Harrah’s Reviews Loyalty Process After $5.8 Million Mistake

Posted on by Chief Marketer Staff

Harrah’s Entertainment has no plans to follow up with Total Rewards loyalty members, but is reviewing its promotional procedures following an estimated $5.8 million error with a local direct-mail coupon.

Harrah’s Joliet mailed out 11,000 coupons each worth $525 in cash to local Total Rewards members. Most of the coupons were supposed to be worth $10 or $15; Harrah’s printing vendor erred on the amount, and the Illinois Gaming Board ruled that Harrah’s Joliet had to honor all coupons, to the tune of about $5.8 million (Nov. 23 Xtra). The printer’s insurance will cover at least some of the costs.

Most of the coupons were redeemed within 10 days of the Nov. 17 mailing date, according to Harrah’s Joliet.

“We’ve seen very high redemption,” said David Norton, Harrah’s Entertainment senior VP-relationship marketing. “The error was definitely in the benefit of customers.”

According to the gaming board, Harrah’s Joliet redeemed a small percentage of the coupons, then started turning away customers whose coupon bar code didn’t match its face value. “Apparently there were 40 to 50 very angry people on the main floor of the casino,” said Gene O’Shea, public information officer for the Illinois Gaming Board.

Harrah’s Joliet did not return calls by press time.

Gaming board officials told consumers who had thrown out the coupon to bring a driver’s license to the casino to redeem the offer.

“It’s easy to look up their Total Rewards account to see what offers they’d gotten” and redeem the offer without the coupon, Norton said.

It’s up to the management of Harrah’s Joliet to decide how to follow up with the affected Total Rewards members, because the coupon was a local promotion, Norton said. The effort did not affect Total Rewards members outside the Chicago-area casino.

Meanwhile, Harrah’s corporate is reviewing its auditing process to prevent future errors.

“We need the right audit procedures,” Norton said. “We thought our processes were pretty strong internally,” but a review will show where the system needs tightening.

“Our [loyalty marketing] programs are highly segmented, so they have a complex logic,” Norton said. “We have had some errors on occasion, but this [Harrah’s Joliet case] has been one of our biggest problems,” because there were so many coupons printed with such a high face value.

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