"In the late '70s, credit-card solicitation depended on a shotgun approach of mass mailings, but by the early '80s, response rates dropped off. We looked for other techniques, and came up with market segmenting of groups that had something in common," said Stephen Bartell, vice president of co-branded and affinity marketing for MasterCard International.
Co-branded cards are affinity cards sponsored by corporations instead of associations.
Today, MasterCard has more than 3,500 affinity or co-branded programs worldwide, Bartell said. Of the 88 million MasterCard holders in the United States, 16 million have affinity or co-branded cards, he said.
The idea for Caesars World to sponsor a credit card originated in its Atlantic City casino as a marketing tool. But the concept spread to the three other Caesars resorts - Caesars Palace in Las Vegas, Caesars Tahoe in Lake Tahoe, and Caesars Pocono Palace.
Atlantic City runs the program for the chain, said Michael McNamee, assistant vice president of direct marketing at Caesars Atlantic City Hotel Casino.
There are no plans for other Atlantic City casinos to jump on the credit- card bandwagon in the near future.
Jim Wise, spokesman for the Sands Hotel Casino, said the casino was not interested because it had fewer gaming properties.
However, Harrah's, which operates Harrah's Casino/Hotel Atlantic City and other gaming halls in Nevada, said it had no plans to have a similar credit- card program.
Caesars MasterCard operates like a traditional credit card. As with other affinty and co-branded cards, the issuing bank returns a small percentage of the interest payments to the sponsor. Most of the money returned to Caesars goes back into the program to pay for day-to-day expenses such as postage and printing, and to recoup some of the other costs, McNamee said.
"We're more interested in brand awareness than making money from the card. We use this as a vehicle to get cardholders to come to our property," he said.
The chain marketed the credit card primarily through existing customers, said Peter Boynton, president of Caesars Atlantic City.
Solicitations were sent to guests at all Caesars World hotels, and to those who responded to casino and hotel promotions.
Caesars sends out a monthly mailing to each cardholder, separate from the bank statement. Each Caesars mailing includes a cash-rebate check and additional discount offers. Rebates average $5 for each $500 charged in a month. The catch is that cardholders must redeem the rebates at casino properties.
In addition, cardholders receive 25 percent discounts at any Caesars restaurant, showroom or retail store in the hotel, as long as the items are purchased with the credit card.
Cardholders also receive room upgrades at any of the four resorts. For example, a cardholder will be booked into a deluxe room at standard room rates, if available, McNamee said.
The credit-card program has already paid off in the casino, Boynton said. Though he declined to reveal numbers, Boynton said slot play among cardholders had increased.
By the end of the decade, Boynton expects Caesars MasterCards to be used inside the casino in place of money, a system known as cashless wagering.
Instead of inserting coins into a slot machine, gamblers insert the credit card and punch in the amount to be played. Wins and losses automatically register on the credit-card account.
"Right now, we have the technical capability to do that," Boynton said.