By Claire Dean
Kris started her session by setting the context for the Gaming industry. It’s growing quickly because it’s become a legitimate form of entertainment in most consumers' minds. And the local governments are seeing great income because of taxes.
Only 5 or 6 years ago, Harrah’s owned only 5-6 properties. Today, it own 42 properties in 5 countries. They went through the 7th largest LBO in history.
In 2003, 2004—MGM purchased the Mandalay group, which was a big play in Las Vegas. Then Harrah’s bought Caesar’s—which was another big play.
The acquisition gave Harrah’s half the strip. The reason for the acquisition wasn’t driven from cost perspective, but a revenue perspective. Caesar’s was a great brand name, and Harrah’s got amazing real estate—360 acres of contiguous space on the strip.
They faced some big challenges, in that they had a huge portfolio of brands. They had to reassess each one and decide which brands to reflag, retire, or rebrand. It was not a small task.
The complexion of the gaming industry was changing. It was becoming more sophisticated. New offerings were coming into the market with a lifestyle orientation. In 2000, the non-gaming revenue out grew the gaming portion—60% of the customer’s budget is spent on non-gaming amenities. That’s a significant shift.
The new properties had some significant challenges. The question for Harrah’s was how do they step back and unlock the intangible brand assets that they have? Harrah’s has an incredibly successful model of operations—they knew gaming operations, but they didn’t know how to think about the branding issues quite as well. They decided to hire a good partner, and chose Prophet.
Kevin O’Donnell explained that they had to start with doing their homework. They had to gain an enlightening view of the customer. Harrah’s had 40 million customers in their database, and some at Harrah’s felt they could just focus on those 40 million and get solid insights. Prophet felt that was an incomplete view because non-gaming was becoming more important and Harrah’s expertise was on the gaming side. Prophet saw two primary weaknesses—Harrah’s was gaming centric, and had no idea what customers were doing outside of Harrah’s. And Harrah’s knew their own customers in depth, but they didn’t know their new customers that went along with their new properties.
Prophet surveyed 15,000 people across the country in feeder markets. They had to cross that information with Harrah’s own database to validate some of the responses. As a side note, Kevin shared that those who are “low worth gamers” lie about 350% more than “high worth gamers.”
Not surprisingly, Prophet discovered that about ½ the customers were driving 90% of the value. They discovered three distinct segments:
1) “Where is the Money?” These customers want it all. They want to see and be seen—non-amenities are really important. They want to get the most out of every single one of their experiences
2) “What do they want”—These are gaming centric people—real connoisseurs of the system. They know how to work it and expect to get the “comp.”
3) “How do we measure up” This customer is more of a “big fish in a small pond.” They like smaller environments that are intense gaming environments, good foods, and spa treatment—a more holistic experience of gaming.
The Harrah’s and Prophet team then looked that all the brands and matched up which one fit best with each segment. They decided to focus on three brands:
CAESAR’S = “Where is the Money”
HARRAHS = “What do they want”
HORSESHOW = How do we measure up?”
After deciding which brands fit best with which customer segment, they then turned to the customer experience under each brand. And they had to create complementary experiences. They did a two step process, starting with the definition of the essence of each brand. Using Caesar’s as an example, they defined the essence as “total indulgence” which is bold, world renowned, and attentive. They then defined “what are the must haves?” to bring that brand essence to life.
Kris and Kevin then turned toward showing us where they are headed. With the Horseshoe property, they defined the mission as “We provide a superior gaming experience, unattainable by our competitors, where our guests can indulge themselves without an apology.” In essence, they want to ignite the true gamblers soul.
Kris confessed that Harrah’s screwed up with Horseshow. They got the Horseshoe brand 4 years ago. There is a saying in Las Vegas. “Don’t’ sweat the money” and at the Horseshow that meant they would take any bet. And they’d give out complementary comps—not based on earning a comp, just because they wanted to. Harrah’s didn’t work that way, so they shut that practice down. Harrah’s saw a decline in customers really quickly. Harrah’s realized that they shouldn’t rush in with their own assumptions and capabilities. Instead, they needed to understand the clientele in each brand. They have fixed those issues, today.
Kris explains that they had the same issues with Caesar’s. It’s an amazing asset-—the brand has immense awareness. It has permission to be bold and spectacular. It has permission to be the authority on gaming. But, Caesar’s was becoming so highly thematic, that the brand was being degraded—it was a bit too kitsch. Harrah’s asked themselves how do we evolve that brand? It’s a 40 years old brand. The closest competitor is the Bellagio and that’s only 10 years old.
So their second step was to evolve the brand position Harrah’s changed all the visual language. It’s hard in the gaming industry to build a brand on traditional media because of regulations. They needed to find creative ways to build the brand. For Caesar’s, they did 3 important steps:
1) Reinventing the spa experience at Caesar’s. A spa is the 3rd largest leisure destination. Traditionally in Las Vegas, a spa is an after thought. Harrah’s decided to focus on the Spa and came up with their own concept of a “Qua Spa”—sophisticated and nurturing. It includes world-class signature elements (like a room that snows). It’s over the top and fabulous. It’s making money like crazy. It has an 85% occupancy rate with 42 treatment rooms. And they charge a 30% premium compared to any spa services in Vegas.
2) Extending the brand experience—Harrah’s wanted to try and reach people in the home? They created a highly editorialized retail component—catalog and online. Caesar’s Luxury Collection for the home.
3) Reenergizing the gaming floor—how do you take the commodity of gaming machines and make them unique? Harrah’s went to the entertainment industry to look for ideas. They own an entertainment property, called the Pussy Cats from their local nightclub. They created a highly immersive and experiential experience using that theme. They call them Editorialized Table Games—using existing assets. They’ve discovered that the editorialized tables drive more energy on gaming floor.
Recent Comments