Last year’s £2.3 billion merger between Ladbrokes and private equity owned Coral has been completed and integration work between the two entities is well underway. That includes a substantial investment in new tech, including new CRM capabilities from Salesforce and the creation of a unified digital platform.
The importance of these initiatives can be ascertained from comments by CEO James Mullen who makes the bold declaration about how crucial getting the tech right is:
Without it, we have no customer proposition.
That said, he’s also clear that, unlike some digitally-enabled firms, Ladbrokes-Coral is not a technology firm. It has a heritage in a specific sector and that’s where it plays to its strengths:
We are bookmakers. We are bookmakers allied with an unparalleled expertise in gaming, and they are our core strengths. They’re ones that sit well with the heritage of [founders] Cyril Stein and Joseph Coral…There is a passion for sports. It’s in our blood and it’s in our heritage and it’s in our people, and it should not be underestimated when building a group with a strong morale and esprit de corps.
But the firm takes a pragmatic stance when it comes to its technology management:
We control the bits of the tech we want to control, and we use the best third-party technology when we feel our tech is not as good and theirs is better. The reason is simple – we’re a bookmaker with an expertise in gaming, and we should not be afraid to use the best of other experts in the sector. We are well aware of the perils of trying to play catch-up in this area and the risk that comes with implementation of major technology upgrades, which is why we are happy to partner with experts and share this risk.
Digital to-do list
That said, a cursory glance at the combined firm’s balance sheet discloses how important it is to get the digital aspect right – digital revenues saw 33% year-on-year growth in the most recent quarter.
So, with that in mind, there is a clear to-do list in place for technology investment and implementation, including the roll-out of a new EPOS system and Salesforce to allow a single real-time view of the customer, regardless of interaction, product or channel. There’s also ongoing efforts to consolidate the back office systems of the two firms, as well as a migration to a single digital platform across the combined entity.
There’s no lack of confidence in Ladbrokes Coral’s multi-channel potential, although it’s clear that much of this lead has come from the Coral side of the business. Mullen says: .
We are in a clear belief that in Ladbrokes Coral, we are the leading retailers in multi-channel, not just in this sector. As we said at the time we announced the merger, we thought Coral was probably 12 months ahead with regard to developing the multi-channel offer, and Ladbrokes is playing catch-up.
Following the move to a single digital platform – which will begin once the Grand National horse race is past – a single digital wallet will be introduced which Mullen expects to improve customer loyalty:
It doesn’t take much imagination to work out that if a customer wins £50 and walks out with £50 in his pocket, then when it comes to that evening of televised football, his first choice for a bet will be any app that’s on his phone with a positive balance on it. It may even be one of ours. It’s simple customer research. However, if he walks out with £50 winnings in his account, when he comes to his evening football bet, he’s more likely to select the account he remembers topping up earlier in the day, and that will be one of ours.
As well as being convenient for customers, this will also allow Ladbrokes Coral to cross-sell better. Mullen explains:
This will then be made even more effective when we plug into our Salesforce CRM solution in H2, which will enhance our already marketing expertise.
Then will come cross-company upgrades to the retail till systems. This is based on a program that was already underway at Coral, but will now be introduced across the whole group, first as a pilot in the second half of this year, then throughout 2018 on a wider scale. Mullen says this is a prime example of how Ladbrokes Coral believes tech can be used for competitive advantage:
Whilst some are now only just turning into multi-channel, we are already at the stage with our till replacements. We are looking to reverse engineer our digital expertise into retail. That means that we can look at improving our capability to have a single view of every customer through the retail estate and enable applications and advance the digital CRM.
It should also help us with the sport customer offers and loyalty, accelerate an already high momentum in our multi-channel sign-ups and increase product cross sell with better customer services. There also is a more immediate benefit of allowing how we can use this technology to help identify customers, even anonymous ones, and their playing patterns with regard to responsible gambling and compliance.
There will also be an increased emphasis of the use of analytics to create a more data-driven approach to marketing. Mullen wants to make sure that the correct money is being spent on the correct targets:
Anyone can spend the money, and there are many ways to do it. The skill really is delivering the marketing smarter and better than your competitors. While I had to spend my first few years at Ladbrokes improving our digital product, Gala and Coral have been rebuilding basic tech systems on their data warehouse. That meant with the added analytics, such as lifetime-value predictors and churn prediction, we were able to much more lead on data-led marketing decisions. That allowed us to get better returns on the marketing investment and quantify that across all channels. These models will now be rolled out across the estate, both brands in [the second half of the year]. And because it’s plug-and-play, these techniques are tried and tested. We expect the benefits to arrive quickly.
The elephant in the room in all this multi-channel thinking is what hapens to the Ladbrokes real estate on the high street. Mullen argues that customers like them, but costs of running and managing them are going up. As such, it’s unclear how big the offline retail footprint will be in the future – although it will continue in some form, even as competitors struggle, he says:
We have the ability to be agile and shrink the estate, but we also have the skill to survive and pick up when others falter.
All told, Mullen sums up the strategic thinking concisely:
We will use the best tech available and are agnostic over ownership. Our marketing will be data-driven based on the best returns, not in gut ‘feel the VAT’ inspired campaigns.
While our multiple brands will continue to offer points of difference to the customers, the engine driving them all will be singular and the same. But the product strategy is to develop once and deploy quickly, and we’ll use our scale to secure exclusivity with our partners on content.
Multi-channel will deliver more valuable customers and drive more value to our digital business. It will also help protect the high street presence of our brands.
It’s an impressively articulated tech and digital strategy in what’s always been a fiercely competitive market. Whether it will deliver the necessary odds to take on rivals like Paddy Power remains to be seen, but it would be foolish to bet against it.
Image credit - Ladbrokes Coral
Disclosure - At time of writing, Salesforce is a premier partner of diginomica.