Harrah*S Entertainment Case Study

HARRAH*S ENTERTAINMENT

THE FACTS________________________________________

• Founded in 1937 in Reno, Nevada by Bill Harrah

• One of the world’s most renowned provider in casino entertainment

• Operates nearly 40 casinos in three countries under the Harrah*s, Caesars, Horseshoe, Bally’s, Flamingo, Paris, Rio, Showboat, Harveys, and Grand Casino Resort brand names

• More than 40,000 employees

• Posted more than $4 billion in revenue and $235 million in net income in 2002

THE HISTORY

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In the volatile world of the gaming industry, renowned casino provider, Harrah*s understands the importance of ensuring the consumer’s complete satisfaction during their stay at their facilities. The history of Harrah*s can be traced back to 1937 when Bill Harrah opened his first bingo parlor in Reno, Nevada and eventually went on the buy �The Mint Club’ in downtown Reno. Bill understood the value of customer service early on as he installed steam pipes at the club entrance so his customers did not have to walk in the snow while coming to the club during the winter. Seventy years later, Harrah*s continues to lead the pack when it comes to delivering superior customer value.

Today, when people visit Las Vegas, they are expecting to be dazzled and entertained by opulent, choreographed water fountains; spirited pirates “battling” for gold and riches; roller-coaster rides that give guests a special “tour” of “the city”; rare white tigers; and world-class entertainers found at many of Harrah*s competitors. However, Harrah*s competitive strategy lies within their strategic focus on the superior quality of its guests gaming experience from the time they walk into their many branded facilities to the time they leave through personalized relationship building facilitated by their evolving customer relationship management database (CRM) tools and processes.

THE CHALLENGE

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During a time when most casinos in the gaming industry are focused on bringing in the next huge crowd pleaser to entice thousands of new guests to walk through their doors on a daily basis, the heavy rollers in the industry must continue to analyze how the budding Internet gaming sector will affect their brick-and-mortar business. Currently, the Internet gaming sector is going through its introductory “bumps-and bruises” phase outside the United States; most notably in Australia and various Caribbean countries. However, how will this change affect Harrah*s ability to enhance its customer loyalty while increasing profitability in the long run?

THE SOLUTIONS

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• Step away from the ubiquitous 80/20 rule and continually develop CRM processes and tools that will enhance consumer loyalty across all levels of consumer rewards program. Historically, organizations who claim to be customer service focused tend to focus their efforts on the 20 percent of their consumers who contribute to 80 percent of their revenue. Throughout the years, Harrah*s has worked on redefining this theory to focus on its “low rollers” who happen to be its “heavy users.” Harrah*s core consumers are typically middle-class individuals who play slot machines as a way to unwind; not inherently wealthy, Bentley-driving high rollers. Keeping this in mind, Harrah*s utilizes its customer relationship management tool to analyze consumers spending potential over the course of a lifetime, all the while understanding the importance of keeping all its guests happy. With the use of “loyalty cards”, Harrah*s continually develops its trademarked Total Rewards Program to motivate consumers to patronize their assorted facilities across the US. This has also increased their shareholder value as overall gambling budgets have increased from 36 percent in 1997 to 43 percent in 2002. On the other hand, simply swiping a “loyalty card” in order to gain incentives does not ensure complete customer loyalty. Consumers must experience a genuine level of personalization in order to continue to come time and time again. If this is not the case, Harrah*s will slowly experience a trend that will not allow them to remain competitive since they do not rely on the “razzle dazzle” of their flashier counterparts.