Harrah’s Entertainment In 1998, Harrah was in the verge of bankruptcy.

And was struggling in almost all of its major markets. In Los Vegas, the company’s $ 300 mn refurbishment was competing against $ 1.6 b Bellagio. In New Orleans, the company’s bankrupt property was struggling with regulations prohibiting casinos. In Atlantic City, the company’s properties were run down and the whole gaming industry was facing serious downsizing. The company’s share price performed very poorly. Quarterly earnings estimates were missed for several years. Today, the company is the world’s largest gaming entertainment services company with a 2005 revenue of more than $ 7 b and has a footprint in the United States that is unmatched by its competitors, has an extraordinarily powerful and valuable data base with detailed and pertinent information about 40 mn gamblers, against an estimated 50 mn gamblers in US. The company’s profits have skyrocketed, its productivity has increased dramatically and CEO Gary Loveman ahs been labeled as the best senior executive in gaming industry for several years in a row by Institutional Investor magazine. Inspired and enabled by a data collection and management system dressed in the garb of “loyalty program”, the company has developed a very scalable differentiation capabilities. Harrahs may be the only company that awards cash bonus to every property level employee, if customer satisfaction scores (which are regularly measured) improve. Given the fact that Harrahs had limited access to capital resources over the past eight years, it has been able to extract maximum from the existing asset pool. A comparison of average cash earnings on assets .in the period 1997 – 2005 in the gaming industry is as follows: Company Ameristar Harrahs Station Wynn MGM Mirage Average cash earning on assets 15.2% 17.9% 16.6 -1.4 11.4

Harrah’s has consistently used information technology to improve employee productivity. The company continues to outpace the industry in productivity. Following is the revenue per employee comparison between Harrah’s and the US casino industry. Year 2000 2001 2002 2003 2004 Harrah’s ($) 83.2 87.9 97.6 96.3 97.6 US casino industry ($) 66.2 70.4 75.5 77.2 82.8

6% 7. While many companies utilize analytical customer relationship management tools to analyze their value and worth if their customers to design appropriate marketing campaigns.8% 10.2% 7. Harrah’s use of operational CRM goes beyond analytical CRM in that it enables real-time application of data-analytic insights derived from traditional CRM capabilities.0% MGM 7.0% 9.4% 10. The operational customer relationship management system (OpCRM) tools and their corresponding rules enable a differentiated customer service.3% 10.7% 11. Given the cumulative size of the database (it grows in size every minute) and Harrah’s footprint.2% 10. The company has taken customer analytics to a new level and has accelerated its application to a real-rime environment.4% 11. they usually focus on the “after-the-fact” actions.6% 10. The scalable service differentiation capabilities that Harrah’s utilizes to deliver its services have helped it compete effectively with more capitalized competitors.3% 9. which in turn generates switching costs.0% 85. but about her lifetime value.7% 9.6% 6. it is unlikely that any other casino company will ever approach the breadth and depth of casino player understanding that Harrah’s has achieved.2% 8. .0% 7. Harrah’s has developed a formidable data base of customer behavior patterns that are linked to customer-provided demographic data.9% 8.1 Comparison of Return on Invested Capital (ROIC) Year 1998 1999 2000 2001 2002 2003 2004 2005 Harrah’s 10. its services are becoming increasingly personalized for its 40 mn customers.7% 7.4% 11.5% 8. Fundamentally this advantage arises from switching costs.1% 7. Over time.2005 108. By growing its customer understanding over a period of time.4 Industry composite 8.7% 7. The primary enabler for Harrsh’a ability to generate switching cost is its Total Rewards database – which contains transaction history of customers. Harrah’s not only thinks about the value of a customer in a single trip.9% Scalable Service Differentiation By meticulously tracking customer transaction data via its Total Rewards loyalty program. Harrah’s has created a basis for scalable service differentiation strategy.

Harrah’s has chosen Intelligent Table System.The relationship marketing and other business intelligence capabilities fulelled by Total Rewards are constantly bringing us closer to our customers so we better understand their preferences. The performance metrics are collected on regular basis. to track which player has which cards. Future Plans. the company is able to calculate the theoretical value of each customer based on factors such as wager amount. time played and othis basis customer tiers are created. But in table games. Another objective was to improve service quality. so that the random method of handling service requests on ‘first seen. Chip Manager technologies to capture exact amount played using RFID technology and Card Manager technology. There are a handful of events that may occur at the slot machines that may require the attention / service of a casino staff. The company now plans to collect non-gaming transaction data. This is driven largely by the acquisition of Caesar’s Entertainment. Ramanathan for class discussion) . In order to address this. The Slot Service Dispatch System was designed to help organize these requests in an orderly manner. And then we had to use the information we gather about them to make them want to come back (Loveman. based on optical recognition. the slot machines are not 100% autonomous. first serviced’ basis would be replaced by an organized algorithm-based dispatch system. Feb. Slot Service Dispatch System (SSDS) Despite all advancements. which will have three components: a Table Manager technology that allows for automatic data management. and from that understanding we are able to improve entertainment experiences we offer (Harrah’s Entertainment 2005 Annual Report) We had to treat our guests extremely well when they were in our casino. which has a wider customer base other than traditional gamers. 2005) Using Total Rewards system. game played.D. Thesis of Vikram Mensharamani titled Scale and Differentiation in Services: Use of Information Technology to manage customer experience in Harrah’s Entertainment and other companies”. Sloan School of Management. Harrah’s is looking at table games as a huge opportunity. submitted to Alfred P. Upon resolution of the problem. The fundamental objective of the system was to enable the employees to prioritize their best customers and offer them service on priority. (Extracted from Ph. data capture had to be manual unlike in slot machines. 2007) (Write-up prepared by S. the service ambassador electronically informs the system and the information is archived.

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