Recently finished the book "Winner Takes All" by Christina Binkley. It's mainly about Steve Wynn, and the other big players in Las Vegas, but there were a few interesting chapters on Harrah's, the casino company run by quants.
Gary Loveman, the CEO of Harrah's is a former professor of the Harvard business school. The book briefly describes the great lengths his team went to, in order to quantify patron interactions with its casinos.
It is an interesting case study to read about Harrah's, and apply its lesson to Athleon. From the book, Harrrah's was able to determine that gamblers who the least time between pushing the button on slot machines were the most likely to be convinced to gamble more:
To entice [those gamblers] to make two visits that month, Harrah's sent cash and food offers that expired in consecutive two-week periods. The gamblers responded like maze-running rats: The group's average number of trips per month rose from 1.1 to 1.4. Harrah's new direct mail programs were so successful that, in its Las Vegas casino alone, the rate at which people responded to mail offers more than doubled.
Unbeknownst to the gamblers, Harrah's statistical model set calendars and budgets that predicted when they would gamble and how much. [...] Harrah's computers spit out "behavior modification reports" so personalized that they could suggest that one gambler would respond best to a cash offer while another would be more motivated by a free hotel room. [...] A gambler who was overdue for a visit to the casino would receive an "invitation" by mail or e-mail. If they didn't respond, they got a phone call from a Harrah's telemarketer. "We get him motivated, back in an observed frequency pattern," Loveman said.
Casinos make for an interesting real-world analogue to web applications. In contrast to casinos, data collection is particularly easy for web applications to do, but few websites utilize that data nearly as effectively as Harrah's did. But, coupons and mail offers are essentially the casino equivalent of alert e-mails sent to existing users. Sending the right message to a casino patron is a subset Josh Koppelman's Lifecycle Messaging. Harrah's Total Rewards program is like a web analytics packages, but with segmentation analysis of the highest caliber.
Sending the right message to the right group of people. More on this in a future post.