Given that retaining a customer is less costly than

Info icon This preview shows pages 2–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Given that retaining a customer is less costly than attracting a new one, building strong relationships with valued existing customers can boost profits. Having information regarding such things as the customer’s birthday, anniversary, and favorite foods and drinks allows a hotel to provide excellent, tailored customer service that cements brand loyalty. 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. In the first two years of its rewards program, Harrah’s saw a $100-million increase in revenue from customers who visited more than one property. Currently, Harrah’s ranks first in the industry in profit growth . Because the “WINet “ system can consistently identify which customers will be most valuable over the long term, data mining is also useful for determining when to avoid offering incentives to customers who are not lucrative. Harrah’s estimates that it has saved some $20 million by withdrawing incentives from customers who are not likely to return. Despite Harrah’s success, some remain skeptical of data mining’s customer benefits and long term financial payoffs. As an example, Susan Dobscha, co-author of “Preventing the Premature Death of Relationship Marketing,” advises hotels that giant central databases “are not where customers want a relationship forged. A customer would probably prefer a lower price over, say, having their beverage choice anticipated.” Another important caveat regarding data mining is that any relationship discovered must be valid to benefit a company’s performance. When British Columbia Telecom tried to reward 100 of its best customers by inviting them to Vancouver Grizzlies basketball game, for instance, it selected customers from the database comprising frequent 900-number users. After sending invitations to the printer, the marketing staff realized that those 900-number users included a large number of sex-line enthusiasts.
Image of page 2

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern