In 1989, Iowa became the first state to allow gambling on river boat casinos.

Casinos which resembled famous monuments & statues were built to attract tourists looking for entertainment.

According to LVCVA, an average visitor spent $1329 during his 3.7 day stay at Las Vegas of which 50% was spent on gambling.

The major players were Park place entertainment corporation, Mirage resorts, Circus enterprises and Trump hotels and casino resorts.

Harrah’s was founded by William Fisk Harrah in 1942 in the state off Nevada and expanded to make a 24-storey hotel across the street from the casino.

Harrah’s Early Strategy

Harrah’s took the advantage of legalization of gambling beyond Nevada and New Jersey.

Customer loyalty as a core competency: Harrah’s focussed on customer loyalty as its core strength to gain sustainable competitive position in the increasingly competitive and expanding gambling industry in the states.

Since Harrah’s was unable to capitalise on cross-market visitation, they started developing a reward program based on tracking cards at their different properties. This led to the increasing importance of IT and database management systems for Harrah’s.

Harrah’s first investment towards achieving customer loyalty was the Winner’s Information Network, a national database.

To connect customers at all their properties, the customer must be able to use the same loyalty card at each of the properties.

A New APPROACH

Gary Loveman , the new COO, launched 3 major initiatives:

Changing the organization structure: Integration of P & L accounts instead of separate P&L for each property to adopt the strategy to encourage customers to spend their money at Harrah’s location broadly.

Building Harrah’s brand: $15-20 million were spent to communicate the feeling of anticipation and exuberance.

Exploiting relationship marketing opportunities & delivering extraordinary service.

Customer Relationship MANAGEMENT

CRM consisted of,

Database Marketing (DBM) 

Total Gold Program

Results from Total Gold Program

Total Gold Program motivates customers to consolidate their play, and the data collected through the program allows them to execute direct marketing strategy.

Designed to facilitate and encourage cross market visitation pattern of Harrah’s customers 

Quantitative models to accurately predict Customer’s worth were developed.

In 1999, they revamped the program into total rewards. It was a tiered customer loyalty program consisting of layers like total gold, platinum and diamond with different offers respectively. It provided a reward menu that translated reward credits to the various complimentary offerings.

Results from DATABASE MARKETING (DBM)

New business program: to effectively convert new total gold members into loyal customers 

Loyalty program (frequency upside): designed to identify customers that were giving only a small share of their total spending in a particular market

Loyalty program (budget upside): to identify customers who were giving only a small share of their gaming budget to Harrah’s on their trips

Retention program: to reinvigorate customers who had broken their historical visitation pattern or had demonstrated other signs of attrition

Significant results from crm

Net income rose by more than 100% from 1998 to 1999 (exhibit 1) even when the total gaming revenue in the united states increased by only 12% (exhibit 3); a remarkable increase in a stagnant industry.

Harrah’s achieved sustainable competitive advantage because of their ability to predict the customer behaviour better than their competitors.

While other players focussed on providing enriching experience to their customers through state-of-the-art infrastructure, Harrah’s achieved higher profitability by lining all their activities with their customer-centric strategy.