You could be excused for thinking that your universe has been turned upside down when the world’s leading loyalty exponent is struggling, but international supermarket retailer Tesco, whose success is largely acknowledged to have been a product of its Clubcard programme, is definitely feeling the heat.
Tesco’s partnership with DunnHumby, the company that it now owns and that changed the face of loyalty, is the stuff of legend, but it seems the insights provided by their data management has taken the retailer as far as it can for now. Despite investing more than 2.5billion in its stores in the last year, sales at the supermarket giant fell 2.4% in the six weeks to January 4th and CEO Philip Clarke is under pressure to fix it.
With Tesco’s media and creative in, what is generally considered to be the safe hands of Initiative and Wieden & Kennedy, Clarke has turned to his head of Clubcard development Rebecca Pollard to shift up a gear and she’s NDA-ing CRM big guns right now in preparation for issuing a brief. Currently Havas EHS handle Tescos CRM. I like Havas, but nobody is flameproof and it seems that even the kings of the loyalty hill need to do more these days to stay on top. Maybe Tesco needs bigger guns?
There is always a “weakest link” in any sales process. Clubcard may be state of the art, but the challenges are mounting for all of us and we simply have to raise our game every day. No business can afford to be squeezing anything less than 100% from their resources and too many marketers have got away with less than that for too long already. Now it just won’t wash. Even if you are maximising your potential today, unless you already have a plan to up your average tomorrow you’ll be left behind. Earlier this month I wrote about the need to change before it becomes necessary. Maybe Tesco missed a beat.
Clubcard may be the best and most connected customer communications platform out there, but maybe it needs different thinking and new ideas. Bringing in some fresh blood to really leverage its advantage might be the answer. This isn’t simple stuff after all and there must be hundreds of ideas that haven’t even occurred to Tesco’s team yet. Managing the data and refining the insights that Tesco have on their customers is a big task in itself. A new survey by Experian, who I’ve partnered with in the past, reveals that 20% of marketers are still struggling to get a fix on their customers’ motivations because they can’t handle the flow of data they are getting. Believe me, there’s far more data on the way so they need to get their act together.
With advances in direct marketing and telesales and the proliferation of digital channels in recent years media selection and management is another massive logistical task. Then identifying the opportunities and composing the messages for each of the innumerable customer segments is additional. A while ago a Tesco spokesperson was heard to say that they had the capability to send individually tailored messages to every one of their customers – eye-watering stuff!
Businesses who haven’t yet reached the lofty heights of companies like Tesco really can’t appreciate life at this altitude, but they need to wise-up. Just as Dunhumby’s approach to segmentation became the basis of loyalty programmes around the world, the stuff Tesco are doing now will be the daily grind for any retailer a very short time from now.
Its not that loyalty is losing its edge. Like most things loyalty is an ever-changing and improving discipline and its convergence with CRM, direct marketing, digital, telesales … you name it are just evolutionary phases. Each coming-together represents a host of new opportunities that we have to explore and exploit.
You don’t have to be Tesco to do this stuff, I’ve been working on loyalty projects for businesses of all sizes, but you can’t afford to stand on the touchline we ALL have to get into this stuff or be left behind.
March 14, 2014