Tesco: The CRM Champion

5 Mar

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In my previous post I discussed all about CRM.  Today I am going to use the CRM champion; Tesco, to explain and convey the use of the information system.

Tesco was once a lost making market that couldn’t sustain long term growth.  Tesco had to undergo strategic decision making to change this.  They needed to do two things to survive;

  1. Get customers into the shop
  2. Retain them and gain loyalty

But how would Tesco get the information needed to make appropriate and efficient decisions?  Only an information system could provide Tesco with data needed to get customers and retain them.  Information systems would enable them to learn more about individuals that shop there, their consumer behaviours, what they like/don’t like.  The information provided was priceless to aid their decision making.

Tesco decided to create a loyalty card, enabling them to gather information onto an information system for each individual shopper and therefore ‘lock in’ their customers.  The loyalty card information systems provide the retailer with information such as trends, product popularity etc, which allows the shop to grow with time.

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The story of Tesco Loyalty card is one possibly the most thrilling and intriguing marketing tales of this generation.  Tesco is renowned for its modern loyalty scheme marketers.

Tesco introduced their loyalty card, named ‘Tesco Clubcard’, in 1995.  Basic achievements gained from the information provided by the customer information systems include;

  • Became the no.1 retailer in the UK market with annual revenues of over £32 billion
  • Successfully entered new markets including home electronics, clothing, personal finance and mobile
  • Become the world’s most prosperous Internet supermarket, one of Europe’s fastest developing financial service companies

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The clubcard enables the supermarket to develop personal relationships with individual customers.  The database that provides information to all levels of the organization is massive.  It in fact, tracks the shopping behaviour of up to 13million British families for more than a decade.  This loyalty card provides all the information from its database to provide guides for all the key business decision making.  There are over four million variations of its quarterly customer mailing to ensure that its discounts and offers are tailored specifically for the customer.  It provides insight into the patterns of consumers and provides immediate advantage over competitors in the areas of;

  1. Consumer trends
  2. Targeted communications
  3. Accurately measured promotions
  4. Basket building
  5. Defence against competitor activity
  6. Right product in right place
  7. Negotiation power
  8. Cross-selling
  9. Site locations
  10. Seasonal peaks
  11. Global growth

So has Tesco has CRM been successful?   Absolutely!!  The database owned by Tesco is invaluable.  It has enables people from all levels of the organization to make the most effective decisions to attract customer and gain loyalty, and, thus, survive in the competitive industry that is the food market.  Without its information systems, Tesco could not had made the decisions it has to

  • Engage with 15million active members with 96% customer retention
  • 300% membership increase since launch
  • Weekly sale increase by 30% and sales valued increase by 97%
  • Most successful online retailer in the world

Interesting short clip to watch;

http://www.youtube.com/watch?v=hv4eEifsE08

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 References:

http://www.youtube.com/watch?v=hv4eEifsE08

http://www.icmrindia.org/casestudies/catalogue/Marketing/Tesco-Marketing%20Case1.htm#Exhibits

http://wps.pearsoned.co.uk/ema_uk_he_kotler_euromm_1/126/32286/8265276.cw/content/index.html

 

3 Responses to “Tesco: The CRM Champion”

  1. sad111417852 March 6, 2013 at 1:48 pm #

    Interesting topic especialy how you related it back to such a well known brand

    • sad111419882 March 6, 2013 at 3:44 pm #

      thanks…I tried to pick an organization that most people could relate to🙂

  2. sad111505863 March 9, 2013 at 9:59 pm #

    really good blog ….very creative🙂

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