Diamond in the Data Mine

Diamond in the Data Mine by Gary Loveman The approach that Loveman used was highly effective outlining the importance of providing an exceptional customer service in today’s service industry through deep data mining.

This article discussed 2 main points: * How Harrah’s Entertainment used information technologies to gather data about its customers and market effectively to them, in turn increasing their revenues in a competitive market. * How Harrah’s incorporated and rewarded superior customer service to drive top line growth.On his first point, it was an interesting look into how Loveman helped transform the company in the time period 1998-2003 from an average casino and gaming company into a leader that other casinos now try to emulate. Loveman’s predecessor, Philip Satre, set up much of the vision and data gathering tools that he had used more effectively. From it’s inception, Satre had instituted this policy of “changing Harrah’s from an operations-driven company that viewed each casino as a stand-alone business into a marketing-driven company that built customer loyalty to all Harrah’s properties”.What Loveman did was apply decision-science methods from consumer retailing and marketing to the gaming industry.

Harrah’s employed a different strategy from other casinos in the 1990s, whose philosophy was “if you build it, they will come. ” Harrah’s decided to follow another route. They used database marketing and decision-science based tools to give them a competitive advantage. They mined customer data deeply, ran marketing experiments, and used the results to develop and implement finely tuned marketing and service strategies to keep their customers coming back.Loveman effectively focused on delivering customer service and on understanding and marketing effectively to the customer.

This is the secret to Harrah’s success which allows him to maintain loyalty from its customers based on the database they had collected over the years, as they were able to identify their customers’ needs and wants as well as to have good reward and incentive programs in place to recognize their clientele according to the time and money they spend gambling over the facilities.Harrah’s wants to make their innovations in data mining a core competency. They want to keep on drilling into their data and making sure their regular customers are more satisfied. Yet, for their workforce, Harrah’s instituted a bonus system tied to job satisfaction.

“Rewards hinge on everyone’s performance at a casino- and on customer satisfaction, not a property’s financial performance”. I touched on how Harrah’s used a first mover strategy in using IT as a competitive advantage in the casino industry.I’d like to discuss his second point that led to their success in the early 20002 – exceptional and intentional customer service. Loveman realized that the innovations Harrah’s had would be meaningless if they did not focus and deliver on a great customer service experience.

This is critical in the casino industry, where happy customers usually become loyal customers. Loveman decided to link employee rewards to customer satisfaction. The better the experience the guest had, the more money a Harrah’s employee stood to make.If a property’s overall customer satisfaction rating rose 3% or more (measured by surveys), then each employee could earn $75 to $200 in bonuses.

In 2002, Harrah’s paid $14. 2 million in bonuses to non-management employees based on their property’s customer satisfaction scores. A great quote by Loveman that I found pertinent in a customer service focused industry was “Meeting budget at the expense of service is a very bad idea. If you’re not making your numbers don’t cut back on staff”.Satisfying your employees will help in turn to satisfy your customers who in turn will deliver the top-line growth that is necessary for your company to grow and thrive.

Most companies will say they focus on great customer service. But unless it becomes an infrastructure and employees know that management takes it seriously and will reward employees for it, it will just become lip service. Harrah’s is a great example of a company that delivered on great customer service as a key strategy led by top management.In summary, to develop all these marketing and service-delivery strategies, Harrah’s CEO Loveman pulls intuition out of the picture and makes his strategies based on fact and evidence. He heavily relies on the database collected and lets the data speak for itself and “suggest the specific marketing ideas to us” so that Harrah’s gets to know its customers better and better and be able to adjust its marketing strategies to stay ahead of the game.

He also leveraged it with other departments such as marketing and HR to give them new insights into their customers and employees. It was so effective, that doing this is becoming the norm in the casino industry. In the late 90s and early 2000? s, Harrah’s was a pioneer is using data warehousing and data mining to gleam useful business information. This is becoming standard in many industries and companies now. In today’s business world, if you ignore the possible competitive advantages that IT can give you, you may often find yourself left behind.