Question 1: What are the objectives of the various database-marketing programs and are they working?
1. New Business Program:
The objective of New Business Program is to convert new Total Gold members into loyal customers more effectively. This program is working as it helps Harrah’s to make more efficient investment and provide more competitive offers than competitors. As a result, the investments are more efficient and profitable. As shown in exhibit 2B, the more and more new sign-ups came back in months after their first visit and the percentage of revenues brought by them in those months got higher and higher.
2. Loyalty Program -- Frequency Upside:
The objective of the Loyalty Program -- Frequency Upside is to identify customers giving Harrah’s small share per visit and offer incentives so that they visit Harrah’s more frequently and bring more profit to Harrah’s rather than visiting its competitors. This program is working in a way that it brings much more guests to visit Harrah’s and the theoretical wins from these guests outweighs the incremental costs of this program.
3. Loyalty Program -- Budget Upside:
The objective of Harrah’s Loyalty Program -- Budget Upside is to encourage customer to visit Harrah’s as the first stop and capture the large amounts of spending on their first day. This program is working as indexes such as number of trips, trips per guest, days they stay, theoretical win from them, and average win per day per guest are all increasing compared to those in months before October.
4. Retention Program:
The objective of the Retention Program is to encourage customers who seem to lose their interests with Harrah’s to come back. This program is working. Although the cost per offer has gone up, the total gain from those guests is very positive. The wins from those guests increased dramatically, especially in the first half of year 1999, after this program was launched in the first month that year....