maybe there was a misunderstanding, and that can be clarified. Or maybe the solution is not for you. But at least we do not have to chase the customer to waste their time and ours that could be spent on a viable deal.”
Interestingly one source observed, “Veteran operators tend to do it (ghosting) more than those newer to the industry. I guess old habits are hard to break.”
While industry veterans may cling to outdated behaviors, newer operators have their own problematic trends. Despite increasing their prices on rooms, F&B, parking, resort fees – not to mention tightening the table and slot odds – casinos are asking vendors to lower their rates while demanding additional services or more equipment.
The rising cost of security
“I definitely think the situation has gotten worse,” lamented one vendor. “With increased security concerns we have increased software protections coded into our products and now have to deal with so many security software hurdles to just support the systems remotely.”
These “security issues” are hitting every vendor in another form: a new requirement to provide “cyber insurance”. This didn’t even exist in the early “twenty teens” but it is now becoming commonplace. They are asking vendors to have insurance to cover any losses the casino suffers from cyber intrusions associated with their products. While that may seem reasonable, the cost of that kind of coverage is skyrocketing. It’s akin to trying to get fire insurance coverage now in southern California. It can often be greater than the price of the machines or software from small, and even medium, suppliers. Yet, as mentioned above, operators are still demanding (often rudely) that prices be lowered from their existing contracts.
Free conversions can be costly
“Free” is also becoming more expensive. A universal complaint we heard about “free conversions” was, “Casinos completely ignore the cost associated with research and development, labor for game designers, facility costs, general overhead, etc. They want the vendor to provide new game theme conversions for free. And if the vendor doesn’t, the old threat comes out. ‘If you don’t give me those free, then I’m not buying any product in the future’.”
Unrealistic performance expectations
Another rep said the record performance of some leased games like “Dragon Link” are also creating new demands. Some operators have “unrealistic and moving targets for performance levels expected for ‘convert-to-sale’ opportunities. They are wanting 1.5x to 2.0 x floor averages on core games.” In the past, anything above House Average was a winner, but that was before some premium games started hitting 3.0x and 4.0x.
Contracts are a big issue
Another common complaint is the excessive time it takes operators to approve contracts — sometimes stretching to a year rather than weeks or months.
Even more concerning is the trend of operators refusing to honor or demanding changes to existing signed contracts. This practice “has increased dramatically in the last two years,” one vendor said. “I don’t know what it is. Are the slot guys trying to be tougher, or is it their CFO breathing down their necks?”
Normally, the courts would provide relief in such contract disputes. But again, vendors are between a rock and hard spot on this issue. While they have the law on their side, suing a casino operator would destroy the vendor’s reputation. It doesn’t seem remotely fair, but it is happening more and more.
One other complaint voiced from vendors was that some casino operators share the submitted proposals with other bidders. The Code of Ethical Conduct of the Associated General Contractors of America calls this practice “unethical”. They say it puts pressure on other contractors to undercut each other’s bids. However, from our survey this is quite commonplace in the casino world.
Operators may not realize the damage such tactics will cause to their own reputation and their future profitability. This is still a very small industry, and the word does get around. Next time, those offenders may have significantly fewer bidders and all the quotes will be higher.
Minor improvements
A few commented that the issue of operators being consistently late to appointments or skipping them completely (detailed in the first story) is getting better: “Missing appointments have steadily decreased, but when they occur the standard excuse is ‘I got called into a meeting with upper management/my boss.’ We, as a vendor, can’t question that, but it does happen and usually a replacement person attends the scheduled appointment.”
Unethical practices
On the negative side, several software and system providers mentioned the discouraging practice of operators probing vendors for specs, features, roadmaps, issues, flowcharts and other ideas over months; but then declaring that they were going to build their own app or software product in-house. While that may sound perfectly fine, others would say it, too, is open industrial espionage and/or blatantly violates patents.
Vendor issues
Sometimes there are aggressive sales reps pushing ‘phantom-ware’ that perhaps share a bit of the blame for the operator’s behavior. One established vendor said, “Another gripe is the constant non-decision making while the casino debates non-existent products: ‘The other vendor says they can do that for 10% of your price’ – but that vendor is invariably not licensed anywhere, doesn’t have an actual working product, or can’t manufacture or support at scales. We’ve all heard this a million times.”
The bigger picture: A call for mutual respect
One commenter reframed the lack of “respect” as a lack of “civility”. They noted the industry’s pursuit of greater and greater profit margins since the 2008 recession has led to a major decline in casino guest service. Alarmingly, they noted that consumer spending on gaming has decreased from an all-time high of 54¢ per $100 of income to just 40¢ today.” They wished that, “Operators and suppliers should band together with the common goal of getting players to spend their maximum affordable entertainment budget at our casinos. If we can just get back to that 54¢ level of 2007, industry revenues would rise by 37%. If we commit ourselves and our personnel to achieving that goal, 95% of the incivility will disappear.”
Share with your vendors
One final point concerns how you relate to your vendor sales reps. Naturally, their primary mission is to sell you something. But unless they are new to the job, they also have a wealth of information that can make you a better operator. Rather than being rude or dismissing them quickly, you need to make time in your day to listen to them and pick their brains. They visit your competitors frequently, attend meetings on industry trends, hear diverse opinions and know who’s doing well (or not) better than most. This is valuable information and often your only source for breaking news.
From their best-selling book, “The Barefoot Spirit”, authors Michael Houlihan and Bonnie Harvey argue, “No one knows the marketplace better than the professional salesperson. Their livelihood depends on it. Progressive companies recognize their special skills and capitalize on their unique position.” But the only way you’ll ever hear any of this valuable information is if you treat your vendors with respect.
In case your vendor salesperson is a “freshman,” pay it forward yourself and share some your expertise with them. It will benefit your successors down the road and do just a little to make everyone in our industry better.
Respect
A newer booklet on negotiating from Harvard Law School says, “People tend to respond to others’ actions with similar actions, research in the social sciences has found. If others cooperate with us and treat us with respect, we tend to respond in kind. If they seem guarded and competitive, we are likely to behave that way ourselves.” Academics call this the “ethics of reciprocity”. In simpler terms, most of us know it as “the Golden Rule”.
With that said, here is a repeat of the introduction and the closing lines of that original story:
“It is uncertain who first wrote the tune ‘Respect.’ Some say it was a guitarist working in a recording studio in Macon, Georgia in the early ‘60s. But for certain it was Speedo Sims, who performed it and intended to record it with his band, the Singing Demons. However, he could never produce a good version. So, he took it to the singer/ songwriter Otis Reading. Otis sped up the tempo of the original ballad, rewrote some of the words and released it in the summer of 1965. It soon made the Top Five on the “Black Singles” chart. But just two years later, the incomparable Aretha Franklin reworked the lyrics again with her version spelling out each individual letter of the title.
This time the song became an immediate hit after its release on Valentine’s Day 1967 (58 years ago). In 2021, Rolling Stone placed it #1 on the list of the ‘500 Greatest Songs Of All Time’. One segment in Franklin’s original version contained the unforgettable line, ‘All I’m askin’ is for a little respect’.”
It all comes down to R-E-S-P-E-C-T. Sing it again, Aretha.
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From an operator’s perspective, are we missing something? Let us know, and we’ll write a response from the other side. Are the vendors right? Or are they showing their own lack of respect? What could they do better? You can email me at buddy.frank@yahoo.com or drop a text to (951) 553-5130. As I promised the vendors, all your comments will be off-the-record.
