Posted by: A.R. Cherian | October 29, 2009

Diamonds in the Data Mine

This week’s reading was a May 2003 Harvard Business Review  article entitled “Diamonds in the Data Mine” written by former Harvard Business School professor and former CEO of Harrah’s, Gary Loveman.

The article talked about two main points

  • How Harrah’s Entertainment Corp. used information technologies to gather data about its customers and market effectively to them, in turn increasing their revenues in a competitive market
  • How Harrah’s incorporated and rewarded superior customer service to drive top-line growth

I’d like to talk more about the first point in this post. I’ll touch on the second one in my next post.

It was an interesting look into how Gary Loveman helped transform the company in the time period 1998-2003  from an average casino and gaming company into a leader that other casinos now try to emulate.  Loveman’s predecessor, Philip Satre, set up much of the vision and data gathering tools that Loveman used more effectively.

What Loveman did was apply decision-science methods from consumer retailing and marketing to the gaming industry. Harrah’s employed a different strategy from other casinos in the 1990s, whose philosopy was “if you build it, they will come.” Harrah’s decided to follow another route. They used database marketing and decision-science based tools to give them a competitive advantage. They mined customer data deeply, ran marketing experiments, and used the results to develop and implement finely tuned marketing and service strategies to keep their customers coming back.

All of these changes Harrah’s develop the most loyal clientele in the casino industry – which is notorious for fickle customers. Harrah’s wants to make their innovations in data mining a core competency. They want to keep on  drilling into their data and making sure their regular customer are more satisfied.

As an MSIS major in information systems, it was refreshing to see how a CEO and his team saw IT as a way to give them a competitive advantage. They leveraged it with other departments such as marketing and HR to give them new insights into their customers and employees.  It was so effective, that doing this is becoming the norm in the casino industry. In the late 90s and early 2000’s, Harrah’s was a pioneer is using data warehousing and data mining to gleam useful business information. This is becoming standard in many industries and companies now. In today’s business world, if you ignore the possible competitive advantages that IT can give you, you may often find yourself left behind.

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