Crm in Casinos

Casinos in the United States have invested billions of dollars on elaborate architectural themes to expensive light shows in an effort to differentiate themselves from their competitors. Although successful at attracting spectators who marvel at Bellagio’s dancing fountains and Luxor’s grand pyramid, this investment has failed at bringing in gamblers, the main source of casinos’ revenues because the games they offer are identical and therefore commoditized. In order to attract customers and gain market share, casinos have had to provide a personalized gambling experience in the form of excellent customer service, lavishing comps and rewards on players, and making them feel special and important. Before the technology age, all this was done solely at the discretion of pit bosses and floor supervisors, who based their decisions on whom to reward solely on their impressions as well as the image patrons gave off. The movie, 21, accurately depicts this, where college students fly into Vegas, dress fashionably, bet large, and get comped luxurious suites, as well as a personal casino host who knows them by name, greets them and make them feel like VIPs . However, casinos have realized that this practice was not efficient in maximizing their profitability as the return on their marketing and rewards depended on arbitrary decisions based on appearances and perceptions, which a player, in reality, may not have qualified for .

With the advent of Customer Relationship Management (CRM) technology, casinos have found a solution to more accurately classify its patrons and properly direct its marketing efforts to the right customer segment. The essential objective of CRM is to attract and maintain loyal, profitable customers. Loyal because it is common knowledge that longtime customers tend to patronize more and are easier and cheaper to maintain rather than trying to acquire new customers. Profitable because this is what makes or breaks the business. With the use of loyalty cards based CRM systems, casinos now are able to proactively identify high margin customers daily throughout their operations and once they are identified, casinos go all out to ensure that these customers are given extraordinary service, from free meals, tickets to shows, room, and even limo and helicopter services. These rewards do not come cheap, and at first glance, may appear to be an unnecessary expense. This might have been a valid argument in the past, where casinos may have spent more on marketing to each customer than they could ever recoup from them. However, with CRM systems and business intelligence software, casinos are now able to statistically calculate the expected return on each and every player’s gambling session, and allocate rewards accordingly. Based on one formula obtained from Casino Player, a player’s expected loss x casino’s percentage return = comp dollars. These comps, which are used to attract and maintain players, are essentially paid for by each player with little or no expense on the casino’s part, thereby making perfect business sense .

The use of CRM systems in the business world has met with numerous successes and many failures. However, the casino industry has demonstrated the best success rate with CRM and is currently the de facto example for using CRM in business. Harrah’s casino, the third largest casino chain in the United States, was one of the first casinos to implement CRM. An interview with Harrah’s COO has led to insights as to how CRM was integrated into Harrah’s business operations:

• Reservations System: When a return customer calls Harrah's to make a reservation, the agent's computer screen displays the customers name, tier level, where he or she usually plays and any marketing offers that have been sent to the guest.

• Hotel Property Management System: When a Total Rewards guest arrives at the hotel, the front desk agent's screen displays past stay information, alerting the agent to important details (e.g., he or she is a high-spending blackjack player and golfer, etc.), so that hotel staff can provide a higher