Opinion: Harrah's digital rewards wager is likely to pay off because the company built the technology around a core business valuecustomer loyalty.
Heres a sure bet: now that the $9.4 billion acquisition of Caesars Entertainment by Harrahs Entertainment has been completed, technology execs at the combined company will be called on to make the wager pay off. And while much focus is given to big banking mergers, struggling airlines and the Wal-Mart-ing of retail America, it may be the gaming companies that are most adept at proving technology really does matter in business success.
Shortly before the Caesars acquisition was completed, I spoke with David Norton, senior vice president of relationship marketing for Harrahs. While relationship marketing is usually associated with airline loyalty programs or credit card customer points programs, airlines and credit card companies could learn a lot about loyalty and relationship marketing from the gaming business.
The loyalty cards developed by execs such as Norton provide a digital tracking system throughout a guests casino stay. The system knows how many pulls you have made on the one-armed bandit and how much you are betting at the poker table. Customers like the perks associated with loyalty cards, and the casinos like the detailed information customers are willing to provide in return.
The return on investment from casino loyalty programs is not some vague guess. As Norton is quick to mention, Harrahs revenue from money spent by a person carrying a loyalty card on a gambling vacation has risen from 36 percent to 45 percent during the past few years. The companys Total Rewards system can help management target customer segments and achieve a broad picture of performance by all the companys properties.
The Total Rewards system at Harrahs casinos runs on an infrastructure made up of a Teradata data warehouse, Cognos business intelligence software and SAS modeling software and is designed to build a central loyalty program that extends across all Harrahs properties. The rewards program has data on more than 28 million participants, and it shares a good deal of the credit in Chairman Gary Lovemans transformation of a loosely organized group of casinos into a 48,000-employee company with 2004 revenues of $4.5 billion.
Loveman, a former Harvard Business School professor, recognized that loyalty is the key driver in growing a business. And one of the first steps in building loyalty is having a system that can grow as your company grows.
"Our next technology steps are to get closer and closer to the customer and integrate with the Caesars operations," said Norton. Those two steps are not out of sync; the company not only has planned for the integration but also has made the multimillion-dollar investment to create a flexible and scalable system to handle the job. The Harrahs IT department has had some practice in systems integration; the company has a long string of acquisitions, including Players International in 2000, Harveys in 2001 and Horseshoe Gaming Holding in 2004.
Norton, who previously worked in the credit card industry, thinks the gaming business is ahead of other industries in developing the delicate balance of data, benefits and privacy for customer loyalty programs because, at Harrahs, the loyalty program is a core company strength rather than an add-on or afterthought.
In an era where not enough resources are allotted to aligning a companys business purpose with its technology strategy, technologists should make sure they have a clear understanding of their companies business values.
If customer loyalty is a core strength of a company, you can build the systems and processes that will support and measure that strength as a company grows. If a company president cant define core values, all the technology spending in the world wont drive company growth.
However, when business values are supported by technology underpinnings, a company can achieve success beyond that of its competitors. At Harrahs, customer loyalty is a core value, and its a sure bet that technology investment is being made to support it.
Editor in Chief Eric Lundquist can be reached at firstname.lastname@example.org.
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Since 1996, Eric Lundquist has been Editor in Chief of eWEEK, which includes domestic, international and online editions. As eWEEK's EIC, Lundquist oversees a staff of nearly 40 editors, reporters and Labs analysts covering product, services and companies in the high-technology community. He is a frequent speaker at industry gatherings and user events and sits on numerous advisory boards. Eric writes the popular weekly column, 'Up Front,' and he is a confidant of eWEEK's Spencer F. Katt gossip columnist.