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Better Take Care Of Big Spenders

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 July 23 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 his businesses give loyalty program members free rooms, Celine Dion concert tickets and 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, 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 profit-and-loss responsibility and basically ordering individual property managers to adopt the new scheme.

To replicate Harrah’s success, he advised operators to seek analytical experts for their systems, not just creative types that can create eye-catching ads. The casino chain indicated that the cash-back coupons drew repeat business, even in the months beyond the offer’s expiration date.

Harrah’s has increased revenue by deciding which customers it needed to spend marketing dollars on, a strategy cable executives said their industry needs.

One stumbling block, participants mentioned, is the inflexibility of billing computers to provision such customer-rewards offers as a buy two pay-per-view movies, get one free deal.

Also, the “silo mentality” built into the structure of most organizations can limit the success of marketing initiatives.

At Harrah’s, customer focus came from the CEO on down and was pursued by all divisional units, according to the study.