By Leonard Fuld, ACI Faculty
C-Suite executives like to think “big.” But what if big is not the solution? What if the blockbuster drug, the industry-shaping iPhone is not a reality for you, your company and its circumstances? What if the market turns, trashing your payday plans? That is when you need to think incrementally, according to David Norton, former CMO of Harrah’s and Caesars casinos.
In his 13 years as the CMO of one of the world’s great casino and entertainment organizations, Norton helped transform Harrah’s/Caesars into one of the top marketing organizations in the world. He relied on his skills with numbers to help him to solve growth challenges. He is a “quant,” a numbers guy who lets the numbers talk to him and argue with him.
With the failure of Lehman Brothers in September 2008, the world’s financial system nearly collapsed, delivering a shock to the gaming and entertainment industries. Travel slowed. Consumer discretionary spending nearly came to a halt. Norton witnessed a sudden sharp drop in spend at Caesars fifty-plus worldwide resorts and casino properties with the parent company, Caesars Entertainment, suffering double-digit revenue declines in 2009. The numbers no longer talked to Norton, they screamed.
As CMO, Norton had to convince the organization that there were ways to at least remedy some of the revenue shortfall – and that the drop off was not all because of the poor economy. Norton turned to analytics, reviewing the entirety of Caesars loyalty program. He mined the data to uncover new customer segments or different ways to approach existing customers. He was looking for new ways to win back revenue that would drive incremental profit
“After the worldwide financial collapse, we were desperate for revenue,” says Norton. “Prior to the crisis, we were focused on gamblers and not necessarily cash-paying customers at Caesars. What I was proposing was counter to our culture, our focus on gamblers, though it was a natural evolution leveraging our great assets and VIP service.”
The number crunching revealed that beyond high rollers there were groups of people who traveled to casinos for all sorts of reasons. The one common denominator? They traveled in groups and they spent money. These were not gambling VIPs whose money mostly went into betting. Instead, they were often people who saw the casino properties as a great location for celebrations and get-togethers.
“We began to research what these groups do on specific occasions,” says Norton. “Who was planning the trip and how much pressure was there to get everything right? We asked ourselves, what if we could give them the same or similar treatment received by a VIP gambler.”
He concluded that “If a group of friends or family could spend close to $10,000 for the group under several scenarios such as a guys’ golf weekend or a girls’ getaway weekend they deserved VIP treatment which is mysterious to the average Vegas visitor.”
“At first, many of the operators at Caesars 51 properties resisted this new strategy because we were still running at a very high occupancy. However, the last 10% of those rooms were booked through Expedia, Travelocity or others and were marginally profitable. We convinced them that Total Experiences was driving significant incremental revenue by providing a high touch experience and capturing a larger percentage of their dining, shopping and entertainment spend.”
Caesars Total Experience website (http://www.totalexperiences.com/totalexperiences/?rd=totalexperiences) makes its message very clear: We at Caesars want you, the consumer, to have a good time with friends or family – and we are the ones that will show you the way, take care of the details. Says the website:
- Gain tips and access to the
best Vegas has to offer
- Make your planning hassle-free
- Get treated like a VIP
- Pay no extra cost for our service
- Deal directly with experts
“Before long,” Norton recalls, “We created a much better experience for our customers and improved profits for our operators. For example, if it was a wedding party, we would help plan the entire trip beyond the ceremony, including spa appointments and the rehearsal dinner. . We became, in effect, a wedding planner.”
Caesars operators began to embrace the Total Experience concept. Weddings, bachelor parties, a “Girls Getaway,” birthdays were all newly minted packages the organization marketed. Arguably, it was also an aha moment for the gambling industry with Norton’s program leading the way. The Total Experience program became a $10-15 million business in the first year and was profitable.
Analytics – along with a very driven CMO – were the heroes of this particular Great Recession story. Blockbusters certainly have their place in industry; they change markets and even economies. No doubt every company wants to produce an equivalent of the iPhone or Lipitor. But when you fail to discover a blockbuster concept and you find your company challenged, demanding fast action to steer toward recovery or growth, think about slices. Think incrementality.
David Norton is currently EVP Customer Analytics and Insights at MDC Partners, headquartered in New York City.