Harrah’s recipe for success

Jul 31, 2007 6:04 AM

Want to know the secret for successfully operating a casino?

Don’t waste your time and effort on marginal customers. Instead, focus on taking care of your biggest and best customers.

That’s the advice from someone who would know, Gary Loveman, the chairman and CEO of Harrah’s Entertainment, the world’s largest casino operator.

In a keynote speech delivered last week at the CTAM Summit (Cable and Telecommunications Association for Marketing), Loveman said casinos should have a customer-service policy based on "meritocracy," which provides faster responses and better rewards for the customers who pay the most each month.

Toward that end, Loveman said that Harrah’s Entertainment has implemented a policy of treating customers according to how much business they bring to the casino.

The policy must be working. Harrah’s stock has increased from a lackluster $19 per share in 1999 to about $90 this year.

For Harrah’s, its biggest and best customers are 45 years and older with the time and discretionary income to spend in the casino. Loveman said they’re rewarded with free rooms, meals and Celine Dion concert tickets, among other things.

Loveman added that Harrah’s doesn’t market to 20-somethings who are always broke and too busy, or 30-somethings who are married with kids.

"God bless you, but we don’t need you," Loveman said of the less lucrative demographic groups.

According to Loveman, there are now 44 million customers in the company’s Total Rewards program, including "Diamond" level members spending $10,000 or more per year in Harrah’s casinos, and "Seven Stars" members at $75,000 in expenditures a year.

Before Loveman took control of the company, the casinos were operated as individual profit-and-loss centers. But he changed that by implementing a centralized marketing scheme, based on the Total Rewards loyalty program.

Loveman advised that there’s more to marketing than creating an eye-catching ad. Marketing is a process based on the company’s ability to analyze and identify its assets, and determine how to bring the customer into the system, he said.