Loveman sees more targeted marketing for Harrah’s

LAS VEGAS, Sept 18 (Reuters) – Casino operator Harrah’s Entertainment Inc. (NYSE:HET – News) plans to sustain its recent growth by treating gambling as a commodity and marketing the pastime with the same sophisticated methods used by other industries, the company’s newly named chief executive said on Wednesday.


Gary Loveman, speaking to investors at an industry event in Las Vegas, laid out his broader UFA strategy for running Harrah’s after his scheduled takeover from Phil Satre as chief executive officer on Jan. 1.


The Las Vegas-based company has wowed Wall Street over the last year, showing strength in the face of the broader economic downturn and even in the aftermath of the Sept. 11 attacks that saw business drop sharply for most of its rivals.


Analysts have attributed Harrah’s strength in particular to its geographic diversity and customer loyalty program — one of the industry’s first plans to tap into its respective repeat customer base.


Loveman was a major force behind that program, called Total Rewards, after he joined Harrah’s in 1998. Since then, Harrah’s has milked the system — which transcends all its casinos — extensively to tailor marketing programs to its best customers.


“The holy grail is to get to the point … where you can promote a specific product to a specific customer under specific terms,” Loveman told the group of investors at the Global Gaming Expo.


Loveman was named CEO designate earlier this month, when Satre announced his retirement by saying he had achieved his goals. In the announcement Satre referred to Loveman as a “key driver of our strategy.”


“It’s now time for Gary to take Harrah’s to the next level,” Satre, 53, said in making the announcement.


Loveman, who said he was hired after sending an unsolicited letter to Satre with ideas about how to make sales at existing casinos grow, said he borrowed many of his ideas from the financial services and retail industries.


“The slot (machine) floor is really nothing but a retail floor,” Loveman said at the Global Gaming Expo. “It’s just never been run that way.”


In keeping with his approach, Loveman was heavily involved in setting up a loyalty program after his arrival at Harrah’s, much like the programs used by airlines for frequent flyers.


The result has been not only more business for Harrah’s, but a big new source of information for the company to analyze in determining which players prefer what games, how often they gamble and other playing patterns.


The company has used that information to create highly targeted marketing campaigns designed for individual types of players, supplanting the more traditional broader approach used by many casinos.


“The database is the vertebrae with which we operate this company,” Loveman said. “This is an industry that has thrown money at consumers in a reckless way for decades.”


Rivals MGM Mirage (NYSE:MGG – News) and Park Place Entertainment Corp. (NYSE:PPE – News) have followed suit, but are still years behind in their development efforts.


While Harrah’s has focused on marketing to its higher-spending customers, one future growth area will be to direct more future efforts at lower-end spenders as well, Loveman said.


“We’re working on significant revisions to the Total Rewards program,” he said. “The second stage is to be a better and more effective promotional marketer.”


Loveman said that Harrah’s will watch developments in the Internet gaming arena, but that he does not see the Internet as a big growth area for the immediate future. Instead, he said, interactive television — which is more easily regulated — could provide stronger potential for near-term gaming growth in the United States.


“We are prepared to be active in Internet gaming … but we will not be an advocate,” he said. “You will hear me stumping on things like interactive TV.”