Rivalry CEO Steven Salz: Sports betting has a retention problem

Steven Salz, Co-Founder and CEO of the Toronto-based esports betting company Rivalry, told attendees of the Canadian Gaming Summit last week that he believes the sports betting industry has a retention problem.

Salz said, “This is a product that people are kind of habitually transient. You know, customers go from app to app. On average, customers will have two to three different sports betting apps they’re consumers of. And a lot of the reason for that is the way retention and acquisition is historically done in this industry; it is very driven by bonuses.”

Rivalry’s view is that if customers are only coming for the latest bonus, “what is the value of the thing that you have? Potentially not a heck of a lot.”

Salz then launched into a discussion of how Rivalry and other esports betting companies address customer retention, by focusing on product differentiation, brand equity and marketing.

For example, he said FanDuel and DraftKings attack retention by offering 24/7 news channels. Jake Paul’s Betr leverages Paul’s internet persona to organically attract customers. Penn Entertainment acquired Barstool Sports to use the personalities from the sports and gambling newspaper to drive customers to Penn’s gaming operations.

Salz said, “One of the things we say to people is if you go to, you know, dorm rooms of over 18s in the US you will find flags of Barstool. There is a brand association with Barstool that is extremely unique within the category, whereas I don’t think you’re going to go around and see a DraftKings flag in a 19-year-old’s college dorm room.

“It doesn’t match the same way. And it’s because they’ve – Barstool’s done a really good job of starting as a content and media channel and then parlaying that into a sports betting business. There is like a connection and a consistency between fandom that does something like organically to grow and develop the business.”

But Salz said Rivalry also looks at brands in other industries for ideas on how to retain customers. Consider Red Bull, the energy drink.

Salt said “The reason they’ve created so much success is they’ve taken the concept of an energy drink and then the foundation of the brand is that it’s like an adrenaline product. And then they’ve paired the concept of an adrenaline product with their entire marketing arm, which is everything in Extreme Sports. And then it’s become so successful that being signed by Red Bull as a Red Bull athlete connotes like a certain level of success.

“This is something we try to do at Rivalry for like internet-based creators, where if you’re in Extreme Sports and lets say you’re a skater, surfer, skier, you get signed by Red Bull, you’ve got a Red Bull helmet, it means something within that community, like it has a certain resonance within that community that you’ve kind of made it. That’s really unique. It takes a brand a lot of strength and success to get to that point.”

For an under-30 demographic, Salz said brands need to follow the advice of the hip water company Liquid Death, which strives to “make entertainment, not marketing.”

Salz said, “If you can deliver like true creative and entertaining experiences to your audience, you’re actually bringing something to them.”

Compare that strategy, Salz said, with what sports betting companies typically do now: they have some celebrity promote their brand on a commercial or in an ad.

Salz said, “What do Aaron Paul and Samuel L. Jackson have to do with betting?”

According to the CEO, it’s like a Mad Men-style of marketing that just doesn’t work anymore.

Salz said, “There’s no continuous thread of the experience that connects like that marketing asset to the brand and then having that continuity that builds like true fandom for what it is that you’re doing.”

So, at Rivalry, he said, the company strives to have a plan that ties all of its marketing, content and branding elements together.

Salz said, “One of the better ones we have is a product called Chicken Out. So, Chicken Out is just our cash-out feature. If you know how cash out works, Chicken Out makes sense. We literally call it ‘Chicken Out.’ So, as you slide the scale of the total value of your bet you want to cash out, it starts as like an unhatched egg, and then it turns into a little chick and then a chicken and then a fully roast chicken if you cash out your full bet.

“So it was just like this thing we say internally: like a thoughtfully bizarre take on a common feature that exists in betting, which is cash out.”

Rivalry then took a particularly muscular character in a chicken suit and sent him to a Counter-Strike esports event in South America; the game Counter-Strike features chickens in it.

Salz said, “We sent this guy who hacked the event. There were millions of people watching it. He was constantly streaming. He became a feature, almost overnight, of the Counter-Strike community.”

This, Salz said, is how you entertain consumers and connect organically to your brand to retain customers.

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