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Tesco - Every Little Helps

Tesco is one of the world's leading retailers with more than 4,000 stores in Europe, US and South East Asia. Tesco was started as a grocery store, but changed and expanded and today the group has interests in grocery, non-food items, financial services and telecommunications. Tesco is committed to offering the best value for price to its customers and seeks to help customers spend less. Tesco is one of the success stories of the retailing world and the reason for its success can be attributed in large part to the CRM initiatives and implementation of the learning from these initiatives. Tesco has seen phenomenal growth over the years and even during the recession, it saw an increase in sales.

Listening

Tesco believes in the importance of listening to all stakeholders: giving weightage to customers, suppliers and employees. Tesco has a large employee pool and makes it a point to get their feedback on what works and what doesn't. They take a partnership approach with suppliers and believe that open and constructive relationships are key to strong supply chain. And it also makes an effort to listen to communities where they set up outlets so that they can understand local issues and concerns and work with communities.

Some of their initiatives include

  • Comment Cards: Tesco holds Customer Question Time sessions each year – where 12,000 customers participate. This is a forum where Tesco can get customer's views on products, price, quality, service and role in the community. Customer Comment Cards are available in all the stores. Customers can also use free customer service helpline.
  • Qualitative and Quantitative Research Techniques: Tesco engages in a range of research activities like focus groups, accompanied shops, home visits, etc. On-street, telephone or on-line questionnaires are also used to talk to a larger number of customers.
  • Research Trackers: On-going research trackers ask the same key questions regularly to track performance over time.


In response to the feedback from customers from the various initiatives, Tesco came up with the ‘Every Little Helps’ initiative:

  • prices are good
  • I can get what I want
  • the aisles are clear
  • I don’t queue
  • the staff are great

CRM Initiatives

Tesco has been known for its successful CRM initiatives – and is especially known for the successful loyalty card scheme. But even before the introduction of the loyalty card scheme, Tesco undertook many initiatives to understand the customer and ensure that they delivered what the customer wanted. They use multiple sources of information to look at various aspects of consumer lifestyles and discover more opportunities to meet customer needs.

The Clubcard Scheme

The Clubcard scheme was launched in 1995 and now has more than 12 million households in its database. Tesco's Clubcard membership allows customers to save money on shopping by giving price-off vouchers. Customers gain a point for every pound that they spend at any of the Tesco stores as well as the partner stores. On accumulating 150 points, these can be converted to Clubcard vouchers.

Other similar initiatives by other companies have ended in failure more often than not. One reason for the success of Tesco's Clubcard scheme is the partnerships that they established with other companies for gas, car hire, hotels, etc. It gave customers a chance to accumulate points at all these outlets, thereby speeding up the point collection.

The biggest challenge in initiating a scheme such as this is to find something that appeals to everyone – for Tesco their customer base is large and varied from a toddler to an 80-year old.  Tesco bridged this gap by introducing different schemes for each member of the family: Tesco Kids Club, Tesco Baby and Toddler Club, Tesco Healthy living Club, World of Wine Club, etc.

The Clubcard acts as a tool for Tesco for collecting useful marketing data related to the buying habits of individual customers. Tesco used this customer data to:

  • shape product offerings
  • create ranges
  • gain a better understanding of consumer segments and shopping profiles
  • helped marketing to build loyalty and develop promotion offerings that suit target groups


Product Offerings and Ranges

Using the data from the Clubcard, Tesco created a variety of product ranges to suit different target groups:

  • Healthy Living: The Healthy Living range, originally launched in 1985, now contains over 400 products which are low in fat and sodium.
  • Free From: These products are designed to make life easier for people with food allergies and intolerances.
  • Special Healthy Kids Snacks: Kids range of food products has fibre, wholegrain and five-a-day fruit and vegetables.
  • Organic Product Lines: Tesco has over 1200 products in this range.


Store Formats

Tesco's UK stores are divided into six formats, differentiated by size and the range of products sold. The different Tesco store formats are designed to suit the varied shopping patterns of customers as learnt from research and data gathered. The flexibility that these different formats provide has helped Tesco meet the changing demands. And in keeping with their overall customer-centric policy, Tesco also takes into account the specific needs of the local community and is careful to ensure that architecture and landscaping are in sympathy with the surrounding area.

  • Tesco Extra are larger, out-of-town hypermarkets that stock nearly all of Tesco's product ranges.
  • Tesco Superstores are standard large supermarkets, stocking groceries and a much smaller range of non-food goods than Extra stores
  • Tesco Metro Stores are between Tesco Superstores and Tesco Express Stores and are mainly located in city centers, the inner city and on the high streets of small towns.
  • Tesco Express are neighborhood convenience shops, stocking mainly food and everyday essentials.
  • One Stop Stores are small food stores.
  • Homeplus Stores are only non-food ventures.


Tesco's success story is clearly more than just the loyalty scheme. In a holistic approach, they went beyond CRM tools and implemented operational changes based on the data they gathered. According to Clive Humby, “What we've done, right from the beginning, is not look at this program as a marketing sales promotion program, but we've looked at the program as a way of learning about how consumers shop, and what they want from their retailer, and therefore, not just changing the one to one communication with the customer, but changing the physical retail offer.”

Where most companies use the data gathered to tailor only the marketing message, Tesco went further to make the operational and strategic changes that customers wanted. He adds, "Tesco has became the first organization to use customer insight to actually run its business well. In the past, people just used customer data to make their marketing more effective." Armed with the data about their consumers, Tesco can second-guess their needs, and tailor its product and service offerings accordingly.

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Singapore Airlines: Flying High with Customer Loyalty
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