Problem/Issue Statement
Harrah’s Entertainment, Inc. adopted
a business strategy that focused on knowing their customers, superior value,
and rewarding customer loyalty. In order to battle competition and grow
this business strategy, Harrah’s needed to implement creative marketing tools
and information technology software. To execute the new business strategy,
substantial investments in information technology were required to integrate
data from a variety of sources for use in Harrah’s patron database (operational
data store) and the marketing workbench (a data warehouse). The company wanted
to truly understand the customers’ preferences by mining data, running
experiments and learning what met customers’ needs. In order to do these
tasks, Harrah’s chose to adopt a new IT solution which included a data
warehouse, customer loyalty program (Total Rewards) and closed loop marketing.
The main problem Harrah’s
Entertainment experienced was operating its 21 casinos as separate entities
where each casino manager ran their properties as independent fiefdoms and
marketing was conducted on a property by property basis. Customer relationships
were not understood or managed. Harrah’s did not know their customer’s
behaviors or preferences and were falling short of identifying specific target
customer segments. Other symptoms of this problem including segmented
advertising and offers, an absence of an all-encompassing brand image and a
clear strategy for the company to expand into additional gaming markets.
The scope of the problem extends to
Harrah’s 21 casinos that serve over 19 million customers and employ over 40,000
people. In addition, multiple databases were maintained and needed to be
integrated to create one customer database where analytics could be conducted.
Situation Assessment
The context of the problem is based
on the new business strategy that Harrah’s adopted which included establishing
one brand image for the gaming company, building lasting relationships with its
customers and a more cost-effective plan to attract, maintain and enhance
customer relationship. The context of the problem stems from Harrah’s
expansion into multiple gaming locations, response to fierce competition and
capitalizing on tight margins. It was critical for Harrah’s to invest in
software that could understand customer preferences and create target marketing
offers.
When assessing how Harrah’s should
address the issues stated above, the following decision criteria should be
considered:
-
Create a single brand image through marketing tactics
-
Foster customer relationships
-
Predict and analyze customer preferences and habits
-
Leverage IT systems to compete with new players in market
-
Prepare for future growth in industry
List of Plausible Alternative
Courses of Action
To address the issues Harrah’s
faced, management decided to develop WINet, which would collect customer data
from various source systems, integrate data around customers, and identify
market segments and customer profiles. It also helped create appealing offers
for customers to visit Harrah’s casinos. WINet pulled data from a patron
database that serviced as an operational data store. By creating WINet,
Harrah’s was able to leverage their customer database and tailor offer’s to
their customers.
Data was collected from a variety of
source systems which included specific details about customer’s demographics,
duration of stay and special events attended. All customer information was
tracked. The Marketing Workbench (MWB) was created to serve as Harrah’s data warehouse.
This is where analytics are performed.
In addition, Harrah’s also developed
its Total Rewards program, a customer loyalty program. This highly evolved
program tracks, retains and rewards customers over time.
Harrah’s also implemented closed-loop
marketing was developed to design, test and retain results for future use. The
company was able to learn what types of campaigns or treatments provide the
highest net value.
Harrah’s management team was able to
successfully integrate the comprehensive data of their customers nationwide and
derive target marketing programs designed for specific customer segments. The
new business strategy aided by the IT solutions resulted in a 62% internal rate
of return on investments in information technology, 14% revenue growth in same
store sales and increased frequency of visits by customers.
However, Harrah’s competition is
adopting similar technologies to learn about customer preferences, habits and
needs. It is in Harrah’s best interest to leverage these IT capabilities
and continue to grow in order remain the leader in the gaming industry.
The company should constantly enhance the data warehouse and consider
integrating a more dynamic analytical tool to further evaluate customers and
possible offer insight into future habits.
It is commendable that Harrah’s did
not fall victim of investing in gimmicks such as sunken pirate ships and roller
coasters. These investments are frivolous and fleeting. Rather, the
company decided to be an early adopter of a data warehouse which was used to
support its customer loyalty program and closed loop marketing efforts.
The company uses closed-loop
marketing which allows it to learn what types of marketing campaigns provide
the highest net value. Thousands of experiments were conducted and results were
evaluated. Feedback provided insight into which campaigns generate a higher
relative value. It is in the Harrah’s best interest to continue researching
customers and finding which campaigns are best received by specific target
markets. This will not only help foster customer relationships but also provide
insight into trends, demographics and changing customer preferences.
Since Harrah's is revamping its website, the company can use this time to experiment with advertising offers on the site. Harrah's can offer a free night stay, coupons to shows, restaurants. This also gives Harrah's the opportunity to integrate the Total Rewards program online. By enabling online access, the customer can track points, view upcoming rewards and offers. This also gives the company the opportunity to link email addresses with customers and rewards.
Another area Harrah’s should develop
is in online hotel booking. Currently, the internet is booming and growing at an exponential rate. Competitor casinos and other hotels chains now offer online hotel booking to customers. Since Harrah's is in the transition of rebranding and revamping the website, it can enable hotel booking to provide a fast convenient way for customers to plan their trips.
Harrah's needs to develop target marketing programs for not only the gamblers but also the customers who visit the casino and utilize the restaurants, shows and special events. Through the customer database, the company should develop ways to create special offers to customers who have visited the casino in the past for special events. For example, if a customer has visited the casino for a large boxing match, the company leverage this knowledge and send offers.
Harrah’s management team was able to successfully integrate the comprehensive data of their customers nationwide to derive target marketing programs designed for specific customer segments. The new business strategy aided by the IT solutions resulted in a 62% internal rate of return on investments in information technology, 14% revenue growth in same store sales and increased frequency of visits by customers.
Harrah’s management team was able to successfully integrate the comprehensive data of their customers nationwide to derive target marketing programs designed for specific customer segments. The new business strategy aided by the IT solutions resulted in a 62% internal rate of return on investments in information technology, 14% revenue growth in same store sales and increased frequency of visits by customers.
Evaluation of Alternatives
When evaluating the decision
criteria that Harrah’s developed one can see that Harrah’s was in need of two
major items: develop an IT structure to support the new business strategy and
in turn leverage the IT system to learn about customers. Harrah’s was
very successful in addressing all of the decision criteria. Not only did
Harrah’s successfully integrate the voluminous customer data but it also
created a cohesive brand image. The new business strategy aided by the IT solutions
resulted in a 62% internal rate of return on investments in information
technology. In addition, 14% revenue growth in same store sales and
increased frequency of visits by customers.
However, Harrah’s should not be
complacent and stagnant with their patron database and marketing
efforts. The alternative suggestions for Harrah’s such as
developing a highly capable website site and offering discounts on coupon website further
support the decision criteria and the new business strategy.
Since Harrah’s was a market leader
in their decision to create one brand image, integrate all customer databases
throughout the 21 casinos and offer a superior customer rewards program, the
company should continue their imaginative ways when evaluating addition
alternatives. The company has prospered by adopting this market leader
position and should continue for the future.
Recommendation
After reviewing the success of
Harrah’s new business strategy and IT software, it is clear that the company
needs to continue with their practices. My recommendation is to grow and
enhance the already effective patron database by adding more analytical tools
that can be used in conjunction with marketing efforts. In addition, the
company should introduce apps for mobile devices and link the Total Rewards
program. The company should utilize its website to further their marketing offers. Overall,
Harrah’s should not abandon their business strategy or IT structure. It has
proven to be capable and an effective means to grow the company.
Presentation
· If I were presenting as a consultant to the class, I would state that I have
been commissioned to identify the effectiveness of Harrah’s new business
strategy which was supported by a new IT structure that encompassed the WINet
database, Total Rewards program and closed-loop marketing. All features
would be described in detail. I would address the decision criteria the company
prepared and how their improvements led to addressing all facets. I would offer
recommendations on how to further their marketing efforts and commend the
company on their successes.
·
Visual aids to be used in presentation:
o PowerPoint presentation for the major
improvements and integrations the company implemented;
o Decision criteria for the new business
strategy; and
o How to continue to be a market leader and
further their understand their customers.
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