InterClub Lotteries Case Study
From InnovationWiki
Contents |
About InterClub Lotteries
InterClub Lotteries is a small company based in Herstmonceux in East Sussex that specialises in the production of lottery ticket machines for clubs. Alan looks after the sales and marketing while Ian takes care of the engineering side. The machines are placed in club houses and dispense lottery tickets to patrons.
Although Alan has been in the business for some time, it was only in 2006 that Ian and Alan started developing their lottery machine and the first machine to be produced was in February 2007. In July the same year the company had a breakthrough innovation which would set them apart from their competitors. They developed a pay as you go system which would allow the clubs to pay InterClub Lotteries only after the tickets had been sold. The machines are installed for free and the club pays the company according to the number of tickets sold at the end of the month. This allows clubs to sell a larger number a tickets, which in turn means larger cash prizes for ticket buyers and, of course, larger profits for the clubs. A ticket can now give a £500 cash prize while the odds remain the same. The system that allows for this pay as you go model is a GPRS modem installed in each machine that communicates with the company's Server. No other lottery machine business in the UK provides this new system.
The Pay As You Go Innovation
The idea for the pay as you go system came from the ProfitNet group that the company is involved in. Alan and the group came up with the idea of setting up a system which would allow club owners to pay only the tickets sold. After finding out what they could about GPRS, InterClub Lotteries did some some basic market research by talking to banks and clubs and estimated costing for possible systems. They toiled with the idea and possible solutions for some time and it was during this process Alan heard of the Shell Step program where a company takes on a second year college student to run a specific project. The process of applying for this program forced Ian and Alan to develop a synopsis of clearly defined goals for the project. A 25 year old computer science student from Brighton was brought on to see the innovation through.
Ian describes the experience of taking on a student as a very positive one. In his words the student "swept" them away with his energy and ideas. The team played with various ideas before they settled on the current system. The writing of the synopsis during the application process helped InterClub Lotteries establish a number of clearly defined goals. This meant that it was easy to see when the team had achieved what they set out do. The testing took place in the company offices in Herstmonceux and the product was ready to go.
The new pay as you go system has generated a significant increase in ticket sales but have as yet to lead to increase in delivery of machines to new clubs. InterClub Lotteries sees the new system providing additional benefits over the 'traditional' lottery machines as the new systems brings increased revenue to the clubs. The social benefits clubs provide is close to the hearts of Ian and Alan who see a club fulfilling a crucial role in a society that is becoming more individualised and isolated.
Throughout the innovation process, money and availability of cash was a problem for InterClub Lotteries. Having access to cash could have shortened the time to market for the new pay as you go system, but Ian sees the positive side to this issue. The cash problem meant that the company was constrained through the process. They were forced to look more carefully about what they were doing and the innovations that resulted were therefore more thought through than if they had the ability to turn them around quickly.
The Future
The main challenge InterClub is facing currently is to make clubs aware of the benefits of the new system. The new, more technical, solution can be quite difficult to explain to customers who are used to the traditional machines where tickets are bought upfront. The company is looking to do more market research on how to increase the demand for machines and the new system. Until Ian and Alan has achieved a more sustainable base with more machines in clubs, they will hold off on any new innovations. They will do everything they can to see this new pay as you go system pay off first.
InterClub Lotteries stand out because of their long experience in business and gambling industry. They have learned to avoid mistakes over the years. Ian and Alan are constantly thinking about how to move forward. The motto of innovation is firmly established in InterClub Lotteries and next steps are never far away.
Interclub Lotteries July 2008
It is now some 18 months since we launched the DUO with all its new innovations and the results have been far beyond our expectations with club secretaries and treasurers willing to assist us in finding out exactly why the big increase in revenues came about. The current situation in very many clubs has been the gradual demise of the fruit machine and its effect on clubs revenues.Without doubt the fruit machine industry have been working flat out to develop a replacement for this type of club revenue stream and probably will have found the answer within 12/18 months but what do clubs do in the meantime to stay financially sound? The club secretaries/treasurers we talked to were keen to help us in finding out just what has made the DUO so successful and here are the most consistant answers.
1.The ability for machine players to be able to offer banknotes AND get change increased sales to a level not seen before.Before this feature was offered the player was give the choice of either using just pocket change,committing a whole note for tickets or going to a busy steward and asking him/her to give change and as soon as you make it difficult for a player to play the machine…they probably won`t!
2.The placement of a DUO near to a clubs fruit machines increased their takings by up to 35% mainly due to reasons above.
3.The new “Power” sets of tickets with their greatly increased play appeal has meant increases of nearly 47% on average and without the need for a club to invest large sums of money for ticket boxes.
Put all together we have a situation where the DUO now has the ability to make the same amount of money as the fruit does or did and without the problems of licensing,rentals and even more importantly. the need to pay VAT on the takings.I recently visited a customer on a Friday morning who was cashing up his machines.He had last cashed up on the previous Friday and the results were,Fruit machines under £100 and the Lottery machine over £1000.When I asked him if this was normal, he replied that it was more or less the same every week though obviously the totals changed. Getting a chance to see this machine is very easy. Just give us a call at 01323 489489 and we will do the rest.Obviously you can see the machine on our web site and ticket details but I think that there is nothing like a face to face visit.I always like to have a chat with prospective customers as with over 45 years in the club supply business (Bingo and Coin operated equipment) I can identify with club`s needs and problems and do my best to offer a solution.
I look forward to hearing from you
Alan Branch Man Dir,
