Last week, we saw just how powerful customer intelligence can be. When Harrah’s Entertainment Inc. announced it was buying Caesars Entertainment Inc. for about $5.2 billion in cash and stock, it demonstrated how customer insight could be turned into market might.
Indeed, it exceeds last month’s high-profile MGM Mirage merger with Mandalay Resort Group to create the largest gambling company in the world. As we have reported here , Harrah's has done a masterful job of analyzing and acting on customer information to generate unmatched profitability.
Harrah’s Entertainment operates riverboat casinos as well as 28 casinos in 13 states under the Harrah’s and Showboat names. Caesars has 28 properties around the globe, including Caesars Palace and Bally’s Las Vegas. “This acquisition will solidify Harrah’s position as the pre-eminent distributor of casino entertainment,” said Gary Loveman, Harrah’s Entertainment president and chief executive.
Caesars led the industry in 2003 with $4.17 billion revenue, slightly ahead of Harrah’s $4.13 billion. Yet Harrah's $46 million profit was six times greater.
In years past, Harrah’s has launched a set of loyalty programs – known as “Total Gold” and “Total Rewards” – enabling it to provide deeply personal service to customers and track their behavior in extremely sophisticated ways. In fact, it can track individual casino and hotel guests across all of its properties. This enables the organization to actively monitor individual levels of play (and other activities), analyze preferences and interests, assess lifetime customer values, and provide personal offers or services based on what has been learned.
Through such efforts, Harrah’s found that 26% of all customers generated 82% of overall revenue. However, it also learned that its most profitable customers are not necessarily the high rollers to which all the other casinos attentively cater. They turned out to be “former teachers, doctors, bankers and machinists – middle aged and senior adults with discretionary time and income who enjoyed playing slot machines.”
Customer intelligence -- and the ability to act on it -- has enabled Harrah's to truly conquer the Vegas strip.
