Risk | How the Smartphone might Kill your Club
Many in the NSW Registered Club and broader Not-for-profit industry were painfully slow to realise the true impact of the World Wide Web. Beyond the seemingly unlimited access to information, www has fundamentally changed our behaviour; behaviours relating to memory, knowledge, storage, research, creativity, leisure and ownership.
Enter the Smartphone.
Since 2010, the global use of Smartphone technology has been exponential. It’s not just the actual device that will kill your club. It is the associated behaviour that will if its risk management is not factored into your long term strategy.
The use of Smartphones fits into the megatrend of ‘Virtually Here’. We are increasingly moving online to connect, to deliver and access services, to obtain information and to perform transactions such as shopping and working. Digital media is allowing people to form new connections and selectively access information through multiple channels with subsequent erosion of trust in traditional information sources (like newspapers).
The critical take-home point about Virtually Here and all the megatrends is that old-school whiteboard-dreaming and strategic plans that treat your venue or business as an economic silo are extremely high risk. Lowering risk means uncovering the unarticulated needs; directors and managers are not capable of saying what they want if they have never seen what is possible or lack the imagination to visualise uncomfortable futures.
There is not a one-size-fits-all generic answer for clubs and other NFP organisations to disruption of megatrends; research and understanding the context of the cultural landscape of your organisation layered with an understanding of critical market behavioural trends will tease out how your business can survive.
Let’s look at how the cultural impact of the ubiquitous Smartphone may kill your club and a few ways you may be able to reduce the risk. These are three ways that are top of my mind at the moment.
1. Online Games
RISK: We’re teaching children that the Smartphone is a one-stop entertainment device and gambling is becoming unrestricted through apps. People no longer need to go to a registered club to gamble. For many clubs, that's up to 70% of existing revenue.
As soon as your youngster can use their thumbs, you’re introducing them to online games. It’s cute to watch little Sally, aged 3, play Frozen the App on your phone. Isn’t she clever!
As kids grow up, the online games become more complex. Although these games can be free, in-app purchases and premium playing levels can be activated. This is where the player can make a financial transaction with pre-loaded credit card details to purchase an advantage over another online player or for a better gaming experience.
So there are two things happening already: the normalising of playing games on the device and the normalising of paying for advantages with a ubiquitous line of credit.
The next step is gambling.
Aristocrat bought ‘social casino’ gamemaker, Product Madness in 2012 and is poised to grow its digital business. Aristocrat’s social casinos are free but users spend cash on extra credits and premium play. Their digital segment increased profit to $15.7 million in 2015.
Yes. This is happening now.
The smartphone will kill the 1950s model of club gambling. It is dwindling now, and the behaviour of ‘having a flutter’ or creating social events around club gambling on poker machines will cease to exist.
Think. Would you ever go back to your mobile phone brick? Will young people prefer the machines of their grandparents? There is an argument that says ‘drive’ gaming now, and with that I agree. There are some clubs that have set themselves up nicely and others that are behind the eight-ball even there. But if that’s all you’ve got for your five year ‘vision’, that’s a problem.
Risk reduction: I keep saying this; you need a robust and bold strategy for the future that considers more than just driving the existing revenue streams in a 1950s business model. I keep seeing strategic plans that are carbon copies of popular plans issued 15 years ago. You need futurists conducting planning. Do something different – start with us at Integrated Governance.
RISK: People think differently about service, including paying, purchasing behaviours and privacy.
The development of smartphones has replaced a few things we grew up with: the watch, the alarm clock, the tape recorder, music players, and it seems that very soon, we can add cash and wallets to that list.
The behaviour around money and financial transactions has already changed. We haven’t seen our weekly salary delivered in small brown envelopes since the early 90s. There is an abstract concept of money, and the physicality of it has almost disappeared. Even the markets stall holders accept credit card and eftpos through their Smartphone apps.
Our behaviour is influenced as we’re not bounded by the cash in our wallet, limit on the credit card or available funds. This changes purchasing behaviour and how we interact (or don’t interact) with staff. The technology already exists to tap and go with our phone.
Next is loyalty programs. Forget the membership card swipe on entry. Think propensity marketing based on previous behaviours, like recent purchasing history.
Scene from August 2016
Me: [Enters Reviver]
Reviver App: Hi Shayne! Last time you were here you ordered a Luxardo and Sparkling. Same again?
Me: [Hits the Yes button]
Reviver App: Great! It will be delivered to your table by Gordon* in 5 minutes. Your account has been deducted $17 and you’ve received 3 loyalty points.
Budgeting App: Shayne, you’ve just spent 20% of this week’s entertainment budget with 5 days to go on this week’s allowance.
Health App: Shayne, your Luxardo and Sparkling is 976 kilojoules. This brings your daily cumulative total to 7989.
Exercise App: Shayne, you’ll need to walk 3.2km to reduce the energy effect of your Luxardo and Sparkling. Would you like to enter this into your exercise calendar now?
Me: [Hits the Yes button]
Risk reduction: Don’t ditch the wallet just yet. Cash, however, will not be the most popular transactional behaviour for young people. Those sci-fi ‘credits’ that can be used globally… that’s where we’re heading. Plus, investment into purchasing good POS systems plus the expertise to analyse and use the data requires strategic thought.
Remember that people will be doing more with their phone than just paying you, so transparency and authenticity in your positioning will become critical.
RISK: People prefer texts, emails and regard quality social networking in equal value to face to face time.
Communication is a massive subject. Our behaviour associated with the delivery of information has changed as has our behaviour associated with the accessing of information as our thinking styles regarding communication.
Smartphones have opened a world of possibilities allowing us to get information and pass information along at any time and almost anywhere which has profoundly affected our human communication.
In a few short years, the smartphone has transformed the way we communicate; principally through visuals, texting and context.
Smartphones have created a space for a photo and video messaging that rethinks traditional conversations. Many apps, like Snapchat, Facebook and Twitter, are about creating content that is ‘being in the moment’ and visual communication is now king.
It’s not just kids, either. Customer service professionals to the customers themselves; everyone appears more distracted from the real moment to the digital moment. Our digital moments are shared beyond the face to face group into our other social networks.
The ability to harness the power of the image and communicate your positioning, branding and value through imagery will defeat text based and valueless propositions of the 20th century.
Visuals must emote.
As we’re receiving more quality visuals on increasingly higher resolution screen, our sophistication in what is good visual communication is improving. This requires investment into understanding who you truly are through imagery rather than telling people what you do with words.
Researchers recognise that young people – and a growing group of older people – profoundly prefer to communicate by text messaging rather than call. Further we regard hanging with our social networks as an alternative to face time. Those Facebook, Snapchat and LinkedIn friends are real although we think about those relationships differently to our face friends.
Voice calls are actually less popular, especially amongst teenagers who receives around 88 text messages per day on average.
We’re better connected with people known to us, but at the cost of in-person contact.
Risk reduction: Communication is a complex topic. Using the same AEMP tactics we were using 15 years ago is going to work in some instances. Not factoring in the change of communication technologies may mean you’re missing out on opportunities to grow the business, including how you’re presenting to the market and the desire to remain connected while in ‘face to face mode’. Start by texting us for a marketing or AEMP audit on 0412 241 773.
At the end of the day...
Technology is now so pervasive that today’s boards and senior managers have to be comfortable using technology. Directors and CEOs need to get out of their comfort zone and start to learn new technology. Until you have actually used some of this technology, it’s impossible to really understand the full risk, disruption and amazing potential of the digital age.
TEXT SHAYNE NOW | 0412241773
*Gordon Ryan is owner of Reviver. His background is IT.
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Integrated Governance is a small, agile governance, strategy and marketing advisory service. Together with a career in clubs and membership organisations spanning almost 20 years, we punch above our weight in delivery and insight. Ask our happy clients about the results they have achieved using the Integrated Advantage.
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