Chief Executive, The: Evening the odds: CRM systems are driving sophisticated loyalty programs at La

When Medeleine W., a 42-year-old executive at a consumer electronics company arrives at McCarran International Airport in Las Vegas, she is greeted by a driver holding a sign with her name. Her luggage is transferred expediently as she is guided past the long line of tourists waiting at the taxi stand. As she enters the limo, she notes the chilled hattle of her favorite Carneros Chardonnay, an envelope containing the keys to her hotel suite and a pair of tickets to the Blue Man Group show.

This is Madeleine's fourth trip to Las Vegas, the first two of which were for business. Despite the many choices of luxurious hotels, she is whisked along the Strip to return to the one hotel with which she has developed a loyal relationship in only a few short stays. In a city that hosts 39 million tourists annually, this hotel's level of service, attention to detail and ability to acknowledge her preferences make Madeleine feel special. Her "Gold Tier" status, which she can track on a members-only Web site, grants her special privileges and rewards, and it was a motivating factor in her decision to spend another weekend in Las Vegas.

Gaining Madeleine's attention -- much less her loyalty -- has been no small feat. From its origins as a gambling town, Las Vegas has become a year-round choice for conventions, trade shows and entertainment that appeals to a diverse audience.

"Las Vegas has changed dramatically in the past 10 years, and even more so in the past three years," says Manny Cortez, president and CEO of the Las Vegas Convention and Visitors Bureau. "The trend has been toward focusing on more affluent visitors across the board, not necessarily just high rollers. And as we attract more affluent customers, the industry responds by building more high-end hotels, golf courses, spas and restaurants."

It is an extremely competitive market, with each hotel and casino vying for a portion of the $31.5 billion in tourism revenue that flows into the city annually. But although the number of hotel rooms has grown from 1,800 on the Strip in 1953 to a staggering 124,270 throughout Las Vegas last year, the average length of stay has barely nudged -- from 3 nights then to 3.7 nights now.

Given the high stakes, hotel and casino CEOs are tasked with a formidable challenge: how to keep customers coming back. The short average length of stay differentiates Las Vegas from most other destinations, and, with so much to see and do, developing a brand identity and consumers who are loyal to a single hotel or chain requires more than a good marketing campaign.

This may explain the gaming industry's willingness to embrace customer relationship management (CRM) from both a technological and a strategic perspective. While banks, retailers and supermarkets all manage socioeconomic databases, loyalty cards and the cross-matching of credit-card data with other files, the casinos have mastered the ability to mine more complex customer data on a scale surpassing almost every other industry.

For example, Harrah's Entertainment, Inc., whose leading-edge GEM capabilities provide a single view of the more than 25 million consumers who participate in its Total Rewards program, was the first gaming corporation to offer an online player-loyalty program across all of its 25 properties in real time.

"The prevailing wisdom in this business is that the attractiveness of a property drives customers," says Harrah's COO Gary W. Loveman. "Our approach is different. We stimulate demand by knowing our customers."

Leslie Ruthe, CIO of the Stratosphere Hotel, agrees. "A lot of emphasis will be placed on delivering customer service that recognizes the guest individually," she says. "However, the business challenge is to maintain fiscal responsibility. There are technological ways to assist in delivering that service."

The link between technology and the personalized service and VIP treatment is the loyalty card, which is intended to reward all customers who participate in a casino's program, not just the high rollers. By swiping their cards at various points of interaction, such as a slot machine or the blackjack table, customers share reams of information with the casino's computers -- how long they play, how much they lose and win, even their betting strategy. Complex algorithms calculate how much a player might be worth. Predictive as well as past information, along with consumer preferences captured from other sources, such as the call center when the reservation is made or through the hotel's Web site, is used to develop customized marketing offers for those guests.

A Wireless Welcome

With the card systems in place, the next step in CRM will likely involve wireless applications. Gaining executives envision a casino host or hotel employee being notified via PDA or cell phone when a repeat guest enters the casino. Service personnel will be apprised of the guest's location right down to which table he or she is playing, be poised to offer a favorite cocktail and, with customer details in hand, can acknowledge personal preferences with impressive attentiveness.

For the frequent guest, rewards in the form of complimentary meals and drinks, hotel suites and entertainment are accumulated based on calculations that determine the customer's worth to the corporation. Entitlement to services and benefits is established through a tiered card level, and can include much more than free rooms and tickets to hot shows. Casinos also offer gaming chips and cash rewards to keep players on their properties. The value of the privileges increases in exclusivity from one tier to the next.

Building a CRM solution for the gaming industry requires more than overcoming the usual technology obstacles, such as managing terabytes of data, building a large data warehouse or knitting together disparate systems. To be useful to pit bosses, reservations agents and hotel guest clerks, guest information must be available and accessible in real time. Yet casinos operate 24 hours a day, seven days a week, with no room for downtime. Adding to the challenge are the Nevada Gaming regulations that govern the industry and require strict management of information. For example, casinos, unlike financial institutions, must ensure that they do not inadvertently market to underage consumers. The sensitivity of data collected requires extraordinary security and recovery procedures.

MGM MIRAGE, which has 19 properties on three continents, and Mandalay Resort Group, which has 12 properties in the United States, are among other leading gaming corporations that also have undertaken significant CRM initiatives intended to capture customer behavior and infonnation across their enterprises. Last year, MGM MIRAGE deployed a near-real-time data warehouse that is updated within seconds of its contributing operational systems and can process more than 1 million daily customer transactions a day. Mandalay has made completion of its data warehouse and associated applications a top priority for 2002.

The gaming industry offers unique insights into the benefits of CRM. With a sophisticated combination of technology and service strategies, Las Vegas has taken the airline marketing phenomenon of frequent-flier programs and developed a value proposition that offers its own products (hotel rooms, casino chips, restaurant dining, entertainment) at the core. By focusing on individual guest preferences and services, the loyalty programs have lured customers back to Las Vegas by making them feel valued, not targeted..

Contact

Harrah's www.harrahs.com

Mandalay Resorts www.mandalayresortgroup.com

MGM Mirage www.mgmmirage.com

Stratosphere www.stratospherehotel.com

Monika Nerger. ("Evening the Odds")

Monika Nerger is the director of Gaming and Hospitality for the Seattle-based consulting firm Strategic Solutions. Her favorite game is blackjack, but the only place she ever breaks even is at the casino's change machine.

RELATED ARTICLE: How Harrah's Rewards Players

Reservations System: When a return customer calls Harrah's to make a reservation, the agent's computer screen displays the customers name, tier level, where he or she usually plays and any marketing offers that have been sent to the guest.

Hotel Property Management System: When a Total Rewards guest arrives at the hotel, the front desk agent's screen displays past stay information, alerting the agent to important details (e.g., he or she is a high-spending blackjack player and golfer, etc.), so that hotel staff can provide a higher level of 'meet and greet" service.

Slot & Poker Machines: When a Total Rewards member swipes his or her card at a slot or video poker machine, the details of the transaction are stored and sent to the data warehouse and integrated into the customer's profile.

Table Games: A guest playing at one of the casino tables provides his or her Total Rewards card to the croupier, who has a computer that records every play. In the interim, a floor supervisor accessing a PC notes the customer's VIP status, greets the guest and offers him a drink. A host assigned to the customer keeps note of personal details provided by the guest.

Transactional Systems: Every dollar spent by the guest is tracked through the point of sale (POS) systems. Whether the guest has purchased a Rolex, dinner or tickets to a show, had a massage or booked a round of golf, each detail is recorded and stored with the customer profile, providing a complete composite of the guest's preferences and spending habits.

Total Rewards Member Web Site: Customers can register for the Total Rewards program on the Harrah's Web site. Members can track their tier status, edit their profiles and view their reward credits. Points or credits can be redeemed online for the next visit Depending on the customer's tier level, the hotel's host can add more perks.

Winners All Around

Phil Satre, CEO of Harrah's, has championed the company's shift in thinking to an enterprise-wide, customer-focused approach. With the implementation of a system called WINet (Winner's Information Network), Harrah's was able to develop a national loyalty program and share customer information across the entire organization.

Harrah's attributes us increase in market snare and growth in cross-market revenue directly to the customized marketing campaigns it has created as a result of its CRM technology and loyalty program initiatives. Company profits have more than doubled since it introduced the loyalty card, and in 2000 the Total Rewards program helped generate an increase of more than $165 million in revenues from top-tier players alone. Last year Harrah's recorded record third-quarter revenue and beat the consensus estimate of 18 Wall Street analysts, despite the aftermath of the September 11 terrorist attacks.

The company holds seven patents for its methodology of tracking and consolidating consumer data. Harrah's has not deleted guest information from the data warehouse since collection began in 1995, and the systems collecting guest information are responsible for processing $440,000 of revenue per hour, 80 percent of which is from slot machines. We asked Satre about the value of focusing on customers.

Why is CRM so important to Harrah's?

Total Rewards enables us to identify and develop relationships with the customers who are most valuable -- the key 25 percent of players who generate more than 80 percent of total gaming revenues.

Who benefits most?

It's a win-win situation. Our valued customers benefit through the incentives we offer them to consolidate their play in Harrah's casinos. The company benefits because it captures a larger market share of those players' annual casino spending through its ability to influence customer behavior.

How do you influence Their behavior?

We have concentrated on assembling analytical techniques that enable us to build relationships with customers based on their predicted future worth, rather than their past behavior. Our ability to analyze data on more than 25 million customers lets us create personalized offers for the most valuable players.

What advice would you offer to other CEOs about creating a successful CRM strategy?

The technology to assemble mountains of data is readily available. A successful CRM program, however, relies heavily on your ability to continually analyze the data and implement effective marketing programs that influence customer behavior. That requires an investment in and commitment to the people who know how to use the technology. Whatever you do with that technology falls flat, though, if you don't deliver truly great service and provide superior products to your customers.