Harrah's Entertainment Case Study

HARRAH’S ENTERTAINMENT INC.

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1. What are the objectives of the various Data Base Marketing (DBM) programs? Evaluate their effectiveness. Why is it important to use the "customer worth" in the DBM efforts rather than the observed level of play?

Database Marketing (DBM) is used to track their customers since they used the Total Gold Cards. By tracking their play preferences, betting patterns, where they stayed, where they liked to eat in the casino, how often they visited and how long they played the basic customer profiles were combined. As the results from DBM, Harrah’s focus on the following programs:

• New Business Program: designed to improve the effectiveness in converting new Total Gold members into loyal customers, this program target customers with high predicted worth, with an offer that was more competitive. It indicates an increase from 31% to 50% of new customers returning over a 3-month period in early 1999. This is a good result, also in terms of improved revenues (Exhibit 2b).

• Loyalty program-Frequency upside: designed to incentive customers to visit Harrah’s properties more frequently instead of competitors, this program target customers that were giving Harrah’s only a small share of their wallet. For the Frequency Upside loyalty program the average number of guests per month increased significantly to 99, as did the number of trips and hotel stays (refer Exhibit 2c).

• Loyalty program-Budget upside: designed to encourage the customers to visit Harrah’s first and capture the majority of the single casino trips (the first stop received the largest share, the second received the second largest and so on). This program target customers that were giving Harrah’s only a small share of their wallet on each trip. Here the results were far less successful delivering a monthly average incremental profit of $22,518 with an incremental cost to incremental revenue at 20%, and the...