The Harrah’s Way: Take Care of Your Biggest-Spending Customers

Chairman and CEO Loveman Gives Keynote at CTAM Summit

By Linda Haugsted -- Multichannel News, July 25, 2007

Washington -- Consider adopting a customer-service policy based on meritocracy, providing faster responses and rewards for customers who pay you the most each month, advised Gary Loveman, chairman and CEO of Harrah’s Entertainment.

The keynoter at the CTAM Summit here related a bit of his personal cable-buying history as justification for this recommendation. The Las Vegas resident complained that he pays $230 per month for cable services. “By the way, that’s ridiculous,” he said as an aside about his total.

“Where are my toys?” he asked, noting that his businesses give members of its loyalty program free rooms, tickets to Celine Dion concerts and free meals. “Not a free movie, not a hat … just a bill every month. That’s the love?” he asked.

And when he calls for service, he added, don’t put him in a queue behind a customer who’s paying $19 per month. When the tech comes out, it should be a $230 tech, too, he said.

“Treat me differently! I deserve it!” he said to audience applause.

Harrah’s policy of treating customers according to their value to the gambling concern has increased the company’s stock price from a moribund $19 per share in 1999 to $90 this year, he said. That improvement is linked to a focus on customers 45 years old and older. His explanation: 20-somethings are always broke and too busy; 30-somethings are married with kids

“God bless you, but we don’t need you,” he said of the latter category. Harrah’s target group has time and discretionary income to spend at the casino, and marketing is executed based on actual play and potential, as determined by software programs. There are now 44 million people in the firm’s “Total Rewards” loyalty program, including diamond-level members spending $10,000 or more per year at Harrah’s, and “Seven Stars” members, at $75,000 in expenditures per year.

Harrah’s adopted a centralized marketing scheme after operating its casinos as individual profit-and-loss centers. Loveman said he was able to execute that fundamental change by taking over ultimate P&L responsibility and basically ordering individual property managers to adopt the new scheme.

To replicate Harrah’s success, he advised operators to seek out analytical experts for their systems, not just creative types that can create an eye-catching ad, he said.