Harrah's Entertainment - Use that technology baby!

Competitive advantage is often discussed in business courses but it is a relatively undefined concept that can vary widely between industries and organizations. In the gaming industry the competitive advantage was long considered to be the ability to attract “high-rollers”, or high-value customers, because they visibly spent a much higher percentage of money gambling than the average every-day gambler. Harrah’s CEO Gary Loveman stated that there was an “if you build it, they will come” attitude in large casino business practices, which couple with the concentration on high-rollers, led Harrah’s to an earnings plateau in the 1990’s. The company’s then CEO, Phil Satre, had a unique vision for his organization and through savvy use of available computer technology the company recognized Harrah’s target customer base and then revolutionized the way they serviced them on their casino floors. This diversion in customer service proved extremely lucrative. The company also established a system of tracking customer information that can be utilized for years to come in retaining customers, all whom have such positive experiences at Harrah’s casinos that through sheer word of mouth Harrah’s can grow its customer base. Though Harrah’s experience was certainly ground breaking within their industry, the lessons they learned can be easily applied to other industries, because there is a quantitative basis to their operations which anyone could duplicate.
It is easy to see why business would want to focus on high-value clientele, as those customers spend more, utilize services more, usually have influential relationships that could increase one’s business, and because it is simply a sexy concept of closing a big dollar deal or ingratiating oneself to a high net worth individual. Many businesses do this such as banks, ski resorts, hotels, universities, and even governmental agencies; and most also have a measuring stick system to see who would fall into said category. Everyone wants a piece of the big players. Now truthfully in some businesses revenue streams are enhanced greatly by these individuals, or large percentages of revenues may come from this category, but in my opinion it is probably a much smaller percentage than realized. Harrah’s began their changes by thoroughly examining their numbers and realizing that 82% of their revenue came from 26% of their gamblers, and that it was everyday/weekly patrons who made up that 26%, not big spenders. This is something that most businesses would probably find true. There is a trend in the ski industry to become a destination resort (where one stays, eats, skis, shops etc. all in one location) because all the big-boy players are destinations. However many resorts just don’t have the terrain or traffic to achieve this and have seen better results catering to pass holders (every-day/weekend skiers) than attempting to bring in whales. Resorts have begun to offer their pass holders discounts on food, shopping, and in the bar (especially important to this season pass holder) as appreciation for being a loyal customer. And it has become more important to resort employees to recognize their frequent visitors which takes real skill when most people’s faces are covered with helmets and goggles. Businesses should do as Harrah’s did and really dive into their numbers to find exactly where their revenue is generated instead of adapting service methods and priorities just because it is what their competitors are doing, or is the industry standard. Though the concept is revisited weekly it seems, it is always good to remember that no sustainable competitive advantage is ever gained through something easily copied from someone else.
Currently those who learn to use the technology available, mine it properly, and utilize it properly within their organization will be at the top of their industry, regardless of what that is. As the gaming industry is largely computerized the technology involved offered Harrah’s a way to collect information on its customers gambling habits quite easily. This is something that can be duplicated in any industry simply by committing to growing their database properly throughout its activities, by for example collecting customer information each time a sale is made or repeated. However this is only the first step. For many years Harrah’s had this enormous database of customer information but were not utilizing it properly, a problem that many businesses have I’m sure. Under the leadership of Loveman they began to take unique interesting steps to slice and dice the data in such a way to gain the maximum benefit from it. They used information technology to establish automated systems that enabled them to further the advantage of collecting all that information. One of the most unique ways I found was their practice of sending a mailer, or tagging someone for a phone call, to someone who had spent at least $1000 and had not visited the casino in three months. Also they flagged those individuals who had lost money on their previous visit and targeted them for event invitations, so that individual would return under non-gambling circumstances and then perhaps (most likely) wet their whistle to begin pulling the one-armed bandit once again.
Importantly as well Harrah’s used their data and technology to drive customer service practices, and not just on the casino floor but everywhere within their casinos from the valet parking, to restaurants, to reception all employees were rewarded for providing good customer service. Not just as individuals either but as teams, therefore placing the onus on the managerial staff to instill a culture of excellent service within each of their departments, and then within their location as a whole. The practice of having pit bosses and casino floor supervisors paged when a customer activated their membership card in a machine, or at a table, is unbelievably ingenious. As a frequent gambler my total pet peeve is when I have to wait to get my free cocktails. As soon change my cash to chips at the blackjack table I would expect a cocktail waitress shortly, and if they do not appear soon I will get peeved. Now if I gambled at Harrah’s and gave my dealer my Rewards card which he would proceed to activate, there would a supervisor over there promptly and most likely calling over a cocktail waitress so Miss Burns can get her Corona with a lime. If that happened, I would be sure to return to Harrah’s more frequently than any other casino, period. Keeping all this in mind the next time that I have the inkling to play a little blackjack, I may just have to try my hand at Harrah’s and experience for myself just how wonderful their customer service is.