Diamonds in the Data MineClass 4: IT & Customer Management
Gary LovemanCase Summary by: Jane Hu
Main Takeaways
- Unlike its competitors, Harrah’s cares more about customers’ lifetime value and maintains its competitive advantage by using its human capital and technology systems to get to know its customers better.
- Harrah’s wins customers’ loyalty by mining its customer data deeply, running marketing experiments, and using the results to develop and implement finely tuned marketing and service-delivery strategies.
- Harrah’s links employees’ rewards to customers’ satisfaction in order to provide great customer services.
More in-depth Summary
- To enhance customers’ loyalty, Harrah’s launched Total Gold in 1977, which was designed to provide regular customers with incentives to visit Harrah’s property throughout the country. However, there were three problems with the program. First, nothing differentiated this program from its competitors’ efforts. Second, there was no uniformity in the program. Third, customers were not given incentives to consolidate their gaming with Harrah’s.
Although Total Gold wasn’t much good for keeping customers loyal to Harrah’s, the information technology systems underlie the program had assembled a vast amount of data on customer preferences.
- Digging into the database, Harrah’s discovered that 26% of the gamblers who visited its properties generated 82% of its revenues, these customers typically did not stay in a hotel but visited a casino on the way home from work or on a weekend night out, and these target customers often responded better to an offer of $60 of casino chips than any other incentives because they enjoyed the anticipation and excitement of gambling itself.
- Data-driven marketing: Coupling information in its database with decision-science tool, Harrah’s could predict individual customers’ theoretical value and create marketing intervention that profitably addressed players’ unique preferences. Harrah’s rewarded customers for spending in ways that added to their values and treated its millions of customers differently depending on their value to it.
Harrah’s split its customers into three tiers: Gold, Platinum, and Diamond cardholders, based on their annual theoretical value. Every experience in Harrah’s casino was redesigned to drive customers to want to earn a higher-level card. As it turned out, marketing that appealed to customers worked wonderfully.
- Harrah’s believed that the better the experience guest has and the more attentive you are to him, the more money you will make. Harrah’s measure all employee performance on the matrices of speed and friendliness. The better the experience the guest had the more money employees stood to make. This score driven customer satisfaction measure has allowed properties – even those in troubled markets – to continue to grow. Harrah’s good customer service is not a matter of an isolated incidence or two but of daily routine.
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