Harrah's Entertainment - HBS - Case Study
Harrah’s Entertainment is one of the largest casino based entertainment companies in the US - Harrah's Entertainment - HBS - Case Study introduction. They have invested a heavy amount of 100 million $ in information technology and they have moved away from “product centered” to “customer centered”. They use a strategy of “Database Marketing” where they utilize their collected data to make business decisions regarding marketing. They have an extensive rewards program where regular customers are rewarded. The employees who carry out these rewards program are compensated via an incentive based pay plan. This has resulted in much improved customer service metrics over time and the company has grown exponentially. However Harrah’s does seem to face some problems. The market share of Harrah’s Entertainment is yet to achieve the projected estimate. There is also a loss in employee morale, which could ultimately result in decreased customer service.
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Market Factors Run Down:
In the present scenario, Harrah’s faces several threats from competing companies in the gambling industry. Several companies such as Mirage Resorts and Circus Enterprises have invested heavily in new infrastructure, which could potentially draw away Harrah’s loyal customer base. Also there is a threat that competitors may try to copy Harrah’s rewards program thus taking away a major competitive advantage. Harrah must come up with innovative solutions to face these threats so they can attract new customers, retain existing ones and even try to bring back the lost ones. Spot Light Analysis:
Harrah’s must innovate if it wants to keep with the competition and maintain its market position. Harrah’s already relies heavily on CRM. They must further leverage technology and invest more in sophisticated methods to understand their customers. Harrah’s must invest heavily in a data mining/predictive analytics team that can mine the customer behavior pattern from the past decades and find out meaningful insights into customer behavior. This will give Harrah’s an upper hand and they will be able to effectively manage their customers. An example of Predictive Analytics is described below:
It is evident that 26% of gamblers generated 82% of the revenue for Harrah’s. • What are the demographics of this 26%?
• What particular games did they spend the most money on?
• Where else do these gamblers gamble and are we their primary casino? • How does this data help us turn the remaining 76% of our customers into higher spenders?
On digging deeper into the data and answering questions such as these, we would be able to find certain patterns and we will make smarter business.