News Feature

HARRAH'S ENTERTAINMENT - Jackpot! Using IT to Manage Customer Information

By Meridith Levinson

February 01, 2001 — CIO — Headquarters Las Vegas

Core Business Gambling, entertainment

Financials 1999 revenues: $3 billion

Employees 36,100

URL www.harrahs.com

Why Harrah’s had a winning hand Harrah’s broke the mold of a conservative industry when it decided to invest in technology instead of more fantasy and glitz. Its bet has paid off big time, with a groundbreaking, coast-to-coast network and integrated customer database that has helped it boost revenue growth by multiples more than that of its flashier competitors.

Las Vegas is all about illusion. You put your money down, and the Strip promises a trip to a fantasyland that replaces reality with dazzle. That’s just as true for the business side of things, and Harrah’s Entertainment is the best example. nConsider the following. Every 15 minutes tourists mob the bubbling volcano outside of MGM’s $750 million Mirage hotel, and after, a few of them might even go into its casino to spend a couple of hours and a few thousand dollars. In comparison, on the other side of the street, the diminutive Harrah’s hotel and casino looks lost and forlorn.

The reality? In 1999, Harrah’s posted revenues from its nationwide business of $3 billion against just $1.6 billion two years earlier, and same-store sales grew 14 percent above the $242 million of 1998 —two to three times the growth of its competitors.

The difference is that most companies put money into the spectacle. Of the newest hotels on the Strip, Las Vegas Sands’s Venetian Hotel cost $3 billion to build and MGM’s Bellagio came in at $1.8 billion. Harrah’s, on the other hand, chose to put most of its money into the winner’s information network (WINet), the industry’s first national customer database.

Now Harrah’s can boast of having the only integrated, coast-to-coast system that allows real-time communication between all of its properties; it can inform a site in Nevada exactly how a visitor from New Jersey likes to gamble, eat and spend. It’s the key to Harrah’s Total Rewards program, a groundbreaking CRM strategy. "They changed their relationship with their customers, set themselves apart in their industry and created enterprise value," says Gregor Bailar, CIO and senior vice president of the National Association of Securities Dealers, and a 2001 Enterprise Value Awards judge.

Bigger Risks Bring Greater Rewards

It has been a complete break with tradition. The prevailing wisdom in the industry is that it’s the property’s attractiveness that drives customers to one site or another, says Gary Loveman, Harrah’s COO—a view that has propelled the spending of ever-greater amounts on evermore lavish hotels and casinos to keep customers coming through their revolving glass doors and parked at their slot machines.