Harrahs sophisticated data mining and statistical analysis found that happier

Harrahs sophisticated data mining and statistical

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Harrah’s sophisticated data mining and statistical analysis found that happier customers spend more money. “If a customer has a very happy experience at Harrah’s they increased their spending on gambling at Harrah’s by 24 percent a year,” report Phil Bligh and Doug Turk in their book “CRM Unplugged: Releasing CRM’s Strategic Value” (John Wiley & Sons, 2004). “In contrast, unhappy experiences led to 10 percent declines. 4 Broadly, the steps involved in data mining at Harrah’s include: 1. Acquire a rich repository of customer information. 4 CRM: A Gamble No More, By Eric Krell;
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Harrah’s CRM Strategy 2. Slice and dice data finely to develop marketing strategies. 3. Identify core customers by predicting their lifetime value. 4. Gather increasingly specific information about customers’ preferences—then appeal to those interests. Data-mining techniques using DST help Harrah’s to reveal data patterns and relationships that are then used to develop strong models for predicting the potential value of each customer. Since retaining a customer is less costly than attracting a new one, building strong relationships with valued existing customers helps Harrah’s to boost profits. (Harrah's discovered that the 30 percent of its customers who spent between $100 and $500 per visit accounted for 80 percent of company revenues and generated nearly 100 percent of profits). Decision science allows Harrah’s to market to their customers based on their potential (as opposed to their history). This concept is fundamental to the success of Harrah's customer marketing efforts. Harrah’s uses DST to answer such questions as - who are their customers; where do they come from; how often do they visit; what is the true value of their customer; what was the true effectiveness of their last mail campaign, and many other such intricate questions that help the company to gain increasing insights into their customer behaviour. Data from low-rollers, for example, convinced Harrahs to redesign its casino floors to include a higher percentage of lower denomination slot machines. David Norton, senior vice president at Harrah’s said, “By helping the company learn more about the types of players using each slot and the profitability of each machine and its location, this technology allows the company to determine the best combination of marketing, merchandising and positioning”. 5 Some of the ways in which DST allow Harrah’s to strengthen its customer relationships include: - Coding customers i.e., grading customers according to their spending habits (high rollers, conservative etc.) - Targeting specific customers with appropriate offers and promotions – i.e. offers that will be of specific interest to them, or the ones they are likely to accept and convert. - Sharing customer information across the various properties in the group, such that the status acquired by a customer due to his high spending at a particular casino (or hotel) in the group will get him the appropriate ‘returns’ at any other casino or hotel within Harrah’s.
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  • Fall '15
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