How can you optimize your customer loyalty and retention efforts? We look at the amazing efforts of Caesar's. Former Harvard marketing professor Gary Loveman created the gold standard in loyalty programming when he joined Caesar's, eventually becoming their CEO. Watch the video of Loveman. Read the case about Caesar's and their Total Rewards (now Caesar's Rewards) loyalty program on pages 440-441. Answer the questions at the end of the case.

CHAPTER 19 BUILDING CUSTOMER LOYALTY 441 Caesars Entertainment's longtimefocus on building Questions longterm customer loyalty has resulted In the company 1. What is the role of customer relationship management becoming one of the biggest U.S. gaming companies. in the entertainment industry? What is the relationship In 2018. Caesars Entertainment had over 40 locations among customer satisfaction, customer loyalty, and worldwide and earned nearly $5 billion is revenue. Its Total company protability? Flewards program also received the "Best Players Club" 2 What are the key aspects of Harrah's customer loyalty award, part of USA Today's 2013 10 Best Readers' Choice program? What are the key drivers of its success? Awards. At the time, the program had over 55 million 3. How should Harrah's use the recent developments members receiving access to various casino. hospitality, in data analytics, machine learning, and artificiat dining, and other rewards.69 intelligence to enhance customer loyalty and create shareholder value? Caesars Taking a closer look at Harrah's customer Entertainment demographics, Loveman saw that the bulk of these customers were middle-aged or senior Caesars Entertainment dates back to adults who prioritized free casino chips, 1937, when founder Bill Harrah opened instead of hotel visits, when redeeming his first club in Reno after the state of rewards points. Loveman concluded that Source: Fichad Green Wary Stock Phon Nevada legalized casino gambling. Harrah's by rewarding customers differently based Entertainment quickly became one of the on the frequency of their visits and playing largest casino companies and, in 1973, behavior, Harrah's could improve customer was the first casino company to be listed loyalty and increase its sales. on the New York Stock Exchange. In Using this newfound information, the late 1980s, Harrah's Entertainment Loveman overhauled the Total Gold expanded farther across the United States as more and more program and changed the name to "Total Rewards." The jurisdictions legalized casino gambling, eventually becoming new program rewarded customers based on the tier in which one of the most recognizable names among American they were categorized: Gold, Platinum, or Diamond. These casino companies. Following its 2005 acquisition of Caesars categories reflected the customer's expected lifetime value Entertainment, in 2010 Harrah's Entertainment was renamed to the company, calculated by the estimated frequency Caesars Entertainment. of visits and amount spent per visit. Each tier provides The longtime focus of Harrah's Entertainment on customers with different perks, such as skipping the lines at customer loyalty was sparked by Bill Harrah, who was restaurants and reception desks for Platinum and Diamond famed for trying to get to know his customers and asking for cardholders. Diamond cardholders also receive benefits that feedback on his casinos to improve customer satisfaction. include personal visits from chefs at Harrah's restaurants Guided by the same ideas, Phil Satre, who became CEO and personalized treatment from staff at hotel locations. of Harrah's in 1984, began sending feedback forms to The system is backed by Harrah's extensive database and customers who had won slot machine jackpots. These forms analytics. The program allows Harrah's to collect information showed Satre that many of Harrah's patrons visited more on who their customer is and the customer's behavior during than one Harrah's location. Previously, management had casino visits. Customers' data are collected from the instant assumed that customers typically visited only one property. they book their visit until the moment they leave. This results In addition, Satre learned that the customers who frequented in highly personalized service for frequent patrons. many of the company's locations were responsible for Harrah's also began prioritizing direct mail and phone a growing segment of Harrah's revenue. To target this calls to encourage loyal customers to keep coming back. consumer segment, Harrah's expanded its existing loyalty Telemarketers were trained to offer incentives to customers program in 1997 to all U.S. locations. The new program was who hadn't visited a Harrah's location in three months. called "Total Gold." When members inserted their cards into Five years after Loveman's arrival, Harrah's had doubled its game machines, the database would record the number of spending on direct mail. The company's high response rate games they had played and their record. As they played, from direct messaging and phone calls to loyal customers members earned points that could be redeemed for rewards allowed it to reduce spending on traditional advertisements. such as meals, hotel rooms, and airline tickets. In addition to redesigning its loyalty program, the Despite the popularity of Harrah's rewards program, the company also overhauled its customer service to improve company experienced slow growth in the mid-1990s. At that the overall customer experience. Loveman believed that time, Harrah's hired Gary Loveman-a Harvard Business exceptional service was crucial to winning the loyalty of School professor-as the new COO and tasked him with customers. Harrah's began providing management with transforming Harrah's operational strategy and improving the more tools and information to effectively hire and train new company's performance. Looking into the data Harrah's had employees. This resulted in a drastically lower turnover rate collected over the years, Loveman noticed that many patrons and a superior customer service team. The company also visited different casino companies. Loveman believed that implemented new employee incentives designed to prioritize by reducing customer "disloyalty," Harrah's could massively customer service: Locations that reported high customer increase sales without the need to open new locations. He satisfaction scores would receive employee bonuses. In noticed that 26 percent of the gamblers who visited Harrah's 2002, Harrah's paid $14.2 million in bonuses under the new locations generated 82 percent of the company's revenue. employee compensation system