In casinos and gambling industry, Harrah’s is somewhat similar to Amazon. com in retail industry. The two companies shares similar characteristics as they were born in internet era and their passion to conquer their industry has driven them to employ appropriate technology to gather customers’ data and use them for increasing their revenue. In short, the two companies increase their revenue by creating large customers data base. For many years, Harrah’s was only considered as a small challenger in gambling industry, far behind MGM Entertainment that rule the industry for many decades.
Fortunately, the coming of information technology has endowed Harrah’s since the company is now able to leap frog into being the second largest gambling company, right behind MGM Entertainment. Currently, Harrah’s has about 26 casinos that are scattered in 13 states in the U. S. In total, Harrah’s, which is headquartered in Memphis, Tennessee, serves more than 25 million customers as of 2001. Concerning Harrah’s entertainment, this paper will discuss about factors that drive Harrah’s customer relationship strategy.
To be specific, there are five issues; they are the alignment of Harrah’s business and IT strategies, integration between Harrah’s patron database and the marketing workbench, examples of Harrah’s closed loop marketing implementation, sustainable advantage, and privacy and security issues. 2. Business and IT Strategy In order to maintain leadership in gaming industry, Harrah’s develop a business strategy that focuses on corporate branding, customer relationship management (CRM). The use of CRM software provides Harrah’s with information about a complete gambling characteristic of each customer.
The use of CRM also enables Harrah’s to personalize appropriate marketing program including an attractive plan to invite customer to visit one of Harrah’s 26 casinos in the U. S. The situation is absolutely beneficial for Harrah’s since they can generate new revenues from new and repeat customers that love to spend their dollars in Harrah’s casinos. In addition, the use of information technology also enables Harrah’s managements to estimate the revenue per customer and what kind of reward is suited for the customers over time (loyalty program).
. Therefore, there is alignment between Harrah’s business strategy and IT strategy in which corporate branding and CRM is supported by IT strategy that integrates data from various activities further, the collected data is used for variety of purposes such as patron database (operational data store), total rewards (loyalty program), and marketing workbench (data warehouse). 3. Database and Marketing Workbench In order to provide customer loyalty program, Harrah’s develop patron database (PDB) that acts as operational data store.
By using this application, Harrah’s can gain information about gambling activities of each customer. The information includes customers’ preferences, the visit behavior etcetera. However, to provide a loyalty program, we cannot only rely on patron database. Harrah’s understands the situation and thus they develop the so-called Marketing Workbench (MWB) that acts as data warehouse. By combining the two applications, Harrah’s is able to customize rewards offering for particular customers.
For instances, MWB application may suggest to give free show tickets for customers who take a day trip to casinos instead of giving hotel vouchers. 4. Closed Loop Marketing Implementation Closed loop marketing emerge to fulfill the need of Harrah’s to find whether campaign effectively influence target markets or not. Heart of the closed loop marketing is a continual process ranging from the definition of objectives, customer treatment (compose suitable campaign message), execution, customer action/no action, measurement, learning, and tests.
For example, there are two groups of slot machine players coming from Jackson, Mississippi. The two groups are offered two different kinds of rewards. The first group is offered a package composing of free two-steak dinner, a free room, and $30 free chip at Tunica Casino. Meanwhile, the second group is only offered $60 free chips. The observation find that the second groups spend more money since they feel they have sources to play with while the first group offering is considered as wasting money for Harrah’s since it does not generate more money for Harrah’s. 5. Sustainable Advantage
Tracey Austin believes that the adoption of information technology at finding out customers’ characteristics and provide customized loyalty program become competitive advantage for Harrah’s. This is because such CRM matches customer needs with product plans and offerings, remind customer requirement, and know what products a customer has purchased, and so on (Young 2003). In the case of gambling industry, the use of CRM software has enabled the gambling companies such as Harrah’s to gather customers’ preferences, their demographic data, their spending amount per visit, their chosen merchandises and many others.
The impact of customer-driven strategy is tremendous since it enables a company like Harrah’s to multiply their revenue. For example, by offering customers the Total Rewards program, Harrah’s is able to increase their profit into $125 million However, i do not see that MWB and PDB become sustainable advantage since Harrah’s competitors also quickly adopt the same strategy. For example, Mohegan Sun has also a customer reward program that enables the company to gain benefits from the spenders.
The company’s Player’s Club program allows their customers to redeem their points in many attractive methods such as paying for bus fare to and from the casino, buying merchandises at retail shops on the casino, having a complementary offer to stay at a hotel for free, or buying vehicle gasoline. 6. Privacy and Security Issues The major problem when dealing with customers data is about privacy and security. For instances, since the data warehouse composes of many personal data of each customer, there is possibility that unauthorized person get into the computer system to break down the files and take benefits for personal uses.
Unfortunately, in the case study, I do not see that Harrah’s address this kind of threats. Therefore, it had better that immediately; the company implements security system and list procedures to prevent information stealing.
Chapter One: Marketing’s Value to Consumers, Firms, and Society. Retrieved October 11, 2007 from http://highered. mcgraw-hill. com/sites/dl/free/0072525231/127665/pt15ch01v2. pdf Coulter, Mary K. Strategic Management in Action. Prentice Hall. 2002.