Case stude: Tesco
One of the most successful loyalty schemes has been Tesco Clubcard, launched to great fanfare in the mid-1990s. Its proponents say that it embodies the ethos expressed by chief executive Sir Terry Leahy: “Our mission is to earn and grow the lifetime loyalty of our customers.”
Fuelling growth
Clubcard is integral to Tesco’s growth, which has seen sales grow from £17.4bn in 1998 to £37.1bn in 2004. One of the reasons for its success is the way in which Tesco has chosen to use the data it collects through the scheme – it has systems that allow it to segment customers according to their life stage, shopping habits, whether they are lured by promotions, their lifestyle, the type of Tesco store they frequent, the brands they choose and how loyal they are to Tesco. All these attributes allow the retailer to build up an individual picture of each Clubcard user. It can send out tailored offers – there are four million variations of product coupon offers on the Tesco system – with the result that 40% of coupons sent out are redeemed.
From lunch to launch
And Tesco doesn’t stop at sending out offers on groceries. It was the information gleaned from Clubcard, for example, that enabled Tesco to launch its financial services arm. It has 4.6 million customer accounts and Tesco Personal Finance is now the largest of the ‘non-traditional’ providers of accounts in the UK, according to Mintel. “It has only been able to do that,” says Paul Alexander of marketing consultancy Dunnhumby, “because of its understanding of what customers want.”