Tesco have recently backed their loyalty clubcard with a £150m relaunch. This second coming of the mighty clubcard has come at a moment when the majority of companies are cutting back on marketing spend. Why then is the world’s third largest supermarket bucking this trend and what are they hoping to achieve?

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Approximately 9m customers already signed up to clubcard scheme

Well, Tesco estimate that the investment will result in an additional 1m customers to its already hugely popular scheme. They’ve already got around  9m loyal customers using the card on a regular basis and if we say conservatively that a customer spends on average about £80 a week with Tesco. It won’t take long to payback that investment!

Market share leaps on introduction of clubcard

Tesco usually do things that involve investment because they have some customer insight that tells them its the right thing to do. And usually they’re right. The initial launch of clubcard in 1995 saw Tesco market share jump by 1.8 percentage points in 2 years or put another way approximately £1.5bn in sales value. Recently, Tesco have been losing out a bit on the UK market share tug of war particularly with its oldest rival Sainsbury. But just 1 month after this recent relaunch of clubcard Sir Terry Leahy, Tesco CEO, is in the papers saying that Tesco had “matched and overtaken” competitors on a like-for-like sales basis. He attributed this partly to the clubcard relaunch although other factors may also have helped.

Find out more about what your customers are doing

Another reason why clubcard is getting a big push may also be because it tells Tesco so much about its customers. At launch Lord McClaurin the then CEO was quoted as saying; “I’ve learnt more about Tesco customers in the last 3 months than in the last 30 years!” The current economic climate must be changing customer’s behaviour so now would be a good time to capture as much information as possible about people’s spending habits.

Not that Tesco don’t already have a vast bank of information about their customers. They recently claimed that there are 9m variations of the clubcard statement and no 3 customers receive the same targeted offers.

Now is not the time to cut marketing spend on loyalty schemes

So if you’re thinking that marketing spend and your loyalty scheme are areas where you should be making cuts maybe you should think again. On the other hand If you’re thinking about loyalty as a tool for building market share, sales value and gaining customer insight then you may be interested to hear how web project people can help you develop your existing loyalty scheme or help you put one in place.

Most companies have some kind of CRM system as the platform to their customer loyalty strategy. Most companies however are not seeing the return on their investment that Tesco is clearly benefitting from with Clubcard. That might be because of the huge resource that Tesco has chosen to put behind its scheme. When Tesco launched clubcard it needed huge investment to get such a highly targeted and personalised customer project off the ground.

The web has put an end to the need for big ticket investment in CRM loyalty schemes

I worked at Tesco in the early days of clubcard and to set some context as to where things were in the technological revolution I can tell you we had computers with green writing on them, no internet access at the desk, a word processing package that pre-dated Microsoft Word and when told about Google we had to ask how that was spelt. In short it was a pre-web world that still relied on big computers to crunch the big numbers.

To achieve something approaching the same thing today using web technology costs a fraction of the price and time.

Web technology means that big ticket CRM software systems are no longer a pre-requisite to effective, sustainable customer loyalty schemes.

Web Based Loyalty Scheme are Very Effective with Low Investment Costs

At web project people we have the expertise to help you make your customer loyalty scheme work harder for you in terms of the customer insight it delivers, loyalty you nurture and the value that creates.

Using web technology we can develop in house databases that help you collect and analyse data and if necessary find ways to integrate with your existing systems.

Using your website as a platform we can work with you to develop ways to personalise to each customer’s requirements and promote a 2 way flow of communication that can only strengthen your customer relationships.

Using social networking tools such as twitter we can explore new channels for you to engage with customers in a friendly and informal manner never before seen on such a personal level.

If the Tesco lead on the need for customer loyalty has you interested and you would like to know more how web project people can help you with your loyalty scheme please get in contact to set up a meeting with our team.

Thank you for listening. If you have any comments or would like to add to this discussion please leave them on this blog.