Caesar’s Entertainment: What happens in Vegas ends up in a $1billion database
The most valuable asset in the Caesar’s Entertainment Corp. isn’t the fabulously-tacky Roman-themed resort on the Las Vegas strip. It’s the company’s big data loyalty program, valued at $1 billion.
Loyalty programs are not a novel concept, and are widely accepted as a way to lock in profitable customers in the long term. Of particular note is Caesar’s Entertainment, formerly known as Harrah’s – the company most famous for running Caesar’s Palace Las Vegas as well as 50 other worldwide casinos.
Caesar’s loyalty program, Total Rewards, earned the company a reputation as a Big Data pioneer on the Vegas strip. The program was launched in 1998 as a way to marry some of the intuition based decisions made by casino operators with science-based analytical tools while continuing to attract and maintain customers. Total Rewards is estimated to be worth over $1 billion and contains over 17 years of data on some 45 million program
members (and is the hot point of the very heated Caesar’s Palace bankruptcy feud with the company and its creditors, which for the purposes of this blog post I’m just going to gloss over..). While Total Rewards is an opt-in loyalty program, customers consider the perks of being a member to be so good that approximately 80% of patrons use the card.
Value Creation & Capture
Like most other rewards/loyalty programs, the casino’s program allows customers to “advance” through reward tiers as they spend more. As they spend with the rewards card, customers are rewarded with meals, room upgrades, show tickets, limo rides – all the way up to complimentary stays, flights for top tier members. The membership card is used at almost every point of contact within the casino chain, and each contact offers another point of data. In exchange, Caesar’s receives a plethora of information on the customer and his/her behavior while in the casino. Data mining has led Caesar’s to develop 90 different customer segment classifications, each of which responds differently to different marketing approaches – again allowing for a more customer-centric approach to service.
The Total Rewards program is so robust and granular that Caesar’s employs a 200-person customer service analytics team based at the Flamingo Hotel in Vegas. With data being captured from the moment the trip is booked online, each individual customer’s trip is monitored in real time (often times including location data from customers using the mobile app) – shopping behavior, meals purchased, etc. – information which allows for the casino to react much faster, deliver a best-in-class customer experience, and, ultimately, lead the customer to spend even more money. All offers and transactions are continually calculating/recalculating a customer’s lifetime value to the casino and all decisions made by representatives are linked back to this valuable metric.
While Caesar’s has certainly tapped into their customer data to improve the experience, they’ve also kept their insights largely in house. What’s perhaps more interesting are the other external implications for the treasure trove of data they’ve collected. With the wide range of activities visitors can engage in while staying at Caesars (e.g. shopping, dining, gaming, shows, spas, etc.), the casino is in a relatively unique position to gain a very broad view into many aspects of its customers’ lives. While there’s a play to be made for monetizing this data outside of the casino, a move I doubt would go over well with its program members, much remains TBD with various possible outcomes stemming from the company’s bankruptcy restructuring.
Student comments on Caesar’s Entertainment: What happens in Vegas ends up in a $1billion database
Really interesting. I’ve always suspected casinos optimize basically everything about their operations based on consumer data. This loyalty program is a really interesting way to use data so effectively.
Really interesting to hear how sophisticated Caesars is! I wonder if the customer segmentation is too granular. 90 customer segments seems like a lot to handle, even for a 200 person team. It will definitely be interesting to see how this all shakes out in the restructuring.
Amazed by the $1B value of the loyalty program. I wonder how they measure the ROI of the program, like how much additional revenue does each award dollar produce? This number may not exist as some of the value is hard to measure, such as the value of more targeted marketing and improved customer experience. Considering that the data is only being used for the benefit of caesars palace (it has not been sold to external parties), I’m curious as to how the program comes to be worth $1B to Caesar’s Entertainment corp.
Really smart of Caesars to move so early and so hard into this area, especially considering the clientele that Vegas attracts and how much some are willing to spend there. The crucial part was ensuring customers saw enough value in turning over this data, which apparently they do with an 80% uptake rate.
Disney Parks has taken this concept to the next level with the introduction of their MagicBands. Will be interesting to see if any other resorts and destinations follow suit… http://www.wired.com/2015/03/disney-magicband/