Saturday, 22 August 2009

Tesco change the game?

TescoGame

The Tesco Clubcard loyalty programme has been in the news again recently, with the announcement that they are offering double points on all earning. This follows the current campaign where they are offering double the value of reward vouchers in-store – so your £10 reward voucher could be worth £20 across certain lines or continue to be worth £40 with selected Deals partners.

If you’ve ever listened to Andrew Mann speaking about Clubcard (before his recent departure to Sainsburys) you’ll have heard how they positioned the scheme, not as a loyalty programme, but as “a way of saying thankyou”. However, the recent changes to the scheme show clearly what it really is – it’s a way of changing customer behaviour – it’s a loyalty programme through and through – for Tesco it has always been game changing and they are now raising the stakes.

In the book Scoring Points: How Tesco Continues to Win Customer Loyalty, Clive Humby and Terry Hunt discuss how they trialled both 1% and 2% back in value and there was no real difference in customer response – so 1% it was. However, a combination of a highly competitive market and stagnant growth have - 14 years later – forced Tesco to up the game; offering double points or 2% back.

But Tesco like to write their own game rules. Back in 2002, Clive Humby was discussing loyalty in an article first published in Customer Management Journal. He was discussing loyalty programmes and how, at Tesco, they don’t take loyalty “best practice” at face value and instead look to prove what works and what doesn’t. When looking at “Loyalty Ladders”, Humby states:-

“There’s a myth that there’s some sort of magical ladder. Customers come in on the bottom rung at the beginning, they go up a ladder, becoming more valuable to you and, over time, they become advocates of your brand. It just doesn’t happen like that.”

Now I suspect all of us in the industry are guilty of having used a version of this ladder before in a PowerPoint presentation somewhere, and as a simple way of expressing the different types of customer segment, from unknown through to advocate they do have a use.

LoyaltyLadderHowever, Humby goes on to discuss how they had done some work on advocacy and actually found that:-

“Advocacy peaks when you’ve just made a choice…when you’ve just made a decision and seek affirmation by talking about it with your friends”

This of course makes sense – in order to make a purchase, customers will have (hopefully) researched the best product, price and retailer and having made the purchase and been satisfied with it, will quite obviously discuss this with other people. In fact, if they had not had a great experience they are probably just as likely to discuss this too – becoming detractors.

This process is ongoing however. The purpose of a loyalty programme is to “smooth” the way to the next purchase – removing barriers to purchase through a better understanding of a customer’s desires and preferences and removing constant re-evaluation through non-price related benefits.

A better representation of the “loyalty ladder” is in fact as a circle.

Relationship CycleThe ideal customer journey is to go from Awareness (of your brand/product/service) to Desire (wanting it) to Behaviour (the interaction/purchase).

If this is a new relationship it’s more than likely the customer will Evaluate you with your competitors based on price, service or other customer reviews. This is where you need to be able to differentiate your product on more than price alone (unless you’re the price leader of course)

If all goes to plan and the customer is satisfied then this leads to Advocacy. The whole process give you a chance to Learn and Customise further communications in the hope of continuing the cycle. Ongoing, the loyalty programme should hopefully create further differentiation and lessen/remove the constant Evaluation.

Of course every interaction has the opportunity to create advocacy – and to destroy it – but this obviously subsides for most customers unless you change the game a little.

For Tesco, changing the game is exactly what they have just done.

With upwards of 50% of households already enrolled in Clubcard and near market saturation, customers would be more complacent – seeking to increasingly Evaluate against competitors. This has resulted recently in Tesco losing market share as customers evaluate alternatives such as discounters like Lidl and Aldi.

By changing the scheme to make both earning and redemption more valuable, this will be a pleasant surprise for existing customers, creating new opportunities for advocacy. It also increases the value exchange, allowing Tesco to create non-price based differentiation and reducing constant competitor evaluation.

I’ve said before that this is the year of loyalty – first it was Airmiles doing a major re-launch earlier in the year and now Tesco – the behemoth of retail loyalty have raised their game and made loyalty the centre of their marketing strategy – in case anyone thought this had ever changed.

Tesco continue to show that if loyalty is done right, with a robust test and learn strategy and a willingness to keep innovating within the programme, customers will respond positively.

It remains to be seen how these recent changes will affect Tesco’s fortunes, but you can bet they already have a good understanding of how the game will play out.

6 comments:

Hua Cai said...

kobe bryants shoes
mulberry outlet
christian louboutin, http://www.scarpelouboutin.it/
juicy couture outlet
coach outlet
michael kors wallet, http://www.michaelkorswallet.net/
wedding dresses, http://www.weddingdressesoutlet.co.uk/
cheap wedding dresses
chanel handbags
ray-ban sunglasses, http://www.raybansunglass.com.au/
michael kors outlet, http://www.michaelkors-outlets.us.com
oakley canada, http://www.oakleysunglassescanada.com
golden state warriors jerseys
basketball shoes,basketball sneakers,lebron james shoes,sports shoes,kobe bryant shoes,kobe sneakers,nike basketball shoes,running shoes,mens sport shoes,nike shoes
tods outlet
cheap oakley sunglasses
abercrombie and fitch
tory burch outlet
new balance shoes
tommy hilfiger outlet
louis vuitton outlet
kobe 9
coach factory outlet
kansas city chiefs jerseys
ralph lauren uk, http://www.ralphlauren-outletonline.co.uk/
cheap jordans, http://www.cheapjordanshoes.in.net/
rolex watches
hermes birkin
lacoste polo shirts
oakley outlet
2015910caihuali

Zhenhong Bao said...

coach outlet store
lululemon outlet
ferragamo outlet
cheap mlb jerseys
oakley sunglasses wholesale
ralph lauren outlet
michael kors handbags clearance
mulberry bags
true religion uk outlet
celine outlet online
tiffany jewellery
hollister shirts
michael kors handbags
omega outlet
tory burch outlet online
ralph lauren outlet
oakley sunglasses wholesale
longchamp pliage
rolex uk
coach outlet
mcm outlet
fitflops sale clearance
nike air max 90
cartier outlet store
discount michael kors handbags
ray ban sunglasses
kobe shoes
ralph lauren uk
true religion sale
cheap oakley sunglasses
polo ralph lauren
tiffany jewellery
versace sunglasses on sale
cheap nba jerseys
ray ban sunglasses
20160514zhenhong

柯云 said...

2016-05-30keyun
louis vuitton handbags
coach factory outlet
louis vuitton outlet
ray bans
michael kors purses
coach outlet online
coach factory outlet online
cheap air jordans
longchamp handbags
ray bans
tiffany and co jewelry
vans sneakers
louis vuitton bags
nike outlet store
nike blazers uk
michael kors bags
true religion jeans
oakley vault
louis vuitton outlet
toms wedges
red bottom shoes
air jordan shoes
coach outlet store online
oakley sunglasses wholesale
oakley outlet
lebron 13
ladies cartier watches
hollister clothing store
cheap oakley sunglasses
ralph lauren
jordan concords
ray ban sunglasses outlet
ray ban eyeglasses
nike roshe run
louis vuitton purses
toms outlet
louis vuitton outlet stores

xumeiqing said...

20160701meiqing
coach outlet
rolex watches
birkenstocks
oakley vault
michael kors handbags
louis vuitton pas cher
tory burch outlet
mizuno running shoes
cheap nhl jerseys
adidas superstars
christian louboutin outlet
ray bans
oakley sunglasses
cheap oakley sunglasses
the north face
discount oakley sunglasses
discount nike shoes
ghd hair straighteners
tiffany and co
burberry outlet
ray ban sunglasses discount
chi flat iron
pandora charms
true religion jeans
the north face
instyler max
kate spade handbags
yeezy boost 350
babyliss pro
michael kors outlet
versace shoes
polo ralph lauren
louis vuitton outlet
ray ban sunglasses
running shoes
armani watches

Gege Dai said...

coach outlet online
giuseppe zanotti shoes
true religion jeans
ray-ban sunglasses
ferragamo shoes sale
michael kors outlet
lululemon outlet
ugg uk,ugg outlet,ugg boots outlet
tiffany outlet
rolex watches
coach outlet
ferragamo shoes
oakley sunglasses wholesale
lebron shoes
polo ralph lauren
louis vuitton outlet
fitflops sale clearance
toms shoes
swarovski crystal
tory burch outlet
michael kors outlet
fitflops clearance
ferragamo shoes
ray ban sunglasses
michael kors outlet online
beats headphones
michael kors outlet
kobe 9 elite
michael kors outlet store
longchamp handbags
michael kors uk
michael kors canada
cheap uggs
longchamp outlet
0727JIANXIANG

dong dong23 said...

ray ban wayfarer
mont blanc pens for sale
coach factory outlet
abercrombie kids
ray ban sunglasses
juicy couture
coach factory outlet
beats headphones wireless
polo ralph lauren
michael kors outlet online
michael kors outlet
michael kors outlet
michael kors
jordan shoes
coach outlet
ray-ban sunglasses
michael kors outlet
ralph lauren outlet
abercrombie and fitch
cheap jordan shoes
mont blanc
tory burch outlet
oakley vault
adidas outlet store
louis vuitton handbags
ralph lauren polo
michael kors outlet online
louis vuitton uk
rolex submariner watches
ralph lauren uk
lebron james shoes 12
oakley sunglasses
designer handbags
oakley sunglasses
oakley sunglasses
adidas superstar
abercrombie outlet
coach factory outlet
adidas ultra boost
burberry outlet
20168.9wengdongdong