Creating Redemption Profits

February 16, 2012 No Comments

Strategies from Family Entertainment Centers

Redemption prizes are creating a lot of excitement among customers visiting family entertainment centers.  Not surprising since, depending on the game, patrons can win everything from toys and trinkets to laptop computers and Apple iPads.  This rise in popularity in redemption games and prizes has become a significant contributor to the bottom line of many FEC arcades.  Here’s how some experts are creating excitement and maximizing redemption use and profits.
“I think with the home market and all that’s available to people outside an arcade being so competitive – since those home games rival anything I can offer – it’s important to be able to offer something they can’t get elsewhere,” said Finn Jensen, one of the owners of Scandia Family Center in Fairfield, Calif.
Jensen, who also serves as general manager for the family owned business, further noted, “There are a lot of high-tech diversions out there.  It’s tough for people to justify a lot of expense for video entertainment games.  That’s not to say there isn’t a market because people still like that, but for us that is somewhat dwindling, whereas the redemption market seems to keep growing.  It’s really what’s keeping us afloat in the arcade.  Out of our top-10 games, I believe all of them are redemption.”
At Mulligan in California, Robert Araiza, a director for the Family Fun Centers with locations in Torrance, Palmdale and Murrieta, said, “Our most popular redemption games are Big Bass, Haunted Manor, Fruit Ninja, Monster Drop and Salsa.”  He also noted, “Winner Cubes and Barber Cut are popular for merchandise games.”
Of course, what’s popular depends on gender and age.  Said Araiza, “Our most popular prizes for boys are spider rings, Pop n Cars and dinosaurs.  For girls, it’s tattoos, bracelets, jewelry and Princess Drawing sets.  And for adults, it’s lava lamps, Angry Bird merchandise and logo-themed Monopoly games, including the Beatles and The Office.”
Accordingly, the experts advise that, to the extent practical, it’s important to carefully tailor the type of machines and prizes for your demographics.  Since all ages visit FECs, this may require offering a fairly wide selection of games and prizes to appeal to customers across the board.  You can further customize your approach by categorizing your demographics using more detail if you can capture visitor data.  This will enable you to adjust the number and type of machines better.  If, for instance, 60 percent of your patrons are kids ages 8 to 12, 20 percent are ages 13 to 17, and the remaining 20 percent are 17 and above, you might consider adjusting the number and type of machines to reflect those numbers.  While this is obviously not an exact science, it can pay off to strive for the right balance.
Having the broadest array of entertainment options possible can also pay off.  As Angela Reynolds, a manager at Trevi Entertainment Center in Lake Elsinore, Calif., said, “Our main attraction is bowling.  Looking at the future we are thinking about adding things like bumper cars and laser tag. We are also a popular venue for weddings and birthday parties. Bringing people in for our other entertainment helps our 6,900-square-foot arcade where redemption are the most popular games.”
Said Jensen, “If you put impressive prizes in them, sales can go through the roof on redemption games.”
But ensuring success means being able to cash in on the popularity of redemption games and prizes in the most effective manner possible. That means finding ways to achieve a balance in profitability or what you pay for items versus what you gain.  “The key to new games with instant prizes is that you have to keep some pretty high-end product,” said Jensen.  “That being said, you don’t have to always go for the expensive products like an iPad.  You can put a lot of knock-offs that are good quality, obviously not Apple quality, but they look good and sales will do well.”
Araiza advised, “You need to manage your ticket percentages – 25 to 27 percent is our goal.”
Efficient operations also play a key role. “One of the most important things is to make sure you have good operators manning the machines,” said Charlene Conway, owner of Carousel Family Fun Centers, with a location in Fairhaven, about 20 miles north of the cape on the south coast of Massachusetts, and Whitman, which is about 20 miles south of Boston.
Conway explained, “In the case of a ticket or token jam or something like that, you don’t want your machines to stay down for long.  We only have about 15 to 20 games at each facility, which is not many compared to the big operators.  Number one, when you have a couple of your popular games down, that is not going to help your revenue. Number two, it makes for unsatisfied customers.  And, number three, we do a lot of birthday parties and if your games are down and you are giving tokens as part of the package, that is definitely not good.”
She added, “Having a fully stocked and colorful redemption counter is also important.  And, when it comes to customer services, the people connection is also crucial.  So, having someone at the counter who is patient, friendly and knowledgeable is essential.”
The consensus of the experts is also to use lighting, layout and the most popular redemption games to create an enticing and inviting environment that provides something for everyone, to the extent practical and affordable.  In short, a people place.
As Susan Pierce, who handles myriad jobs from human resources to spokesperson, for the Mega Play Family Entertainment Center in Mishawaka, Ind., said, “In addition to the fact that redemption games and prizes provide something unique in a competitive environment, there is something else that is impacting sales.  That is, people are growing out of solely being engaged in things like home games.  They want to socialize.  Places like FECs have something for all ages.  And, what I am finding is that my gamers, especially the 35 to 45 year olds, are coming back in again because we have everything, including the classics like Tron.  They are bringing their kids to play in our play land while they play the games they know.  Undoubtedly they can plan them at home, but this is for the whole family.”
So, while FECs represent the opportunity to appeal to all demographics, it’s important to balance your business model by sticking to the basics.  That is, offering great customer service, an exciting and inviting venue, efficient operations and leveraging the unique characteristics of games and prizes like redemption. -

 


Four Top Tips for Making Redemption Counters Popular and Profitable

  1. Staff your counter with friendly, patient and knowledgeable personnel.  Use constant reminders to ensure customer service remains paramount.
  2. Make sure you have a well-stocked prize selection, especially popular items.
  3. Balance prize selection with top-brand name products and quality substitutes to maximize profit margins.
  4. Use color and lights to create an exciting counter.
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