So I want to talk about a couple of examples about companies
that have used information technology and
specifically the data about their customers.
To come up with business models that are quite distinct, from product centricity.
And so two examples I want to share with your very briefly, would be Harrahs,
the casino chain here in the US, and
Tesco, grocery retail chain in the United Kingdom.
In many, in many ways the stories are quite similar.
Despite the fact that they're very different
companies operating different businesses and different geographies.
In both cases, these were companies that
were getting beaten up in their businesses.
They weren't nearly as large as some of their competitors, they
didn't have the resources to compete
head-to-head, in a traditional, product-centric manner.
And so they turn to the data.
They turn to a deep understanding about their customers to draw insight and
to let them change their business models in a way
that actually let them rise to the top of their industries.
So let's talk first about Harrahs casino chain here in the US.
They're having a hard time competing against other
chains that just had deeper pockets, greater resources.
It was hard for them to develop the products
and services to compete on a head to head basis.
So Harrah's instead turned to its data, and in particular, developed an amazing
loyalty program.
Now many companies develop loyalty programs, but
few of them were able to draw the
actionable insights that Harrah's was to truly understand
at a granular level what each customer's doing.
Not only which games they're playing, but what meals they're
eating, what room preferences they have, what entertainment options they seek.
And to understand, when that customer is likely to change his behavior,
when he's likely to walk away from the table, and what kinds of
things that Harrah's itself could do to change their behavior for the better.
What kinds of messages and offers to provide, at the right time, and through
the right channel, in order to create and extract more value from that customer.
So Harrah's was just brilliant in drawing those
insights and understanding, for instance, what someone's threshold was.
If this customer goes down about say, $150, it's time to intervene.
It's time to offer them a meal or some kind
of other activity which is going to make them feel great.
But equally importantly, is going to reset their mental account.
And so when they sit back down again, their threshold is back towards zero.
So Harrah's was very smart about understanding that kind of messaging.
And it's a very similar story for Tesco.
Again,
a, a competing very, very tough with other big grocery chains in the UK.
Sansbury, Morrisons, and so on.
They turned to the data, they developed the OLC programme.
They really understood their customers in some
very clever ways, they would understand which
households were buying a lot of their meals and, and other products from TESCO.
And which ones weren't and specifically which
kinds of products were the light households
not buying from TESCO.
So, Tesco knew which kinds of coupons to send to which kinds
of households, at which time, in order to get them to buy more.
And this helped them not only grow the business with
those customers, but also helped them to compete more effectively.
So when Wal-mart bought a small chain and entered the UK.
Tesco knew which customers were most vulnerable to switch to
Walmart, and which products they'd likely buy from Walmart.
So Tesco knew, again, which coupons to send to which households, at which
time, in order to really hold on to those customers and bolster their business.
So by understanding its customers.
TESCO is able to do a great job defending itself against Wal-mart
and, and staying at top of the grocery business in the UK.
So those are only two examples of companies
that have turned to the data in addition to developing fine products and services
but really leaning heavily on the data
and a rich deep understanding of their customers.
In order to pivot their business model, in a way
that they could never achieve, through products and services alone.
[MUSIC]
Barbara E. KahnProfessor of Marketing and Director, Jay H. Baker Retailing Center
Peter FaderProfessor of Marketing and Co-Director of the Wharton Customer Analytics Initiative
David BellXinmei Zhang and Yongge Dai Professor, Professor of Marketing
