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Gambling on customers
Las Vegas–based Harrah's Entertainment, an operator of casinos in a number of states, looked outside the sector for a new strategy and someone to implement it when growth stalled during the mid-1990s. The company found Gary Loveman, a Harvard Business School professor, who as chief operating officer set out to help it get more value from its existing assets by persuading gamblers to spend less at competitors and more at Harrah's.
In this McKinsey Quarterly interview, Loveman, now CEO, explains how he overhauled marketing and customer service to boost customer loyalty—and profits. Technology played a key role: Harrah's uses a loyalty card program and sophisticated CRM systems to collect and analyze customer interactions. The company relies on that data to influence the behavior of its customers, to market itself more effectively to ever smaller segments of customers, and even to make more effective capital decisions, such as whether to increase the number of hotel rooms at a site.
The take-away: A radical change in Harrah's strategy, made possible by new technologies and marketing techniques, required a radical restructuring of the company and a change in its corporate culture. Loveman's free hand as COO, and later as president and CEO, gave him the ability to implement changes that moved Harrah's into a new era of better customer service and stronger economic performance.
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© 1992-2003 McKinsey & Company, Inc
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