Analysis of Hurrahs Loyalty Program - Case Study Example

Heading: Harrah’s CRM Strategy Your Name: Course Name: Professors’ Name: Date Analysis of Hurrah’s loyalty program One of the most integral components of the program is a Total Rewards Program. This is an initiative that was derived from the initial Total Gold Program. Through the program, the customers were rewarded with computers so as to motivate them into maintaining their loyalty with the firm. The main objective of this program was to gather information about clients and use it to customize the company’s marketing plans for each client. The company’s use of the strategy was one the best decisions ever made in that it has several benefits. Firstly, apart from the improving the customer loyalty, the program is influential in capturing and retaining more customers than its competitors. According to Harrah’s Senior Vice President, Richard Mirman, the company understands its customers’ needs; therefore, it has unique ways of handling them. Moreover, there are various elements that are responsible for the program’s success. One of these elements is an electronic card that is inserted in the machines used by the clients. This electronic card is of great significance in that it helps in the tracking of the clients’ preferences and collection of their data. In the process of tracking the customers’ data and preferences, the firm has extensively used information technology to improve the effectiveness of electronic card. Therefore, business intelligence (BI) and a large data warehouse were created in order to better understand its clients; the company used some science tools from the SAS and Cognos on their data. These tools are also instrumental in the getting insight on their gaming preferences. Therefore, the company greatly benefits from the program in that it realized a 13% rise in the profit, within the first year of introducing the initiative despite its $251 million expenses on rewards. Moreover, the enrolment level of the loyalty card programs has rose from the 12million in 1997 to 26 million in 2006. Flexibility of the Reward program The loyalty programs used by the Harrah’s company are adjustable to other forms of business. For instance, it can be used in a pedigree industry to perform the same functions as in an entertainment industry. This is because it uses information technology strategies to carry out its operations. Information technology is beneficial in the corporate world because it fits in any setting. Just like in the entertainment industry, loyalty programs can be adapted to whatever a pedigree industry needs (Klein, & Newman, 2006, pp. 91-93). For instance, it can be used in the collection and consolidation of customer information, especially on assessing clients’ needs. Nonetheless, not all the elements used in the Harrah’s company are applicable in the Pedigree firm. Particularly, the electronic loyalty cards cannot be used in this firm, because it requires a gadget that the customers use. Unfortunately, a pedigree firm is not a gaming industry where clients need to insert cards in the machines. Moreover, a pedigree firm does not have to know the clients; instead, it should understand the needs of pets. Therefore, cards are unnecessary because pets cannot function like human beings. For such a company, the collection of clients’ information can be done through other ways that are favorable to the business (Goldenberg, 2008, pp. 57-60). However, the company can employ other loyalty programs that are relevant to its nature of business. According to Sherwin (2010, pp. 45-47), there are other elements that include appreciation, partnership, affinity, rebate, and coalition. The most suitable program for a pedigree program is appreciation. This entails the act of offering the customers more of its services and products in order improve their loyalty to the company. Moreover, the firm can also employ the partnerships that are concerned with the promotion of a company’s database and allow the loyal customers to select their preferred rewards from other any of the companies. Therefore, the reward program is transferable to the pedigree business, but the elements used should be appropriate (Reynolds, 2002, pp. 67-70). Improvement of the CRM strategy at Hurrah’s firm Although the Customer Relationship Management program has been helpful in the Harrah’s firm, there are certain improvements that need to be done in order to enhance its performance. One of the modifications that the company needs to consider is to add loyalty programs. Apart from the Total Rewards Program, there are other different programs that are applicable in the industry in order to enhance its effectiveness. To start with, Harrah’s company ought to adapt the appreciation program. In this program, the company is expected to give its clients more of its products and services (Ratten, & Babiak, K, 2010, pp. 92-96). This is highly instrumental in that it adds the company’s market share by increasing the number of clients. Through additional services and products, the company will manage to increase and maintain the number of customers. Another loyalty program that the company ought to employ is the affinity system. This initiative entails the company’s building of a long-term relationship with the client that is based on the common benefits instead of the rewards. The relationship built between the company and customers is crucial in the satisfaction of the clients’ needs. At the same time, the company will also benefit in that it will capture a larger market share than its competitors. Another modification necessary in the company’s CRM is the use of rebate. This an initiative in which the company gives the clients money when they buy more products. In the case of Harrah’s business, loyal customers that tend to buy more products should be motivated by through discounts in order to attract and maintain. Partnership is another necessary that the company should incorporate in its customer relationship management. This program is likely to widen the firm’s market by marketing its database. It also allows loyal clients to select their rewards from another company. Additionally, Pomering and Johnson (2009, pp. 78-80) assert that coalition is another of widening the company’s market share by developing a long- term relationship. This is achievable through the teaming up with various companies in order to share the clients’ information that is useful in targeting a customer population. The above loyalty programs are highly significant in improving the company’s relationship with its customers. As a result, the company can achieve its objectives because of the wide market created. What is more, the company ought to use smart cards in order and clutter wallets in addition to the reward program that it is currently using. These are important in that it helps in rewarding the loyal customers through discounts. This way, the company’s retention, satisfaction, and attraction of customers improve. Therefore, Harrah’s entertainment company will gain a wider market share than any of its business rivals. Implementation results table $ mil 2005 2004 2003 2002 2001 2000 Revenues 4858 4,548 3,948 3,747 3,317 2,977 Total Costs 4411 4,181 3,656 3,512 3,108 2,989 Net Income/Loss 447 367 292 235 209 -12 After the implementation of the suggested programs above, it is clear that the company will realize an increase in the amount of revenues. If they are successfully put in practice in the whole of 2005, the amount of revenues, costs and income will be affected a great deal. Assuming that all the factors, such as, taxes, capital purchases, and HR costs in the company, the company is likely to register an increase in the amount of revenue. Considering the increase in the level of revenue since 2000-2005, it is explicit that the employment of the other loyalty plans is quite beneficial. For instance, the increase from $4548-$4858 is a result of the wide market that is created by the modifications. Likewise, the effective implementation of the above modifications will also have a slight effect on the costs of the company. This is because every marketing strategy costs a company some money. Because Harrah’s business ought to add more loyalty programs, the amount of costs incurred will rise compared to other years in which only one program was used. For instance, by the end of 2005, the total amount of costs in Harrah’s company is expected to rise from $4181in 2004 to $4411 in 2005. The figure was arrived at by estimating the cost of each loyalty program that is introduced in the firm. In addition, the company’s introduction and implementation of the new loyalty programs is of great significance in that it will lead to a rise in the amount of incomes per year. In fact, if the programs succeed, the company will realize an income rise of $ 447 in 2005. This is the highest income since 2000 that results from the improvement of the company strategies. This estimated figure was arrived at through the calculation of the calculation of the margin between the total revenues and the costs in 2005. Therefore, the idea of adding more loyalty programs in the company is critical because it will enhance customer retention and satisfaction. There are certain ethical issues that the company is likely to face in the course of using the customer relationship management strategy (Goldenberg, 2008, pp. 56-60). The customer relationship management is quite beneficial to the customer and supplier. This is because the supplier reduces the cost of wanted products. In order to understand the clients’ needs, the supplier ought to collect and store their data. Nonetheless, this system has ethical issues that are concerned with the accuracy of the information gathered, and the clients’ privacy (Henning, 2009, pp. 57-58). According to Greenberg (2004, pp.245-250), one of the ethical issues associated with the use of a CRM system in a company lies on the collection of the customer information. In the process, clients’ sensitive data can be destroyed; hence creating a lot of conflicts between the company and its customers. Therefore, companies ought to cautious on how it handles its collection, verification, and transmission of the information in order to avoid loses and fraud. Despite the costs of its security, it is significant to verify the accuracy and identities of the clients’ data before submission. Another serious ethical issue concerned with the use of the CRM system in a company is based on the storage the collected data. It is vital that the company observes certain ethical measures (Klein, & Newman, 2006, pp. 90-94). Firstly, it should only keep the information with the clients’ consent. Secondly, the company should allow the customer access to the data so as to make any necessary changes. Thirdly, it should also allow its customers to withdraw from the program; hence erasing their information. Lastly, ethical companies ought to understand that the data belongs to the clients who have control over it. Blumberg (2003, pp. 57-70) explains that in the application of the CRM data, it is crucial that ethical companies keep customer information private as much as possible. In order to achieve this, it is imperative that the company stores the information in either a form, or in a place that is not easily accessible. This implies that the information is only retrieved whenever there is a CRM task to be fulfilled. Therefore, the company ought to ensure that the persons handling the information who allowed its access in order to maintain its security and privacy. Lastly, ethical issues may also arise from the way the company disposes its data. This is vital in at a time when customer information is erased from the company database (Barthel & Ivanaj, 2007, pp. 56-70). Imperatively, the company needs to design proper disposal mechanism, which ensures that the clients’ information is kept safe and private. Therefore, it is vital that companies have detailed procedures and policies of destroying and tracking the unwanted information. References Barthel, P. & Ivanaj, V. (2007). Is Sustainable Development in Multinational Enterprises a Marketing Issue? Multinational Business Review, 15, pp. 56-78. http://www.questia.com/PM.qst?a=o&d=5045025190 Blumberg, D. (2003). Managing High-tech Services using a CRM Strategy. Boca Raton, FL: St.Lucie Press. Pp. 56-79. Klein, G.D., & Newman, C.M. (2006). Call from Peerless Bank: a Case Consideration of Telemarketing and Ethics. Journal of the International Academy for Case Studies, 12, pp. 90-95. http://www.questia.com/PM.qst?a=o&d=5044771975 Greenberg, P. (2004). CRM at the Speed of Light: Essential Customer Strategies for the 21st Century. New York, NY: McGraw-Hill/Osborne. Pp. 245-256. Goldenberg, B. (2008). CRM in real time: Empowering Customer Relationships. Medford, N.J: CyberAge Books. Pp. 56-60. Henning, P.J. (2009). Corporate Criminal Liability and the Potential for Rehabilitation. American Criminal Law Review, 46, pp. 56-67. http://www.questia.com/PM.qst?a=o&d=5040383904 Pomering, A & Johnson, L. W. (2009). Constructing a Corporate Social Responsibility Reputation Using Corporate Image Advertising. Australasian Marketing Journal, 17, pp. 78-80. http://www.questia.com/PM.qst?a=o&d=5044908212 Ratten, V., & Babiak, K. (2010).The Role of Social Responsibility, Philanthropy and Entrepreneurship in the Sport Industry. Journal of Management and Organization, 16, pp. 90-98. http://www.questia.com/PM.qst?a=o&d=5046820304 Reynolds, J. (2002). A practical Guide to CRM Building more Profitable Customer Relationships. New York, NY: CMP books. Pp.67-70. Sherwin, N.D. (2010).The Global Impact of Customer Relationship Marketing. Journal of Global Business Issues, 4, pp. 34-48 http://www.questia.com/PM.qst?a=o&d=5046147029 Read More