Caesar’s Entertainment, formerly known as Harrah’s – the company which runs the famous Caesar’s Palace Las Vegas and more than 50 other casinos worldwide – established itself as an early leader in Big Data customer service.
It has hit more than a spot of bother recently – amidst a messy bankruptcy of its casino operating unit, it is also now reportedly facing fines of up to $20 million over money laundering allegations.
The most valuable of the individual assets being fought over by creditors is the data which has been collected over the last 17 years through the company’s Total Rewards scheme. This program gained Caesar’s a reputation as a pioneer in Big Data-driven marketing and customer services in the entertainment industry and is estimated to be worth over $1 billion.
The program was launched by CEO Gary Loveman, when he took up the post of chief operating officer in 1998.
Way back in 2003, Loveman told Harvard Business Review “We use database marketing and decision-science-based analytical tools to widen the gap between us and casino operators who base their customer incentives more on intuition than evidence.”
Over the years, Caesars extended the scope of its rewards scheme and the depth of its analytics. By spending money at its resorts and gambling at its casinos, customers could be rewarded with free meals, upgraded hotel rooms, tickets to shows and limo rides.
The program is divided into tiers, which customers advance through by spending money in the casinos. At the top tier, known as seven star, guests receive up to four night’s complimentary stay at Caesars hotels, and even get their air fare paid by the casino chain. With customers this valuable (seven star members spend upwards of $500,000 with the company in a year) no expense is spared in getting them through the door.
In fact, there is one tier higher than seven star – but it was specially created for one gambler, Terrence Watanabe, a businessman who blew over $200 million gambling in Vegas in one year! Mr Watanabe was extended a monthly air travel allowance of up to $12,500 by the casino group.
In return Caesars receive information from the customer on who they are, and how they behave while using the facilities. This meant that offers could be tailored and floor staff could be ready to greet customers by name and direct them to their favorite game.
It’s no surprise that the massive dataset has been valued as the company’s most valuable individual asset. And also no surprise that the transfer of the asset from the bankrupt operating unit to the still-solvent parent company is currently the subject of an independent investigation, ahead of upcoming bankruptcy proceedings. Creditors have accused the company of trying to keep its best assets to itself, while Caesars, adamant that everything is above board, are contesting the charge.
The program is said to contain details on over 45 million customers, and data is captured from the moment they make their booking to the moment they leave, in the name of providing a tailored customer service experience – and of course ultimately encouraging them to spend money with the group. The value derived from the program prompted company vice president Joshua Kanter to claim in 2013 “Big Data is even more important than a gaming licence.”
All of the company’s customer service analytics is carried out by a 200-strong team based at the Flamingo, Las Vegas. Every individual customer’s trip is monitored in real-time – allowing representatives to step in and offer a complimentary meal or night’s stay as a consolation prize to an unlucky player – as long as the analytics say that the investment is likely to make a return in the long-run. The most important metric is the “lifetime value” of the customer whose behavior is being analyzed.
The wide range of activities offered at Caesars venues – from dining and gaming to shows, shopping and spa treatments – mean that a wide variety of data can be collected on many aspects of their customers’ lives. By contrast, a movie chain will only collect data on what films a customer enjoys (and perhaps what variety of popcorn), and a restaurant will probably only be able to collect data on their diet. This broader overview of a person’s preferences allows more precise judgements to be made about how to make sure each customer keeps coming back.
The company also uses location data from customers using its mobile app. The app offers the customer the convenience of skipping check-in queues, making reservations and ordering room service, while allowing the company to see where they are – meaning they can be offered discounted tickets to shows nearby, or other location-based promotions.
Caesar’s current financial difficulties are said to be down to a general decline in the money spent in the US on gambling, and its failing, unlike rivals, to take advantage of growing overseas markets, particularly in Asia. However, its casinos continue to operate and it is thought to be extremely unlikely that famous names like Caesar’s Palace will disappear from the Las Vegas strip any time soon, whatever the outcome of proceedings.
No matter what shape the group emerges from its troubles, it will be remembered for its pioneering use of data to identify and meet customer expectations in the gambling industry, and is likely to go on to innovate further in the field of customer-focused Big Data analytics.
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