Tomorrow the big boxing fight is on at Caesars Palace but another is brewing around big data, writes Mariam Sharp

Once past the ‘Welcome to Fabulous Las Vegas’ signpost and into the centre of the Las Vegas Strip you find the casino mecca that is Caesars Palace. Customers are greeted by the huge feature of the ‘Fall of Atlantis and Festival Fountain’ as they enter the complex of hotels, shopping malls and around 50 world famous casinos that sprawl into the Nevada Desert.

Tomorrow, the much hyped Mayweather vs Pacquio fight takes place in nearby MGM Grand and luxury apartments at Caesar’s Palace in the complex are, according to the BBC, reported to be selling for up to £50,000 per night. The purse for the fighters is estimated to be $300m. However, the value to Las Vegas is closer to billions.

Outside the boxing ring another battle is brewing, which proves that today ‘big data’ really does have muscle. Yes, big data has become Caesars Entertainment's biggest asset and is at the heart of a bankruptcy case brought against it by creditors.

Caesar’s Palace 'Total Rewards' customer loyalty programme has 45 million members and is estimated to be worth in the region of a $1bn. Created in 1998, as away to revive customer interest in the company’s casinos, the programme enables them to collect detailed data on customers spending activity, to develop offers and target their marketing campaigns. Interestingly, investing in the group’s digital architecture was prioritised over the renovation and modernisation of the physical architecture of the resort. It was a less costly way to keep customers engaged with its international network of casinos, and provided more streams of revenue growth.

The gold is in the points not the prizes 

Clearly, casinos are big business and Total Rewards offers customers a visa card and loyalty programme. If customers are willing to spend $10,000 dollars on their Total Rewards, then they are, well, richly rewarded with VIP access and speedy check-in the following year to restaurants, nightclubs and other entertainment venues. In addition, points can also be earned by online gaming that can then be spent as ‘real money’ in the resorts. 

Caesars’s strategy has been to attract two kinds of customers: the wealthy, big-spending elite, and the ‘wannabes’ that collect points all year from gas, food, online activity and flights, so that they can enjoy a year glimpse of the celebrity bling lifestyle.

The company has actively sought to identify key customers in the bid to actively target segments that can afford things like timeshare and pre-sale access for shows or special events, like the weekend’s big fight. 

In the Wall Street Journal Caesars’ outgoing chief executive Gary Loveman, a former Harvard Business School professor, said he purposely made it quick and easy for customers to earn and redeem points, unlike airline loyalty programmes that require you to take several flights to get a free trip. “In our world, you gamble tonight, you eat dinner tonight,” said Loveman, who will stay on as chairman from July this year.

While loyalty has helped Caesars rake in the customers, the group today is struggling with debts borrowed when interest rates were rock bottom. In attempting to agree a restructuring plan to reduce the increased costs of interest paid on debts, some creditors, reports the WSJ, are unhappy. The allegations are that transactions involving the Total Rewards programme were part of a series of insider deals by Caesars’ parent company and Apollo Global Management LLC and TPG Capital, their private-equity sponsors. 

It’s estimated that 80% of senior creditors have agreed to the restructuring plan put forward by Caesar’s Palace, and if all goes according to plan, it should be business as usual for customers. However, it's not yet a done deal and there are many creases to iron out. Where it’s going to get interesting is just the Total Rewards programme is valued, and whether it amounts to more than ‘funny money’. As we pointed out in a previous EyeforTravel report, while the original aim of reward schemes was to create customer loyalty, in a world of big data and personalisation, they could well be worth their weight in gold.

While creating a loyalty programme might not be quite as simple as weighing gold (or a boxer’s fight weight) on a scale – and as the Caesars story shows there are some risks – there a few lessons to take from this.

1. Help customers to get a feel good factor so that they can benefit from points quickly, without having to initially make a number of large purchases
2. Give customers a big goal to aim for that gives them VIP status
3. Create online ways to earn reward points, as well as through purchases
4. Create special partnerships, networks, or activity that give customers access only through rewards points
5. Manage the data as a primary business asset
6. Make it simple to redeem points