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KPIs: How to Determine the Success of Online Casinos

11 december 2023

Specialists of the CASEXE company will talk about the main factors that confirm the status of the modern gambling business. From us, you will also learn why operators should implement KPI metrics and what is so useful about them.

KPIs in gambling: general info

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What Are KPIs

They ​​reflect and evaluate how successful the strategy chosen by the company is. The analysis can be conducted both for the whole enterprise and within individual areas.

The indicator’s calculation is based on the BSC system. This is the most popular method used by banking organisations, insurance companies, venture funds, and other firms whose work involves big money turnover.

The history of metrics for performance evaluation has deep roots. American scientist Peter Drucker was one of the first to describe the features and advantages of KPIs in business. The practical application of the system was also studied by J. Malo, K. Roberts, L. Meisel, P. Adams, and other economists.

With the development of gambling, entrepreneurs are increasingly focusing on these parameters. They allow project owners to conduct a quick and qualitative study of online casino activities, estimate ROI, return on marketing promotion costs, etc.

The choice of KPIs for a particular brand is based on SMART criteria:

  1. Specific. Values ​​in the form of numbers, percentages, and indices.
  2. Measurable. Ease of the efficiency parameters calculation.
  3. Attainable. Attainability of goals, as well as their accurate and reliable choice.
  4. Relevant. Validity of metrics.
  5. Time-bound. Analysis of parameters for a specific period (week, month, quarter, or year) and their comparison with planned numbers.

Advantages of Using KPIs

The company’s growth depends on the correct selection of the course. However, there are even more aspects, such as timely tracking and monitoring of intermediate and final results of the iGaming platform’s activity.

The KPI system provides specific figures isolated from a variety of other data. They allow operators to quickly and accurately analyse the current state of their companies, thus helping them to choose priorities for the future.

Let us consider why gambling brands should focus on such metrics:

  1. Careful assessment of results. The basis is taken from the main indicators (income, expenses, net profit, and earning power), which are then compared against the plan. Entrepreneurs can see the real situation without waiting for the publication of annual financial statements.
  2. Improved decisions. Casino owners see what indicators help their projects outperform competitors, and what can be done better. Based on this information, it is possible to adjust the current budget, redirect funds to priority tasks, and achieve good results in the future.
  3. Strategic goal setting. KPIs help plan the work of digital portals for years to come. Analysis of metrics allows entrepreneurs to choose the optimal directions and focus on the main thing.
  4. Motivation of employees. The tool is used to evaluate staff performance and reward/encourage personnel who make a huge contribution to the firm’s growth.
  5. Marketing strategy optimisation. The iGaming niche depends on advertising more than other sectors of the economy. KPIs allow operators to quickly evaluate the effectiveness of the selected campaign, identify a loyal customer base, and introduce new mechanisms for driving web traffic.

Financial Performance

Financial performance metrics: features

This group of indicators gives a complete picture of the current state of affairs at the enterprise: the size of gross and net income, return on investment, liquidity, etc.

GGR

This is the total amount of all bets placed by customers minus their major wins and jackpots received. The figure is calculated for the day, week, month, quarter, or year. It serves as the basis for analysing the success of a startup and calculating taxes, licensing fees, as well as duties.

Using the metrics, analysts estimate the industry’s capacity in the country as a whole.

Thus, in 2006, in the United States, it reached a record $90 billion. This amount included the income of the managers of land-based casinos, bookmakers’ offices, and poker rooms.

In 2023, the leading position in terms of the GGR was occupied by Malta. According to Statista, the operating revenue is estimated at $410.9 million, which is 11% of the country's GDP.

Forecasts for the size of deductions to the treasury are based on planned gross gaming revenue indicators. In most states where gambling is legalised, entrepreneurs pay a tax on the turnover, from 3% to 20%, depending on the jurisdiction and type of licence.

Thanks to the indicator, iGaming project owners can get an idea of:

  • the nature of the clients' behaviour (limits, frequency of visits, and duration of sessions);
  • quality and variety of entertainment catalogue.

The size of GGR is affected by what solutions (slots, cards, and arcades) are presented on the website. Content with a low RTP (up to 94%) brings huge profits to online casinos. However, it is not recommended to completely abandon slot machines with high return rates. Otherwise gamblers can quickly lose interest and go to competitors.

NGR

It shows the real amount of money in the online casino, which remains after the payout of prizes and carrying out calculations with all counterparties.

The indicator is GGR minus the following basic expenses:

  • bonuses, gifts, and other types of incentives;
  • payments to affiliates;
  • taxes, administrative costs, and licence fees;
  • royalties and rental charges for using the platform;
  • value of the services of hosting providers, content creators, and advertisers;
  • commissions of payment systems, etc.

The parameter clearly demonstrates the expenditure side of the company’s budget and how efficiently the funds are spent.

At the start of work, entrepreneurs can theoretically go lower due to the huge costs of launching an iGaming portal. Further, as the project develops, NGR should gradually increase. This shows the correctness of the chosen business strategy and the rational allocation of the brand’s budget.

Knowing the figure, 2 more metrics can be calculated:

  1. NGR to deposits. It allows project owners to understand what percentage of profit is brought directly by the players. Indeed, in addition to the acceptance of bets, casinos can receive income from sponsorship, advertising, and promotion of affiliate programs.
  2. Rates to deposit ratio. In this case, it is necessary to evaluate the turnover of funds and the amount spent on the payment of various incentives. An increase in the parameter shows that the rewards are too high.

Return on Investment

The metric helps to calculate the ROI for an iGaming project and evaluate the effectiveness of the funds spent.

In this case, the formula is quite simple. The difference between income and expenses for launching a virtual casino is divided by the total costs and then multiplied by 100%.

For gambling, anything more than 100% is a good indicator. It means that the startup is profitable, and the investors’ efforts are paying off.

It is important to remember that ROI cannot be considered without interrelation with the other key metrics (GGR and NGR).

To see the dynamics, payback should be analysed in the context of several reporting periods (months or quarters).

Smooth growth in the return on investment (for example, an increase of 4% every 12 weeks) shows that the company is on the right track: it competently manages the assets and maintains a balance between income and expenses.

Marketing Effectiveness

Marketing performance indicators: the main nuances

In gambling, advertising KPIs are used with enviable frequency. This is explained by the fact that the industry, more than other sectors of the economy, depends on the chosen strategy for attracting and retaining customers. If operators make some mistakes at this stage, users will go to competitors, and the online casino will suffer losses.

Conversion Rate

This is the percentage of players (of all visitors to the platform) who made the desired action.

Internet traffic CR is divided into several groups:

  1. View — visit. The metric shows the share of clients who clicked on the advertising message (link or banner) and went to the digital resource.
  2. Visit — registration. In this case, we are talking about the percentage of people who filled out the form and went through the verification procedure.
  3. Registration — first deposit. The coefficient demonstrates the share of new customers who placed an initial bet.

The last type of conversion is the most valuable for online casinos. Therefore, the main part of advertising campaigns is built with an emphasis on replenishing your account on the site. Only after this, the gamer receives bonuses, most often with a wagering requirement.

Cost Per Acquisition

The metric shows how much it is necessary to pay for the acquisition of one gambler who made the first deposit.

This parameter is often used in affiliate marketing to settle accounts with partners using the CPA model. Entrepreneurs transfer funds to the webmaster (a fixed price for each new online casino visitor).

Owners of iGaming portals are interested in reducing the CPA. A sharp increase in it may be a clue that the marketing strategy is ineffective.

Average Revenue Per User

It is calculated for the reporting period (most often, this is one month, and sometimes it can be a year).

ARPU allows project managers to evaluate:

  1. Traffic quality. Operators see what percentage of attracted customers are motivated players and how many bots or bonus hunters there are.
  2. Nature of the game. A high indicator confirms that the audience is most interested in the suggested content: it responds positively to incentives, special features, and other promotional offers.

Churn Rate

CR is the number of clients to the registered users in general who, for one reason or another, left the website.

An increase in the metric means problems in:

  • the bonus program;
  • the fullness of the entertainment catalogue;
  • the work of the technical support service.

Business owners need to look for weak points in the work of their casinos to understand why customers choose to leave.

Return on Marketing Investment

The metric demonstrates the feasibility of marketing costs for:

  • advertising;
  • digital resource;
  • SEO promotion;
  • email newsletter;
  • blog;
  • loyalty program, etc.

To calculate the parameter, it is necessary to determine the ratio between income and marketing expenses, as well as the total amount of advertising costs.

High ROMI and dynamic growth of the coefficient reflect the success of the chosen promotion strategy. If the figure is low, the company should reconsider and, if possible, reduce advertising costs.

KPIs for Building a Strong Team

To effectively manage personnel, the HR department uses:

  1. Loyalty index. The metric gives an idea of ​​how the employees are willing to recommend a gambling brand to their friends.
  2. Hiring quality. This KPI shows the percentage of new team members who received positive feedback from management during a performance evaluation. Most often, the indicator is assessed after the end of the probationary period, as well as in the first year after signing the employment contract. With its help business owners can also analyse the effectiveness of the HR department.
  3. Turnover rate. Any firm is interested in reducing this parameter. Frequent changes in personnel (managerial and executive) are associated with additional financial expenses.
  4. Cost of absence. This metric is calculated as the sum of the employee’s salary and how the need to redistribute the work to others will affect it. This KPI marker is especially valuable in Europe where trade unions are strong, and hired staff is well-protected by local laws.
  5. Engagement index. It is measured through surveys and observation of employee behaviour. A high level of involvement has a positive impact on the productivity of the online casino team and reduces turnover rates.

The Main Things about KPIs in the iGaming Niche

KPIs in the casino niche: key characteristics

Such a business tool is used to quickly evaluate the effectiveness of a project.

Key features of these parameters:

  • They are used to set strategic goals, make better decisions, optimise a marketing campaign, and motivate staff.
  • The group of financial KPIs includes gross and net income, as well as return on investment. GGR is a measure of the success of a startup and the basis for calculating various taxes and fees. NGR allows operators to assess the budget structure and see how efficiently the money is spent.
  • Marketing metrics include the cost of attracting one new client, conversion, churn rate, and others. They are useful for the quantitative analysis of online casino policies related to customer engagement and retention.
  • HR specialists pay attention to several specific KPIs aimed at improving the efficiency of personnel management. This is the loyalty index, quality of hire, cost of absence, etc.

The CASEXE studio is your reliable partner in the dynamic gambling market.

With our help, you can launch a turnkey platform, a licensed White Label portal, a modern Bitcoin casino, and other projects with guaranteed profitability.

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Author: Matt Grant
iGaming business expert
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