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A Different Look at Loyalty Generation

Caesars Entertainment’s CEO Gary Loveman helped invent modern guest loyalty systems. Here’s how he sees it differently than other industry leaders.

Monday, November 26, 2012
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For as long as we have been around here at Hotel Interactive®, major hotel companies have been trying to perfect the art of customer relationship management, otherwise known as CRM. But it’s been pretty elusive to most of the big boys as they have as of yet not been able to create true mass customization for guest experience.

Though the industry has been good at collecting data, for the most part the hotel business as a whole has been unable to turn those bits and bytes into meaningful experiences and offers for customers. Sure they know if someone likes golf or the beach and that customer gets an appropriate offer. The problem has really been turning all the information collected about a guest into truly customized offers.

One company light years ahead of the pack is Caesars Entertainment. The company has been heralded repeatedly for its Total Rewards guest loyalty program which has between 40-45 million participants. And unlike any other company in the hospitality business Caesars has a keen ability to truly understand their customers and how they spend. More importantly, however, is they understand the potential value each customer has for future business.

Gary Loveman, CEO of Caesars leverages Total Rewards to provide guests with offers and opportunities that add incremental revenue rather than just giving customers free stuff they otherwise would have paid for.

“We have to constantly surround decision maker with reasons to make the next decision in our favor,” said Loveman, whose company operates 53 casinos under recognizable brand names such as Caesars, Harrah’s, Horseshoe and the World Series of Poker.

The approach Caesars takes with Total Rewards is radically different than any other companies. Whereas most companies rewards customers with business they already did with offers that may be hard to redeem – such as a rewards seat on an airplane – Caesars takes the opposite approach. That is they reward guests on what they believe the value of the customer will be like on a go forward basis and reward customers right away.

“You gamble and you get what you want. You play today you can eat today and stay today. We’ll give you comps in advance and if you tell us you will play we believe you,” said Loveman.

Caesars also is able to see a customer in a very different way than other companies. Take this example. In Tunica, MS a 60 year old woman from Memphis (which is about 20 miles away) joins the Total Rewards program and plays $10 slots briefly and leaves.

Most casino companies see that as an “unpromising guest,” but at Caesars they see that very short burst of play very differently. Loveman says the company garners lots of important info that can be used to identify how good of a customer she can be. “We are not interested in what she is but what she could be. People who are inexperienced gamblers do not play $10 slots so she must be a good customer of a competitor,” said Loveman.

So understanding that older women play more slots than other and the fact she bet so high sets off flags which will generate what Loveman said would be a “bold offer based not on observed action but predicted action.”

“We want to make sure we don’t treat every customer the same, all very well but not the same. We base everything on what they will do for us in the future,” said Loveman.

The company also has a tiered reward program. Diamond benefits for example get players free visits to any of its reorts globally, guaranteed views of Strip in Las Vegas, valet parking and more. and those rewards are advertised all over the hotels for everyone to see and strive for.

The rewards program is so critical because the top two categories represent 70 percent of the company’s overall profit. They are so valuable that one Diamond level customer is worth 20 gold level ones.

They can even be sure that if a Diamond player and Gold player hit jackpots at about the same time, the Diamond customer is tended to first.

For these players they create offers that the company I sure will increase their spend rather than spread out the same spend over different properties.

“We want to know who is spending more and why and we focus more on them. If people are declining [ins pend] we better figure it out quickly and do something increasingly relevant to them to reactivate the experience,” said Loveman.

Laughlin, NV has been in a declining state for years so looking to boost business the company decided to try something new. They approached the best customers in the Akron market where no Caesars is conveniently present and invited them on an all-expenses paid trip to Laughlin. They chartered a flight and gave them a free stay.

The company was able to boost business at a flagging property and give guests and experience they could never have had. No commercial planes fly Akron to Laughlin. It’s proved such a successful and profitable program the company now flies 15 charters a day, about 5,000 a year!

“It is purely value created which was informed by data that made us confident to make this kind of offer. We couldn’t do it in an undifferentiated channel,” because the company would have no idea on how much money those customers would wager, explained Loveman.

Now the company is working on next generation programs to help people make decisions in the moment since the typical casino visitor does not plan out a complete trip itinerary.

“We want to engage you constantly with relevant offers, the response to which informs us about you,” said Loveman.

Already they can tell how valuable a customer is when they put the loyalty card into a slot machine. So now if one of the companies top customers is at say Bally’s in Atlantic City the GM gets notified and he or she can come and greet the player to thank them for their business.

Not only are they able to make that person feel special but discover through a simple conversation and questions, concerns or desires they have. That way they can create a branded and immediately relevant offer.

Finally, next month Caesars is hosting the first ever $1 million per player poker tournament. They have about 40 players, many of which are not Total Rewards customers; yet.

“This is the ultimate example of a customer acquisition tool that feeds loyalty,” said Loveman.
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