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Stoloto has begun a digital transformation to create a new product and return lotteries to their former popularity. It seems to have worked: online sales have grown to 54%, and the loyal audience – up to 30% of the number of adults in our country
How the lottery market works in our country
In the USSR, up to 70% of the adult population played the lottery, and deductions from lotteries amounted to a quarter of the budget of the Olympics-80. But now the situation has changed: our country ranks only 37th in the world in terms of sales of lottery tickets in 2018.
But there are development opportunities here. According to Market Insights Reports, the volume of the global market in 2018 amounted to $302,3 billion, the forecast is to grow to $2025 billion by 379,7. Annual growth rates will average 3%, the segment of online lotteries will increase most actively – by 8 % in year.
According to GfK-Rus experts, from 2014 to 2019 the number of our countries playing lotteries during the year increased from 4% to 27%. In 2019 alone, the total revenue from lottery sales increased by 34%, the volume of winnings increased by 27,4%, and targeted deductions increased by 22,4% and now amount to 6,69 billion rubles.
What is lottery money used for?
State lotteries in our country are organized by the Ministry of Finance and the Ministry of Sports. Today, state lotteries are held in order to financially support and develop physical culture and sports. Deductions to support sports have already amounted to more than 14 billion rubles, and the total deductions and fees to the budgets of different levels from lottery activities since the start of the distribution of the Stoloto state lotteries have already amounted to more than 27 billion rubles.
The main problems are the lack of a culture of lottery consumption and a biased attitude towards them.
According to Market Insights Reports experts, The main prospect for the Russian and global lottery market is the development of online sales and mobile applications. But to enter this market, you need to repackage products in a cross between lotteries and mobile games and create a new customer experience.
Step 1: Heading for the “number”
In 2018, Stoloto launched the digital transformation of its lotteries. Albert Usmanov, Director of the Digital Marketing Department at the S8 Capital diversified holding, which includes Stoloto, says: “We realized that it is impossible to ensure business growth only through offline tools. This prevented us from attracting a younger audience, who, according to the IGT study, considered this category to be “granny fun.”
Stoloto is the largest distributor of all-Russian state lotteries, which are organized by the Ministry of Finance and the Ministry of Sports of our country under the Federal Law “On Lotteries”. Lotteries are held under the state supervision of the Federal Tax Service throughout the country through 91 thousand points of sale, as well as on the website www.stoloto.ru and in the Stoloto mobile application.
The company had two tasks:
- Improve customer experience. According to Stoloto, this allows you to increase LTV (Lifetime Value – “lifetime customer value”) by 23% and ARPPU (Average revenue per paying user – “average revenue per paying user”) of the lottery player by 19%, as well as increase the efficiency of attracting new lottery participants.
- Change reputation. It is necessary to correct the negative image of lotteries, which arose due to flaws in customer service. This is also reflected in the growth of NPS (Net Promoter Score – an index of customer willingness to recommend a product).
“We found that the distrust of the lottery category and the insufficiently high level of NPS are the consequences of an imperfect customer experience in digital and retail channels,” says Usmanov. “For example, when a person has difficulties in the Stoloto mobile application, he thinks that this was done on purpose to deceive him.”
Step 2: Customer Experience Management
According to the Accenture Strategy Study, US companies lose more than $1,6 trillion annually due to customer experience issues. This is due to the fact that the business focuses on attracting consumers, but not on their retention and loyalty.
As a result, according to PWC, more than half of customers worldwide remain unsatisfied with the interaction with companies and services. 73% of respondents expected a higher quality of service. After the first negative experience, 31% stop using the brand’s products or services.
At the same time, companies that work to improve customer experience earn up to 16% more than their competitors.
AIC is one of the leaders in customer experience design and digital services. Over 20 years of work, AIC has implemented more than 250 projects for the largest Russian banks, retailers, telecom companies and government agencies. AIC helps its clients transform their products and services based on the needs of their audience.
To improve the customer experience, Stoloto divided the task into two blocks:
“Already now this period takes only one or two months, and the cost of attracting does not exceed several hundred rubles. Our task is to reduce the cost of attraction by 20% every year,” says Usmanov.
To do this, Stoloto and AIC conducted a study of current and potential customers. It identified about 100 growth points that affect the customer experience and prevent consumers from participating in the lottery. For example, it turned out that new customers faced difficulties already at the stage of creating an account and buying a ticket.
“We noticed that 12% of users come to the site only to check paper lottery tickets and leave without buying new ones. We came up with a hypothesis that these are offline consumers who come to the site to check tickets. We soon realized that digital platforms were not aimed at an end-to-end experience, which led to a decrease, including offline sales, ”said Valeria Kurmak, director of AIC’s Human Experience practice.
The company also lost customers due to the fact that the rules of the game are written too complicated, the draw time is indicated without taking into account the time zone, and it is impossible to buy a ticket in the application without registration.
Step 3: Client Profile
The study identified six types of online consumers, which explained about 95% of all behavior on the site and in mobile applications.
The last two types are advanced players.
After analyzing these profiles and user behavior, the company saw what problems each of them faced. This allowed developers, marketers, lottery product managers and even PR managers to radically change the strategy of working with each of the consumers. And also start changing business processes and company showcases.
Step 4: Digitization as a Growth Stimulus
Before the final transformation of lotteries into digital industries, it will take about three to four more years. But already today in Stoloto more than half of the lottery tickets are sold through the website and mobile applications. The share of digital sales has grown by almost 15% in two years. At the end of 2020, it is expected that it will amount to more than half of all revenue, and in 2021 it will exceed offline revenue.
“So far, lotteries in digital channels are, in a sense, a copy of offline. But it is digital channels that make it possible to take a different look at the customer experience and the “form factor” of lottery products, for example, by using additional mechanics and tools, as well as gamification, to attract and retain users,” says Albert Usmanov.
With the help of the new strategy, the company expects to increase the profitability of online platforms to 10% by the end of 2021. And most importantly, to restart the online lottery format by becoming part of the mobile gaming industry.
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