Harrah's CRM Strategy

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Case Details:

Case Code : MKTG105
Case Length : 15 Pages
Period : 1998-2005
Pub Date : 2005
Teaching Note :Not Available
Organization : Harrah's Entertainment Incorporated
Industry : Casino/ Entertainment
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"They (Harrah's) understand precisely what is going on with customers, how to motivate them and how to sell them more."¹

- Sergio Zyman, Former Coca-Cola Branding Guru.

"CRM is the vertebrae of everything we do. I don't think most retailers take full advantage of what they already know about their customers or use that knowledge to modify future behaviour."²

- Gary Loveman, President and CEO, Harrah's Entertainment.

Introduction

The late 1990s witnessed a rapid expansion of casinos, especially in Las Vegas and Atlantic City, New Jersey due to relaxations in the US State and Federal gaming laws. New laws had legalised gaming on riverboats and Indian reservations³ and this led to intense rivalry between casino operators who started spending millions of dollars in opening new extravagant properties that featured shopping malls and hotels in order to attract customers. Harrah's Entertainment Incorporated (Harrah's)⁴, an entertainment company which had business interests in casinos, food & beverages and hotel rooms, decided to follow a different approach as it realized that about 90 percent of its revenues came from its casino business and not from associated ventures.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Instead of opening lavish properties, Harrah's initiated a customer relationship management (CRM) program that aimed at developing long-term relationships with its customers that would enable the company to capture a bigger market share in the gaming business.

In 1997, Harrah's discovered that its customers spent only 36% of their annual gaming budget at the company. It realized that increasing customer spends would translate into significant increase in revenues.

At the heart of Harrah's CRM program was a loyalty programme called Total Rewards (derived from the earlier Total Gold program) that rewarded customers with comps⁵ in order to stimulate loyalty.

The Total Rewards programme was aimed at gathering information about customers and using it to customize the company's marketing programs for each customer.

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1] Daniel McGinn and Steve Friess, "From Harvard to Las Vegas," Newsweek, April 18, 2005.

2] Susan Reda, "Harrah's Hits the Jackpot with CRM," Stores, June 2003.

3] Indian reservations are lands reserved for American Indian tribes in the US and are governed by tribal governments. There are more than 300 Indian reservations in the US.

4] Las Vegas, Nevada headquartered Harrah's Entertainment Inc. generated revenues of $4.54 billion in the fiscal 2004. In July 2004, Harrah's reached an agreement to acquire Caesars Entertainment Inc. for $9.4 billion. The completion of the deal will make Harrah's the world's largest gaming company.

5] Comps refer to complimentary offerings such as free meals and discount at hotels.