Group-6: Saumya Srusti Peeyush Sumit Abhishek

Harrah’s Its CRM Strategy

Agenda of the case

Introduction

Issues

CRM Initiatives

Benefits

Road Ahead

Conclusion

Introduction

Launched by Bill Harrah in 1937 in Reno, Nevada

Harrah’s Entertainment Inc., an entertainment company had business interest in casinos, food, beverages & hotel rooms

Harrah’s Entertainment—data warehousing supported a successful tip to a CRM oriented corporate strategy. Winner of the 2000 TDWI Leadership Award

Operates 21 casino across the country.

Company’s Overview

Company’s Overview

4 million sq feet of casino space40,000 hotel rooms

40 million total reward points

100000 employees

World’s largest provider of branded casino entertainment Owns, operates and manages 50 casinos under brand such as:-

Belly’s Caesar’s Harrah’s Horseshoe Rio

Main operations are :- Casino Hotels Dockside Riverboat casinos

Competitors are ( MGM Mirage , Boyd gaming corporation, Las Vegas Sands Corporation)

Company’s Overview

Started rivalry, instead of opening lavish properties, Harrah initiated CRM.

Understand and appreciate the importance of customer focus and relationship building in a successful CRM program.

• Examine the importance of capturing and using customer information in a CRM initiative.

• Study and analyze the role played by loyalty programs in developing and nurturing customer relationships.

• Understand the role played by IT in a CRM initiative

Need for CRM

The further we get ahead and the more test we run, the more we learn. The more we understand our customers, the more substantial the switching cost that we put in place and the farther ahead we are of a competitor’s efforts. That is why we are running as fast as we can.

-Gary Loveman, CEO, Harrah Inc.

CRM Initiatives

Total Gold program customers were given electronic card.

The customer information collected using this card is stored in central repository.

This information also used to reward customers.

Some weaknesses in Total gold program that are:-

-There was nothing different about Harrah’s rewards as compared to competitors.

-No consistency in rewards earned by customers.-Earned different rewards at different properties.

1) Customer Loyalty Program

Different approach i.e. tiered approach where customers were divided into tiers:

-Gold-Platinum-Diamond

-Another objective of Total reward program was cross-market.

2) Customer Loyalty Program (cont.)

Harrah’s used COGNOS Impromptu. to access data warehouse & run predefined reports & execute queries.

A tool SAS used by Harrah’s carrying out market segmentation.

Primary purpose was to Estimate customers' worth over period of time.

Determine Customer’s preferences.Predict the services and rewards for customers.Customize offering to its customers.

2) Decision Science Tools

Decision Science Tools

Prospect

Non –loyal

Loyal

Attritor

Classification of customers done by Harrah

i) O

fferin

g cu

stom

ers a

t att

racti

ve

tariff

s.

ii) T

he st

rate

gy

was

use

d fo

r op

timizi

ng th

e su

m o

f gam

ing

and

room

re

venu

e.

iii) S

yste

m

mad

e us

e of

cu

rren

t and

hi

stor

ical

de

man

d in

or

der t

o co

me

out w

ith

dem

and

fore

cast

.

3) Hotel Revenue Management System

3) Hotel Revenue Management System (diagram)

25% revenue came from just 5% of its customer base.

Harrah called this segment as ‘VIP Customer’ and this customers assigned personal hosts.

A player contact system was implemented to provide information about customers to the host.

4) Personal Contact Management

IT Role in Implementing CRM

Collect customer data from various source systems,

Integrate the data around the customer, Identify market segments and customer profiles, create appealing offers for customers to visit

Harrah’s casinos, and make the data available for operational and other analytical purposes.

WINet: Creating a Single Customer View

Customer View of Total Gold Program

Closed Loop Marketing

Customer Relationship Cycle

Benefits

From 2000 to 2002, the customer gaming budget increased from 36% to

43%13% profit hike after the implementation

of the CRM strategy

Increased in the Loyalty card enrolments from 12 million to 26 million

Store growth sales increased by 14%

Cross market revenue also increases from 13% to 22% in the year 1999

Revenue generation of US$4,48.3 mn compared to US$2,977. mn

Benefits

A doubling in the response rate of offers to customers

Benefits (cont.)

A brand identity for Harrah’s casinos An increase in customer retention worth several million

dollars A 72% increase in the number of customers who play at

more than one Harrah’s property, increasing profitability by more than $50

million 62% internal rate of return on the information technology

investments.

Benefits (cont.)

Operating Income

Current Scenario

Revenue Breakdown

Current Scenario (cont.)

Current Scenario (cont.)

Revenue Breakdown

The Road Ahead

2008, Harrah’s entertainment was bought by private equity firms Apollo Management and Texas Pacific Group

Deal size $30.7 billion Including $12.4 billion debt and $1 billion

transaction cost

Recent Developments

Exposure to Fluctuating

Government

Regulations

Natural Disaster

Tourism in Las Vegas

Lack of Exposure to

Macau

Expected Risk Factor

The integration power of Information Technology and CRM gives a better a dominant competitive advantage to the Harrah’s

Gary W. Loveman refers to their success as "the triumph of software over hardware in gaming“

An increase in retention of just 1 percent is worth $ 2 million in net profit annually. So far, Harrah's is

enjoying an increase in retention of a couple of percentage points, thanks in large part to its data warehouse.

Conclusion

Thank You