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Customer Relationships Make Playing the Odds Easy

BY Marc Millstein

Harrah’s knows exactly where its profits come from—and that extends far beyond the gaming tables. It is based on precise details of what its customers want and catering to them so they keep coming back.

It is a lesson retailers are still striving to learn—some with more success than others. A behind-the-scenes look into what Harrah’s knows about its customers points to a number of winning tips retailers are, or should be, implementing and leveraging as well.

Despite the long-held reputation that the chance to win money is the big draw for going to casinos, Steve Pinchuk, corporate VP of revenue management for Harrah’s Entertainment, put an end to that notion. He said winning money on gambling is impossible in the long run and, frankly, not why customers visit casinos. Pinchuk spoke at the Technology & Operations Store Summit (TOPSS), produced by Chain Store Age and Retail Technology Quarterly in Las Vegas in October.

Customers come to Harrah’s—and keep coming back—based on service, targeted marketing, knowing what each guest most values and even, at times, returning money to a customer when he or she has run into a particularly bad string of luck, said Pinchuk.

It is a complex mixture of knowing what customers want and providing it to them even before they ask, something he also termed, in part, surprising and delighting them as much as possible.

Harrah’s, Pinchuk said, has information on 30 million people in the United States—all 18 years of age or older. It knows what its customers play, when they gamble and how much money they spend at spas or other non-gambling activities such as shopping. “Some customers will spend $1,000 a night with us and not gamble at all,” he said.

“Revenue management is about gaming, but it goes way beyond that,” he noted. Making money and catering to customers is a particularly complex system driven by advanced customer loyalty and revenue-management programs. The goal, above all else, is to avoid “promiscuous” behavior by gamers—meaning keeping Harrah’s customers from “straying” into another owner’s casino where a bond could be formed.

Based on the in-depth knowledge of its customer base, Harrah’s focuses totally on the experience—“what the customer feels”—to cement loyalty and increase share of wallet. If a loyal customer likes a certain type of martini, he said, a Harrah’ hostess will very likely walk over to that person a few minutes after he or she sits down and offer them their drink of choice.

“Price is something you can do something with, but service is the big driver,” Pinchuk said. Surprise and delight customers during their stay, he said, giving as examples the idea of making a reservation at a customer’s favorite restaurant, or a reserving tickets to a favorite show, without waiting to be asked.

The casino sends targeted offers to its frequent guests offering discounts on special tickets that they know will match particular desires. It does the same for its guests in the casino and once they return home. These are the type of things that matter, Pinchuk stated.

Harrah’s Entertainment represents an almost a scientific brainstorming center for analyzing customer spending and shopping behavior, and then treating each person in the way that ensures the best experience well beyond the notion of winning money.

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CompUSA may get a new look

BY CSA STAFF

ADDISON, Tx. After opening a new format store last month, CompUSA may be changing the format of its other stores, depending on customer demand and product interest.

According to reports, the elements found in the prototype store, located in Texas, will be incorporated into other CompUSA locations across the United States.

The nearly 7,700 square-ft. relocation site includes an Apple shop featuring Mac computers, iPods and Apple accessories, and a full-length LCD TV wall.

Additional expansions include extended gaming, which includes an entire wall devoted to the Nintendo Wii, PlayStation3 and Xbox 360 gaming platforms, plus a PC gaming setup to test equipment and play new titles.

While businesses can get their share of support with a specialized services section, all consumers can visit the store’s redesigned IT support area.

“This new store aligns CompUSA’s vision to better serve its three core customers, the technology enthusiast, educated professional and small and medium businesses,” said Gabriela Villalobos, the retailer’s sales and operations evp.

CompUSA announced in April that it would narrow its focus to three core customer groups rather than try to serve a mass audience.

The move was part of a comprehensive restructuring, initiated last February, that included an overhaul of senior management and the closure of half its store base as the privately held chain looked to improve sales and profitability.

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Walgreens withdraws from CVS provider plans

BY CSA STAFF

DEERFIELD, Ill. After many months of talks over low and below-market payment rates by CVS Caremark for four prescription plans, Walgreens has withdrawn as a pharmacy provider from the plans.

Patients affected include members of prescription benefit plans managed by CVS Caremark for ArcelorMittal, Johnson Controls, Progressive Casualty Insurance and Wisconsin Education Association Trust.

Most of the affected members live in Illinois, Indiana, Michigan, Ohio and Wisconsin.

Trent Taylor, president of Walgreens Health Services, the managed care division of Walgreens, released the following statement:

“This is not where we wanted negotiations to lead,” he said. “We’re sorry that our pharmacy patients and CVS Caremark’s clients are caught in the middle, and we’ll do all we can to ensure a smooth transition for our patients to another pharmacy. Meanwhile, we’ll continue to work on resolving this issue with CVS Caremark.

“Leaving a benefits plan is an extraordinary step for us, but it demonstrates how extraordinarily low our payments were from CVS Caremark. We can’t continue accepting reimbursement rates that are drastically below market, while offering patients needed special services such as 24-hour pharmacy access and drive-thru pharmacies.”

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