A Marketing-Driven Casino Operational
Business Plan
Gary Green’s customer relationship management
strategies for casino growth strategy, property
EBITDA, and overall performance.
R.O.I. in a 21st century casino
1
© 2002-2003
Copyright 2002-2003
Gary Green
No portion of this booklet may be reproduced in any manner, print,
not electronic, without the express written consent of the author and
publisher(s) of the material herein.
Additional information may be obtained at:
www.VerdeVegas.com
or
www.garygreen.com
Published in cooperation with Saul Weinstein Agency
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2
Table of Contents
Tremendous opportunity available in the casino industry. ............ 5
An Executive Summary Overview.............................................. 13
What is the formula for the gaming industry? ............................. 17
Why these formulas work. ......................................................... 18
Formula One: Management....................................................... 20
CASE STUDY: Mandalay Resort Groups' Value Creation .......... 20
CASE STUDY: Inside Harrah's Relationship Marketing ............. 26
CASE STUDY: Mandalay Resort Group's Customer Focus ....... 29
CASE STUDY: Harrah's Tierd Player Cards .............................. 31
Formula Two: The Marketing Plan ............................................. 34
CASE STUDY: Harrah's 49% Increase ...................................... 36
The complexity and simplicity of formula-based marketing. ........ 41
CASE STUDY:Mandalay's Luxor Mistake .................................. 57
Fine-tuning more traditional casino marketing tools. .................. 58
Formula Three: The Technology Marriage ................................. 63
CASE STUDY:Gary Green's Mandalay Presentation ................. 73
Vision, Summary and Conclusions. ........................................... 76
Management Bio. ...................................................................... 79
Appendix One: The Wall Street Journal's Review of Harrah's .... 87
Index......................................................................................... 91
EndNotes .................................................................................. 94
3
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both patent-pending methodologies and
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Gary Green can be reached at:
th
3960 Howard Hughes Parkway, 5 Floor
Las Vegas, NV 89109
(702) 990-3920
or
(561) 865-9609
gary@garygreen.com
4
Introduction.
A tremendous
opportunity is available
at this moment in the
evolution of the casino
gaming industry.
Almost 80% of the population of the U.S. lives within a
two-hour drive of a casino. According to a July 2002 survey
commissioned by Harrah’s1, more than 53-million adults
visited casinos in 2001-2002: that is more than 27% of the
adult population of the country2.
Those 53-million people visited an average of 5.7 times
per year (for a total of 303-million casino visits)3. And
countering some industry whines of “market saturation”,
casinos visits were up 27% over the previous year4.
Despite somewhat dubious origins (at best) and entry
into the legitimate business world through Howard Hughes’
controlled madness and Michael Milken’s 1980s “junk
bonds”, there is no denying that casino gaming has become
a valid sector of the American economy. While we have not
made it into the thirty Dow Jones Industrials, three publiclytraded gaming companies do rank in the Fortune 500 list5;
two more rank in the Fortune 10006; and several major
universities (yes, outside of Nevada) teach Casino Management
in their business schools7.
5
Nonetheless, casino gaming as a business is a relatively
new industry. Even Nevada did not legalize corporate ownership
of casinos until 1967; Atlantic City didn’t legalize gambling
until 1979; Indian casinos did not become legal until the
Indian Gaming Regulatory Act became law in 1988; the first
Mississippi casino opened in 1992 and a myriad of riverboat
and state-by-state laws have followed (and are still being
debated into law in local jurisdictions).
Through its corporate infancy, the gaming industry has
continued to find its way into standard accounting practices,
traditional business patterns, organized marketing plans, and
EBITDA-focused management models.
But like any start-up industry, the most-revolutionary
advancements internally are often archaic to the rest of the
business world. Twenty-five years ago, one casino’s
discovery of Standard Accounting Practices & Procedures may
have been incestuously revolutionary amongst other casinos,
but for the rest of the business world it would be hard to
understand how a business existed without them.
The exact same situation is true today as the gaming
industry enters its adolescence. Basic business procedures
are, at long last, firmly in place and there is no question
about the legitimacy of policies, procedures, and
management technique.
However, when it comes to some other tenets basic to
most industries, casinos are frighteningly behind the times.
These deficiencies include (but are not limited to):
� CRM (customer relationship management) and
other advanced marketing practices fine-tuned by
the cataloging and direct marketing worlds;
6
� prudent use of technologies that were just not
available at the beginning of the casino industry
“business” era;
� and implementation of some widely-proven
formulas for streamlining forecasting, decision
support, and general business operations.
Just one example of these stark deficiencies becomes
evident when we look at the way customer data is managed
in the gaming industry. In 2002 (for the second time)
Harrah’s won a bevy of national awards for their datawarehouse project. With co-winners including such
powerhouses as Office Depot, Tufts University, Charles Schwab &
Co., Dell Computers and Pfizer, Harrah’s was the winner for
advancements in their specific industry niche: gaming. Their
CRM data-mining project is, without a doubt, revolutionary
for the casino industry and given what they had to work
with. However, when examined side-by-side with the
technologies of their co-winners, it is painfully clear that the
casino industry is measured from a different standard than
the rest of the business world.
A leading technologist for one of the Nevada slot
machine manufactures recently wrote to me:
“Everyday I see how caveman gaming is now. The simplest
things ― like using real TCP/IP STANDARD networking, NICs,
CAT5 cable, routers and hubs you can buy at radio shack. NO
they all have to invent their own bad systems of communication.”
It is indeed noteworthy, revolutionary, and a giant leap
forward to have the best horse in the race at the county fair;
but when everyone else is running Formula One race cars,
that award-winning horse looks more and more like an old
nag. Harrah’s data-mining and marketing example is indeed
THE best horse in the race. Unfortunately, this is a highperformance auto race in business and not a horse race.
7
In another example, a recent employment advertisement
posted by giant MGM/Mirage warned potential marketing
candidates:
“Must have ability to learn and master THREE DIFFERENT
Computer operating systems (hotel, slots, and casino).”
And this was for a Marketing Manager not for a computer
technician! Yet no one stopped to ask, “Why?” Bizarrely, in
the casino industry this kind of nonsense is routine and
doesn’t raise a single eyebrow. In any other industry it would
be laughable. Personally, I can’t decide if I should laugh or
cry.
With the exception of adherence to some basic business
rules and decisions, the entire casino industry is saddled with
these kinds of out-of-date methodologies…and not just in
technology.
In fact, technology is only one small part of the equation.
The issue is really about marketing techniques, management
methodologies, and then the technology. After all,
technology is really nothing more than a tool for marketers
and managers (at least that is all it SHOULD be).
Even more alarming is the state of the smaller casinos ...
those operators not supported by large public corporations
like Harrah’s, Park Place Entertainment, MGM/Mirage,
Mandalay Resorts Group, Trump Casinos, etc. The smaller
operators (second and third tier) are working in the 19th
century compared to the rest of the business world and a
good decade or two behind even the rest of the casino
industry.
This would not be so bad if it were not for the size of the
existing consumer market. 300+ million casino visits a
year is a very serious number.
8
These deficiencies in practices are not a reflection on the
management of the casinos…or of the Operators…so much
as they reflect the development stages of the gaming business
itself. It takes time for an industry to grow, and as we have
discussed, this is a very young industry.
Therefore, there is a tremendous opportunity
available at this moment in the evolution of the casino
gaming industry.
The opportunity…crying out for attention…is the
creation and implementation of step-by-step formulas for
measurable results for growth strategy, property EBITDA,
and overall performance.
More specifically, the opportunity exists to focus
management on the techniques, methods, and values that
already drive successful companies in other sectors: sales and
service.
These are not hollow buzz-words, but are, in fact, a
genuine opportunity to build real business from an industry
that already has more customers in a year than the
automotive industry (for example).
The industry-wide anemia is very similar to the situation
in the Motion Picture industry when video tapes were first
introduced. The movie business fought tooth and nail
against allowing consumer VCRs (and BetaMax) into the
United States; they were certain their profits would go down
the tubes. They were already a profitable industry and didn’t
need some johnny-come-lately fad technology telling them how
to do things. Then one day it dawned on them: we can make
even more money if we produce videos. Today, 20 years later, video
and DVD sales usually surpass box office revenue.
9
Businesses must grow with the changing expectations of
the consumer market. New rules and methodologies must
be integrated into the old.
Again, this is clearly not a call to across-the-board
replace management nor even to replace the tried-and-true
marketing methods using match plays, nonnegotiable chips,
spree, rebates, comp programs, hosts management, bus
programs, and other effective programs.
Rather this is an outline and business operational plan
for exploiting that opportunity; for taking any one casino or
group (and the industry as a whole) to the next level of
growth… and for a phenomenal R.O.I. using the existing
infrastructure and adding to it the proven techniques from
business, from direct marketing, and from technology.
The methods I am proposing began with my appearance
at the World Gaming Congress in Las Vegas in October of
2000 at which I laid the ground work for my widelydistributed white paper “Casino Executives Meet 21st Century
Technology”. That paper became one of the driving factors for
many casino operators’ move toward more advanced (and
more profitable) player-tracking and decision-support
systems. It also sparked my subsequent direct and indirect
consulting for a half-dozen of the major Las Vegas strip
operators8.
Since that trade show seminar I have been able to work
with or talk to a number of operators as well as gaming
manufactures and technology providers about these issues
and possible solutions.
I have reviewed the marketing methodologies, CRM
strategies, and customer-building techniques of more than a
dozen Las Vegas operators, university Casino Management
courses, and “insider” seminars.
10
I have studied, evaluated, and even map-plotted the
management strategies of the largest national operators, a
select group of Las Vegas locals operators, and two holding
companies.
Taking what I learned from them as well as my own
more than twenty-five years on the periphery of the gaming,
entertainment and hospitality industries combined with a
pioneering role in the technology revolution of the 1990s
and executive positions in the catalog (direct mail) marketing
industry… I have focused on: research; gaming; technology;
marketing; and management.
Using specific case studies and formulaic methods, this
incredible opportunity in casino operations and marketing
becomes crystal clear.
This is a call to seize this prime opportunity and apply
proven cross-industry expertise to develop a casino property
and its profitability.
This is a business plan focusing on operations,
marketing, and technology to take an existing infrastructure
to the next level.
This is a strategic plan. It is a management philosophy. It
is a marketing plan. It is an operational road map.
But above all, this is a call to action and a call for that
investment.
Gary Green
11
12
An Executive Summary Overview.
A Proven 40% Increase
In Operator Revenue.
Using just a fraction of Gary Green’s Patent-Pending solution.
Be fore
Afte r
As we noted earlier, most casinos today are overlooking a
major source of tangible and measurable quarterly revenues
as well as an ability to attract new customers, to increase
loyalty amongst existing customers, to increase time-in-play,
and to increase the betting handles of existing loyal
customers.
The business rules and methodologies created by Gary
Green were responsible for more than $3.2-billion in sales in
20029. This methodology is no “johnny-come-lately” fad; rather
it is the application of specific formulas (long-proven in
other business disciplines) to the gaming industry.
13
One publicly-traded casino operator using their own
version of just a fraction of the Gary Green operational
outline was able to increase casino revenue by up to 40% in
one year of using it10.
With this method, the traditional and decades-proven
casino management programs absolutely remain in place (for the
most part), just as do traditional marketing programs (those
earlier mentioned match plays, nonnegotiable chips, spree,
rebates, comp programs, hosts management, bus programs,
etc.). These are proven and effective techniques.
When the Nordstrom brothers grew their business from
a Seattle shoe store to the premier upscale Department Store
retailer, they did not scrap the methods developed by Macy,
Sears, and Federated. Instead, they added a new element of
customer service to the already solid foundation laid by the
earlier pioneers11. And in doing so they created a valuation
that Macy’s wishes they could duplicate.
Likewise, in an existing casino, the tried-and-true models
now can be melded into a highly formula-based balance
between this new operational marketing management and some
special technologies (that were not even available before the
technology boom of the late 1990s).
The synthesis of these worlds (operations, marketing,
and technology) can be all brought together through focus
on three factors:
�
Growth Strategy;
�
Property EBITDA (with investment-grade credit rating);
�
and Actual Performance.
With these three targets in mind, a new kind of
management is created: a management that is driven by sales
and service: a management philosophy that has long been
14
present in most consumer-focused industries but is
somewhat revolutionary to gaming.
Beyond simply applying Customer Relationship
Management
marketing…and
beyond simple datamining
applications…this is
an entirely new
Business
management
Marketing
Overview
philosophy that finds
R.O.I. as a constant
balance between new
marketing strategies
and a healthy general business overview. It is a balance
between the best of the business world and the best of the
marketing world…woven together by technology.
R.O.I.
The entrance of corporate America into the gaming
world did, indeed, open the door for some advanced
business thinking to be applied to casino operations. And
despite the 1980s-era “junk bonds” used to create some of
the public-corporation gaming empires, operational focus
was shifted to that Return On Investment. Casinos became
“businesses.”
That was, without a doubt, the first step in creating
modern business entities in the gaming world. Both in Las
Vegas and in the hinterlands where riverboat and Native
American gaming have grown roots, serious businessmen
and serious business practices are at the helm of some of the
better run gamming entities. A number of non-Vegas
gaming companies like Isle of Capri have very sound
business management at their leadership and are on the road
toward the evolution of the industry.
15
But like Macy’s before Nordstrom or Paramount
Pictures before video tape recorders, this very young
industry has not evolved to that next level of assured
profitability.
Now it is time to take THAT vision and add a closer
look at implementing operational procedures to support it.
R.O.I.
mers;
New customers;
Brand loyalty from
from re
r turning customers;
Increased betting handles from all customers.
The gaming industry has only recently discovered a basic
business and marketing law that other industries learned
long ago:
“This is a formulaic business. It is consistently
predictable, and financial results can be projected
with a high degree of accuracy and reliability.”
―Renowned direct marketing consultant Don Libey talking about
customer contact
Knowing and properly implementing the formulas is the
hallmark of the experienced practitioner of any business
discipline. Applying the formulas (along with adequate levels
of capital) to create above average margin is the hallmark of
the master practitioner and the above average casino.
Decades of casino operational experience and even an
unlimited marketing budget are useless without the basic
formulas being known and understood, and applied.
16
What is the formula for
the gaming industry?
Many formulas exist for the modern casino to focus on
our three (previously defined) targets of revenue growth.
Finance uses a set of these every single day. Good marketers
use a different set in measuring responses. Slot managers use
another set to determine machine placement as well as such
factors as volatility. Existing high-level management extracts
are nothing more than overviews of another set of formulas.
In short, then, a “formula” for success is little more than
a step-by-step 1-2-3 approach to any given problem, issue,
or even procedure. We are talking, here, about procedures to
reach our three goals; those are our formulas.
Depending on the goal, these formulas (or steps to
accomplish the goal) change (based on numerous variables
and externalities). But the wonderful thing about proven
methods… about proven relationships… about proven
formulas is that only the percentages change.
Only the relationships change from situation to situation.
The “relativities” and the “unities” are preserved in a
mathematical formula.
17
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Why these formulas
work.
THAT is what makes it possible to apply cross-industry
formulas to a specific set of circumstances.
That is why Generally Accepted Accounting Practices work
regardless of the business in which one is involved.
That is why company valuation, P/E ratios, Market Cap, etc.
are computed the same way for a Hotel/Casino as they are
for an automobile manufacturer.
And most importantly, THAT is why Customer
Relationship Management has the same procedures regardless
of for what the customers are spending their money.
Understanding the relationships and how to manage and
exploit them is what makes THIS plan different from
anything among operators today. But, more importantly,
18
understanding the relativities and the unities is the key to
creating margin in this complex business.
The formulas I apply for these successes fall into three
concentrations:
1. Management/Operations;
2. Marketing;
3. and Technology.
This is almost a “which comes first the chicken or the egg” kind
of issue. In order for management to make operational
decisions, they need a solid understanding of the marketing
strategy. In order for marketing to develop an effective
strategy, they need a handle on the technology to support a
modern campaign. And technologists need the guidance
from marketing and approval of management.
Thus part of the complexity of the gaming situation has
been an inability to marry the three into one philosophy.
This is not because anyone has failed to do anything, but
rather because it is so rare to find a philosophical marriage
between marketing and technology in senior executives.
For too long, these functions have been separate. In
today’s competitive landscape, that is a mistake that can no
longer be afforded. It is time to focus and train executives
on and in the tools of the 21st century.
Let’s first look at what senior management should be
doing to apply the formulas of this edge-of-marketing
science and the edge-of-technology to secure increased
bottom line for the casino and to increase:
– A base of new customers;
– Betting handles and amount of play time of
existing customers;
– and brand loyalty from occasional or first-time
customers.
19
Formula One: Management
A new forecasting focus
for management
decision support
Very specifically, I propose a 20-point management
operational plan for melding technology with marketing to
increase the casino bottom line; a program that can be
adopted and implemented by almost any management
operational structure:
1. Begin by consolidating authority over the all of
company's operating vice presidents (and over all
casino/hotel properties in multi-property cases) with
technology-driven marketing becoming the new
driving force. At a minimum, establish an EVP level
position to manage this program. This highest level
signal is essential to instill the new vision and
direction at every level in the company and it lays
the groundwork for the growth that comes from
these steps. While some of these functions will, at
first glance, look like micro-managing, in fact they
merely reflect a different kind of focus from what
top management has had before now.
2. Develop revenue enhancement programs that add
value in the property’s achievement of data-driven
operating plans. Top management focus on this
issue is essential for success. (see marketing
section later in this discussion)
3. Incorporate technology, direct mail, and teleservices into one unit as part of marketing.
4. Set focus group trials (with current visitors)
examining what gets people to gamble more and
what incentives work best (based on data tracking
20
their previous behavior in casinos) so that top
management can understand exactly who it is that
provides the revenue.
5. Establish mathematical models to score gamblers
on how profitable they can be to casino...per visit
and lifetime value (since profits....revenue…sales
are ALL that drives this business).
Let’s pause here for a minute to look at these concepts
of value creation, lifetime value, and revenue enhancement
programs:
CASE STUDY:
From Mandalay Resort Group Management Review Presentation
Mandalay Resort Group views value creation in terms of
what they call the “New Model” vs. the “Old Model” of
management and marketing. Their “new model” revolves
around EBITDA Margin driven by linking together all customer
information to target the largest segments of visitors and
positing the Mandalay properties as “must see” destinations.
Focusing on revenue management rather than unit growth,
they developed loyalty programs to identify the long-term value
of those targeted groups of customers. (Technology and
modeling methodology limitations hold them back and force
them to examine only the largest GROUPS of targeted
customers rather than ALL customers.)
21
CASE STUDY:
From Mandalay Resort Group Management Review Presentation
22
CASE STUDY:
From Mandalay Resort Group Management Review Presentation
23
CASE STUDY:
From Mandalay Resort Group Management Review Presentation
With Mandalay’s excellent recognition of new metrics as
a case study, let’s continuing this 20-point management
formula program emphasizing that these items are, in fact,
management issues (rather than some other internal
discipline, like marketing only). New management is going
to HAVE to be focused on growth, sales, and what
Mandalay calls the “new metrics.” In short, the NEW casino
executive is sales focused to such a degree that some issues
24
typically examined only by lower management venues are
now essential to the new executive overview.
6. Create Skinnerian behavior modification projections
(including intervention programs) into existing
gambling behavior to increase loyalty, time, and
betting handle. Make it truly PAINFUL for a loyal
customer to change brands or to stop coming.
7. Set budgets and calendars for gamblers,
calculating their "predicted lifetime value” as a
decision-support tool for management
projections.
8. Train outbound telemarketers, casino hosts, and
even cocktail waitresses in recognizing key
behavioral words so as to follow specialized scripts
that match those word-histories. (Create a
Nordstrom-esque customer service focus at
EVERY level…and driven by very top
management.)
9. Identify the target market, based on data of who the
typical “good” customer is and the largest numbers
in these groups. But do not exclude one-on-one
relationship marketing from customer contact
strategies (like Host programs).
10. Institute (and modify current) “loyalty" marketing
and technology programs; using psychographics –
rating players and potential players according to
characteristics such as their careers, eating habits,
social activities, show interests, etc
Let’s take a look at how these seemingly “marketing VP
functions” are really part of an executive management
strategy of focusing on tangible operational issues, again, as
a tool for decision support and specifically for management
projections.
25
CASE STUDY:
From Harrah’s Investors Presentation
When Harrah’s adopted data modeling around the issue of loyalty
programs, they discovered dramatic increases in customer retention.
So much so that they developed what they believed to be a
sophisticated set of marketing tools to promote trial visits, incentive
programs for rewarding loyalty, and most importantly turn that loyalty
into better profitability.
All of this was driven by what they called their 9 parts of “relationship
marketing” to drive loyalty and lower costs. These nine interrelated
areas are identified as:
1. Player Card Program &
5. Yield Management
Data Collection
6. Internet Functionality
2. Data Mining
7. Slot Management
3. Direct Mail
8. E-commerce
4. Telemarketing
9. And Labor efficiency
26
My 20-point executive management plan further focuses
on the issue of creating that unique “value proposition”
through implementation of additional “knowledge of
customer” programs essential for making any reasonable
projections. Every modern casino executive should be able
to tell you exactly who the source of his revenue is.
Suddenly, following these decision-support points,
projections becomes a science rather than an art.
Once upon a time in old Las Vegas, revenue came from
“whales” (old Vegas slang for “high rollers” who gamble
large amounts of money on each visit). In fact, in those days,
slot machines were little more than decoration kept around
to amuse wives and girlfriends while the high-rolling men
spent the real money.
Then along came the marketing strategies of Bill
Bennett, Mel Larson, and others who transformed the target
market from a known-by-first-name handful into an
unlimited mass-appeal audience.
By the 21st century, that transformation has seriously
changed gaming. That 2002 Harrah’s survey 12 revealed that
those 53-million casino visitors widely prefer slot machines
and video poker machines to table games: 74 percent
preferring slots with only 14 percent opting for table games
(and 8 percent expressing no preference).
And casino profits reflect that focus as well. Hence
knowing the customer is not only important…it is
ESSENTIAL…to top management. Continuing, then, my
20-points for re-adjusting top management’s focus:
11. Evaluate the favorite games of players by age and
gender and focus a pro-active outbound customerservice track around that information.
27
12. Evaluate which neighborhoods around the country
(or in the targeted geo-area) produce the most
lucrative customers and have Marketing focus
direct mail and telemarketing on that data-driven
targeting.
13. Incorporation of an RFM (tracking of Recency,
Frequency, and Monetary Value) program into
the mix of data (see marketing section). And make
available REAL TIME demand forecasts so as to
optimize
(on-the-fly)
corresponding
yielding
determinations. The addition of the RFM formulas
is, within itself an essential step…and revolutionary
to most casinos…that makes forecasting absolutely
and totally formulaic PREDICTABLE
and
ACCURATE. (See marketing section later.) This
one vital addition to management philosophy is
strong enough within itself to build a business. It is
the cornerstone of the cataloging (direct marketing)
industry and a requirement for any effective direct
mail or outbound telemarketing campaign.
14. Determine what percentage of every wagering
dollar of a customer is being spent in this casino
(as opposed to others) and analyze loyalty base.
15. Add to slot ratings such data as how fast players
pull the lever (or hit the button). While this
traditionally helps slot managers determine the right
location on the floor for the right game for the right
price for the right customers, its purpose here is,
(once again) to provide a full behavior picture of the
customer base so that realistic projections are
scientific and not “best guesses”.
Again, while many of these functions are to be delegated
to existing casino management (from slot manager to
marketing VP to data analysts, etc.) the RESULTS are of
paramount importance to the casino executive.
28
CASE STUDY:
From Mandalay Resort Group Management Review Presentation
Mandalay Resort Group focuses on creating a unique value
proposition and obtaining a larger share of the customer’s budget by
focusing the customer on their multiple brands. They do this through
customer knowledge / information sharing across their properties
(and exploiting their “Masterplan Mile” in Las Vegas).
But more importantly, they take a portion of the customer data listed
above as of this writing they are not yet sophisticated enough to
analyze the full range described here) and very effectively and
professionally posit the results within the track record of the industry
in general and then specifically on its impact on their own cash flow
and EBITDA.
Having very similar data needs and very similar limitations to the
Harrah’s situation, Mandalay Resort Group differs in that their focus
is always on sustainable long term corporate returns from their
various revenue streams while the Harrah’s data focus is almost
exclusively on relationship marketing.
29
CASE STUDY:
From Mandalay Resort Group Management Review Presentation
This new management focus is (1) a synthesis of those
two focuses and more importantly (2) the addition of
methodologies to enhance decision support for projections
to build the overall value proposition with this outlined
formulaic growth strategy, predictable performance, and
EBITDA.
If we “drill down” further into the executive,
management/operational role, we see that attention to such
traditionally marketing-only matters as frequent-player-cards
suddenly has direct impact on EBITDA:
16. Change slot payout13 to be less based on volatility;
to pay out smaller jackpots but more frequently
(since with the exception of the “whale” card rooms,
30
up to 85% of revenue is generated from slots and
from repeat brand customers).
17. Modify player (frequent-gambler) cards to match
airline systems of silver, gold and platinum and
clearly identify for players the thresholds, which
offer escalating rewards for gambling more (see
details in marketing).
CASE STUDY:
From Harrah’s Investors Presentation
When Harrah’s instituted the first-ever nationwide tiered card
system, they saw dramatic increases in customer annual
revenue…up to three times what they had seen before.
31
CASE STUDY:
From Harrah’s Investors Presentation
18. Make frequent player awards data available realtime to players via the Internet along with real-time
yield-management reservation system (at a
property where rooms are involved) that will realtime interface with casino marketing. All of this, of
course, is in exchange for additional data.
19. Focus on and exploit the fact that in our industry
12% of the players provide for 55% of our revenue;
and these are the multi-market, avid, experienced
players.
20. And finally, create high-level management
understanding of the value of marketing and
technology as a decision-support tool for strategic
planning, forecasting, overall budget management
and operational efficiencies.
32
These are the beginning steps of creating sustainable
growth and an entirely new philosophy of managing a
modern day casino. These are the “cutting edge” steps for a
management overview.
They, in fact, DO include some disciplines that
heretofore were exclusively the venue of department
managers and not of direct concern to the top executives.
Once again, attention to some of these issues could at a
glance, be construed as some sort of micro-management of
less-than-important functions that might best be handled by
a lower level manager.
However, in careful examination, these issues are the
essential ingredients for accurate forecasting at the highest
management levels.
In short, these management steps represent THE cutting
edge for this business.
33
Formula Two: The Marketing Plan
Navigating the search
for market share.
Many traditional casino marketing executives (despite
having learned some of the right buzz-words (like “CRM”
and “RFM” for new marketing techniques), in general
continue to apply old-world gaming-experience marketing
methodology to a more sophisticated target…even in the
age of super-casinos, luxury parlors, and Disney-sized grind
joints.
They continue to see market share drop but can only use
the scapegoat excuse of “competitive saturation” for so long
until something has to give. And while IT (Information
Technology) professionals can devise a myriad of ways to
grab data, they have no idea what to do with it, which data is
germane, and how to generate revenue from that data…
without some guidance from Marketing.
Hotel/hospitality industry marketing methodologies are
“ok” for filling rooms and even driving some traffic to the
casino (the Harrah’s survey numbers prove that)…but are
pale and hollow when comparing to trackable results along
side of a highly-targeted modern gaming-marketing
program.
In Vegas, specifically, there is so much traffic available
that it would SEEM to be hard for a marketer to fail. Yet it
happens everyday.
In July of 2000 I pleaded with Jack Sommer to examine
the Harrah’s model and my enhancements to it before he
opened the now ill-fated Aladdin Hotel and Casino on Las
34
Vegas’ strip (in the middle of Park Place Entertainment’s
block of properties). I forewarned the pitfall of creating a
new casino project without the new management focus (the
very focus that I described in the previous section). More
importantly, I proposed a data-mining and technologymarketing program that not only would build revenue…but
would be NECESSARY to survive in such a highly
competitive situation.
In this case my outline…my plea…fell on deaf ears. I was
blown off like any salesman off the street. Fourteen months
later they were filing for bankruptcy and as of this writing
KPMG, on behalf of the bankruptcy trustees, is desperately
trying to sell the distressed property rather than even
considering a reorganization plan. Hindsight is always
20/20, and the Aladdin had a number of poorly-executed
operational flaws. However, there is no doubt that a
marketing-focused executive management and an effective
marketing plan would have had a major impact on the
bottom line: that much is proven from case studies.
Add to that, the abysmal situation of buying new but
technologically outdated hardware and software, and the
raptor-like claws of industry double-talkers posing as
“consultants”, and it is no wonder that millions…perhaps
billions…of revenue dollars are lost every year, left laying on
the ground rotting when they could have easily been
scooped up…not just by Aladdin but by most operators.
It is a somewhat bleak picture that becomes even more
cloudy when you pour into the mix the territorial up-manship many casinos suffer between the departmental fiefdoms
that often make slots, pits, marketing, hotel, and technology
adversarial rather than united. Market-focused top
management can end that nonsense willy-nilly.
35
As the Aladdin plowed forward into the mire, other
operators (like Mandalay Resort Group) were frantically
working (and meeting with me) to find ways to bridge the
gaps between all of these issues and create a coherent
marketing solution. Meanwhile horse-race leader Harrah’s
was still setting the pace in Marketing as well as in
management.
A year earlier Harrah’s had hired a Harvard marketing
professor (with no gaming industry experience) as COO14. It
paid off for them big time (See Appendix One for the Wall
Street Journal’s take on the Harrah’s methodology):
CASE STUDY:
Most operators do not even use the most fundamental of the new
marketing modeling and tools. When Harrah’s became the first to
apply a standard marketing mathematical modeling from their data,
they were able to increase response to their direct mail pieces from
3% to 8% (according to the May 4, 2000 Wall Street Journal). And
much more importantly, annual earning and the P/E ratio have a
direct correlation to this new kind of marketing. And, by their own
internal numbers their test of a direct mail program increased
customer visits by 49% (see their chart on the following page).
In 2000, Harrah’s was named by InformationWeek to be number one
among the top 100 U.S. corporations that use information technology
to build customer relationships and in July of that same year they
were given the “Best Practices in Data Warehousing Award” form
The Data Warehousing Institute. The criteria for the latter were
“development of a practice that can be followed by others, its
innovation, and impact on the success of the business.”
But despite the fact that this is revolutionary in the GAMING
INDUSTRY…and despite Wall Street gaming analysts seeing this as
cutting-edge…from the viewpoint of the architects of the technology
world and from the proven list-based direct marketing world, this
methodology of casino data-mining is at best kludge and at
15
worst…archaic .
36
CASE STUDY:
From Harrah’s Investors Presentation
Even the InformationWeek award has to be qualified as among the
best to use technology to build customer relationship FROM WHAT
16
THEY HAD AVAILABLE TO WORK WITH .
There is SO much more available; so much fruit is being left on the
ground rotting rather than contributing to casino bottom line. Still,
Harrah’s work does represent an incredible advancement and
hardcore proven results that the methodology does work. The
industry had to learn to crawl before it could walk…and certainly
before it could run.
The leading-edge Harrah’s methodology for customer contact and
“offers” is based on the limited psychographic profile drawn from the
data mining that they do (again, rudimentary for the direct marketing
industry; revolutionary for the gaming industry ― see the section
following on technology solutions for marketing data mining).
In terms of the tenets of presenting “offers”, prospecting for
customers, and creating customer retention that the catalog industry
does so well, the performance of Harrah’s campaigns is totally
37
CASE STUDY:
unacceptable. In any OTHER industry than gaming, rather than
award the company, I would fire the marketing manager. But in
gaming, he deserves elevation to the highest honors!
The interesting thing is that neither Harrah’s nor their competitors
seem to be fully aware of just how limited their “leading-edge”
solution really is. In fact, because it is SO successful compared to
anything ELSE being done in the industry, it is constantly copied.
Mandalay has been testing CRM software packages to compensate
for their own poor prospecting and retention response rates. Park
Place has consolidated player cards in hopes of building brand
loyalty. And at least two other operators have asked me directly if I
could produce for them a “copy of what Harrah’s has, without
getting sued by them.”
One major operator in Las Vegas wrote to me, “I am interested in
having something similar to Harrah’s. If I can get one and if it is as
you have stated, I can contact three or four more friends of mine who
have casinos…I have a lot of friends there (at Harrah’s) and would
hate to lose them because of coping something that they have
done.”
The marketing methods are a whole new world for
traditional casino marketers…and a new set of formulas for
even the theoretical MBAs. Even the incredibly complex
(and proprietary “top secret”) Harrah’s algorithms devised
by their Harvard professor are void of many of the day-today factors for complex direct marketers.
There are, for example, 14 standard variables to optimize
results in test prospecting for retention campaigns; elements
commonly known amongst catalog mailers. An effective
testing process alone can take up to 25% of each one million
mail pieces dropped.
Those elements must be combined with a second half to
these formulaic methodologies: the proper implementation
38
of a customer contact program using the data. The combined
elements of Recency, Frequency, and Monetary value
(RFM) of a customer have driven traditional paper-catalog
direct marketing for years. Using that data has allowed the
testing of new products, new pricing, and targeting specific
offers to match specific types of customers. It also has
allowed highly accurate analyses and projections of profits.
Add this modeling to other standard direct marketing
methodologies (still foreign to most of our gaming world)
and we open an entire new world of customer response and
revenue…far surpassing the revolutionary and at same time
archaic Harrah’s methodologies.
The increase in response rate using similar elements
(with the existing Harrah’s limitations in data modeling) has
already proven highly effective for a number of operators.
Add to the mix the elements of full data modeling and CRM
testing capabilities the predictability becomes precise.
The addition of these elements to a casino’s direct
marketing program moves customer drop projections from
educated guesses to percentage-specific formulas of
certainty. The concept of definitive and predictable
consumer spending certainty is still unheard of in MOST
gaming circles.
To fully understand the value that the previous twenty
executive management operational steps bring to the
corporate bottom line, let’s look at just one of dozens of
examples: expanding the data used and formulating
customer relationship marketing (CRM) based on that data:
This one example is the behavioral modification method
called suggestive selling.
39
Jupiter Communications, a leading New York-based
analytical service, has found that: “suggestive selling should be
able to contribute as much as 39 percent of transaction revenues and
increase the number of acquired customers by 28 percent in the first 12
months of deployment.”
Application of this model of data collection and mining,
and its attachment to some fundamental assessments of
more traditional casino marketing, makes the core of my
methodology for marketing.
As I noted, traditional direct marketing data (like RFM
measurements) are almost never matched with existing
casino geographic data, basic census data, demographic data,
and basic gambling behavior data for those groups…and
especially when using casino’s existing LSI (or other player
tracking system) data. In order to get even an overview of
the dramatic marketing improvements I am projecting here,
we need to take a 30,000-foot overview of what adding basic
RFM formulas to can do for casino marketing.
40
The complexity and
simplicity of formulabased marketing.
To understand how to manipulate more gambling and to
harness this awesome power of forecasting and revenue
predictability, let’s consider what each of these three RFM
elements represents, and how to use them together.
Recency. This is when a player last gambled in our
casino. The knowledge of how recently a player gambled
with us gives us the beginning ability to project the value that
customer has (to us or to other casinos, if we chose to sell
that customer’s name). It does not reveal, however, if this is
a repeat player; an important factor in venues where
tourism, foot traffic and convention traffic are in play.
Frequency. This is how many times a player bets at our
casino. We should be able to measure the frequency of
players as either one-time players or as repeat players. This
equation should also factor in hands-per-hour at tables or
(more likely) handle-pulls (or button pushes) per quarterhour of play. However, this does not identify the last time
this person played at our casino. They may have played 5
times last year; or once a month for five months; these
different behavioral patterns are VERY important for
creating a marketing offer that will attract additional betting
from different types of players.
These two measures, together, give us two of the axis we
need to plot a customer’s value. If we consider the left (or
Y) axis to be Recency, then we should be able to begin a
chart of repeat customer activity:
41
Played Today
Played Within A Week
Played Within 30 days
Played this Quarter
Played within a year
If we consider the top (or X) axis to be Frequency, then
we should be able to put together a full graphical analysis of
two dimensions of our customers. (For the purpose of this
basic illustration, we will exclude the plays-per-hour portion
of the Frequency plotting…though in real application of this
technique it is an essential element for an accurate
projection.
Played
5
times
or
more
Played
4
times
Played
Today
Played
Within
A Week
Played
Within
30 days
Played
this
Quarter
Played
within a
year
42
Played
3
times
Played
twice
Played
once
Now, let’s identify each of the positions where we
should be able to enter data to plot the behavior. In each
block we should be able to insert the number of (or the
names of) customers who match the criteria for that block.
To visualize that plotting for this example, we will identify
each block with a letter of the alphabet.
Played
5
times
or
more
Played
4
times
Played
3
times
Played
twice
Played
once
Played
Today
A
B
C
D
E
Played
Within
A Week
F
G
H
I
J
Played
Within
30 days
K
L
M
N
O
Played
this
Quarter
P
Q
R
S
T
Played
within a
year
U
V
W
X
Y
Customers in block A played 5 times and played one of
those times today. Customers in Block F played 5 times and
one of those times was this week.
Customers in Block Y played once last year. Customers
in block U played 5 times, but not in the past year…and so
on.
This example-charting allows us to examine the behavior
of our best customers…either by number or by name. This
43
within itself is a powerful tool because it allows us
immediately to tailor different offers to different players,
based on this little bit of data.
For the purpose of simplification in understanding the
process here, let’s merge some of these blocks into
quadrants so that we can easily see our best customers, our
worst customers, and our borderline customers. Even
though we are using simple charts here, remember that in
reality a computer is keeping track of all of this data for us
and sorting the players into our categories. In reality, these
seemingly time-consuming and expensive models are instant
and virtually cost free.
Played
5
times
or
more
Played
Today
Played
4
times
A, B, F, G, K, L
Played
3
times
C
Played
once
D, E, I, J, N, O
H
Played
Within
A Week
M
Played
Within
30 days
W
Played
this
Quarter
Played
twice
R
P, Q, U, V
S, T, X, Y
Played
within a
year
Customers in grid ABFGKL are our very best
customers; while customers in grid STXY are our worst
customers. The other grids have varying values to us as
good or bad customers.
44
Now if we also modify our axis to match our grids, we
get a chart that looks like this:
Played Today
to 30 days ago
Played 4 times
or more
Played
3
times
Played once
or twice
A, B, F, G, K,
L
C
D, E, I, J, N,
O
H
M
R
Played this
Quarter to one
year ago
P, Q, U, V
W
S, T, X, Y
This over-simplification very easily shows us how we
conceptually should be able to rank customers based on “R”
and “F” data…and how easy it is to start targeting specific
offers to customers based on their behavior (and therefore
to what they are most like to respond).
This model holds true, unless we consider the possibility
that each of the customers in grid ABFGKL played 5¢ slots
the customers in grid STXY each played $5 slots …then
suddenly our two dimensional graph is seriously skewed if
we plan to use it to measure “good customers”.
Fortunately the Greek philosopher and mathematician
Euclid taught us that the world is not two-dimensional. And
fortunately neither is the understanding of customer history.
The third dimension for us is Monetary Value.
Monetary Value. Pure and simple, this is how much
money a player gambles; his or her handle. Generally, for
analytical purposes, this figure is the average handle for a
45
repeat customer. This measure can be as simple as betting
handle or as complex as actual drop.
Let’s first consider the monetary value of players as a
standalone chart. We will chart average bets placed in three
per-session categories: $1 to $100, $101 to $500, and $501 to
$1000. This will be our Y-axis.
The X-axis, then, is a little more complex. If we rate each
of the values as big spender, average, and worse, then we
want to see what steps we must take in each category to
increase a lower player to become a bigger spender. The Xaxis then is the category of play.
Big
Spender
$501$1000
$101-$500
$1-$100
Average
Spender
Worse
Spender
A
B
C
In the A block, all the players are already spending in our
top (over simplified) segment, so no movement is
necessary…only retention. (And retention IS a major issue.)
In the B block, players must be retained AND move one
level to become our best spending players. And in the C
block they must be retained and move two levels to become
best…and move one level to even become average.
The Big Spender category, then, should receive the most
attention in attempting to retain them, to get them to play
more times and more often. The ones who spend almost
nothing should have fewer resources dedicated to moving
them toward spending more often and more times. This is
46
one of many possible basic marketing strategies that most
good marketers already deal with on a daily basis.
If we superimpose this model onto our “R” and “F”
chart from above, we should be able to quickly see that a
player who spends the most AND has recently played and
plays often is our very best customer. Likewise the player
who spends the least, has only played once, and has not
played in the past year…this is the worst customer.
Everyone else falls somewhere between in a (vastly over
simplified) three-dimensional graph of this RFM data.
Played
Today to 30
days ago
Played 4
times or
more
Played
3
times
Played
once or
twice
A, B, F, G,
K, L
C
D, E, I, J,
N, O
H
M
R
Played this
Quarter to
one year
ago
W
P, Q, U, V
S, T, X, Y
Among the magical formulas that direct-marketing gurus
talk about are rating formulas for customers…using the RFM
history that we keep for each player. Without taking the time
here to teach RFM rating systems (and thereby lose the
focus of this high-level overview marketing plan summary),
let us assume that we have developed a rating system that
47
gives us 10 different categories of players, ranking from 0 to
9. For this simplified example:
� Category 9 players are those very best customers who
play often, gambled recently, and spend a lot of
money;
� Category 0 casino visitors played twice, haven’t
played in more than a year, and their average handlevalue was a mere $2;
� Categories 1-8 all fall mathematically between those
two extreme poles.
With this data, we now have a powerful personalization
tool to add to our existing arsenal of explicit user ratings,
observed behavior, purchase history, and demographic/psychographic
information: we can create an OFFER based on this RFM
table.
For example, if I am a player who ranks in category 9, I
might warrant personalized attention from a host, some
outbound telemarketing, and a series of incentives that
match other players like me. My offer would point me to
specific games and even days of the week to visit (all based
on my history as well as on my behavioral data). It would
push up-sells and cross-sells to me based on casino activity
issues and cross-sell histories. It would provide me with a
personalized experience for my next visit based on my
history and predicted behavior (measured against others in
category 9).
Creating offer or even visit personalization and all the
bells and whistles associated with suggestive selling is a
complex process but, as Jupiter noted, it is a process well
worth the effort. But most existing casino marketing
personalization efforts stop at that point.
48
In my research into the much-touted Harrah’s targeting
algorithms I found some of the most absurd mismatches of
data imaginable. I visited Harrah’s in Tahoe twice, Harrah’s
in Las Vegas five times, Harrah’s Las Vegas Rio Casino
property twice, and Harrah’s New Orleans’ property once.
In each case I deliberately played low-end 25¢ slots for a
time-period of from one hour to up to three hours. My
profile (which I filled out during my first Harrah’s visit to
get a “Total Rewards” card from them so they can rate me)
clearly identified me as an executive with a six-figure annual
income who lives in a zip-code geo/demographic that is
among the 5% wealthiest in the United States.
The next calendar quarter following these research visits,
Harrah’s mailed me ONE offer: a FREE BUFFET in New
Orleans only if I return to play there. Where did their
analysis came up with the supposition that I would (a) stand
in line for a buffet anywhere, (b) visit New Orleans again
(seeing as how 70% of my action was in Vegas), or (c) be
enticed to fly from Florida to New Orleans for a free $7.95
meal?
The “where” is actually clear: They used limited
dimensional analysis. They compared only certain elements
of my behavior and not the full gambit of information that
SHOULD have been available to them to target me with a
more suitable offer. This one direct mail piece offering the
buffet instantly revealed to me the great failing and
limitation of the Harrah’s “state-of-the-art system”. It was truly
frightening to me that their system is so far advanced
beyond most other casinos.
To test the Harrah’s system against other large operators,
I next tested Park Place Entertainment’s system. Over a
three-month period I visited several of their Las Vegas
49
casinos to play $1 slots for two to four hours per session
with eight sessions during each visit.
Painfully to me as a marketer, I discovered that one PPE
property did not recognize me as having ever played at a
PPE casino because (as I was told) “our computers do not
talk to each other.” Even among PPE brands I could not be
identified as a rated player 17.
I presented my Caesars’ Las Vegas players card to
Caesars’ in Tahoe and was informed that I needed a
different card to play in Lake Tahoe (even though the cards
themselves listed all of the Caesars’ properties on them).
Get this: the Tahoe plastic card actually had old-style
computer punch-card holes in it so that it could be read
without magnetic tape:
Do Not Bend, Fold, Spindle, or Mutilate?
The infamous and somewhat silly 1960s punch-card style Caesars
Tahoe player tracking card (above) issued in 2001.
50
The “other” Caesars card required at Las Vegas Caesars. It
took TWO cards to play in two Caesars casinos…even as a
rated player!...and different cards to play at each of the other
PPE properties. And look at the graphics on this card: the
“Emperors Card” logo was haphazardly (and crooked) stuck on top of
the background as if designed by a 7th grader.
To make matters worse, even though I had (by relative
slot standards) a pretty high handle, when I asked the Las
Vegas Hilton to comp a room for me based on my play over
several weeks at other PPE properties, they quoted me a
per-night rate that was MORE THAN the rack rate I could
get booking the room on the Internet or through Triple A.
This is the way to retain good customers?18
Nonetheless, beginning the next quarter the Las Vegas
Hilton did start (and continues to) mail to me almost every
month a discounted room rate that is in fact a little less than
rack.
No wonder Harrah’s system, flawed as it is, is heads and
shoulders above the rest of the industry!
51
Even the most rudimentary suggestive selling
methodologies…the Harrah’s package… will indeed bring
some more visitors to a casino, convert more of those
visitors to players, increase the number of returning players
or additional play by existing gamblers, and increase the
average size of play. But this methodology alone falls far
short of a full targeting strategy. Alone, this type of
personalization, cool as it is, allows no means for analysis of
the results…and especially no accurate method to forecast
revenue.
Johnny Cash sang powerful lyrics: “It is dark as a dungeon
way down in a mine 19.” That applies to the data mine as well.
All of that data we are (or should be) collecting about players
and their gambling behavior is pretty worthless if it is in a
dark bottomless pit somewhere.
Without analysis, the personalization of offers is little
more than an attractive toy. It is for the analysis, projections,
budget management, marketing examination, advertising
decisions, and a host of other operational considerations
that we create offers rather than just random advertisements.
At a bare minimum an offer should analyze:
� Cost per Promotion (this is a complex calculation
that we will examine further below when we look at
fine-tuning the more traditional casino marketing
tools);
� Actual number of sessions driven to the offer;
� Budgeted monetary handles;
� Budgeted number of plays;
…and many other factors.
Far beyond merely running reports on these areas, an offer
should be incredibly configurable so that each personalized
52
or suggested-sell has the availability of intense analysis and
projection.
Unfortunately, only a handful of casino marketers (even
the ones with personalization and suggestive selling
techniques) have yet learned how to calculate using these
powerful formulas…or, alas, for that matter, even that such
formulas exist.
At the base of the analytical process is the assignment of
a unique tracking and analysis number… a structured code
for each Offer created…a code that ultimately will allow
statistical analysis of an offer’s variables.
This “source code”, typically, should be a 16-digit
alphanumeric code with the first eight digits identifying the
offer itself, and the last eight identifying the use of that offer.
The meaning of the distinction in these two terms will
become apparent once we look at the structure of an offer
itself.
Typically an offer code should look like this:
53
In order to properly use these codes, each offer should
be configurable uniquely with offer-specific components for
each of our target groups. Among these many configurable
components, we should create business systems and models
that will allow us to configure and track:
� The purpose of the offer (increase handle, increase visits,
increase loyalty, acquire new customers, create a list, etc.);
� How players will find out about the offer (direct mail;
emails; advertisements; outbound telemarketing, junket affiliate
networks; and so on);
� Time frame in which the offer will be available or
repeated (including start date and stop dates of any
particular offer);
� Price point of the offer (some offers may have higher prices
than others; many offers will have NO price point);
� An offer should be able to specify which unit within
our organization generated the offer and which
division within any unit generated it as well as the
department within the division;
� The offer should carry a description of the offer
itself;
� An offer should be able to be tied to an analytical
discount table based upon either gambled dollars or
time played (or both). A discount can be either a
Percentage or a Monetary amount;
� Each offer should allow us to set up automatic
promotional chains of events that help provide the
ability to obtain the Optimum Conversion
Percentage. (The word Optimum is used because the
largest conversion percentage may not be the most
profitable to obtain. As we become able to define a
54
virtually unlimited number of automatic promotional
sequences, a good marketer should be able to test
how many efforts or the contents of efforts yield the
most profitable conversion percentage);
� We should be able to specify which play-products are
promoted for any specific offer. This is part of the
mechanism which allows us to have different prices,
advertising space, buy-ins, up-sell, minimum handles,
match plays, etc. between different offers.);
� For analytical purposes, we should be able to specify
(with data analysis tools) our expected revenue for each
offer. This allows us to compare budget versus actual
sales on an offer level;
� Up-sell (and cross-sell) should be able to tie to an
offer as well as to player levels.
All of these offer configurations are then track-able by
those first eight digits of the 16-digit source code we
discussed above. The remaining digits of the source code
should be configured to track the USE of the offer.
A use, for example, might be an RFM segment of the
existing customer base, or it might be the location and run
of a particular advertisement, or the time slot for a TV spot.
Think of a use as the distribution of the offer…what drove
the customer to that offer….how did the offer get into that
player’s hands.
In order to allow proper statistical evaluation of each use,
we need to be able to specify all of the vital elements of each
use in the remaining eight digits of a structured source code.
We will define, in the Use Code, at least the following
elements:
� The advertising method that reached the player;
55
� A code for when the offer method was operative;
Each use should be able to have a given date that it
first appeared and an expiration date, as well as the
date the first player appeared from that specific use;
� Additionally, the use code should be able to define the
date of the initial budget or when it is to be
established;
� How often the offer ran;
� In addition to RFM data, the use can allow additional
segmentation clusters with criteria like average
handles, games played, or even demographics;
� For analytical purposes, each use should have its own
costs, depending on advertising or other
methodology for driving the player (or potential
player) to the offer;
� A use code also should track the date the last forecast
was produced (as it relates to this usage).
Another operation of the use code can be to measure the
“quantity” of that use. A simple offer may be measured in
player sessions generated from each one-thousand offers
sent or viewed; or for advertising buys (and junket affinity
programs) we might want to have the use code reflect total
impressions that reach the targeted market; or any number
of other CPM-type formulas.
The combination of powerfully and flexibly configured
offer and use codes together make a total source code that in
turn can allow us to begin applying those magical formulas
that this whole marketing section is all about.
The next task before marketers, then, is to integrate
these new methodologies with the existing proven tenets of
casino marketing and then fine-tune that integration process.
56
CASE STUDY:
One widely told (and published) story is the Luxor’s tale of losing a
$500-a-hand blackjack player because the cocktail waitress forgot
his bottle of water (for which she was advance-tipped $100) while
bring a pack of cigarettes to another player (for which she was tipped
$1).
The angry Luxor manager blamed the cocktail waitress. One industry
analyst blamed poor management. But the fact of the matter is that
the “blame” rested solely on the lack of an effective REAL TIME
customer relationship management system that instantly tipped key
staff to value, activities, and needs of customers.
To compensate for their lack of knowing that such a methodology
existed, smart managers at Mandalay hired a key manager of highrollers away from the Mirage group and had him set up an advanced
casino hosting system for such players.
Overall the strategy was smart and effective and took full advantage
of the universe of knowledge available to them. Then again, a mule
team does great hauling until one learns about tractor trailer trucks.
From a cost-basis, the formulaic solutions far surpass anything
based on instinct rather than data.
57
ent;
anagem ent & H.R.;
m
d
l
o
+ H
gem
trols; y;
r mana
ial con
+ Labo ting & financ tion & securit
e
c
+ Budg illance, Prote
e
v
r
+ Su
it;
ons;
)
+ Cred ality operati issues;
ambling
it
l
g
p
a
s
l,
g
o
e
o
H
h
L
o
+
&
ues (alc
lations
+ Regu & Cultural Iss nction
l
fu
+ Socia et customer gaming laws
n
r
+ Inte ges in on-line
n
and cha
Fine-tuning more
traditional casino
marketing tools.
Let’s look at some simple examples of the more
traditional casino marketing tools that we can fine-tune with
the new technologies and especially new uses of data:
� Traditional casino marketing, in many cases, has
match play coupons and nonnegotiable chips
handed out as pre-comps without truly calculating
the cost to the casino and without using the full
range of customer-tracking data to calculate those
costs:
o
How are these coupons distributed in relation to
specific customer
history and (equally
importantly) to similar-customer history (using
58
o
o
o
the more powerful RFM modeling along with this
data;
How much in additional wager amounts are
needed to recover the total cost of match play;
How many hands will be required for the player
to bet that needed wager amount;
At (for example) 50 hands per hour, how many
hours of playing time are needed to generate the
requisite number of hands.
These are the kinds of issues that must now be
matched against the wealth of player data from
the data mines we create.
� Gambler’s Spree programs are (usually) only
evaluated in P/L terms, because most lose money
(I painfully know this, because in the early 1980s I was
an Atlantic City junket master.)
o
o
o
o
o
Are these junket-master partners given standard
packages, or packages based on tangible data,
testing, and focus-groups;
What is the profit/loss if only minimum
requirements of a program are met by
participants in any partner’s program;
What minimum action is required for any given
program to break even;
Is it reasonable to expect play in excess of that
break even? (and therefore is a profit assured);
Are there justifications for such programs even if
it is unlikely to receive the action necessary to
even break even?
� In attracting “whales” and “semi-whales” though
common 10% - 25% loss rebate programs,
many casinos fail to calculate the expected valueper-hand in conjunction with the now-available
historical data on total number of hands played.
In these failings the program will cost the casino
(and the whales KNOW it):
59
o
o
o
o
Casino advantage decreases as the total hands
decrease;
Casino advantage decreases as the betting
becomes more volatile;
If the player bets banker side at baccarat, the
rebate almost totally nullifies the casino
advantage;
Most importantly, these programs must be used
in conjunction with comprehensive marketing
data, not just as a function of a vendor-supplied
rating system.
� Casino hosts and remote sales reps who use a
traditional tracking system for payer action
criteria are likely to overlook quantifiable data
that should create differentiated comp schedules
rather than a flat one. Flat comp schedules were,
indeed, a vast business improvement over the old
pit “pencil” system, but are absurdly in adequate
in apply universal standards to highly segmented
groups of players. For example, though it is
widely known that roulette players lose a lot more
money per hour than blackjack players and
therefore should have a different comp schedules,
little or no attention is given to players who at
times reach beyond their favored game and the
intricacies of those games (handle-pulls-per-hour
on slots, or even different slot payout schedules
for example)…all of which should impact that
action criteria.
� Do the mathematics of chip warrants and dead
chip commissions ever justify their costs?
Though these programs are not as prevalent in
Vegas as in some international casinos that have
called me for advice (or tried to hire me), they still
need to be evaluated in the context of customer
60
data. In fact, customer data should be the single
overriding factor in making all marketing
decisions.
Over all, each of these examples and ALL of the casino
marketing programs (from host management to
telemarketing to bus programs to comps to rebates and
everything in between) absolutely MUST be data-driven.
Moreover, they cannot be driven by partial data (like
Harrah’s faux pas of inviting me to New Orleans for a
buffet) or very limited data (like the PPE bone-headed
tracking structure).
The second and third tier operators (outside of the huge
corporate support and influence) are actually blessed in that
they don’t have to revamp existing infrastructure to fine
tune existing marketing programs: for most part their
existing programs are so rudimentary that they actually can
begin with the state-of-the-art.
According to Harrah’s public documents on file with the
SEC, that corporation spent tens of millions of dollars to reinvent the wheel in many respects and apply their versions
of these rules from scratch.
But the fact is, using the latest technologies available and
using the tenets of already-proven business models (such as
the above-described RFM approach honed by the cataloging
/direct-marketing industry), it is both possible and expected
that such a system would cost thousands and not
millions…or even tens of thousands of dollars. Truly, one
does not have to start from scratch and reinvent the wheel.
For example, the off-the-shelf $299 Microsoft Excel
spreadsheet can do player analysis breakdowns faster (and
obviously cheaper) than Harrah’s NCR Tetradata solution
61
run remotely from their Memphis data processing center
and returned overnight to Las Vegas.
There are numerous other issues that have to be
addressed in the overall marketing processes for modern
casino operation. But they all MUST be understood from
this starting point…from the beginning realm…of data
collection and data usage (data mining).
That starting point requires, as we discussed earlier, a
high-level management ordained marriage between
marketing and technology with the focus heavily on bottomline performance.
Just as the day of “the pencil” is over so must be over the
days of customer retention programs that are based on the
partial-data of rating system software and mathematical
models that lack the full picture.
Almost any internal analyst or competent manager can
make computations for management of the daily hold,
handle management, or drop predictions based on reports
from the pits and the slot room. However to accurately
predict behavior and modify it in advance is the new
formulaic science of casino marketing.
The marriage of marketing and technology, under one
operational leadership, provides a proven formulaic pathway
to that base of new customers; increased visits, play time
and handles among existing customers; and increased brand
loyalty from occasional or first time players.
I have shown what management needs to do. I have
outlined some of the tools needed by marketing. Let’s now
look at cleaning up the technology situation.
62
Formula Three: The Technology Marriage
The puzzling problems
of getting data into the
hands of marketers.
Casino technology today is, at best, a series of puzzles.
Remember that MGM/Mirage ad for a marketing manager
that required the poor guy to be fluent in three different
computer systems? Unfortunately, that kind of absurdity is
not only common place in the industry but is considered
normal.
In order for marketing executives to accomplish their
goals and use the powerful tools we just outlined, the
technology puzzles must be solved; technology itself must
become a tool for marketers rather than an obstacle to deal
with. The puzzles themselves can be summed as:
63
� Current data models are deployed in proprietary
formats that differ for slots, pits, and analytical
systems;
� Current data models are dependent on the
software applications for each game tracking
system rather than a universal standard;
� Current data models are dependent on the rules
and parameters set up by the designers of each
independent system and NOT on the casino’s
needs;
� Current data models are dependent on which type
of computer system they are running on and they
cannot share information from other systems even
in the same casino.
� The time required to integrate models with other
applications can be long and the process can be
very expensive.
Keep in mind that executive management cannot get
accurate forecasting tools and marketing cannot get the
most effective targeting tools until these issues are resolved.
Fortunately, solving the technology puzzle is actually a
much more simple issue than originally thought by many
managers, marketers and technologist… despite vastly
different platforms and communications methodologies. To
see why this is so, we need to understand a little about what
we learned about technology from the Internet era.
The trend…and most “solutions”…for these casino
technology puzzle revolve around the buzz-word of “clientserver” computing. The industry’s GSA (formerly GAMMA)
c-link specs were all about this approach.
64
In that model, each slot machine or pit terminal would
be (and in some newer cases IS) “networked” to a massive
server that processes all the data and directs traffic between
each client machine.
In a true client-server model,
the “client” computer (or slot or
pit terminal) is always connected to
the “server”. This was pitched as
the “Internet” or “Intranet” model
and it makes for a lovely story with
good ways to spend a lot of IT
dollars.
But apparently this model was not designed by people
who were actually instrumental in development of the
Internet. Because despite the buzz, the Internet is NOT a
client server model of computing. Once a web page has
loaded, the client connection to the server has ended. The
server can even be unplugged and the page will still be on
the “client” machine.
Rather, the Internet is a TRANSACTION model. Both
the connection and the data passed depend on a single oneway sending of information…transactions, not two-way
communications.
If we do the same thing GAMMA did in citing Internet
technology as a solution…but apply the REAL Internet
65
model to an operator’s computer hardware we get a
different picture.
Rather, the Internet is a
TRANSACTION model:
It is probably important to note that the GSA
(GAMMA) is dominated (if not controlled) by slot hardware
and software manufacturer IGT. That fact may or may not
have some impact on the “solution” suggested by that
industry organization.
A version of the real transaction model is what is typically
found between a gaming device (or table) and its
information processing server.
Using this true Internet model of transaction computing,
rather than a client-server model, we are able to take data
66
from multiple sources, on different platforms, in different
programming languages, with different data-base
schema…and write a one-way communication to a central
server… from the customer point to and from that device’s
own processing server (i.e.. AS400) and from that server to
an Applications Server.
Slots
Tables
Any Point Of Sale
Hotel CheckCheck-in
In true Internet terms we called this the ASP model
(Applications Service Provider model). It is a simple solution
to a series of problems made overly complex by
technologists who did not view the issues from the
executive need or marketing need.
This simple and inexpensive solution allows data to be
presented to marketers and to executives from an
information management structure called “data marts.”
67
Advertising
Response
Analysis
Player
Performance
Customer
Lifetime
RFM/Source
(RFM)
Analysis
Analysis
Other Data &
Analyses As
Needed
Using a combination of ATT’s RFS model, Microsoft’s
new dot-net initiative, and XML protocols, the Applications
Server will house ODBC compliant data marts containing
warehoused summarized data from the various
sources…converted to one central relational repository.
Again using the transaction methodology, once this
amalgamated data from all sources is processed, an extract
from it can be sent back (as a message file in the proper
format) to the servers for each device. Because it is a non
client-server transaction, this is done without interrupting
the on-going relationship between the device and its own
server.
The magic technology key (and currently missing piece)
is an API (Applications Program Interface) which easily can
be created to communicate between each server and its
proprietary software. This API will translate the data stored
on the proprietary server to a standardized format on the
ASP server. Additionally, the API will take the collected data
from multiple sources and convert it to readable data in the
format of each proprietary system.
68
Because this is the normal communications line between
the client device (a slot in this case) and its server (an AS400
running CDS software in this example), there is no huge
costs involved here either. While on the surface it appears
that the connection between the proprietary server (the
AS400 in our example) and the ASP server is a client-server
connection (since there are two-way communications taking
place), in fact, the ASP server can be down or even taken
away without impacting the data flow between the device
(slot in this example) and its server (CDS AS400 in this
example)…AND with the last ASP update intact on the
server.
There is no need and therefore no costs to update
existing machines, software, nor communications. And
THAT means there is no need to spend a fortune on all the
new technology that many insist is the ONLY solution.
Both marketers and executive management can have
real-time access to decision support tools and at the same
time these APIs can send real time data to any legacy
accounting systems or other decision support systems.
(Again, without spending additional money.)
Communications between the various player tracking
systems and vendor packages is SOLVED by this ASP
Model of data warehousing and the transaction model of
data exchange. The data is now available for MODERN
marketing analysis.
A second level of technology problems come to surface
when we look at operators that have more than one
property. Consider this really bad scenario and think about
my travels between the PPE properties and the Harrah’s
properties::
69
A good slot player staying at the hotel of Property
One takes the indoor walkway over to Property Two.
He is a rated slot player at Property One and has a
substantial handle. When he sits down at a machine
inside Property Two, no one knows him and there is no
indication whatsoever that he is one of the best
customers of the parent company over at their other
property. His frequent-player card from Property One is
not recognized by the even same model slot machine
in Property Two. In fact, in this day of no-customer
service, he is treated like anyone else off-the-street
who just wandered in as foot traffic.
Frustrated with the level of service (or lack thereof),
he walks over to the upscale flagship Property
Three…where again he finds that he is just another
one of the herd there too.
He is not an idiot. He, of course, knows that all
three properties are owned by the same Operator. And
he is totally frustrated at the operator’s failure to
recognize him or reward him for his play.
Then on a recent business trip to another city he
believed that the casino there, also controlled by the
same operator, should have recognized him for his
play at Property One.
At least on a recent trip to New Orleans the kiosk at
Harrah’s recognized his players card from Las Vegas.
He felt like Property Two in this case, next door to
Property One should have done at LEAST that much.
But of course it did not happen. And to amplify that
marketing nightmare inside ONE PROPERTY, he left
the slots and sat down at a blackjack table.
The pit boss didn’t EVEN know he was a rated
player. Despite the pit staff diligently keeping notes and
entering data, there is no real-time connection and
recognition between the system in the pits and the slot
tracking system.
70
This absurd scene is played out every day in Las Vegas
and other locations…including American Indian nations
that have multiple casinos. And there is NO excuse for it!
As of this writing, in Las Vegas, Park Place
Entertainment, Mandalay, and Harrah’s have all begun some
limited versions of a one-card system…with Mandalay being
the most advanced and Harrah’s philosophically
understanding the importance. Outside of Vegas, Isle of
Capri Casinos pioneered a standardization of marketing
between all of their properties; a standardization that rivals
even the most progressive of the big Vegas operators. Still,
the industry as a whole…and especially the REAL TIME
element is sadly lacking.
The communications of systems between properties has
(until now) required either special network lines being run
between properties (a major issue if one property is in Las
Vegas and the next is in Mississippi) or having a dedicated
telephone line open to transfer data. The first method,
though very fast in data transfer is prohibitively expensive.
The phone line method has a data transfer rate that can take
hours.
Then along came the Internet. In the Internet world we
have the option to transmit certain data over a Virtual Private
Network in which no one can access or intercept data
transmitted. The data transfer rate is as fast as a network
connection can be and no special wiring has to be run.
A Virtual Private Network (VPN) connects the
components of one network over another network. VPNs
accomplish this by allowing the user to tunnel through the
Internet in a manner that provides the same security and
features formerly available only in very expensive private
networks.
71
Transit Internetwork
Virtual Private Network
Logical
Equivalent
This VPN technology also allows a corporation to
connect to branch offices or to other companies (over the
Internet), while maintaining secure communications. The
VPN connection across the Internet logically operates as a
Wide Area Network (WAN) link between the sites. The
secure connection across the inter-network appears to the
user as a private network communication—despite the fact
that this communication occurs over a public internet —
hence the name Virtual Private Network.
Communications between an operator’s various
properties is SOLVED by the VPN solution serving as the
transport mechanism for the communication between the
ASP and legacy servers in the various locations at the
various properties. The connection is open all the time and
therefore the data can be updated REAL TIME, giving
executives up-to-the-second forecasting tools.
72
CASE STUDY:
In the year 2000 I presented the following outline to Mandalay. By
late 2001 they had implemented a version of this architecture and
begun a serious Customer Relationship Management marketing
system using this data:
ASP Server
VPN
VPN
VPN
VPN
AP
I
VPN
io
on
Connectti
t
n
e
n
a
m
Pe r
73
Since I first outlined this revolutionary technology model
Harrah’s has implemented a non-real-time batch-process
version of this technology; Mandalay Resort Group has
implemented a one-player-card-system and Park Place has
integrated SOME of their frequent player programs.
Progressive steps are being taken in the industry; but we
still lack a comprehensive marketing-driven solution.
Despite the progress, all of these new systems still lack
either real-time CRM response or they lack an effective datamart mining structure. In short, they still lack the most
modern tools to solve the problems.
The real issue for technology, then, is still the support of
marketing through creation of a data-mining process. In
short, the problem is the need for coordinated, architected
real time copying of data from various sources (both in
house and externally) into an environment that is optimized
for analytical and information processing.
Data from one system must be matched with player data
available from other systems in order to create a full
customer history as well as a psycho-graphic profile of the
player.
This requires much more than mere presentation of data.
It requires complex mathematical algorithms based on
predictive-response modeling.
To create similar mathematical models but ones that
come no where near real-time Harrah’s hired that $1.5million-dollar-a-year Harvard mathematician. And to their
credit, as Harrah’s moves into their next phases they are
working toward that real time transfer. Their interest was
apparently time-to-market…and they could afford a few
74
million dollars to invest in outdated technology to speed the
process.
But, of course, it CAN be done much cheaper using VPN
and the technology methods I have outlined here.
Understanding the mix between the technological needs,
the formula creation, and the marketing need…and then
implementing action on that need is part of the role of the
new management in the process.
As for technology, it is not enough to collect data. The
data must then be analyzed, sorted, and presented in
accepted mathematical models according to the standards
and practices of modern social science.
Marketing policies and procedures must be in place to
best take advantage of the available data and the analytical
algorithms.
Marketing management and staff must be trained to use
this data and these new methodologies and technology staff
must be trained to meet these needs.
75
Vision, Summary and Conclusions.
Summary of the Gary
Green Methodology:
R.O.I.
Business
Overview
Marketing
1.
Growth
Strategy;
1.
Creating new
customers;
2.
Property
EBITDA and
investment
grade credit
rating;
2.
Building brandloyalty among
returning
customers;
3.
Performance.
3.
Increasing betting
handles from all
customers.
76
The proposal presented here…the vision…is to take one
casino property, one organization, and build the next level
of casino management and marketing.
This vision is to take the evolution of this very young
industry to the next step by incorporating into it the hardlearned but well-proven tenets of general business, of directmarketing, and of technology.
This vision is to seize the tremendous opportunity to
implement step-by-step formulas to create:
� A predictable, forecast-able growth strategy;
� a strong property operating and nonoperating
profit (excluding depreciation and amortization
and before interest and taxes);
� and a record-setting overall performance.
This vision is to create the metrics to accurately measure
these results, forecast the likelihood, and generate a betterthan-average return on investment.
The vision here is to create a NEW kind of casino based
on marketing, sales, and customer development.
The vision is to run casino marketing, operations,
finance, hospitality, F&B, entertainment, and all aspects of
the casino…driven by the new model and never focused
away from the relationship between CRM strategies and
bottom line.
Within the first year of operation we will be a highly
visible company known as the best of breed in the gaming
world.
We will have developed and marketed the property to
position it as a market share and industry leader.
77
We will enjoy sound forecasting and projection
methodologies and will have established a track record
based on our already-proven methods and history.
Based on these projections and the outline in this
document, we believe that this is in fact the basis of a sound
business development and THE future of gaming.
That is what this outline is all about. That is what this
research has been all about. That is what I now present here.
78
Management Bio.
Gary Green is widely recognized as one of the world’s
leading strategic marketers and authorities on creating new
markets. A popular trade show speaker and award-winning
writer, he is well-known for taking complex issues and
quickly finding formulaic solutions to them.
He has a broad cross-industry background that includes
the periphery of the gaming industry as well executive and
management positions in the cataloging (direct marketing)
industry, software and technology industry, entertainment
and hospitality, publishing, tourism, public relations, and
journalism.
A plethora of varied experiences, his mastery of business
modeling and ability to quickly winnow revenue streams
from operational chaff has given him an earned reputation
for finding new ways to look at old businesses.
A colorful entrepreneurial and over-achiever
background.
His colorful background includes the former coownership of a Russian circus and a slot machine gallery, as
well as an award-winning career as a technologist (he was
twice a finalist for the Best of COMDEX technology award
in the late 1990s).
More than 200 companies (including Microsoft Developers
Network, Sony, and Nordstrom in the non-gaming world and
including Mandalay Resort Group, and MGM Mirage in gaming)
are currently using some portion of the business rules,
methodologies, and technologies he created beginning in
1996. As of this writing, still more than $3.2-billion in annual
sales can be directly attributed to his innovations in ecommerce (technologies created before the dot-com bubble
79
popped). Five-percent of all e-commerce on the planet is
still processed using his backend innovations.
A notorious over-achiever in whatever venture he enters,
his early career was punctuated by an entrepreneurial
alphabet soup of unrelated ventures and accomplishments:
�
He was twice-nominated for the Pulitzer Prize in Journalism
from his days as newspaper reporter;
�
As a touring musician, recording artist and singer/songwriter,
he was inducted into the Smithsonian Institute’s Permanent
American Folklife collection for his three 1970s-era record
albums;
�
He ran a leading Washington, DC public relations firm
handling Congressional, Senatorial, Gubernatorial, and U.S.
Presidential campaigns in the 1980s.
�
He is the former publisher of a 250,000 circulation tourism
magazine;
�
A veteran of the dot-com IPO frenzy;
�
He marketed a start-up tourist attraction and entertainment
venue (with tiny slot casino) and grew from zero to 12million-plus visitors a year;
�
As a division president of a 21-year-old catalog company, he
created a new marketing frontier through CRM development
of more than eight-million active customers and targeting
another 13-million annually.
�
He created an e-business venture for a $1.055-Billion real
estate developer, creating a business model, technology
model, and marketing model;
He established strategic alliance with Computer Associates,
Compaq, Lucent, Hewlett Packard, and other technology
partners;
�
�
He created and was the primary marketer of a software
middleware methodology of data exchange to more than 150
vendor companies’ order management systems (exactly like
the major legacy casino player tracking systems on IBM
AS400s);
�
He mentored and guided a first-round start up that creates
and manages "Interactive Information Response Systems"
80
for vendors, publishers, and advertising agencies using the
Internet, Wireless Communications, and Interactive
Television;
�
He co-founded a venture capital fund to explore digital
opportunities in the real estate development sector;
�
He helped obtain 26 patents on process of getting retail
planograms to real time three-dimensional consumer
interfaces deliverable via the internet;
�
He is the creator and co-patent holder for the only multicatalog on-line shopping process;
�
A former night club owner, bar owner, and movie theatre
manager;
�
�
He was one of the first Atlantic City casino junket operators;
He owned one of the first non-Bar Association paralegal
firms;
�
and he was the architect of the single largest labor union
organizing drive in American history.
A strong gaming background.
Gary Green was born into the gaming industry and has
never really left it far behind. When his father was a 16-yearold boy he had run away from home to join a traveling
carnival. While touring with the carnies he learned to be a
blackjack and poker dealer, double-dealing to the pikers,
punters, and local yokels.
By the time Gary and his brothers could hold a deck of
cards, their father had taught them how to “magician’s
force” a card to the top of a deck, how to deal seconds, how
to spot a cheat…and most importantly, never burn a face
card.
By age 12 Gary was thrown out of a bingo hall during a
family vacation in tourist-Mecca Myrtle Beach, South
Carolina for finding, collecting, and playing the hot cards all
night, every night, for a week. The night after the expulsion
his father returned with him, expecting to confront the
81
operator. Instead, the wise old carnie rushed out to shake
the father’s hand and ask if he could hire the boy as a shill
for the remainder of the summer. Though his mother
vetoed it, this was Gary’s first formal introduction to the
gaming industry.
It was not until his mid-20s that he began to recognize
gaming as a business. When Atlantic City legalized casino
gaming in the early 1980s, he teamed up with former (Las
Vegas) Tropicana junket master Willie Maizer to run highroller junkets from Baltimore/Washington to Atlantic City,
Las Vegas, and The Bahamas. Operating with one leased
Citation jet and two leased “luxury coach” buses, they
targeted high-rollers for one day or weekend junket trips to
Resorts International Casino (when it was owned by the Mary
Carter Paint Company).
For hourly slot pullers and the non “high-roller” crowd
he was responsible for filling 136 buses DAILY from
metropolitan Baltimore and Washington, DC to deliver
players to casinos.
From that business model of handling all marketing for
daily grind-tour buses from Washington, Baltimore, and
Philadelphia to Atlantic City casinos, he graduated to
providing regulatory analysis for a Native American tribe in
North Carolina investigating the gaming industry following
the landmark 1986 Cabazon court case in California and the
Pequot creation of Foxwoods in Connecticut. He had
legislative involvement in S. 1303 (which became the Indian
Gaming Regulatory Act).
Following the death of Willie Maizer, he begain his first
full P&L responsibility for a casino operation as he
converted a nightclub to run gaming operations (tables, no
slots) for AFL-CIO unions, churches, and fund raisers for
82
non-profit organizations. He ran food concessions and bars
at both non-gaming location and at Maryland limited-license
gaming locations.
His next gaming/entertainment project was to become a
partner in The EuroCircus (formerly elements of the famous
Moscow Circus) where he had full P&L responsibility for
the tourist attraction and entertainment destination as well
as two restaurants, three gift shops, a bar/lounge, ticket
sales, and most importantly a small slot-casino room (SC law
limited size and number). It was there that he also became
responsible for slot selection, placement, repair, and
especially tracking systems. At the same time, he also wrote
a best-selling tourism book.
As he expanded his marketing career into technology
and into cataloging, on a software sales trip to Las Vegas he
had a meeting with Mirage Resorts technologists to discuss
providing them with an ERP system to handle fulfillment of
sales of their trinkets, gifts, etc. to consumers via the
Internet and mail order. In the course of these discussions,
he began discussing the resort’s supply-side vendor issues,
an on-line reservation system, as well as a myriad of ITrelated issues facing the casino. This was his first
introduction to the technological nightmare of casino
operations.
From these talks, he began a brief consulting contract to
outline a business model that would allow a transactional
client-server interactivity between these various technology
systems. (It was from these consultations that executives of
Mirage began their initial interest in co-founding what
became PurchasePro.com.)
During the next few years almost every major operator
on the strip either directly or indirectly (through vendors)
83
consulted with Gary Green concerning some portion of their
CRM plans, their Internet strategy, their technology jumble,
or their marketing mix.
Finally in October of 2000, executives at Mandalay
Resort Group encouraged him to appear at the World
Gaming Congress in Las Vegas to discuss his analysis and
recommendation. After “stealing the show” during an
impromptu workshop lecture on disjointed management
and technological naiveté, he began writing what would
become his widely-distributed landmark white paper, “Casino
Executives Meet 21st Century Technology”.
That paper became one of the driving factors for many
casino operators’ move toward more advanced (and more
profitable) player-tracking, revenue forecasting, customer
relationship management, and decision-support systems.
Often photocopied or emailed, that paper made its way
through the rank and file marketing departments and IT
departments of several small and medium size casino
operations looking for a edge. Two years later Gary Green
still receives new emails almost every week from a GM or
AGM asking about particular aspects of the paper.
Earlier in 2000, he had teamed with a 30-year-veteran
Lucent Technologies (Western Electric) engineer and
created LogicComps, a company that designed a
methodology for solving those casino technology issues.
Although nothing ever came of the LogicComps project,
they did began addressing the issues of making the diverse
tracking systems (Akers, IGT, etc.) communicate between
properties of the same operators, and even between the pits
and the slots.
In the course of doing this, Gary Green began an intense
analysis of the whole issue of player tracking and targeting,
84
and realized that the state of the science in the gaming world
was light years behind the e-commerce world and especially
the direct-marketing (catalog) industry. (The best the gaming
industry had to offer was the award-winning data-mining
project from Harrah’s and THAT system was nothing more
than a batch process conversion system that sent data
overnight to a processing center in Memphis, Tennessee and
converted it back in a batch process with a 12-18 hour
delay).
Being primarily a marketer, he was convinced that such a
methodology (though revolutionary in gaming) was archaic
and provided nowhere near the tools that were actually
needed to provide the MOST useful data for targeting
players.
From that subsequent meetings with operators, he
developed his first methodology to fine-tune what our
industry already does in marketing and add to it
revolutionary (for gaming) new models.
Expanding the points in the earlier white paper, he
outlined that modeling in a four-color glossy 53-page spiralbound booklet distributed to 75 gaming executives,
operators, and industry friends.
As a result, he was able to work with or talk to a number
of Operators as well as gaming manufactures and
technology providers to develop these issues and possible
solutions.
He was called for consulting issues, independent of each
other, by six Strip operators in Las Vegas, one African
casino, one Central American operator, and one vendor
hoping to sell to casinos. He was also asked by a gaming
software company to monitor regulatory, technical, and
business issues concerning on-line gaming, from his unique
85
vantage point as an Internet “insider” and one of the
original developers of e-commerce.
It is this conglomerate of his work, this broad crossindustry background in executive management and seniorlevel marketing, this research, and this rich backdrop in the
gaming industry that gave birth to the outline you are now
reading.
Realistically speaking, he is probably the singularly mostqualified person to lead such an aggressive and ambitious
undertaking and to develop this new marketing and business
modeling for the casino industry.
86
Lucky Numbers: Casino Chain Mines Data
on Its Gamblers, And Strikes Pay Dirt
--`Secret Recipe' Lets Harrah ' s Target Its LowRollers At the Individual Level
--A Free-Meal `Intervention'
By Christina Binkley
05/04/2000 The Wall Street Journal Page A1
(Copyright (c) 2000, Dow Jones & Company, Inc.)
TUNICA, Miss. -- She doesn't know it, but Linda Maranees is the subject of a behavioral
experiment that could change the odds of the gambling business.
The Memphis, Tenn., retiree, her blouse bedecked with sequined cards and dice, has just
received invitations to two nearby slot tournaments, along with vouchers for $200, all
courtesy of Harrah ' s Entertainment Inc.
" Harrah ' s is savvy," says Ms. Maranees, who admits that once in the casino door, she is
bound to spend much more than what Harrah ' s has given her.
That is exactly what the Las Vegas-based company is banking on. Over the past two years,
Harrah ' s has quietly conducted thousands of clinical-style trials to determine what gets
people to gamble more. Based on its findings, Harrah ' s has
developed closely guarded marketing strategies tailored individually
to the millions of low-rollers who make up its bread-and-butter
business.
The results are impressive enough that other casino companies are
copying some of Harrah ' s more discernible methods. Wall Street
analysts are also beginning to see Harrah ' s -- long a dowdy alsoran in the flashy casino business -- as gaining an edge on its rivals.
Harrah ' s stock price has risen quickly in recent weeks as investors
have received news of the marketing results. And the company's
earnings have more than doubled in the past year.
At the center of Harrah ' s strategy is a former Harvard professor
named Gary Loveman and a vast mathematical model much like the ones that economists
use to predict the gross national product or that airlines use to fill seats with the highestpaying fliers. But this one scores gamblers on how profitable they can be to Harrah ' s .
Richard Mirman, the company senior vice president who refined the model, boasts that it
is Harrah ' s "secret recipe" -- on a par with the famous unrevealed formula of Kentucky
Fried Chicken.
87
The model tells Harrah ' s marketers how to appeal to gamblers such as Ms. Maranees,
based on data tracking their previous behavior in casinos. Spitting out "behavior
modification reports," Harrah ' s computers suggest that Ms. Maranees -- an avid slottournament player -- will respond best to a cash offer, while Tina Montgomery, a realestate agent from nearby Oxford, Miss., is better motivated by a free hotel room. As Ms.
Montgomery gambles downstairs, she explains, "my husband stays in the room."
Drawing on data from electronic frequent-gambler cards that customers present before
they play, the model sets budgets and calendars for gamblers, calculating their "predicted
lifetime value" to Harrah ' s . When a gambler wagers less than usual -by skipping a monthly visit for instance -- Harrah ' s "intervenes" with a
letter or a phone call offering a free meal, a show ticket or a cash
voucher. Telemarketers are trained to get customers to talk about their
earlier casino experiences, and then to listen for trigger phrases such as
"hotel room" or "steak dinner" to come up with the most alluring offer.
This "Pavlovian marketing," as Mr. Mirman calls it, is a far cry from the
traditional methods gambling companies have used to attract customers.
Casinos have long depended on the inherent sexiness of their product to
reach the low-rolling public. Until Harrah ' s , they have eschewed the
kind of quantitative analysis employed to great effect by other
consumer-oriented industries such as airlines and banks. Instead, they
have focused on high-rollers, doling out VIP perks such as free flights
and fine champagne. The masses have been courted with gimmicky contests and,
increasingly, with fantastical top-this-one resorts.
This has cost the gambling industry. Over the past decade, the billions of dollars lavished
on hotels, malls and marble bathrooms have cut casino investment returns in half. So
Harrah’s, with its solidly proletarian properties in places like Topeka, Kan. and Joliet, Ill.,
has had to think differently.
The marketing push was born when Phil Satre, Harrah ' s chairman and chief executive,
was struggling to recover from what appeared to be a gross strategic error in the early
1990s: After leading the way among casinos into new jurisdictions as legalized gambling
spread across the country, Harrah ' s got creamed whenever competitors put up flashier
properties next door. "We were fed up with running our business as a victim," says Colin
Reed, Harrah’s chief financial officer.
The only way out was to squeeze more business from existing customers. But the first
round of "loyalty" marketing and technology programs, with names such as Marketing
Workbench and WINNET -- which generally relied on blanketing gamblers with freebies - not only failed to keep them coming, but also cut into the company's bottom line.
In 1994, Harrah ' s hired a chief marketing officer, Brad Morgan, with experience at Visa
and Procter & Gamble, to bring in some outside consumer-marketing savvy. Mr. Morgan
spoke of sizing up gamblers "psychographically" -- rating them according to
characteristics such as their careers.
Mr. Morgan also identified a small group of Harrah ' s customers who produced most of
the company's profits. He says he found that people who spent between $100 and $499 a
trip accounted for about 30% of gamblers but 80% of revenue and, startlingly, nearly
100% of profits. Among themselves, Harrah ' s officials referred to these customers as
"grazers" for their steady casino habits. Publicly, the company settled on another term for
its core audience: "avid experienced players." "I felt like I'd discovered the Rosetta stone
of casinos," Mr. Morgan says.
"Avid experienced players" became Harrah ' s target customers.
88
The company began collecting intimate details on these players when it
launched its Total Gold frequent-gambler card in 1997. The electronic
cards, inserted in slot machines or handed to casino supervisors,
gathered minutiae on gamblers' habits in exchange for letting them
know how to attain the free drinks, hotel rooms, show tickets and other
"comps."
The idea was that gamblers would bet more if they knew the exact
threshold they needed to cross to get a freebie. But it didn't work out
that way. Freebie levels differed from one Harrah ' s casino to the next,
confusing customers. Casino managers balked at sharing the data with
their colleagues at other properties. Getting them to cooperate "was like
herding cats," says Mr. Morgan, who left Harrah ' s in 1997 and is now a business
consultant in Boulder, Colo.
Meanwhile, Harrah ' s executives were swimming in information they didn't know how to
use. "I went through a period of frustration," says Mr. Satre. "I said, Why isn't any of this
stuff working?' "
Although he didn't fully grasp it at the time, the electronic card was generating some key
intelligence for Mr. Satre. It told Harrah ' s how fast people pull a slot-machine lever and
what their favorite games are. It told them a gambler's age and gender. It helped the
company to identify which neighborhoods around the country produce the most lucrative
customers.
A few weeks before Christmas 1997, Mr. Satre made a pilgrimage to Atlanta to see Sergio
Zyman, Coca-Cola Co.'s marketing guru at the time. In a two-hour conversation in an
executive lounge at the airport, Mr. Zyman talked while Mr. Satre scribbled notes. Mr.
Zyman recommended that Mr. Satre hire a chief operating officer with a marketing
background. With authority over all of Harrah ' s properties -- which now number 21 -and over the company's operating vice presidents, the executive could make marketing the
driving force at Harrah ' s .
In what he calls a "Eureka moment," Mr. Satre thought of Mr. Loveman, the Harvard
Business School professor, who had consulted for Harrah ' s about marketing and
training. A year from becoming eligible for tenure at Harvard, the affable and rumpled Mr.
Loveman says he was "dumbstruck" by the offer. Mr. Satre presented the hiring to his
board as a fait accompli because, as he puts it, "if I said I was looking for permission,
they'd have said I was crazy."
Approaching his $1.3 million-a-year job as one of Harvard's classic case studies, Mr.
Loveman decided that a lack of customer loyalty was Harrah ' s biggest weakness. Noting
that clients spent only 36 cents of every wagering dollar at Harrah ' s , he realized that if
the company could raise that by a penny, annual earnings would jump by more than $1 a
share. "I'm in the business of fostering customer monogamy," Mr. Loveman says, "like the
Ladies' Temperance Movement."
Mr. Loveman began his push by recruiting outside help. That's a rarity in the insular
gambling industry, which tends to promote from within. One of his early hires was Mr.
Mirman, a former University of Chicago math whiz who favors conservative blue suits
over the kind of wide ties and pinky rings often found in casino executive suites. When he
left his management-consulting job at Booz Allen & Hamilton to join Harrah ' s in 1998,
Mr. Mirman says, he shrugged off the reactions of colleagues, as when a senior partner
asked if he was "comfortable with the morals of this."
Mr. Loveman and Mr. Mirman grouped together the 16 million gamblers in Harrah ' s
database according to characteristics such as age, how much money they are likely to lose
89
and how frequently they gamble. Then Harrah ' s started testing hypotheses against
control groups.
One example: Harrah ' s chose two similar groups of frequent slot players from Jackson,
Miss. Members of the control group were offered a typical casino-marketing package
worth $125 -- a free room, two steak meals and $30 of free chips at the Tunica casino.
Members of the test group were offered $60 in chips. The more modest offer generated far
more gambling, suggesting that Harrah ' s had been wasting money giving customers free
rooms. Thereafter, profits from the revamped promotion nearly doubled to $60 per person
per trip.
In another test, Harrah ' s focused on a group of monthly gamblers whom the company
suspected could be induced to play more frequently because they lived nearby and
displayed avid gambler traits such as hitting slot buttons quickly (playing at "high
velocity" in Harrah ' s parlance). To entice them to make two back-to-back visits, Harrah
' s sent cash and food offers that expired in consecutive two-week periods. The group's
average number of trips per month quickly rose to 1.4 from 1.1.
Harrah ' s has dropped some old casino standards, such as giving customers bonus points
that can be spent in Harrah ' s gift shops and restaurants. Research showed that most
gamblers weren't motivated by the bonus points, which cost Harrah ' s $14 million a year.
In its trials, the company is also studying the widely held belief that gamblers notice slight
changes in slot-machine odds. If that's wrong, as Mr. Loveman suspects, casinos could
slightly lower the odds of winning and reap even bigger profits. "I believe there's a lot of
money to be made for the person who has the answer to that," says Mr. Loveman.
This experimentation is helping Harrah ' s gain market share around the country. Here in
Tunica, chosen as a key test site because of the "average" characteristics of its gamblers,
Harrah ' s revenue has risen at nearly double the rate of nearby casinos since the new
targeted marketing was introduced last June. Not only that, the higher volumes came
cheap. Profits at the Tunica casino rose sharply, according to Harrah ' s executives.
Rivals are trying to follow suit. " Harrah ' s has taken a different tack than everyone else,
and they've been really smart about it," says Marc Grossman, head of investor relations for
Hilton Hotels Corp., which spun its casinos off into Park Place Entertainment Corp. a little
more than a year ago.
The approach is also winning some fans among Harrah ' s old-timers. Tom Jenkins, who
oversees Harrah ' s Las Vegas flagship, calls Mr. Loveman and his crew "propeller
heads." But he says they've helped to more than double the rate at which people respond to
offers that he mails to their homes -- to 8% from 3%.
There are more pitches to come. Harrah ' s last month launched frequent-gambler cards
with gold, platinum and diamond thresholds, which offer escalating rewards for gambling
more. Ms. Maranees, the Memphis retiree, is a proud diamond echelon player. That means
Harrah ' s expects she'll lose a minimum of $5,000 this year.
Ms. Maranees says she's not put off by Harrah ' s "Pavlovian" marketing. "A gimmick to
get me to spend more money?" she asks rhetorically. "Why of course it is."
90
customer relationship management,
6, 57, 84
INDEX
st
“Casino Executives Meet 21 Century
Technology, 10, 84
customers, 9, 13, 18, 19, 21, 28, 31,
37, 39, 40, 42, 43, 44, 45, 47, 48,
51, 54, 57, 62, 70, 80, 87
Accounting Practices, 6, 18
data, 7, 15, 20, 25, 26, 28, 29, 32, 34,
35, 36, 37, 39, 40, 43, 44, 45, 47,
48, 49, 52, 55, 56, 57, 58, 59, 60,
61, 62, 63, 64, 65, 66, 67, 68, 69,
70, 71, 72, 73, 74, 75, 80, 85, 87,
94
Aladdin, 34, 35, 36
ASP, 67, 68, 69, 72
Atlantic City, 6, 59, 81, 82
behavior, 21, 25, 28, 40, 43, 45, 48,
49, 52, 62, 87
Data Mining, 26
behavioral modification, 39
data modeling, 39
bingo, 81
Data Warehousing, 36
blackjack, 57, 60, 70, 81
data-driven, 20, 28, 61
brand, 19, 31, 37, 62
decision-support, 10, 25, 27, 32, 84
budget management, 32
Direct Mail, 26
bus, 10, 14, 61
EBITDA, 6, 9, 14, 21, 29, 30
Caesars, 50, 51
E-commerce, 26
Caesars’, 50
forecasting, 7, 20, 28, 32, 33, 41, 64,
72, 78, 84
cards, 30, 31, 37, 50, 51, 81, 87
CASE STUDY, 21, 26, 29, 31, 36, 57,
73
formula, 14, 17, 24, 41, 75, 87
casino management, 14, 28, 77
Frequency, 28, 39, 41, 42
Casino Management, 5, 10
gamble, 20, 27, 87
catalog, 11, 37, 38, 39, 80, 81, 85, 94
gambling, 6, 25, 31, 40, 41, 52, 87
chip warrants, 60
games, 27, 48, 56, 60, 87
client, 64, 65, 66, 68, 69, 83
cocktail waitresses, 25
gaming industry, 5, 6, 7, 9, 13, 16, 17,
36, 37, 79, 81, 82, 85, 86
comp, 10, 14, 51, 60
GAMMA, 64, 65, 66
comp schedules, 60
Gary Green, 11, 13, 14, 76, 79, 81,
84, 94
formulaic methods, 11
competitive saturation, 34
corporate ownership, 6
growth, 9, 10, 17, 20, 21, 24, 30, 33,
77
CRM, 6, 7, 10, 34, 37, 39, 74, 77, 80,
84, 94
GSA, 64, 66
cross-industry, 11, 18, 79, 86
handle, 19, 25, 41, 45, 48, 51, 54, 60,
62, 70, 83
Customer Relationship, 15, 18, 73
handles, 13, 19, 52, 55, 56, 62
91
methodology, 13, 21, 34, 36, 37, 40,
52, 56, 57, 68, 80, 84, 85, 94
Harrah’s, 5, 7, 8, 26, 27, 29, 31, 34,
36, 37, 38, 39, 49, 51, 52, 61, 69,
70, 71, 74, 85, 87, 94
MGM/Mirage, 8, 63
Hilton, 51, 87
Mississippi, 6, 71
hosts, 10, 14, 25, 60
Hotel, 18, 34
models, 6, 14, 21, 44, 54, 61, 62, 64,
74, 75, 85
IGT, 66, 84
Monetary Value, 28, 45
Indian, 6, 71, 82
Motion Picture industry, 9
international casinos, 60
Network, 72, 79
Internet, 26, 32, 51, 64, 65, 66, 67,
71, 72, 81, 83, 84, 86
Nevada, 5, 6, 7, 94
New Orleans, 49, 61, 70
Johnny Cash, 52
nonnegotiable chips, 10, 14, 58
junk bonds, 5, 15
Nordstrom, 14, 16, 25, 79
Jupiter Communications, 40
number of plays, 52
Las Vegas, 10, 11, 15, 27, 29, 35, 37,
49, 50, 51, 62, 70, 71, 82, 83, 84,
85, 87
ODBC, 68
offer, 31, 41, 48, 49, 52, 53, 54, 55,
56, 85, 87
lifetime value, 21, 25, 87
offers, 37, 39, 44, 45, 52, 54, 55, 56,
87
loss rebate programs, 59
Luxor, 57
operations, 7, 11, 14, 15, 77, 82, 83,
84
management, 6, 8, 9, 10, 11, 14, 15,
17, 19, 20, 21, 24, 25, 27, 28, 30,
32, 33, 35, 36, 39, 52, 57, 61, 62,
64, 67, 69, 75, 79, 80, 84, 86, 87
operator, 14, 37, 66, 70, 72, 82, 83,
85
Management/Operations, 19
operators, 8, 10, 11, 18, 35, 36, 37,
39, 49, 61, 69, 71, 81, 84, 85
Mandalay, 8, 21, 24, 29, 36, 37, 57,
71, 73, 74, 79, 84, 94
P/E, 18, 36
Park Place Entertainment, 35, 49, 71,
87, 94, See PPE
marketing, 6, 7, 8, 10, 11, 14, 15, 16,
19, 20, 21, 24, 25, 26, 27, 28, 29,
30, 31, 32, 34, 35, 36, 37, 38, 39,
40, 41, 47, 48, 52, 56, 58, 60, 61,
62, 63, 64, 67, 69, 70, 71, 73, 74,
75, 77, 79, 80, 82, 83, 84, 85, 86,
87, 94
Park Place Entertainment’s. See PPE
percentages, 17
Performance, 14
pit, 52, 60, 65, 70
Marketing, 8, 19, 28, 34, 36, 75, 87,
94
match plays, 10, 14, 55
player, 10, 30, 31, 32, 37, 40, 41, 45,
46, 47, 48, 50, 51, 55, 56, 57, 59,
60, 61, 69, 70, 74, 80, 84, 87, 94
methodologies, 8, 10, 13, 30, 34, 38,
39, 52, 56, 64, 75, 78, 79, 94
Player Card, 26
92
players, 25, 27, 28, 31, 32, 41, 44, 46,
48, 50, 52, 54, 57, 60, 62, 70, 82,
85, 87
table games, 27
profile, 37, 49, 74
technologies, 7, 14, 58, 61, 79, 94
proposal, 77
technology, 8, 9, 10, 11, 14, 15, 19,
20, 25, 32, 35, 36, 37, 62, 63, 64,
65, 68, 69, 72, 74, 75, 77, 79, 80,
83, 84, 85, 87
Tahoe, 49, 50
psycho-graphic, 74
R.O.I, 10, 15
Technology, 19, 21, 34, 63
REAL TIME, 28, 57, 71, 72
telemarketers, 25
Recency, 39, 41
tested Park Place Entertainment’s, 49
Recentcy,, 28
the pencil, 62
Return On Investment. See ROI
tiered card, 31
revenue, 9, 14, 17, 20, 21, 27, 29, 31,
32, 34, 35, 39, 41, 52, 55, 79, 84,
87
Total Rewards, 49
TRANSACTION model, 65
RFM, 28, 34, 39, 40, 41, 47, 48, 55,
56, 59, 61
Trump, 8, 94
roulette, 60
use, 7, 17, 34, 36, 37, 41, 45, 53, 54,
55, 56, 60, 63, 75, 87
Russian circus, 79
value creation, 21
second and third tier, 8, 61
Vegas. See Las Vegas
senior management, 19
Virtual Private Network, 71, 72
server, 64, 65, 66, 68, 69, 83
vision, 16, 20, 77
service, 9, 14, 25, 27, 40, 70
VPN. See Virtual Private Networks
Skinnerian, 25
Wall Street, 36, 87
Slot, 17, 26
whales, 27, 59
slot machine, 7, 65, 70, 79
World Gaming Congress, 10, 84
slot managers, 28
XML, 68
slots, 8, 27, 31, 35, 45, 49, 50, 60, 64,
70, 82, 84
Yield Management, 26
source code, 53, 55, 56
spree, 10, 14
Spree, 59
strategic planning, 32
strategy, 9, 19, 25, 30, 52, 57, 77, 84,
87, 94
Strategy, 14
suggestive selling, 39, 40, 48, 52, 53
93
ENDNOTES
The survey, commissioned by Harrah’s Entertainment, Inc. (NYSE: HET)
and posted for the public on their website, is based on two nationwide studies:
the Roper Reports, conducted by Roper ASW, and the U.S. Gaming Panel,
conducted by NFO WorldGroup, Inc.
1
By contrast a little less than 41-million people bought new cars during the
same year according to Reuters. At long last, it IS true: We ARE bigger than
General Motors.
2
3
Op cit, Harrah’s.
4
ibidem
Park Place Entertainment (PPE) at number 353; MGM Mirage (MGG) at
404; and Harrah’s (HET) at number 440, according to the 2002 Fortune
Magazine rankings.
5
Op cit, Mandalay Resort Group (MBG) at position 590 and Trump Hotels
and Casinos (DJT) at 984.
6
Widener University, Georgian, Purdue, Michigan State, Rutgers, Niagara,
Villanova, University of Indianapolis, Arizona State, Pace, Johnson & Wales,
State University of New York (SUNY), and a myriad of others…including the
Nevada schools.
7
Chronologically: Mirage Resorts (MGM Mirage) to outline their earliest on-line
reservation system (through my association with a software vendor); Stations
Casinos (through my association with a CRM provider) to discuss online CRM
strategies and added values; Mandalay Resort Group to discuss methods of
unifying player data from multiple properties and creation of a one-card
system; Sahara Casino to outline a clone of the Harrah’s data-mining
methodology; Stratosphere Corporation to review their proposed customercontact CRM online strategy; and other proprietary talks.
8
More than 5% of all e-commerce on the planet and approximately 25% of all
mail order catalog sales in the US are processed using Gary Green’s
methodologies, business rules, and technologies incorporated into the
WebMacs/MACS/Ecometry direct marketing software. A sampling of
companies using this solution includes: Microsoft (MSDN developers network), StarTrek.com,
9
StarWars.com, WWF.com (Suresource) American On Line (AOL) Products (AB&C Fulfillment), i-legions.com,
ClickMail, LogicComps, Wave Marketing, 4-Dshopping.com, A-3 Services, A.M. Leonard Adam’s Headwear,
Affinity Express, Alpha Memory, Alpine Trading America’s Hobby Center, American Supply, Antena 3 Directo,
Aquascape Design Asset Marketing, Bailey’s, Ballard Design, Beren Shoes Best Uniforms, Baseball Express, Big
Toe Sports, Bluewater Books & Charts Bravanta.com, Brookstone, Burden Sales, Bureau for at Risk Youth CRT
Associates, Carlton Industries, Carnell, Case Logic Casual Male, Catalog Ventures, Century 21 Promotions,
Chaparral Motorsports Childcraft Education, ClassroomDirect.com, ClubMac, Coach Coldwater Creek,
Compactappliace.com, Cornerstone Brands, Corral West Ranchwear, Cosmetique, Country Home Products,
Country Supply, Crestline Cyberguys, Outpost.com, Daniel Smith, Delia’s, Desantis Collection, Design Within
Reach, Dexter Shoe Company, DiamondDepot.com, Direct Source, Direct To Home, ERB Industries,
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Earlychildhood.com, Easthill, Educational Experience, Ethel M. Chocolates, Fahrney’s Pens, Fantastic Media, Fire
Mountain Gems, Flaghouse, Footsmart Fruitful Yield, Gaim, Galls, Geiger, Gemplers, Genesis Direct, Girlfriends,
LA, Beauty and the Best Global Video, Golf Warehouse, Golfventuresonline.com, Guideposts HCI Direct, Hallmark,
Hallmark Flowers, Hamakor Judaica Hammacher Schlemmer, Heritage Collections, Hickory Farms, Home Trends
HomeShowcase, Homeclick.com, Hot Topic, Humbolt Industries I/D/E/A, IMT Harrowbrook, Idea Art, Indiana
Botanic Gardens Informal Education, Insect Lore, JC Penney Logistics, Jenson USA John Smith, Journal
Education, Junonia, KBkids King Schools, Knight/Williams Corp., LFP, Inc., Lab Safety Supply Lego Systems,
Leisure Time Entertainment, Levenger, Library Video Littlewoods Home Shopping, Logistix, Mailcome PCL, Make
Up Art Cosmetics Malaco, Marketing Concepts, Marriot Desert Springs, MasterGrip McFeely’s Square Drive,
MvGlen Micro, Melitta, Meyer Distributing Miami Dolphins, Mile Post Four, Miles Kimball, MilesTex Misco Canada,
Mitchell’s Newspaper, Model Expo, Monterey Bay Musician’s Friend, Mustangs Unlimited, My Twinn, NVE
Pharmaceuticals New Braunfels Smokehouse, New England Serum Co., Nine West, Nordstrom Norm Thomson,
Northern Saftey Co., Old Glory, On Campus Marketing One StepAhead/ Chelsea, Open Enterprises, Overtons, PC
Nation PCMall, Peachtree Business Products, Personal Creations, Pet Doors USA Pinch A Penny, Precision
Response Corp., Price Point, Pro Sound & Stage Lighting Professional Uniforms, Programmers Paradise,
Promotional Resources, Pure Encapsulations QVC Television, Quadratec, Quartermaster, Readers Digest
Reading Etc., Red Envelope, Right Stuff, Rimmer Brothers Rocky Mountain Motorworks, Rodale Press, RossSimons, Rude de France Satisfusion, Savory Foods , Schneider Saddlery, Scully & Schully Seeds of Change,
Sensational Beginnings, Shar Products, The Shopping Channel Sid Savage Auto Dealer, Siegel Display Products,
Softmart, Sony Music Entertainment Sound City, Southern Tier Athletics, Specialty Pool Products, Standard Tools
Staples, UK, Star Struck, Steeda Auto Sports, Steuben Glass Story House, Stumps, Sun Precautions, Sunbelt
Sportswear MACMall, Swell.com, Tlavideo, Tafford Manufacturing Taylor Gifts, Teacher’s Discovery, That Fish
Place, That Pet Place Kingshill Collection, Lakeside Collection, Pfaltzgraff Co., Republic of Tea Thor Tek, Tiger
Direct, Time Customer Service, Time Life Customer Service Title Nine Sports, Tom Snyder Productions, Topix
Innov. Gallery, USCO Distribution United Methodist Publishing, Ultimate Office, USI, Urban Outfitters
ValentineOne, Valu-Bilt Parts, Victorian Paper Co., Vitacoast.com Western Athletic Supply, Wetmore & Company,
What On Earth, Wine Country Gift Baskets Wine Enthusiast, Wine Watch, Winterthur, World Almanac Education
Zale Corporation, Zomax, PCZone, e-shortcut.com PCWarehouse, MACWarehouse, MACZone,
Harrah’s Entertainment Corporation (HET) independent of any association
with Gary Green instituted elements contained in this methodology and
achieved these results in 2000.
10
I was in Dan Nordstrom’s office one time for a high-level meeting
discussing the technology of their catalog business integrating with their ecommerce business. In the midst of this meeting a red light in the ceiling
began to flash and Mr. Nordstrom excused himself to pick up the telephone.
“Good afternoon, Nordstrom’s. May I help you?” he answered. He later
explained that as part of their commitment to customer service, rather than
allow any customer to remain on “hold” on the phone if all operators are busy,
a red light flashed so that every employee was trained to answer a call. No
customer, no matter how small, would be inconvenienced. Nordstrom serves
customers; not the other way around the way many companies do business.
THAT is customer service!
11
12
Ibid Harrah’s and http://investor.harrahs.com/news/20020718-85593.cfm
Detailed attention to slot payouts does NOT reclassify a casino as a “grind
joint”.
13
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See Appendix One for Wall Street Journal front page story detailing that
process.
14
The Harrah’s “superior” data management was to use out-dated NCR
Teradata proprietary UNIX database parked at their data center in Memphis
Tennessee and nightly accepting multi-hour uploads of comma-delimited data
from each property around the country. Once all the data is loaded, there is an
auto-merge routine that is run and then the data is downloaded back to the
properties. Once the data returned to the properties it was imported back into
the various systems for use at the sites. THIS was the 2000 “cutting edge” of
casino data warehousing. The concept of real time communications never
entered into the planning.
15
16
ibid
17
PPE has since gone to a one-card system for the majority of their properties.
Where PPE did do somewhat better was in their Casino Host system. Once
I visited the slot host office and asked the clerk there to review my play, I was
able to convince her that I should be transferred to a regular Casino Host.
Once in the care of my assigned hostess I was able to get comp rooms, food,
shows, etc. And it DID serve to instill some personal brand-loyalty in me. But
how many players know to go through that ritual to CONVINCE the sales
entity…the casino…to PLEASE make me loyal? Nonetheless, the hostess did
a great job taking care of me!
18
19
Actually a Merle Travis song, Cash had the most powerful delivery.
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