HARRAH’S

ENTERTAINMENT
INC.
Customer Relationship Management

......... ethical and security issues associated with what Harrah’s is doing............................................................ 10 1|Page ........................................................ 4 How does Harrah’s integrate the various elements of its marketing strategy to deliver more than the results of DBM? .................................. Are there concerns and how can Harrah’s address them? .................................................................................... 2 Why is it important to use the “customer worth” in the DBM efforts rather than the observed level of play? .................................................................................... 8 Discuss the privacy....................................................................Contents What are the objectives of Harrah’s data base marketing (DBM) programs and are they working? .......................................... 6 How sustainable is Harrah’s competitive advantage? ........................................................

constant search for new opportunities contributed to the marketing data base implementation. loyalty in terms of frequency and budget. behavior not just once but over time. In order to get to the desired results Harrah’s developed sophisticated customers’ profiles. The objective was achieved by focusing on the target market. The objectives and outcomes of the DBM are discussed below. predicting its value and converting potentially profitable customers into real ones. Marketing approach concentrated on each person individually and helped fulfill the customers’ needs not only on material but also on emotional level. Three programs were developed according to each phase – new business during which Harrah’s encouraged to increase frequency. What are the objectives of Harrah’s data base marketing (DBM) programs and are they working? After Harrah’s Inc started to experience negative consequences of poor transaction data management. The new strategy proved to be effective and applicable during several years. After analyzing the internal and external situation the decision was made to be concentrated more on the marketing rather than operational side of the business. which would track the clients’ preferences. The objective of the marketing campaign was to increase company’s revenues gradually by amassing frequency. modified customer service. Several models were created to distinguish between the phases of relationship. budget components.Harrah's Entertainment Inc. The data managed properly helped to determine the potential value of every client. which led to the reduced revenues the company realized the need for a change. Knowing what people wanted and providing them with what they needed predicted how much profit they would bring to the company. The challenges of the organizational restructure. 2|Page .

the trips to the casino increased with less incremental cost involved. In general. as well as growth in stock and profits. and retention with intent to retrieve the customers in case their interest was lost. The managers of each region were entrusted to make marketing decisions. Without the knowledge on the local property level the marketing ideas would not be effective. Observations were made to determine which strategy works better and what marketing tools are appropriate to use. budget upside. Harrah’s succeeded in a customer centric marketing strategy by implementing a new data base approach. as well as the number of the customers who stayed with Harrah’s for some time but lost their enthusiasm showed up after contacting them by mail. The program was not executed blindly to please the customers to the largest extent. Probably it was due to difficulty of influencing the customers’ behavior in terms of consequence of the visited casino locations. as it appears in terms of rewarding the customers with 3|Page . According to the results of each program summarized in the Exhibits 2b through 2e the new business became more effective and profitable. Therefore local implementation of the MDB was essential. The only program. The company also started to improve connection by eliminating “the same day cash” approach and setting a portion of the profit to reward potentially profitable customers. policies. which influenced further integration of the data base. For example.which extended relationship. Exhibit 1 shows the evidence of achieving the objective in terms of the revenue growth. the pro-active marketing forecast of potential revenue made allocation of the company’s operations. strengthen or recreate the relationships. Many marketing programs and experiments were held to establish. which did not demonstrate the desired results according to the figures from the Exhibit 2d was the loyalty program. finances and other resources easier to manage.

Thus they need to know their customers really well. It has got lots of major companies competing against them. modest package led to more intensive gambling behavior. 4|Page . They collected information regarding the customer’s gaming preferences by implementing a program called Total Rewards. the management was able to save on the hotel rooms. The information is collected through the customer ID cards which are inserted into the slot machines when they are playing. This process made it possible to do several marketing tests and track clients over a period of time. As a result.) Why is it important to use the “customer worth” in the DBM efforts rather than the observed level of play? Harrah’s Entertainment is one of the world’s biggest providers of branded Casino Entertainment. n. Figure 1:Customer View of the Total Gold™ Program (Terry college of business. Harrah used Customer Relationship Management (CRM) in order to face the increasing challenges.d. It has got about 50 casinos under several brand names.food and accommodation the less attractive.

This would lead to narrowing down of the market.d. The incentives can be customized and provided to the 1 Harrah’s Entertainment. It was observed that the observed level of play indicated the customer’s past activities and it was less relevant to the future or current business of the firm. as the observed level of play does not include the amount of money that Harrah’s Inc. are losing to its competitors when their customers play at other casinos. The business of Harrah’s can achieve a whole new level if they can find and target the high worth customers in the low observed frequency market as there is very low competition in that section.) Theoretical win or customer worth is the theoretical amount of money that the casino expects to earn from a customer’s play. The quantitative model developed by the firm helps in exploiting more customers from the broader customer base and to improve the customer services. n. DBM changed the way by which Harrah’s invested in their customers.ibm. Inc. Harrah’s uses IBM COGNOS1 data manager to access the data warehouse and to obtain queries and report. Figure 2: Total Rewards (Total Rewards. The investment should not be concentrated on the frequent/active visitors. Harrah’s can get potential high worth players if they give more emphasis on the customer worth rather than the observed level of play. Source : http://www.They have developed their own quantitative models in order to predict the customer worth accurately.com/us/en/ 5|Page .

He was brought into the company in 1998. left Booz Allen & Hamilton to join the new team as Senior Vice President of Relationship Marketing. earlier each property functioned as a separate entity whereas now they are changing that to create a bigger and wider experience for the customer. One of the important measures taken to improve Harrah’s position in the market was to bring in a COO who is a marketer. Richard Mirman. 6|Page . After the arrival of Loveman. Here Harrah's division presidents and their subordinates in brand operations. information technology. a former University of Chicago math whiz. started reporting to Loveman (COO) instead of to the CEO as shown in the . and marketing services. This was done to create a broader perspective in terms of the customers. The firm gets sustainable profits when its customers are satisfied. Loveman disbanded the existing marketing function and rebuilt it with people who preferred slide rules to mock-ups. i. These led to the development of the Database management system and Total Gold program which later was updated to Total rewards program. Thus we can say that customer worth is more important as it is more profitable for the company in the long run and it helps in satisfying the high worth customer’s needs. Gary Loveman who was on the faculty of Harvard Business School and had been working with Harrah’s for five.driven company that viewed as property separately (stand-alone businesses) to a company which is driven through marketing with major focus on the customers and building its brand image. One of Loveman’s initiative was to implement marketing tools and programs across all Harrah's properties. How does Harrah’s integrate the various elements of its marketing strategy to deliver more than the results of DBM? The important factor which led to the above results is the changes made in the organization structure of Harrah’s. he helped the company to migrate from an operations.e.customers based on their future value.

the company had to use the results of Database marketing to implement three key packages: new business program. each month resulted in bringing a new vintage of customers signing up. customer retention and loyalty. Harrah’s provided customers with marvelous offers which resulted in regaining a lot of customers from other casinos. Harrah’s was able to seize the major chunk of customers spending (as seen from exhibit 2c). when Harrah’s saw a decline in their frequency of visits in the latter half of 1998. Another worthwhile factor was that customers who returned to Harrah’s were put into loyalty marketing program and were managed depending upon their upside potential.focused marketing strategy emphasized on three main aspects: building new business. The new business program was aimed at improving the effectiveness in converting new Total Gold members into loyal customers. the main goal was to extend the firms relationship with its customers on a long term basis. predicting customer worth and making more effective investment at the ground level(customer level). loyalty program and customer retention program. it had to test out the reducing support of some customers and then had to send direct mail offers to approximately 8000 customers (mainly coupon incentives) in-order to revitalize their relationship with their customers. For that purpose. as seen from exhibit 2b. Moreover as a visitor’s first stop. 7|Page . For example. Incentives were offered to the customers to frequently visit its properties which in a way inspired them to switch on to Harrah’s from their competitors. i.Harrah’s customer. For instance. Customers who were known for atleast 6 months or three trips were more targeted. In fact. The objective of retention program was to regain the market from their lost customers. which resulted in a big improvement in customer visits and sales. they mailed incentive coupons in January 1999.e. As seen from the figures mentioned in the source. In the loyalty program.

Harrah’s was losing market share to these flashy and extravagant establishment. The program also did have a major impact on consolidation play based on the theoretical approach. Loveman guided the company to new direction to change from operations-driven company that viewed each property as "standalone business. In addition to this program. Trump Hotels & Casino Resorts. Company's major competitors were Park Place Entertainment Corporation. has created a competitive advantage for the company with its customer minded operations.These three programs jointly played a major role in satisfying the customers and hence achieving their marketing goal. Inc. But in the mid 1990's Harrah's competitors had in the market came up with better and flashier properties. Chairman and CEO of Harrah's Entertainment. Atlantic City. Harrah’s also made the customers make feel that it patented itself with the “feeling of exuberance”. In addition to this. Inc. Reno. How sustainable is Harrah’s competitive advantage? Harrah's Entertainment. the Total Rewards program also managed to build a strong rapport between Harrah’s and their customers as the customers believed that their specific needs were taken care of by the firm. Circus Enterprises Inc. is a well renowned in the gaming industry operated casinos in major casino markets like Las Vegas. where customer focus was seen as utmost important. This had attracted a great deal of customers to come to the casino for the sole purpose of monetary escape. Mirage Resorts. who joined Harrah's as Chief Operating Officer (COO)." to a marketing-driven company that focused on the target customers and build their loyalty under Harrah's brand. Loveman launched three major initiatives: changing the organization structure. Satre. Lake Tahoe. Laughlin. delivering extraordinary service and exploiting relationship 8|Page . building the Harrah's brand. Philip G. Inc. Harrah’s strong role in advertising and ensuring high customer and service quality also paved its way in building its strong brand image. To overcome this and to re-establish the market Satre with the board member’s approval appointed Gary Loveman. where the properties were made in to an “experience” with different attractions.

Gary W. This approach was in contrast to the prevalent strategy of building ever more elaborate and splashy new casinos. An increase in retention of just 1 percent is worth $ 2 million in net profit annually.marketing opportunities. As a result of these by December 1999. Keeping customers goes right to the bottom line. they have been able to create sustainable loyalty. which contains the world's largest database of casino customers. The other important initiative was to implement marketing tools and programs across all Harrah's properties. and marketing programs driven by data from the warehouse are increasing retention. but it chose to invest more than $100 million in technological improvements such as computers and software development. Their innovative idea was to grow by getting more business from Harrah's existing customer base. a dominant competitive advantage. Harrah’s had an option of investing 100 million dollars into property. thanks in large part to its data warehouse. The Customer Relationship Management at Harrah's consisted of two components: Database Marketing (DBM) and the Total Gold Program. Loveman refers to their success as "the triumph of software over hardware in gaming. Harrah's had 50% growth in revenue and 100% growth in stock price and profits. 9|Page ." The Total Rewards program has increased traffic in Harrah's casinos. So far. Harrah's is enjoying an increase in retention of a couple of percentage points. which are regarded as the industry's most sophisticated "frequent bettor" program. Which included new business. With the Total Rewards program. which were significant. loyalty and retention programs. and insulate the business from local market volatility.

The database technology and customer relationship management software enable Harrah's to maintain sharp customer profiles. improve its customer service. and offer consistent customer service.The database technology and customer relationship management software help Harrah's achieve a sustainable competitive advantage in the gambling industry. 10 | P a g e . analyze its data to identify the most profitable customers.

such as behavioral and financial information but Harrah’s has stated that it will not sell of the data it has collected to any third party. Customers’ 11 | P a g e . particularly when Harrah’s can track customers’ spending patterns on gambling. Given the nature of their business. This sort of data cartel can have far-reaching consequences for a customer’s credit profile and ability to secure credit. Which may lead to ethical and privacy concerns depending on the information sold. when all customers are looking for is a good time.What are the privacy and ethical issues that Harrah’s should be concerned about? First and foremost. Forcing behavioral/psychographic patterns on users can backfire. People go to the casino because they want to feel “exuberantly alive”. Most of their offers are targeted towards this. There is always debates around data mining that there is the problem of sharing Harrah’s internal data with credit card companies. This raises issues of privacy. If this argument is true then they may be targeting such individuals to spend more money in their properties. right from their playing strategies to their personal information including address and birth date. Harrah’s also runs the risk of over profiling through its data. Harrah’s system relies on tracking customer behavior. Harrah’s works at enticing customers to feel the adrenaline rush of gambling. there is potential of selling customer data. This has definite ethical issues since gambling can become an addictive practice and Harrah’s offers encourage such behavior. Some may debate that Harrah’s is exploiting customers who are known to exhibit gambling addiction. they promote gambling. if the individual is not aware of such transactions he/she can be in grave danger when it comes their personal information. which can be deemed an unethical practice.

and an incorrect pointer to their behavior metrics and/or psychographic positioning. so in order to overcome these Harrah’s should have a clear description of the terms and conditions. the customer should be aware of what the information will be used for.e. there should be transparency i.behavior in Harrah’s may only be a reflection of their less guarded selves. 12 | P a g e . Even the reward program should have be clearly defined to avoid any conflict with the customers. The customer should have an clear opt-in and opt-out conditions. There is always a possibility of accusation by customers who are not satisfied or who have had a bad time at the property. All of these should be maintained in order to reinforce the trust shown by the customer.

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