Monday Mornings with Madison


Each week, millions of people in the United States decide to spend their hard-earned money on a “chance” to win a big lottery jackpot and reap all the freedom that they believe will come with it. This is nothing new: people have been drawing lots in hopes of winning a prize at least since the Chinese Han Dynasty (between 205 and 187 B.C.E.) and the earliest known European lottery was organized by the Emperor Augustus Caesar, who used the funds to make repairs to the city of Rome. Meanwhile, the first drawing in colonial America took place in Jamestown, Virginia in 1612, when settlers desperately needed to raise funds in order to fortify the town after attacks by Indians and the Spanish.

Throughout the centuries, governments have viewed lotteries as a voluntary and painless form of taxation. People pay for a chance to get rich and some part of the revenues is used to finance a worthy civic project, such as building the Weybosset Bridge in Providence, RI in 1744, or equipping George Washington’s army in 1777. These funds also helped to establish Yale, Dartmouth, Harvard, Williams, and New York’s King’s College, now Columbia University.

The most common lottery game today requires a correct match of six numbers out of 49. The odds of picking this winning match is about one in 14 million, which means that statistically you have a greater chance of getting hit by lighting than of winning the lottery. But that doesn’t stop millions of people from spending millions of dollars weekly in the hopes of getting lucky.

The psychology of lottery gambling is fascinating. People convince themselves that the more often they play, the more likely they are to win. Regardless of how much money they have already lost, they believe that eventually they have to win if they just continue to play. Of course, this is a false assumption because the game starts every week from scratch and the person who plays for the first time this week has the exact same chance of winning as someone who has played for years.

Business lessons from the lottery  Although it’s true that sales for lottery tickets have increased during the current recession, sales have generally been flat over the past few years. Research shows that younger people in particular are not playing. Hoping to find a new model for the game, New Jersey Lottery hired executive consultant and best-selling business author, Robert J. Kriegel, to study the problem and come up with recommendations.

The first thing Kriegel did was to review the basic components of the game and identify the drawbacks. Here is the list that he came up with:

  • One big prize winner:  While this is obviously rewarding for that lucky person, having only one big winner highlights the fact that virtually everyone who plays will lose.
  • Pure luck:  As much as people like to play a game of chance, they also enjoy putting their skills to use. The fact that everyone competes equally is a turn-off to many potential players.
  • Delayed gratification:  While many people enjoy the anticipation of a weekly drawing, many others do not want to wait to find out whether they have won. 
  • Passive participation:  There is no active involvement in the game.

Younger people, who had come of age playing video and internet games, did not want to spend money on a game they saw as slow, passive and impersonal. Kriegel drew upon his business paradigm of leading customers, rather than following them. His goal was to rethink the rules in order to reinvent the game. As a result, New Jersey developed a new generation of games characterized by:

  • More prizes for each drawing:  Even if each prize is smaller, the number of people winning something goes up.
  • Instant results:  Players find out immediately whether or not they have won.
  • Active and interactive: There are countless new games, each of which has slightly different rules for playing. Some are quite convoluted: the Super Crossword Game involves scratching and matching 18 letters onto two 11-by-11-space puzzle grids to reveal complete words.
  • Visually exciting and fun to play: Whether the game is titled “Flowering 50s,” “I Love Dogs! I Love Cats!” or “Harley-Davidson,” each card is graphically designed to be eye-catching.

The point of this lesson is that any product or service can benefit if you take a closer look at its features and compare them to the needs of your market.  Ask questions of your customers, analyze their experience, identify the drawbacks and then find ways to make small changes. This can make a big difference in attracting more sales.

Hey! You never know!

“If you really want something in this life, you have to work for it. Now be quiet, they’re about to announce the lottery numbers”  Dan Castellaneta

© 2009 – 2011, Written by Keren Peters-Atkinson, CMO, Madison Commercial Real Estate Services. All rights reserved.

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