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Sunday, 13 June 2010

Good Riddance, Terry Tesco – 3

Those looking for a USP that sets Tesco apart from its competitors need look no further than the loyalty scheme that is the Clubcard. It’s a simple and nifty idea: punters get a point for every pound they spend, and those points can be redeemed at a penny a go – but only at Tesco stores.

On the face of it, this looks like a generous act, but it isn’t. Those vouchers that drop through the letter boxes of the Tesco faithful are not some kind of universal money substitute – although you can cash them in (not with Tesco) for less than their face value – but a means of causing those punters to keep choosing one retailer over another.

Clubcard points don’t mean you get a discount of any significance on your shopping: their full “value” is only redeemed if you do yet more shopping. And the information this provides Tesco about your retail preferences is worth it. That information enables the retailer to target new products and services far more effectively. Thus more bang is extracted from each promotional buck: those Clubcard points more than pay for themselves.

And Clubcard points are given entirely at the discretion of Tesco – which means, for instance, that not every forecourt gives them on petrol sales. Generally, you’re more likely to get points on petrol where there is a large enough store nearby – in other words, there is more likelihood that you will be doing enough shopping to make it worthwhile for Tesco to offer a little inducement. As ever, any advantage from this arrangement accrues to them, not to you.

But the facade must be maintained: all those “personalised” letters that accompany Clubcard statements and vouchers help reinforce this. In reality, they are yet another way of targeting punters according to their shopping habits. The idea that Tim Mason, or any of his minions, give any attention to mere individuals is laughable.

And the brains behind Clubcard? Step forward Terry Leahy. This scheme is Leahy in a nutshell: the appearance is given that the customer matters, but the reality is that there is only one beneficiary, and that is Tesco. You’ve signed up to the Clubcard myth? More fool you.


John B said...

The brains behind Clubcard are two wonks called Edwina Dunn and Clive Humby (yes, I also wish the first/last names were the other way round) - their market research agency Dunnhumby invented the Clubcard programme and subsequently was bought out by Tesco. Leahy's skill was being the first big retail boss to realise that their model was worth adopting.

(I'm also slightly less cynical about Clubcard as a concept - the idea is that you understand your customers better so can offer them things they're more likely to want, which should in theory benefit you and the retailer. At least, if they do it properly...)

Tim Fenton said...

ITYM "things they're more likely to *buy*". Maybe targeting sometimes fulfils a real need, but the beneficiary is Tesco first. Provided the numbers keep stacking up, little else matters.

Thanks for the backstory, BTW.