Lifting Lotto’s online odds

LOTTERIES ARE getting personal.

Digital technologies and online and mobile business isn’t just disrupting retailers and the media industry, New Zealand Lotteries is also positioning itself for an unpredictable future.

With NZ Lotteries now threatening to break through $1 billion in turnover, chief executive Wayne Pickup is targeting increased online sales through NZ Lotteries’ MyLotto portal as one path to growth along with greater personalisation of direct customer communications and increased midweek sales through product launches and promotions.

But he is at pains to stress that none of that will come at the expense of existing retail channels.

Pickup said there is no evidence anywhere that increased online lottery sales cannibalises retail sales. In the first half of the 2013 financial year, for example, online sales climbed by a sharp 40 per cent while retail sales also improved by a creditable 7 per cent.

Nine months into the job, Pickup is an industry veteran with 11 years in the gambling industry in New Zealand, Europe and Australia. He is intimately acquainted with NZ Lotteries, however, having served as its chief information officer in the past.

But, while online and digital business models need to be understood and embraced, getting Kiwis to realise that Lotteries’ success is also the success of around 4000 community groups will also be a major challenge, Pickup says.

Organisations such as Sports New Zealand, the Film Commission and Creative NZ receive 40 per cent of Lotteries’ 22-cents-in-the-dollar surplus, with the other 60 per cent spread widely through the community.

Few, for instance, will realise that Lotteries is a significant funder of the Westpac rescue helicopter, he says.

‘‘It’s not a message that has gotten through,’’ he says.

‘‘We’d like to see the Lotto brand associated with where the money ends up.’’

Pickup says Lotteries’ mandate is clear: To raise money to fund community projects and not to hurt anyone doing so. He says the company works with the Problem Gambling Foundation closely and

‘We’d like to see the Lotto brand associated with where the money ends up.’

‘‘doesn’t feature’’ in problem gambling statistics.

‘‘We are at one end of the statistics and pokies are at the other,’’ he says.

Lotto is designed to be a harmless flutter, he says. Many buy just for the 10-minute conversation about what they would do with the winnings.

Despite that, staff are being trained to identify and connect with any customers who may be taking their enjoyment of Lotto or other products too far.

According to Lotteries’ international benchmarking, New Zealand could be under-lotteried, achieve 20 per cent and in Austria up to 40 per cent of sales.

Pickup says 6.5 per cent ‘‘is probably too low’’.

‘‘We have 200,000 registered users but only a third are active.’’

Getting this ‘‘lazy database’’ active again is one of NZ Lotteries major objectives over the next year. Such databases and direct relationships have ‘‘inherent value’’, Pickup says, and need to be developed.

They also bring in a different type of player, he says, hence the minimal cannibalisation of the retail channel.

Increased digital marketing with direct calls to action are important as is adopting ‘‘relationship marketing’’ as well as mass marketing, he says.

Further, new platforms such as tablets and smartphones are perfect for NZ Lotteries’ business. And they could actually be a boon for the retail channel.

That’s because a new payment and transaction technology called Near Field Communications (NFC) is on its way. NFC allows transactions to take place from a virtual wallet held in the device or online by simply tapping a phone against a payment terminal.

That would take the registered online community into the retail channel.

It could also bridge a gap in Lotteries’ arsenal. Currently, Lotteries does not offer a loyalty or player card. In future, this too could be delivered via smartphone-based software and NFC. And that’s one place where the value of a healthy database can be realised.

Pickup says he wants Lotteries to be seen as a technology leader but, to do that, the MyLotto web front end needs to be ‘‘decoupled’’ from the 25-year-old core gaming system. The front end, what Pickup terms a Player Account Management system, would be the master and the gaming system the slave.

In the past, providing that core system and managing the retail network was the heart of the business but, in the future, being nimble and delivering personalised offers to customers will be key. That change, he says, will go through everything – technology, culture and staff.

With behemoths such as Facebook now delivering games such as Bingo internationally and casino-style games in the UK, Lotteries will need to be nimble.

Pickup says Lotteries’ will never be able to match the huge jackpots now being seen overseas, but it can be distinctly Kiwi. That’s another reason why it needs to get the message out about where the money ends up.

It may seem that everything Lotteries offers could be delivered through kiosks, but Pickup says that is not part of the plan.

‘‘Part of the Lotto experience is the retail interaction. I haven’t seen it work anywhere in the world that can be related back to New Zealand.’’

Building midweek sales is another opportunity. Two-thirds of Lotto sales are at the weekend while in Australia, 80 per cent are midweek.