Since Harrah’s Entertainment Inc. launched Total Rewards in August 1999, its share of participants’ gambling budgets has jumped from 36% to 42%.
Not bad, considering that each percentage point represents $40 million. The program has contributed to the firm’s 18 consecutive quarters of same-location sales growth. And it has helped the firm build a powerful transactional database, while capturing 75% of all the gaming revenue within the chain.
There’s only one thing the Las Vegas-based firm could do with such a program: Relaunch it and make it better. On June 17, that’s exactly what Harrah’s did when it unveiled Total Rewards II.
The new program captures more information on table game play. It allows gamblers to store points in anticipating of earning high-value prizes, such as a ride with a NASCAR driver, a private show with Chippendale’s dancers, or even use of a personal Coca-Cola vending machine for one year – with Harrah’s picking up the tab for all refills.
In return, Harrah’s is able to compete against ornate local casinos by locking in traveler loyalty. Total Rewards II, like its predecessor, is integrated throughout the enterprise, meaning that a high-value customer in Atlantic City is treated as such when walking into a Las Vegas venue for the first time.
The decision to invest in cross-property marketing systems instead of dancing fountains, elaborate stage shows, or other casino bells and whistles was a deliberate one, according to David Norton, Harrah’s senior vice president of relationship marketing. Rather than compete with local casinos on flash (which can lose luster after repeated exposure) the firm focused on being able to reward its best customers no matter where they played. Customers have responded: Of the $4.5 billion in revenue Harrahs realized last year, $1 billion came from cross-markets–that is, casinos other than the one the member initially signed up with.
The information tracked on each member’s value as a player also allows the chain to allocate its rooms to the most profitable gamblers. A revenue management system allows members attempting to book rooms at various properties to be charged on a sliding scale for their rooms – or even to be comped, if their level of play is high enough. And some lower-value players are actually turned away if rooms are scarce. For Harrah’s, it’s not about filling space in its hotels: It’s about filling space with the most profitable players.
Harrah’s has been using this preferential booking system for a few years, and can point to top-line results. Between 2000 and 2001, revenue per average night rose 14%. The next year, it jumped by another 17%. Partly through this booking management system, the chain estimates that 98% of its Atlantic City rooms, and 60% of its Las Vegas capacity, were taken by known customers.
Norton presented the Harrah’s case history during a keynote presentation at the National Center for Database Marketing conference in Long Beach, CA.
