Diamonds in the Data Mine

This in contrast to the Good to Great Article praises data mining, and it is doing so rightfully.  The title put it perfectly in that Harrah’s did actually find their “Diamonds” in the data mining process.  This goes to further prove that not one model will work for all business practices.

Harrah’s used a very ingenious way of gathering data on its customers profile; it did this through its customer reward card program.  One might say that there was nothing new to using customer award cards in the casino industry, which they are 100% correct.  It is how they used these cards is what made Harrah’s a success.

They used customer feedback, even though the customers had no clue, in order to shape rewards that were tailored to their high-value customers.  You might ask, “What is the high-value customer?”  The high-value customers weren’t necessarily the high-rollers; it was and is the people with both the time and a little money in their pocket, i.e. the normal people.  Harrah’s took a close look at these customers and made these customers happy which in turn created a high customer loyalty.  This loyalty is viewed, to the casino, as a long term customer as opposed to a short term customer.  They also rewarded the employees at the front line for doing an exceptional job.  They realized that the people dealing with the customers were directly affecting the company as a whole and whether or not that specific customer will come back or not.

Harrah’s used their card program to track its customers and when the customers were there they made them feel like royalty.  The data base told them everything about their main customers.  They utilized this and they catered to their specific needs and this made the customers feel like a high-roller and they keep coming back.  They very wisely used “database marketing and decision-science-based analytical tools.”  This allowed the company to make its marketing decisions based on evidence as opposed to just intuition.  This ties directly to my evidence based management post in that companies should base their marketing decisions on evidence in order to succeed.  The card program created incentives for the customers for spending more money with Harrah’s casinos.  This is nothing new but one thing that they did that was new was that they created a visual difference between customer benefits.  The higher level card members had their own separate lines to wait in that were usually never a wait so all the members in a line visually see this and want to spend more money to get that benefit.

Harrah’s not only was very good at retaining their existing customers and creating incentives to make them want to spend more money, but they checked on old customers.  The customers that haven’t been there in a while they would call them or send something to them to get them to start coming back.  All these ideas stemmed from their data mining system that they had in place.


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