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Tesco – Time to Rethink Your Loyalty Scheme

February 19, 2014

Green Sheild Stamps A few years ago, I wrote a well-received business case study that told the story of how Tesco used CRM, or Customer Relationship Management, to move from a pile it high and sell it cheap retailer to the UK’s best-loved supermarket brand both in market share and profitability.

The agent of change for Tesco was the customer loyalty scheme, which rewarded Tesco’s frequent customers but also provided Tesco with a wealth of actionable customer information that drove both sales & profitability.

The loyalty scheme was manifested through the Tesco Clubcard, which cardholders presented at the checkout to accumulate Clubcard points based on the value of their purchases, promotional offers and so on.

Clubcard vouchers were then sent out periodically to members, which could then be used in store against purchases or could be used to buy the products of businesses that were Clubcard partners.

This basic process still operates today with the addition that vouchers are now also stored in an electronic wallet where they can be applied against one’s online shop at tesco.com.

So that’s generally how Tesco’s Loyalty Scheme works.

Now, on my recent visits to my local Tesco store, I have begun to question the benefits of the Tesco Clubcard – to me, the customer!

Because, like many thousands of customers, during their weekly or monthly shop, I have stood mid-store or at the checkout and groped my way through booklets or loose slips of vouchers or “money-offs” trying to determine if I had any that I could use.

It’s not a nice experience and certainly is a frustrating one for me and for the customers, who ‘patiently’ wait, as I attempt to liberate those same vouchers from my wallet, only to find that they have either expired or are unrelated to the items I have in my shopping basket!

Yes, Tesco vouchers do offer pounds of ‘savings’ but you have to be able to use them or make needless purchases to realise those savings.

And then there are the occasions when I’ve shopped at Tesco but forgot my vouchers at home, which has happened quite frequently.  Or the occasions when I just didn’t need to do any shopping and so the vouchers and ‘money-offs’ just sat in my wallet and expired!

This made me think, is my Clubcard really benefiting me?  Am I really getting full benefits of my custom at Tesco?  Tesco is promising a lot of savings, but in reality, am I getting much less?

And is Tesco really deserving of my loyalty or would I be better served shopping at price discounters, like Aldi or Lidl, or stores that promise every day lower prices, like Asda, and not vouchers, which are beginning to look more like the unwieldy ‘Green Shield Stamps‘, as far as I was concerned.

At least I wouldn’t have to remember to bring my savings with me to the store to use them!

First, let me point out that the use of an electronic wallet to store vouchers has, to some extent, eased my online frustrations.  In the past, it used to irk me that I would receive vouchers that were only redeemable in store and were useless for an online shop.

However, if Tesco really does want us to use these voucher in store, they need to invest in some tech that would allow their customers to dispense with these paper nuisances and select at the checkout the electronic vouchers they’d like to apply against their shop just like one can now do online.

The online and brick-and-mortar experiences cannot be disjointed with one being half-hearted.

No, I’m not talking about another smartphone app, as those of us without smartphones won’t benefit and the burden would be once again on the customer to realise full Clubcard savings.

No, there needs to be some sort of touch-screen panel at the check out, which allows customers to view eligible vouchers and optionally apply them.

Having such a system would remove the onus on the customer.

Unfortunately, it won’t prevent vouchers from expiring but, at least, it would be a step forward and make Tesco shoppers once again feel that their loyalty is being fully rewarded.

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