HBR Article: Diamonds in the Data Mine

March 31, 2010

By Gary Loveman

This is a pretty nice and short yet highly effective article that outlines the importance of providing an exceptional customer service in today’s service industry, especially in the gaming industry as it is the case of Harrah’s Entertainment casino. Actually, from its inception, Harrah’s former CEO Phil Satre had instituted this policy of “changing Harrah’s from an operations-driven company that viewed each casino as a stand-alone business into a marketing-driven company that built customer loyalty to all Harrah’s properties”.

In doing so, Satre asked Gary Loveman to head a strategy to affect this change in all Harrah’s organizations, and so Loveman did follow through on this task. He effectively focused on delivering customer service and on understanding and marketing effectively to the customer. This is the secret to Harrah’s success, which allows him and Harrah’s to maintain loyalty from its customers based on the database they had collected over the years, as they were able to identify their customers’ needs and wants as well as to have good reward and incentive programs in place to recognize their clientele according to the time and money they spend gambling over their facilities. Yet, for their workforce, Harrah’s instituted a bonus system tied to job satisfaction. “Rewards hinge on everyone’s performance at a casino- and on customer satisfaction, not a property’s financial performance”.    

Also both Satre’s and Loveman’s secret was not to built fancy or extravagant facilities “billion-dollar casinos” as it was not the most prudent use of capital because “the returns on such buildings often waken when the novelty wanes”. But rather, they strive on dazzling customers with exceptional service. What a smart strategy.

Another interesting point I found on this article was that Harrah’s treats its valued customers differently; however this is not to say that Harrah’s treats any of its customers poorly, on the other hand Harrah’s implemented a system of total rewards cardholding customers, divides it into three groups: gold, platinum, and diamond, and treats each group differently- that is Harrah’s rewards customers for spending more.   

In summary, to develop all these marketing and service-delivery strategies, Harrah’s CEO Loveman pulls intuition out of the picture and makes his strategies based on fact and evidence, so he heavily relies on the database collected and lets the data speak for itself and “suggest the specific marketing ideas to us” so that Harrah’s gets to know its customers better and better and be able to adjust its marketing strategies to stay ahead of the game.

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