1. Operational Customer Relationship Management is based on enhancing and improving processes of a business such as customer interface and customer support through automation. It focuses on customer related processes such as selling, marketing, before and after sale services. Examples of operational CRM are; Marketing Automation, which is based on making marketing activities automated, Sales-force Automation, which is simply making all processes within a sales cycle automated, and finally Service Automation which is automating the services an organization offers to its customers.
On the other hand, Analytical CRM are inclined towards the operations of the back office, which does not deal with customers directly. This type of CRM analyzes customer information to establish customer behavior patterns which are very important in the decision making process. Examples of analytical CRM are; Customer Analytics which models the knowledge pool of customers to create an excellent understanding of customers and Market Analytics which is responsible for venturing into new markets among a couple of others.
2. For effective implementation of a CRM, an organization must first understand that CRM is not just about increasing operations efficiency; it is also focused on improving customer efficiency and value. They should therefore clearly understand their current customer strategy in order to be able to choose an appropriate technology. The CRM implementation program should be fragmented into pilot projects for easier management and effective communication of the CRM vision and objectives to employees since they will be the forces behind its success. An organization should then put into consideration the type of data is to be mined so that it does not end up harvesting irrelevant data and finally, an organization should prepare its systems to handle a very large amount of data (Wailgum, n.d.).
3. The CRM project should be aligned across all departments that will be using it but spearheaded by the IT department and the chief information officer in order to get all involved parties on-board in its implementation. This is because the CRM is not just any other IT project but a corporate strategy that affects all aspects of business functionality (Wailgum, n.d.).
4. Telecommunication, makers, and retailers of consumer goods and financial service industries are the most pro-active in the implementation of CRM while heavy manufacturing industries lag behind in CRM implementation because they are quite distant from the consumers of their products. Active industries in the implementation of CRM mostly deal directly with the consumer of their products while those that lag behind in the implementation of CRM sell raw materials to other industries who process them and then sell the finished goods to the end consumer (Wailgum, n.d.).
5. Harrah’s loyalty program is called Total Rewards Program and it has an edge over other loyalty programs because it revolutionized how Harrah’s relates to its customers because it was a nationwide database system running from coast to coast. This system integrated all of Harrah’s casinos making it easy to track their customers and their preferences unlike other programs, which dwelled on attractiveness to draw customers. This very all Harrah’s casinos stopped competing and started complementing each other by sharing customer information with a common casino player card, which was important to its success. This way, loyal customers were easily identified and gifted with free hotel rooms, dinners and shows on the house (Levinson, 2001). In addition to that, unlike other loyalty programs, Harrah’s increases its inventiveness by actually making use of the data related to its Total Rewards Program in its revenue management system.
6. WINet enabled Harrah’s to share information instantaneously to all of its casinos thus enabling employees to understand the customers better and know what services to prioritize. Its real-time nature also allows Harrah has to use it to implement its Total Rewards Program for instance when a customer is rewarded with a room for his loyalty, he is allowed to choose his preferred venue. This system is also able to dig into the Harrah’s vast database and retrieve customer-specific information therefore making it possible to customize promos and marketing to every customer’s suitability. WINet also led to the reduction of talk time because redundancy was eliminated therefore enabling Harrah’s to save on call costs (Levinson, 2001).
7. Harrah’s owned and personalized this technology by moving to patent it, therefore preventing its competitors from duplicating it. This way, Harrah’s can sue anyone who tries to copy this innovation. Protection of this innovation is very important to Harrah’s because it is what gives the company an edge over its competitors (Levinson, 2001).
II. Integrating CRM with Revenue Management
8. Revenue management in the gambling industry is based on offering the appropriate capacity to the right customer and at the right price, commonly referred to as customer segmentation. Profitability is derived from the willingness of a customer to pay therefore priority is given to customers who are willing to pay more. Customers set their own prices by the amount they are willing to spend on gambling. The high-end gamblers spend up to between 20 to 50 times what the low-end gamblers spend therefore giving the high-end gamblers first priority no matter how little the number. This boosts the profits by a greater margin than giving both groups of gamblers equal priority. The Cherokee offers its rooms to the overall most profitable customers who are the high-end gamblers rather than low-end gamblers. They are able to detect these customers by tracking their wagers through the Total Rewards Program. 98 percent of Cherokees rooms are complementary from January down to November to encourage customers to spend more hence generating higher profits. Mr. Smith who is a low-end gambler is therefore denied reservation since using the rooms as incentives for high-spenders generate higher profits (Metters et al., 2008).
9. Some restrictive segmentation might be illegal especially those based on race. For instance in the United States it is illegal to charge customers different airfare based on their nationality or race though it is practiced elsewhere. Another major hitch of restrictive segmentation is the loss of customer goodwill as they may view the segmentation as a segregation hence leading to a lot of negativity from the customers. People are always bound to react to unequal treatment because to them, it does not matter whether it is a business strategy or not (Metters et al., 2008).
10. RFB1 refers to the compliments accorded to a customer by a casino in terms of the best rooms, food, and beverages available. For a customer to qualify for these complements, he/she must gamble an amount equal to or greater than 1000 dollars on average (Metters et al., 2008).
References:
Levinson, M. (2001, Feb 1) Harrah's Entertainment - Jackpot! Using IT to Manage Customer Information. CIO. Retrieved 7th April 2013
Management Study Guide (n.d.) Customer Relationship Management. Management Study Guide. Retrieved 7th April 2013
Metters, R., Queenan, C., Ferguson, M., Harrison, L., Higbie, J., Ward, S., & Duggasani, A. (2008). The "Killer Application" of Revenue Management: Harrah's Cherokee Casino & Hotel. Interfaces, 38(3), 161-175.
Wailgum, T. (n.d.) CRM Definition and Solutions. CIO. Retrieved 7th April 2013
