Superior customer value strategies and implementation

Superior Customer Value

Beginning in 1998, Harrah's decided that it wanted to change its business culture from an operations-driven company that viewed every casino as a stand-alone property to a marketing-driven company with a holistic view of its properties and customers (Blight and Turk, 2004). The organization structure was revamped to become a national distribution network with a single, unifying brand. The company was then able to execute its corporate growth strategy, one that sought loyalty to increase same-store-sales growth. This required convincing gamblers to spend less at competitors and more at Harrah's. As discussed in this paper, enterprise collaboration, competitive positioning focused on customer service and gaming in the middle market, supply chain optimization, and regulatory considerations are all significant factors affecting Harrah's ability to deliver superior customer value.

Collaboration

Instead of building glitzy casinos with attractions such as volcanoes, sinking ships and replicas of the Eiffel Tower, Harrah's developed a service-oriented strategy based on collaboration (Levinson, 2001). In the mid-1990's, Harrah's implemented Winner's Information Network (WINet), a system that linked all its properties and allowed the company to collect and share customer information across all properties. WINet consolidates data from all of the company's transactional, slot machine, hotel management and reservation systems. All reservation agents have access to a customer's history and marketing uses the data to create individualized marketing programs for customers. According to Levinson, WINet is credited with changing Harrah's corporate culture "from an every-casino-for-itself outfit to a collaborative, customer-focused enterprise." Further, WINet paved the way for a very successful national loyalty program that targeted and rewarded customers.

Competition

As states liberalized gaming operations in the 1980's, Harrah's expanded beyond Nevada by opening casinos and river-boat gambling facilities. The competition soon followed Harrah's lead, but did so in more extravagant ways with multi-billion casinos to drive customers to their site (Gambling on customers, 2003). Luxury casinos such as MGM Mirage view their gaming and non-gaming operations as equal contributors to their success (Weinberg, 2004). For example, the Bellagio, completed by Wynn's Mirage in 1998, is considered the standard for luxury casinos, with five-star restaurants, its own Cirque du Soleil show and high-stakes gaming. Fearing that it didn't have the time or money to keep up with rivals, Harrah's developed a different strategy to drive demand by knowing its customers to create customer loyalty. Further, Harrah's focused on the gaming tables and in the middle market. Most all it properties are branded with Harrah's log and are less flashy than the competition.

Suppliers

Customer relationship management isn't the only area that Harrah's has optimized to improve operations. In late 2000, the company created a centralized sourcing group to eliminate renegade purchasing (Case in point: Harrah's, 2002). Areas targeted included gaming equipment, food and beverage, casino and hotel construction, guest furnishings and MRO. Its sourcing strategies are focused on achieving the lowest total cost, including demand aggregation, supplier rationalization, product rationalization, sole source, sealed bid, specification improvement, inventory management, and reverse auctions. Over the course of two years, Harrah's saved nearly fifteen percent on more than $250 million in spend by executing these sourcing strategies.

Regulators

Nothing demonstrates the power of regulators in the gaming and casino business better than Harrah's plan to purchase rival Caesars Entertainment for $9.4 billion (Seiberg, 2004). If completed, the deal would make Harrah's-Caesars the largest gaming company in the world. However, the potential combination has drawn concern from the Federal Trade Commission and state regulators because there are potential antitrust issues in regional markets where Harrah's and Caesars have overlapping casinos, especially in Atlantic City where the combined Harrah's-Caesars would have fifty-two percent of Casino winnings and in Indiana where they would have more than the two casino licenses allowed by state gaming rules. Therefore, divestiture is likely required to gain regulatory approval of the deal.