Customer understanding key to HK success
23 July, 2015 | Shane Anderson - @Globalgallop
The Hong Kong Jockey Club (HKJC) has celebrated its 130 anniversary with a record-breaking year for wagering turnover and the club’s understanding of its customer is the key to its success.Winfried Engelbrecht-Bresges, chief executive of the HKJC, believes that things could not have beenscripted better.“When you look at the racing turnover, it’s close to HK$108 billion (HK$107.9 billion, up 5.8 per cent)which is almost $19b Australian,” said Engelbrecht-Bresges in an exclusive interview onRacing.com’s Racing Ahead on RSN.“We have 83 race meetings and if you look at our attendance, it is an average per race meeting of25,000.“This gives us 2,000,000 racegoers (per year) which is a fantastic result.“If you look at the sporting quality of our racing, we have only 800 races per year but we have fourraces in the top 25 races in the world which I think is a wonderful achievement.“We also have some of the best horses in the world in Hong Kong; this year we had 24 horses in thetop international ratings headed by Able Friend.“But we are not only a racing club, we also have football betting which also had a record year wherewe had HK$78b (A$13.6b) wagered on football.“We are also the biggest tax payer in Hong Kong where we will pay HK$20b in tax, which is probablyeight per cent of the tax income in Hong Kong.“Our charity donation this year will reach HK$3.8b, which makes us one of the top 10 charityorganisations in the world.“Everything from the racing side to the other business side, we are very happy about and proud of.”When determining the achievements of the HKJC, Engelbrecht-Bresges takes a broader view thanjust one year, looking more in five-year cycles. A reason behind this is that there will always befluctuations.“When you look at why we have been so successful, it probably goes back to around nine years agowhen we had a significant turnover decrease in horse racing,” said Engelbrecht-Bresges.“Our turnover dropped from HK$93b to HK$60b so we had to have a really deep look at what werethe reasons why this had happened.“You could say that we have done the most systematic analytics regarding what our current customerwas and what the future customer could be.”Over the past decade, the HKJC has developed an understanding of its customer base that hasbecome the envy of the world. This led to having a deeper understanding of gaming propensity (thebehaviour traits attached to wagering), what makes horse racing attractive to punters, and what arethe different customer segments.“We came back after one-and-a-half years of research with a very clear idea of a customer strategywhich is based on customer-centricity,” said Engelbrecht-Bresges.“We know what the different customer segments want.”The HKJC has invested heavily in racecourse facilities and technology to satisfy its customer base.The Hong Kong racing industry is unique on the world stage, something that Engelbrecht-Bresgesunderstands. Other jurisdictions have structural difficulties that are not present with the HKJC.“We know everything about our horse owners; we know about their behaviour, what food that theylike, what type of gaming behaviour they have, what type of horses they want to buy,” saidEngelbrecht-Bresges.“The same is with our customers; we know that we have 1.8 million customers on a database who areregular customers of the Club, so we know their preferences.“Because we have the racing and race-going preferences, and the gaming preferences, we canshape the offering and provide an end-to-end customer experience.“That is a big advantage.”Producing 8,400 hours of television annually allows the club to know more about their customerpreferences. It can tailor content depending on what preferences its customer base has for viewing,whether television, internet channels, tablets or smart phones.The HKJC controls the racing product end-to-end; the quality of trainer, jockey, facilities and depth ofinformation provided is all determined by the club.The HKJC has long been a leader in creating in-depth information streams for its customer base. Thisincludes every aspect of a horse in training - from having a swim, to cantering, to a serious gallop, tohow the horse scopes under veterinary examination - being made available freely to the public.“Everything is considered an information offering on an integrated platform,” said EngelbrechtBresges.“Having complete information, IP rights and defining what we want to do for the different customersegments is our great strategic advantage.“It’s not that I want to brag about it but you need to understand that you have these opportunities andthat you need to make the best of it.“That we have done and this has helped us to grow turnover.”The HKJC has invested heavily in understanding younger demographics and creating offerings thatwill suit. This includes concepts that are less gaming-orientated and being more ‘playful’, with thedevelopment of the ‘Happy Wednesday’ brand at Happy Valley racecourse on Wednesday nightsbeing the must-attend event for many in Hong Kong.Racing wagering remains the core business of the HKJC and it is something that EngelbrechtBresges values.“Our customers of racing want an extremely competitive product,” said Engelbrecht-Bresges.“We know that the optimum field size for our customers is 12-14 horses.“They want to have a clear distinction in what we call the class system, where you have horsesclearly grouped in the different classes.“How the horses are trained is clearly transparent.“If you look at the wagering side, our customers are clearly data-driven.“You have to offer as much information as possible into odds, pool sizes, and trends in the betting fortheir consideration.”The HKJC has introduced the Longitude engine to the pari-mutuel, which allows for greater liquidity inmarkets and to also consistently display the odds of exotic bet types, such as the Tierce and FirstFour offerings. This increases customer attraction to those products as the punters will have a clearidea of what the likely payout will be.Further opportunities are emerging with mainland China, with the club developing Conghua - a trainingcentre in Guangdong.With plans to open in 2018, Conghua will provide for an additional 1500 horses to be trained,assisting with the backlog of ownership requests, and also give a marginal increase into racemeetings staged.“We have no interest in wall-to-wall racing in Hong Kong,” said Engelbrecht-Bresges.“Our customers do, on average, four hours of form study per meeting before betting.“Knowing customer preferences, we want to keep horse racing as a mind game.“For that, you need richness of information and you need time to study the form, you have to havetime to see the horses in the paddock and assess the conditions.“Our customer learning shows that they don’t want permanent betting opportunities, they see this asnot a chance game but as a mind game.“Therefore, the driving force for us is to have sufficient time for our customers and the richness ofinformation so that they can come to the conclusion that their bet is a good proposition.“That is why we have to be mindful as to how much racing we have in Hong Kong.”Engelbrecht-Bresges understands that this could not necessarily work in other racing jurisdictionswhere breeding industries will have an impact on racing opportunities.However, he is conscious that jurisdictions with too much racing are only a small step away fromvirtual racing. Racing should not fall into the ‘slot machine’ branding.Simulcasts of racing from international jurisdictions will be managed closely, with coverage needing toreplicate what the local production of Hong Kong racing provides. Horse racing is an entertainmentgaming industry and Engelbrecht-Bresges is keen for the HKJC to mentor other jurisdictions on bestpractices in this area.The success of the Hong Kong International Races in December remains a major focus for the HKJC,especially as a co-mingling wagering opportunity.“I would like to see a stronger connectivity with the horses,” said Engelbrecht-Bresges.“One area I would like to see improvement in is enticing some more Australian horses to compete asthis has been thinner in recent years.“As a long-term aim, we are looking at whether this meeting can increase stallion value.“With the long-term aim of opening up China to racing, could this meeting become the platform toshowcase some of the best horses in the world and, aside from prizemoney, could this meeting createbreeding value?“One of the reasons why the Breeders Cup was significant to the breeding industry in the US isbecause it was attractive to European runners, because it enhanced the breeding value.“As a long-term proposition, I see that the breeding value is something that we have to create.”Engelbrecht-Bresges is also keen to promote the week as a major tourism initiative, as it can easilyattract horses from all parts of the world to compete.
