Harrah's Details Loyalty Strategy at NCDM

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LONG BEACH, CA - Harrah's Entertainment Inc.'s Total Rewards program is a major centerpiece of its strategy to generate more loyalty from customers, attendees at the National Center for Database Marketing's summer show were told yesterday.

The program, relaunched June 17, accounts for $1 billion, or a fifth of Harrah's revenue from casinos across the country, said keynote speaker Dan Norton, the Las Vegas company's senior vice president of relationship marketing.

"It's all about relationship marketing," Norton said. "We believe it's been a big reason for our success."

The program launched in 1998 primarily as a relationship-building effort. Over the years, company executives realized the program was not meeting its full potential. So at relaunch, Harrah's added external rewards for members as is done by American Express Co. toward redemption of merchandise. Aspirational awards were added as well. The program was made easier to understand too.

Attention was also paid to Harrah's Diamond members. These frequent users of Harrah's hotels, slot machines and table games are pampered. They are given priority while checking in and expedited in restaurant lines. And a private lounge has been created for them in each of Harrah's properties.

Total Rewards is a critical part of Harrah's use of technology, customer knowledge and brand experience to generate loyalty and profits, Norton said.

It is important to gauge the customer lifecycle in order to effectively market to them. The company works hard to identify first-time gamers.

"If they show gaming behavior on that first trip, we know they're a loyal customer somewhere else," Norton said.

So the key is in making them switch to the Harrah's brand. This is not easy since switching costs are high for consumers signed onto other loyalty programs. But Harrah's sees customer potential and is willing to sacrifice margin "because we need that second and third trip," Norton said.

Thereafter it almost becomes an annuity for Harrah's.

Once card members, Harrah's offers these customers various incentives to keep them loyal. Eighty percent of the revenue comes from loyal repeat customers.

But at the same time, the company needs to divert its resources to woo new customers.

"How do you scale back a little bit?" Norton said. "You test and learn."

Finally, Harrah's must address Total Rewards members for whom card activity is down. Have they become loyal elsewhere in the highly competitive gaming industry? So the objective with incentives and marketing is to reinvigorate those customers before they become loyal elsewhere.

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