Date post: | 18-Nov-2014 |
Category: |
Documents |
Upload: | abhishek-chakraborty |
View: | 2,035 times |
Download: | 6 times |
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
at
attra
ctive
tariff
s.
ii) T
he st
rate
gy
was
use
d fo
r op
timiz
ing
the
sum
of g
amin
g an
d ro
om
reve
nue.
iii) S
yste
m m
ade
use
of c
urre
nt
and
hist
oric
al
dem
and
in o
rder
to
com
e ou
t with
de
man
d fo
reca
st.
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.)
Revenue Breakdown
Current Scenario (cont.)
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