About a month later, Caesars sent another $1,000 in free chips, followed by another grand the month after that. He became a regular, visiting every month. By the time he felt enmeshed in the loyalty program, Caesars lowered their offer to $300. Kostel liked the $1,000 offers better, but he kept coming regardless.
Kostel is just one guy, of course, but Caesars target millions of customers to come again and again. Maybe you think Jerry Seinfeld is hilarious. Caesars may invite you out to Las Vegas for one of the handful of days a year the comedian performs stand-up at Caesars Palace. Or maybe Caesars know that you are a fan of Elton John, or Rod Stewart. If they know a bachelor party might lie in your future, they may serve up a promotion for a Hangover -themed package. Many people respond to such offers. Overall, the company says its personally targeted offers have generated billions of dollars over the years.
Even if you have never set foot in a casino, many businessesâcredit cards, banks, alarm companies, magazines, divorce lawyers, you name itâare trying to serve up individualized offers based on their interpretations of your personal data. You donât get a pile of free chips from those companies, of course. But you might get a free flight, meal, or other benefit based on your value as a customer.
When gamblers such as Kostel sign up for the loyalty program at Caesars, they know who is collecting the information. The casino does not sell the information to anyone else. Management could, however, buy data about the gamblerâs activities outside the walls of their hotel casinos to learn even more about their customers and help persuade them to gamble more with Caesars. Who are the personâs friends and relatives? Does he or she make a lot of money? Does the person have an arrest record? What else does he or she spend money on?
If you are a business trying to understand customers, it certainly is tempting to look at this kind of information. The company was reluctant. Like a professional baseball slugger shunning steroids even after the drug became widespread, it watched from the sidelines as the use of third-party data grew. It only collected information about its own clients, within its own walls, with their permission. The know-it-all data brokers would call from time to time to try to sell additional information. How about details about customersâ income level, job status, or friends, family or work associates? they would ask. The answer was always no. Caesars steadfastly refused.
The company first adopted the âno outside dataâ policy in the mid-1990s as it ramped up its own data collection. In 2000, it published a public code that pledged to conduct the business âwith honesty and integrity, and act in accordance with the highest ethical and legal standards.â After Harrahâs bought Caesars Entertainment in 2004, the company reconfirmed its âno outside dataâ policy. To gather outside information from third-party data brokers would violate the trust Harrahâs had established with its clients, officials felt. âWe were not going to overlay external information that is really potentially intrusive even if a vast majority would not find it intrusive,â recalled John Boushy, who worked as an executive at the company from 1979 to 2006.
But not everyone agreed, especially rivals who envied Harrahâs lead among casino loyalty programs. Over time, competitors caught on and established alternatives. Eventually some newer Caesars executives began to wonder: was the company voluntarily shackling itself when everyone else was going data hunting?
8
Recession
The Economic Crisis Hits
Gary Loveman had made Caesars so attractive by 2006 that two private equity firms, Apollo Global Management and TPG Capital, swooped in to take Harrahâs private. Financial markets were soaring, so they paid a staggering $30.7 billion. The firms financed the deal, which
Kostel is just one guy, of course, but Caesars target millions of customers to come again and again. Maybe you think Jerry Seinfeld is hilarious. Caesars may invite you out to Las Vegas for one of the handful of days a year the comedian performs stand-up at Caesars Palace. Or maybe Caesars know that you are a fan of Elton John, or Rod Stewart. If they know a bachelor party might lie in your future, they may serve up a promotion for a Hangover -themed package. Many people respond to such offers. Overall, the company says its personally targeted offers have generated billions of dollars over the years.
Even if you have never set foot in a casino, many businessesâcredit cards, banks, alarm companies, magazines, divorce lawyers, you name itâare trying to serve up individualized offers based on their interpretations of your personal data. You donât get a pile of free chips from those companies, of course. But you might get a free flight, meal, or other benefit based on your value as a customer.
When gamblers such as Kostel sign up for the loyalty program at Caesars, they know who is collecting the information. The casino does not sell the information to anyone else. Management could, however, buy data about the gamblerâs activities outside the walls of their hotel casinos to learn even more about their customers and help persuade them to gamble more with Caesars. Who are the personâs friends and relatives? Does he or she make a lot of money? Does the person have an arrest record? What else does he or she spend money on?
If you are a business trying to understand customers, it certainly is tempting to look at this kind of information. The company was reluctant. Like a professional baseball slugger shunning steroids even after the drug became widespread, it watched from the sidelines as the use of third-party data grew. It only collected information about its own clients, within its own walls, with their permission. The know-it-all data brokers would call from time to time to try to sell additional information. How about details about customersâ income level, job status, or friends, family or work associates? they would ask. The answer was always no. Caesars steadfastly refused.
The company first adopted the âno outside dataâ policy in the mid-1990s as it ramped up its own data collection. In 2000, it published a public code that pledged to conduct the business âwith honesty and integrity, and act in accordance with the highest ethical and legal standards.â After Harrahâs bought Caesars Entertainment in 2004, the company reconfirmed its âno outside dataâ policy. To gather outside information from third-party data brokers would violate the trust Harrahâs had established with its clients, officials felt. âWe were not going to overlay external information that is really potentially intrusive even if a vast majority would not find it intrusive,â recalled John Boushy, who worked as an executive at the company from 1979 to 2006.
But not everyone agreed, especially rivals who envied Harrahâs lead among casino loyalty programs. Over time, competitors caught on and established alternatives. Eventually some newer Caesars executives began to wonder: was the company voluntarily shackling itself when everyone else was going data hunting?
8
Recession
The Economic Crisis Hits
Gary Loveman had made Caesars so attractive by 2006 that two private equity firms, Apollo Global Management and TPG Capital, swooped in to take Harrahâs private. Financial markets were soaring, so they paid a staggering $30.7 billion. The firms financed the deal, which
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