10
Harrah’s Entertainment Inc.
Class 4: IT & Customer Management
Rajiv lal
Case Summary by: Aileen Wong
Main Takeaways
Using IT and data mining to improve marketing and customer service.
Core Competency – Customer loyalty
Gary Loveman launched 3 major initiatives:
1. New Organizational Structure
2. Brand and Service
3. Customer Relationship Management
- Database Marketing
- The Total Rewards Program
More in-depth Summary
New Organizational Structure
 Division presidents and subordinates in brand operations, IT and marketing report to
Loveman, COO, instead of CEO
Brand and Service
 Advertisement centered on the feeling of anticipation
 Delivering world class experience
Database Marketing
 Developed sophisticated customer profile based on transactional data
 Use customized marketing to drive incremental frequency, budget or both
 Estimated that 26% of players provided 82% of revenue
 Marketing experiments lead Harrah’s to conclude that “less attractive” promotion was more
profitable.
 3 key phases to customer relationship through the use of direct marking programs
 New Business Program
- To encourage customers to take a second and third trip
- Converting new members into loyal customers
- Used predicted customer worth to make investment decisions (building customer
relationships based on their future worth rather than on their past behavior)
 Loyalty Program
- Frequency upside – Offering incentives to customers who were only giving a
small share of their total spending to visit Harrah’s more frequently.
- Budget upside – Encourage customers to visit Harrah’s first on their trip thereby
giving a bigger share of their gaming budget to Harrah’s.
 Retention Program
- To reinvigorate customers who had shown signs of attrition.
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10
Harrah’s Entertainment Inc.
Class 4: IT & Customer Management
Rajiv lal
Case Summary by: Aileen Wong
The Total Rewards Program
 To increase cross-market revenue
 Designed a completely integrated IT network that linked all properties together
 Provided incentives for customers to establish a set of goals and very clear criteria for how to
achieve them
 Added tiered loyalty program
 Total Gold – No minimum customer worth
 Total Platinum – Theoretical customer worth $1,500 annually
 Total Diamond – Theoretical customer worth $5,000 annually
Harrah’s Competition
 Park Place Entertainment Corporation
- Strategy includes acquisitions and focusing on a diverse customer base served
through variety of properties (from high end market to value segment)

Mirage Resorts
- Leader in the Las Vegas strip gaming
- Targeting upper-middle and premium segments
- Strategy has been to develop high profile “must see” attractions.

Circus Enterprises
- Strategy is to build the most ambitious, fully integrated gaming resort complex in the
world.

Trump Hotels & Casinos Resorts
- Pursue cost controls and efficient operations without diminishing the Trump experience.

Native American casinos
Case Discussion / Digest Questions
What can you say about Harrah's value discipline? How do data mining and database marketing
enable the execution of this value discipline?
Value discipline – customer intimacy
- Customized marketing
- Developed better incentive programs
- Better customer service
Consider the Frequency Upside Loyalty Program. Based on the data in Exhibit 2c, can you
quantify the incremental profits from this database marketing program, by comparing the
incremental theoretical wins to the incremental cost of the program? Make sure to document any
assumptions you make in your analysis.
-
See Exhibit 2c on p. 158
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10
Harrah’s Entertainment Inc.
Class 4: IT & Customer Management
Rajiv lal
Case Summary by: Aileen Wong
Why is it important to use the "customer worth" in the database marketing programs, rather than
the observed level of play?
-
Customer worth forecasts theoretical amount Harrah’s expects to win over the long term.
Model is based on various customer information collected.
Past behavior does not always constitute future behavior.
How sustainable are Harrah's IT-enabled business intelligence strategies in the face of imitation
by its competition?
Sustainable due to high switch costs for competitors.
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