Tuesday, August 3, 2010

Customer Loyalty Called a Must-Win for Casinos

July 28, 2010: summarized from Las Vegas Sun -- The increasing popularity of gambling and casinos as mainstream entertainment is a double-edged sword for casino operators that must compete with properties offering the same games and similar entertainment options.

This makes casinos more dependent on marketing — and the battle for customer loyalty all-important.

Harrah’s Entertainment founder Bill Harrah took this to heart more than 30 years ago with the introduction of Premium Points — a predecessor of the company’s Total Rewards loyalty club that distributed paper tickets to customers who won slot jackpots, redeemable for products such as TVs and golf clubs.

Customers hoarded these tickets, the low-tech equivalent of last century’s S&H Green Stamps, saving up for bigger-ticket items and returning to Harrah’s to accumulate points playing mechanical slots, former Harrah’s CEO Phil Satre recalled at a recent conference.

Satre, who lives in Reno, retired in 2004 but is still in demand for his business insights. He serves on numerous corporate boards and made a rare appearance in Las Vegas last week.

Satre imparted some marketing lessons to casino operators at the sixth annual Casino Marketing Conference at Paris Las Vegas.

“Change creates an opportunity to learn,” he said. “It’s in these times of great change that those who capitalize on it create inordinate wealth.”

Satre joined Harrah’s in 1980 when the company had only two casinos. When Nevada’s casino industry viewed the fledgling business of riverboat and Indian casinos with trepidation, Satre saw opportunity. Under his tenure, the company grew exponentially, transforming from a small, regional casino operator to a nationwide casino chain.

If Harrah’s hadn’t taken advantage of the spread of casino gambling, others would have — and did, he said.

Much of the company’s growth can be traced to Total Rewards, a 12-year-old loyalty program that has boosted profit at Harrah’s casinos relative to competitors lacking a comparable program. Believing that the company’s future lay in its marketing strategy, Satre hired a Harvard University marketing professor, Gary Loveman, as the company’s chief operating officer, setting up an epic battle between Loveman, now Harrah’s CEO, and his team of marketing technicians and old-line casino operators.

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