Summary

In this episode, ReelMetrics CEO, Nick Hogan, and VP of Professional Services, Don Retzlaff, conclude their discussion of Demand Driven Inventory Management (DDIM), the company's updated best practices model for building and maintaining world class slot mixes.

Transcript

Nick:

At ReelMetrics, we collect and analyze a ton of slot data, and we’re hit up frequently for insights, tips, and tricks. So we decided to do a webcast in which we present, discuss, and otherwise nerd out on our work. Coming to you from our offices in lovely Leiden, the Netherlands. Welcome to ReelCast.

Good morning, Don. How are things today

Don:

Morning.

Nick:

… in Mound City?

Don:

It’s a nice spring day. It’s going to be near 70, so winter’s finally passed.

Nick:

Wow, you guys have sun?

Don:

We do. It’s good. It was beautiful yesterday. It’s supposed to be beautiful today as well.

Nick:

Okay. Well, sun here is a distant memory or fantasy, whatever you want to say. We haven’t had much of it lately. But okay, so back to Mound City. So that is one that I’d not heard previously, and I looked it up this morning and saw that goes all the way back to St. Louis’ earliest days, and that it was used by French fur traders in reference to the many Native American burial mounds located in the area.

Don:

Yeah. Cahokia Mounds is right across the river from the Arch, and it was the largest Native American settlement in North America for a long time.

Nick:

Okay, are they actually still, they’re still there and you can see them?

Don:

Oh, yeah. Yeah, they’re a big tourist site and they’re a big educational site for the kids. It’s fascinating of what they did and how they used to live. It was a massive city. I want to say it was somewhere like a hundred thousand Native Americans lived there at one point.

Nick:

Oh, not kidding. Wow.

Don:

Yeah, it was massive.

Nick:

Okay.

Don:

There’s some mystery as to what happened to them him and why they dispersed. But we’re not talking mounds, we’re talking hills that they built to live upon. They were, it’s fascinating.

Nick:

Okay, so they weren’t just, they’re not burial mounds then, per se. They were actually, they lived on these hills?

Don:

Exactly.

Nick:

Huh.

Don:

Exactly.

Nick:

Okay. Well, fascinating. Next time I’m in the area, I’m definitely going to go check that out. I had no idea. So, cool, cool, cool. Okay, so I thought we could dive in early to listener questions, but before we do that, let me say that we’d love to tackle any questions that anyone listening may have. So if you have a question about what we’re presenting or something you’d like us to present, please drop us an email at reelcast@reelmetrics.com. Again, that’s R E E L CAST at reelmetrics.com.

Our policy is to keep all questions anonymous, so please speak directly and don’t worry about us revealing your identity. We do not do that. Okay, so we received a number of questions following the last episode, and two jumped out at me. So the first was from an exec on the supply side, who asked if we could devote some time to addressing operator anxieties regarding jackpot liabilities. So, we won’t have time to hit that today, but we’ll get at it in next month’s episode, and we’ll wrap some math around it so that we’re dealing in digits as opposed to just platitudes.

But for the listener who submitted that, thank you. Please trust that we didn’t blow it off. To the contrary, we absolutely love that question and we’re going to tackle it next month. So stay tuned on that one. The second question then comes from a slot director in the American Southwest. “Hi, Nick and Don. Loving the podcast. I’ve been listening to the episodes about best practices and I have a couple of questions. So first, in general, it seems like you’re suggesting that if around 15% of our players generate about 85% of our revenues, we should be devoting 85% of our opex and CapEx budgets to inventory for this 15%. Is that correct?”

And then second, “Does ReelMetrics help clients implement these new best practices?” So thank you very much for both questions. Don, I’d like you to discuss those percentages. But before we do, I’ll tackle just very quickly that second question. So the answer to that second question is a categorical yes. We do indeed help our subscribers implement best practices. So these best practices episodes you should really view as thumbnail summaries of what Don’s group does with our subscribers.

So they dig into the local operations in meticulous detail, and then they help you start applying these methods in a way that provides you with long-term competitive advantage. So again, yes, that’s a big part of what we do, helping people implement superior inventory management practices. Okay, so Don, the first part of that question was, again, “If 15% of the players are generating 85% of the revenues, should 85% of the slot budgets go toward that 15% of players?”

Don:

In a word, yes. I’ve never thought of it that way, per se. So it’s worded perfectly. But yeah, why not? If you wanted to make sure that, you’ve said in the past that you stock the shelves with things that your players want to buy, and if 85% of your sales are from these 15% of your players, well, make sure you have the games they want to play. And it’s really interesting, because I’ll get into this in a little bit on the best practices is, those customers play a certain style of games and the rest of your customers play a different style of games. So you have to have both obviously.

You’ve got your daily customers, but your daily customers are not what you’re spending your money on. It’s your high-limit customers, your host customers, your customers who will bet three and $4 a spin. Those are the ones that are gravitating towards your lease games and your new games that you’re buying. The daily customers that…