3-Year Strategic Plan FY through FY Presentation to California State Lottery Commission March 24, 2016

Transcription

1 3-Year Strategic Plan FY through FY Presentation to California State Lottery Commission March 24, 2016

2 Process to Develop the Plan Analysis of Lottery Business and Sales Trends Review of U. S. Lottery Industry External Consumer and Retailing Trends SWOT Analysis Key Priority Issues and Cross-Division Teams Integrate into 3-Year Plan

3 Developing the 3-Year Strategic Plan Business Review

4 Lottery Sales Have Grown Tremendously in Past Few Years

5 Sales in Current 3-Year Period Up 36% Prior 3-Year Plan Period (FY thru FY ) Estimates for Current 3-Yr Plan Period (FY thru FY ) Percentage Increase Scratchers $7,767,591,648 $11,534,303,719 48% Jackpot Games $3,052,679,417 $3,525,151,363 15% Daily Games $1,019,740,449 $1,018,226,987 0% Hot Spot $415,932,270 $621,829,948 50% Total Sales $12,255,943,784 $16,699,512,017 36% 85% of the Dollar Volume Increase comes from Scratchers

6 Profits from Current 3-Year Plan are $500 Million More than Prior 3-Years Prior 3-Year Plan Period (FY thru FY ) Estimates for Current 3-Year Plan Period (FY thru FY ) Percentage Increase Total Profits $3,733,648,579 $4,221,146,613 13%

7 How Lottery Sales Grew Significantly Sales = Customers x Occasions x Transaction Size # of Customers (Players) Multiplied by # of Purchase Occasions Multiplied by Amount spent per Occasion

8 Growth Fueled by Sales of Scratchers Higher Price Points

9 Scratchers Purchase Occasions Have Not Increased Recently

10 Over 19 Million Lottery Players in CA

11 Average Player Spending Actual FY sales = $5.44 billion Number of players (per survey) = 19.4 million Calculate average spending per player $280 annually Or, less than $6 per week

12 Industry Comparisons Many states with better per capita sales have a higher percentage of adults buying lottery tickets Florida Top 5 Lotteries combined in terms of Per Capita sales However, NY & TX have same playership level as CA Players in these jurisdictions also spend more than CA players

13 Barriers to Play: Many Related to Perceptions of Lottery In FY , 44% of CA Adults have a Positive opinion of the Lottery 36% hold just a Neutral opinion

14 Other Reasons / Barriers Similar for non-players and infrequent players Tangible, external, rational barriers Also internal, emotional barriers to play

15 Elements of Strategic Plan

16 Vision Over the next three years to become THE largest Lottery for sales and profits in the U. S. But, grow sales in a responsible manner Guiding Principles in Implementing the Plan: Integrity Security Honesty Fairness

17 Outcomes from the Plan Increase Profits Grow Sales Increase purchase occasions by Casual Players Expand Playership

18 5 Key Themes / Strategies To achieve these desired outcomes: Build Sales in Jackpot Games and Hot Spot Clear-up myths about the Lottery and elevate the Brand Perception Be a Responsible Corporate Citizen Put more Fun & Entertainment into the Product Become customer-focused and Improve the Customer Experience

19 Strengthen Draw Games SuperLotto Plus and Hot Spot warrant most emphasis in 3-Year Plan SLP: Brand Advertising to motivate play R & D for new promotions and new features Hot Spot: Retail initiatives R & D for new promotions and features

20 Clear Up Myths and Elevate the Brand Continue messages about Lottery s Mission and commitment to Public Education R & D to identify other Key messages for those w/ neither positive or negative towards Lottery Utilize media vehicles and personal speakers/ambassadors Develop way to manage all communications

21 Be a Responsible Corporate Citizen Responsible Gaming Retailer Training Social Responsibility Tool In-store POS WLA Level 4 re-certification Application due 2018 Upgrades to the CSR Website Implement Facilities Master Plan with construction of new DO s and a DC that use Zero Net Energy

22 Put More Fun & Entertainment into the Product With Prize Payout relief, focus has been on prizes and more chances to win To reach other players, need to focus on other game attributes and communicate differently Fun, excitement, suspense, entertainment, etc. Example: Crossword and Bingo Scratchers Investigate other tactics beyond communications

23 Becoming a Customer-Focused Organization Lottery s culture needs to be customer-centric Make decisions looking through the lens of our three customers Players Retailers Our Beneficiary Initiatives for Players, Retailers, and Internal Customers

24 We ve Entered The Age Of The Customer 2015 Forrester Research, Inc. Reproduction Prohibited 24

25 Improving Customer Experience Examples Some examples at retail or purchasing products: Simplifying Game Selection / Purchase Transaction Investigate Payment Options New Gift Card Program Develop add l Settlement Terms to suit retailer needs Other initiatives for Players: Player Rewards Program Customized Communications for registered players Internal Initiatives