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The Fine Line

Group led by former Harrah's exec becomes one of the most sought-after consultants in industry

The Fine Line

It’s probably the one thing on which Harrah’s Chairman and CEO Gary Loveman and Randall Fine, the president of the Fine Point Group, can agree.

“I’ve never been a great employee,” Fine says, as he explains the genesis of his company, which has quickly become one of the industry’s most aggressive consulting companies.

Fine’s departure from Harrah’s Entertainment wasn’t entirely without rancor, according to sources familiar with the situation. While he claims credit for directing the effort to expand and monetize the company’s Total Rewards program (cited in a patent application), Harrah’s executives insist it was a total team effort with no one (other than Loveman) deserving of the lion’s share of credit.

Whatever the share of the credit, it’s clear that Fine has a grasp of customer service and loyalty that few in the industry can match.

Starting from Scratch

After achieving an MBA at Harvard Business School, Fine created a company focused on developing loyalty programs for supermarkets. After seeing some parallels with the gaming industry, he was convinced by Loveman, one of his former Harvard professors, to take a position with Harrah’s, which was trying to upgrade its loyalty program.

He said Harrah’s had already begun compiling information given by its customers and that piqued his interest.

“I found the business to be incredibly data-rich,” he says. “And I’m a mathematician at heart, so the ability to create an improved value proposition based on that data was very compelling.

“They had done a good job with the database, but the actual card program was broken. And while you could earn a point at any of the Harrah’s casinos, you couldn’t necessarily use them at any other casino.”

Fine says there were three things he did when he came on that made a big difference in the success of the program.

“First, we made the program explainable,” he says. “We were able to tell customers that every $5 of coin-in got you a Reward Credit at every Harrah’s property in the United States. We created a seamless program.

“Second, we made the points transportable. It didn’t matter where you earned the points, you could go anywhere to redeem them. To create a transfer pricing structure that allowed for that to happen was an industry innovation.

“And the third thing was that we pioneered the use of external rewards. People thought we were crazy to put things like cars in our reward program. But it turned out that putting things in there that people could earn over a multitude of trips made them more loyal and got them to consolidate their play.”

Despite his Harvard MBA, Fine says the most instructional experience he had in the gaming industry was getting down with front-line employees.

“The most instructive week I had was when I worked in a Rewards Club booth in Laughlin,” he says. “I was told that I wouldn’t understand the business until I had a customer throw a card in my face.

“Unfortunately, I was pretty good at customer service, so I never had any cards thrown at me. What I learned was if I could not communicate within 30 seconds what the marketing program was, it didn’t matter. If I had to explain that earning a point was based on your length of play, your type of game, your level of play… customers don’t understand that.”

Clear communication, says Fine, is the key.

“Good loyalty programs have to be simple,” he says. “They have to put the customer in control. They have to be aspirational. They have to be transferable and they have to be flexible, because not all properties are the same.”

Broad-Based

After leaving Harrah’s, Fine joined Carl Icahn’s casino company, which operated four properties in Nevada and Atlantic City.

“This was a totally different experience,” he says. “This was a capital-constrained company. When I worked at Harrah’s, I was a corporate guy. With Icahn, I was essentially the vice president of marketing for four casinos. So I had to be involved with all of the details. It was fun for me to take that $300 million investment and turn it into $1.2 billion through both cost-cutting and marketing improvements.

“It allowed me to take all the theoretical things we experienced at Harrah’s and make them more tactical.”

It wasn’t long before Fine decided to strike out on his own and apply the principles he learned at Harvard and during his gaming career.

“I felt there was a lack of talent in the gaming industry to help people optimize their business,” he says. “So I decided to put together a group of people who actually want to be consultants and who have walked the walk. It started with just me, but four years later we have 15 folks, all of whom have five or more years of actual casino experience, have worked for great gaming companies and have a passion to help our clients.”

Fine won’t talk specifically about his clients-“Our job is to help our clients look good, not necessarily make us look good,” he says-but he gives some hints, such as running the marketing for one of the largest Las Vegas locals companies or a Native American casino in Connecticut.

“Those are very narrow universes,” he laughs.

Detroit Rotation

One client that he will discuss is Greektown Casino Hotel in Detroit. Fine Point won a public bidding process to operate the property while it is in bankruptcy, and Fine believes it is a true gauge of how far his company has come in four years.

“We always felt that after we did the consulting for a while, it would get to the point where we could prove ourselves at actually operating a property, and that’s what happened at Greektown,” he says.

What he found, however, was distressing, in a highly competitive market where Greektown held the lowest rung on the customers’ ladder.

“It’s always fun being on a winning team, and this was a team that was clearly dispirited. What was once a 29 percent market share was down to 22 percent. I don’t think people were poorly intentioned; I just don’t think they had any direction.”

At Greektown, Fine deployed two of his most powerful weapons-Chris Colwell, who was appointed COO, and Amanda Totaro, who was named vice president of marketing-and developed a plan with definitive goals.

“We made changes on the first day here,” he says. “We beat the plan by 30 percent in January, even with just two weeks. In February we beat it by 80 percent, over 100 percent in March and in April we’re just going to light it up.

“We instituted leadership, did some strategic cost-cutting, world-class marketing, which we’re known for… We really wanted to show what we could do.”

If imitation is the greatest form of flattery, Fine’s efforts were soon noticed by his competitors.

“I’m loathe to declare victory after 90 days, but on April 1, MGM Grand started a campaign that offered $10 in free slot play if you brought your Greektown card in,” Fine explains. “It wasn’t MotorCity or Caesars Windsor; they specifically mentioned Greektown. So the market leader targets little Greektown.”

Even though Greektown recently opened a first-class hotel, the original casino is still in place. With the three other properties in the market building brand new facilities or expanding existing ones, Fine says Greektown will always be challenged.

“When you compete on facilities, we’re at a disadvantage. Greektown is nice, but we’re clearly not as nice as MGM Grand,” he says. “That is a spectacular building. I think it’s too spectacular for the market, but that’s just my opinion. If we try to say ?we’re nicer than you,’ we lose. But if we provide better service, better value and more ways to win, and work harder for your business, then we win-and we are winning.”

Fine says Greektown has picked up more than 300 basis points in the three months his company has been on the job.

“We didn’t come in here and fire 20 percent of the staff. That’s not what we were brought in to do. It was targeted. Things like purchasing and food costs. On the marketing side, we chose to do what our competitors have not. We chose to use our hotel as a vehicle to improve casino performance. MGM is $229 midweek, $299 weekends. MotorCity is about the same, I believe, and they don’t do any hotel offers. We’re different. If you’re a gambler, live a few hundred miles away and want a free room, you come right in. We’ll take care of you!”

Marketing Muscle

While Fine says he respects and admires many of the marketers in the industry for their creativity and effectiveness, he says there is something lacking in many corners of casino marketing departments.

“There’s not enough analytical horsepower in the industry,” he says. “There are not enough people who love math. We have a wealth of numbers and data unlike any other industry I’ve seen. We know where you live, how often you come, how much you play and much more. But if you don’t love math, there’s not much you can do with it.”

When hired to work on casino marketing, Fine first turns to the client’s database, he says.

“Most of our clients are not using their data in very sophisticated ways. The reason we can gain hundreds of basis points of market share in such a short time is that there is so much low-hanging fruit. I say that the fruit has fallen off the tree and is lying on the ground. You just have to pick it up and eat it.”

And it all boils down to the relationship a casino develops with its customers. Some old-line casino executives don’t believe in the importance of customer relationship marketing, but Fine swears it works.

“We believe in this stuff,” he says. “That’s why we’re able to do what we do. We have a cultural belief, which is important.”

It’s a new era, however, for the casino industry. The drying up of capital has all but ground the industry to a halt, and executives don’t know how to respond.

“The problem is that for 20 years, until two years ago, value was created by the deployment of capital,” Fine says. “All the value in the business was focused on building, adding, refurbishing and more. Everything was about capital, capital, capital. There was never enough emphasis on operating an existing asset. Capital was the answer to everything.

“Because of that, operators got lazy. Why be an effective marketer if you can get $20 million to build some fancy new club? And those capabilities were not developed as well as they should be. Now, the era of capital is over. That door has slammed shut violently. It’s time for marketing and operators to step up. Unfortunately, I don’t think a lot of people are trained or are capable of doing it.”

The result, says Fine, is a mishmash of programs that have little to do with attracting new customers and retaining existing ones.

“Some casinos are going crazy and spending money like drunken sailors,” he explains. “Others are cutting marketing budgets indiscriminately and driving customers out the door. They’re responding with clubs and not scalpels.”

Keeping Focus

All is not lost, however, if executives can focus on the business and not on the economic travails.

“Even if the business is down 10 percent, it means 90 percent of the business is still there! You can take enough share from your competitors to make an impact. That’s why we only work with one company in each jurisdiction. You can’t do what we do for everybody. Our goal is to get the other guy to close. It’s that simple.”

And yet it’s not. Fine says there is no “silver bullet” that can be loaded and shot at the market. Each casino is unique.

“We don’t have some formula in a box that we roll out for every client,” he says. “We use our analytical and strategic skills to come up with the right solution for each client. Each property is different. Greektown is the weakest bricks-and-mortar. If I was running the MGM Grand, which has the best bricks-and-mortar, I would be doing things differently.”

Going back to his original masterwork, Total Rewards, Fine says that concept worked for Harrah’s but probably won’t work for anyone else.

“I’ve done 12 programs since I did Total Rewards,” he says. “The other 12 don’t look anything like Total Rewards. That was right for Harrah’s but it’s not right for anyone else. We think about programs using the same methodology, but the answers aren’t the same.”

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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