On using evil for good (in your marketing)
In the late 1990s and early 2000s, executives at Harrah’s casinos revolutionized predictive customer analytics.
A generation before the rise of marketing automation and inbound marketing, they figured out how to use big data to understand a customer's potential lifetime value, match the right offers to the right customer, and increase customer value and frequency to win back flagging customers and win more of the portion of the total spend of customers who spread their dollars across multiple casinos.
That’s a lot.
Among marketing circles, especially the academic ones, the Harrah’s story is lauded as a massive success.
There’s a story within that story, though.
During these years, those casinos’ wildly successful marketing practices were aggressively pulling people into their locations, capitalizing on people’s gambling addictions, to build profits.
This American Life once told the story of Angie Bachman (not her real name) who sued Harrah’s because, according to her lawyer, “at the time of [her gambling] losses, she has passed the point of no return, to where she has no control over what she’s doing, and the casinos know it and take advantage of it.”
The tactics used to capitalize on people’s gambling addictions are the very same that are lauded by academic circles as massive successes, that indeed pushed the marketing industry as a whole forward, and changed how we think about marketing that attracts and retains the right people, and that maximizes customer lifetime value.
Perks and rewards — Based on the data collected through Angie’s loyalty card, Harrah’s provided a steady stream of perfectly timed vouchers, coupons, and invitations.
Relationship selling — Starting with a casino host “chatting her up” but generally making sure she feels seen, “casino hosts” called her directly to personally invite her to their Harrah’s location. The more the casinos gave her, the more she felt obligated to come back when these real people she felt connected to would call her and ask her to come back. (They’d push on this human tendency to be agreeable by going as far as saying things like ‘my job depends on you coming back to this casino.’)
VIP treatment — Free luxury hotel rooms, surprise gifts, concert tickets, luxury goods from the gift shops…“anything she asked for, she got” (seriously). And these were things she (at least believed) she could not have had otherwise. The VIP treatment works best when it seems to deliver things that would otherwise be out of reach. That’s when it really hits both our sense of belonging and sense of value.
All of the above is based on the company’s calculation of the customer’s lifetime value.
As a person plays more, the bets get bigger, so do the comps.
But it’s neverending. The more Angie bets, the more she’s worth, the more the company invests in bringing her back. The more the company offers, the more she gambles, and so on.
Reading the Harrah’s story feels a bit like reading about how tobacco marketing teams successfully got young people to start smoking, not stop, or stick with their brand of cancer sticks (before you make assumptions about the height of my horse, note that I was one of those ‘90s kids who got sucked in just as people were starting to get all up in arms about tobacco companies targeting their marketing to teens).
The formula that measured an individual's “propensity to smoke,” created in 1969, feels especially like something that could’ve come straight out of the Harrah’s playbook measuring an individual’s likely lifetime value.
Source: https://tobaccocontrol.bmj.com/content/11/suppl_1/i5
Also, much like Harrah’s, tobacco brands figured out that low-income customers represented the lion share of their profits and are more susceptible to influence by loyalty programs.
I don’t know about you, but I don’t want to feel like my work is driving people to engage in things that will be their undoing, much like the lemmings we thought followed each other off of cliffs but now know don’t but still it’s such a fitting analogy, right?
So what can we learn from the Harrah’s success story? And should we?
We can learn from the successes of brands and businesses that didn’t put more good into the world. As long as we do so fully awarer of what we’re learning, from whom, and why.
In Hooked, Nir Eyal says it’s possible to learn from the most manipulative and successful tactics that social media companies have used to grow their share of our attention but ultimately make our lives worse...in order to use them for things that make our lives better.
It’s perfectly valid to study stories like the Harrah’s one. Or even how big tobacco has done what they’ve done. Or a host of other bands or businesses that you disagree with or that are objectively not creating more good for humanity. We almost have to.
You could say that, at face value, success is success. They grew the business. They pushed marketing and related technologies forward on multiple fronts.
But, like the cigarette brands, Harrah’s was a success for the brand but not the buyer. Harrah’s was killing their dear Angie Bachman, slowly. (By the way, there is an executive who says in This American Life that the company is made of real people who don’t want to hurt other real people. The end result of these tactics still stands.)
It’s up to each of us to decide if we define success purely in terms of net dollars gained or lost, or also in terms of net gains or losses to the people parting with those dollars.
Let’s study these stories alongside the ethical dilemmas they represent.