Annual Business Plan FY Presentation to California State Lottery Commission May 17, 2017

Transcription

1 Annual Business Plan FY Presentation to California State Lottery Commission May 17, 2017

2 Process to Develop the Plan Starts with the 3-Year Strategic Plan Review of product and business performance Form the key areas of focus for the year Develop tactical proposals in these areas Determine resources needed Evaluate and review the proposals Prioritize and select tactics for next year

3 Recap of Strategic Plan

4 Vision and Desired Outcomes Vision: Become the largest lottery in the U. S. Outcomes: Increase Profits for CA public schools Grow Sales in a Responsible Manner Increase purchase occasions by Casual Players Expand Playership: more adults buy Lottery tickets

5 Five Key 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 Brand Become customer-focused and Improve the Customer Experience

6 FY Business Plan

7 Key Pillars for the FY Plan Mix of elements providing immediate sales gains with long-term strategies delivering sales growth in the future Growth in Jackpot Games and Hot Spot Moderate gains in Scratchers sales Elevate perceptions about the Lottery Improve the customer experience

8 Create Significant Sales Growth in Jackpot Games and Hot Spot Jackpot Games have highest profitability among our products Examples from Product Review to highlight rationale behind the Plan

9 Mega Millions Sales Declining (Particularly after Big Powerball Jackpot) $35.00 Nat l MM Sales at Jackpots around $160 million $6.00 CA Sales at Jackpots around $160 million $30.00 $5.00 $25.00 $4.00 $20.00 $15.00 $3.00 $10.00 $2.00 $5.00 $1.00 $0.00 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Winter 2017 $0.00 Fall 2014 Spring 2015 Fall 2015 Spring 2016 Winter 2017

10 SLP Efforts in FY Source: Communications Effectiveness Tracking Study Future Purchase Intent for SLP Oct 16 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 63% 57% 59% 67% 56% 68% When advertising was running (Jan & Mar), significantly higher purchase intent scores seen The SLP Promotion in March produced over $1.5 million in incremental sales by boosting transaction size

11 Plan for Jackpot Games Continue Super Lotto Plus Brand Advertising Utilize periodic SLP Promotions Implement Consortium s Game modifications for Mega Millions Evolve Jackpot Alert advertising for Mega Millions and Powerball

12 Hot Spot Background Although sales have increased more than 60% in the past 4 years, product review shows Hot Spot still having much potential Many states have higher sales for this type of product on Total Dollars and Per Capita basis Number of retailers in social environments dramatically lower in CA than in other states Hot Spot has responded very well to increased prize payout

13 Hot Spot Tactics Dedicated effort to recruit new Hot Spot retailers Net gain of at least 200 Social Trade Channel locations during the fiscal year Add Hot Spot monitors to many existing retailers in the convenience, liquor and grocery trade channels Additional support for Hot Spot retailers

14 Produce Moderate Sales Gains for Scratchers Scratchers sales have increased well over $1 billion over past 3 fiscal years Primary driver has been growth of higher price point games Although $10, $20 and $30 games have higher prize payouts, dollar profits have also risen

15 New Products at Higher Price Points Have Driven Sales

16 Profits Also Rising with the Product Innovations

17 Scratchers Plan Continue Product Innovation to drive sales growth Introduce $10 Crosswords Game Maintain presence of $30 product Apply innovation to $1 and $2 product enhancements Retailer Support continues to be important Reduce Out-of-Stock situations Provide training, support and service via DSR s

18 Elevate Perceptions about the Lottery Improved perceptions about the Lottery is critical for expanding playership A number of areas where perceptions need to be upgraded Need to develop integrated plan for delivering these messages

19 Improve the Customer Experience Consumer-focused Initiatives: Redesign Public Website Streamline process to claim winning tickets >$599 Improve direct communications to players Retailer Initiatives: New Retailer Website Alternate Payment Terms for Scratchers Internal Initiatives: Upgrade Financial System