Diamonds in the Data Mine Class 4: IT & Customer Management
Author Gary Loveman Case Summary by: Jakub P. Sram
Main Takeaways
· Use data mining to analyze information about customers to cultivate a lasting relationship with the company
· Don’t focus on how much people spend in Harrah’s casinos during a single visit, but focus on their potential worth over time.
· Harrah’s keeps its competitive advantage by using its human capital and technology systems to get to know its customers better
More in-depth Summary
· Database strategy: combine data from all properties for customers to use their reward cards at multiple locations
· Determine who were the 26% of gamblers that generated 82% of Harrah’s revenue
· Treat millions of customers differently depending on their value to Harrah’s
o Split customers into three tiers: Gold, Platinum and Diamond
§ Best customers want service quickly—don’t want to wait in lines
· Use data mining to improve customer service: customers want friendly, helpful attention and fast service
· Customers come to Harrah’s because of the service rather than the casino theme park
· Harrah’s using database marketing and decision-science-based analytical tools to widen the gap between them and other casino operators who base their customer incentives more on intuition than evidence
· Data mining suggests the most specific marketing strategy for Harrah’s value customers
o “our target customers often responded better to an offer of $60 of casino chips than to a free room, two steak meals, and $30 worth of chips”
– 1 –