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Harrah's takes the gamble out of customer loyalty

Harrahs Entertainment Group has implemented a customer loyalty program that allows it to treat different customers differently. The ultimate result has been a boost in revenue.

So you've got executive buy in and you've just invested in the hottest customer-interaction app. Now what? How do you properly mine the data to determine what's actionable? How do you get the right data into the hands of the right people across the enterprise? These are strategic and technological conundrums that many companies have yet to tackle. Collecting, mining and integrating data are three of the biggest challenges modern execs face.

These were the very issues that Harrah's Entertainment Group was wrestling with a few years back. For Harrah's it's all about customer loyalty. So the company realized it was time to act when it was only getting about 34 cents out of every gaming dollar, even among its best customers. In 1997, Harrah's launched its Total Rewards loyalty program to boost its share of the gaming customer.

Pulling the customer levers

Total Rewards membership is tiered with different colored cards denoting each customer's level of play. The difference in appearance is significant because it helps Harrah's recognize its best customers on the spot. Cards are also used to capture transactional data, a customer's game preference, how long he plays, his frequency of visits and which locations he favors. The company identified about 80 segments that, when matched with individual customers' data, make for some very powerful information.

With data in hand, Harrah's can, "figure out who we should be targeting," says David Norton, VP of loyalty marketing. Armed with this 360-degree view -- and because customers can build points at any location -- Harrah's creates, "an incentive for gamers to visit a Harrah's location wherever they may be." This is critical when you operate 25 U.S.-based locations, from Las Vegas to Louisiana, explains Norton.

The result is a system that treats different customers differently. In those cases where the customer comes to Harrah's "relatively frequently" but where the predictive models show that the company doesn't have a full share, "We come up with more attractive incentives," explains Norton. And for new customers, Harrah's might emphasize an educational message relating to the quality of its facilities and the value of its loyalty program.

Cashing In

Is the payoff worth the one-to-one gamble? Absolutely, confirms Norton. "By looking at the particular segments, instead of the aggregate, that's where you really drive profitability." The program has contributed "over $100 million to revenues since its inception," he says. Even more impressive, "North of 70% of our revenues are what we call 'tracked'," he adds. In other words, they can be stored and traced to an individual card holder. Today there are some 6 million active card members, and more than 25 million in the database at large.

Simply put, bringing technology and strategy together to create an integrated, customer-data program can help companies capture the revenue they seek. "If you decide all you want is market share, and you get aggressive with your offers to just everybody, then all you're really doing is eroding your margin," explains Norton. "Capture and analyze the data, and you can keep the margin where performing well, and attack segments where there's more opportunity."


To read more articles like this one, visit Peppers and Rogers Group's Web site at www.1to1.com.

All materials copyright 2002 Peppers and Rogers Group -- 1:1 Marketing.

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