Playing for Keeps
Want to Make Losing Clients Feel Like Winners? This Casino Has a Formula
Posted Jun 28, 2005 10:27 AM CST
By Margaret Littman
Above the Trees looks at leaders and industries outside the law. It lets you draw analogies to how you run your business, how you deal with your clients and how you face your own challenges.
The odds of hitting 21 or rolling 11 haven’t increased. But Las Vegas-based Harrah’s Entertainment Inc. knows how to keep its high rollers happy, regardless of which cards they’re dealt.
The Harrah’s $4.5 billion corporate empire, which includes 48,000 employees, 28 casinos and 17,000 hotel rooms, has had a frequent-customer program called Total Rewards since 1997. But in the late 1990s Harrah’s made Total Rewards just one part of a far-reaching initiative that rewards employees for pleasing guests, ties pay to customer satisfaction and--most important for the stockholders of the publicly traded company--boosts revenues, says chief operating officer Tim Wilmott.
Harrah’s measures customer happiness not by the number of quarters that spill out of a slot machine after a jackpot, but by a mind-boggling 2,000 surveys per month per property. An outside firm mails the surveys to the casino’s better customers--not “casual retail gamblers”--and processes the 35 percent to 40 percent that are typically returned. It also generates and sends the company weekly reports. Customers grade their experiences with a score of A, B, C, D or F, responding to questions about whether they were addressed by name and given a “warm and friendly greeting” upon arrival.
As recently as four or five years ago, the corporate objective was to get either A or B scores. That changed, based on survey results showing that 90 percent of customers who rate a property as an A intend to return, as compared to only 40 percent of those who dole out a B. Now Harrah’s strives only to convert lower scores to A’s.
Hitting the Revenue Jackpot
Such conversion is well under way. In 2004, 52 percent of customers who completed the surveys gave the casinos an A, versus 40 percent in the late 1990s. While a 12-point increase may not sound like much, “It is very difficult to move customer satisfaction scores,” Wilmott points out.
Difficult, but not impossible. To achieve this feat, Harrah’s established incentives for those whom Wilmott calls the “frontline troops”--employees who interact with customers. Goals are based on improvement over the property’s previous year performance. Harrah’s brought in experts to train its staff in customer relations best practices. Their recommendations include focusing on customers who spend a lot of money and are likely to return, referring to customers by name, and hiring employees on the basis of personality tests that show they like people and are friendly.
The program required a $5 million investment, but Wilmott estimates it increased last year’s revenue by 10 percent while decreasing employee turnover, always an issue in the service industry, from 35 percent to 25 percent. “It took a good five to six years to get traction. There is not something you can do to turn a switch and make it happen,” Wilmott says.
During the process, Wilmott was aware that Harrah’s was creating something unique in the casino industry. That point has been driven home as the company completes corporate culture evaluations as part of its acquisition of rival gaming giant Caesars Entertainment. “They have a focus on customer service,” he says, “but in looking at the corporate culture of the entire organizations, we see that we’re maniacal about how we pursue it.”