If you are unfamiliar with the data management company DunnHumby try reading the book Scoring Points by Clive Humby and Terry Hunt. For anyone in data management, retailing, loyalty or any other form, of marketing for that matter, this is a must read.
In essence this is the case study of how Clive and his wife transformed the fortunes of one of the world’s biggest and most successful retailers and in the process, built for themselves a unique consultancy that turned data management on its head.
To those in the know, the Tesco Clubcard programme is an icon of modern marketing and, in my opinion despite having already been the key to the Tesco turn-around, still has plenty of room to develop.
The DunnHumby approach to data and loyalty continues to set the bar for every practitioner. I’ve developed a number of loyalty programmes and talked to more data management companies and loyalty consultancies that I care to count and I can tell you that even today few get it like Clive and Edwina did back in 1994, when, just five years after setting up shop, they pitched Terry Leahy the then Tesco Marketing Director.
Tesco started protecting it’s secrets way back in 2001 in a series of acquisitions of DunnHumby shares until finally acquiring the whole business around 2006. Thus, the business that prompted the Tesco chairman of the time Lord MacLaurin to famously say to Clive Humby “What worries me most about this is that you know more about my customers after three months that I do after thirty years” was guaranteed international expansion on the back of that of Tesco. However, knowing Tesco’s customers meant that DunnHumby also knew the customers of just about every fmcg manufacturer and to this day it is generally accepted that the organistion knows more about all the manufacturers’ customers than they do themselves.
However, we are facing the dawn of a new era as Tesco, whose new CEO Dave Lewis is remodelling the business in the face of changing market dynamics and the challenges from budget supermarket chains. He’s set to tighten the focus of the business and is divesting non-core interests including DunnHumby now valued at something around £2billion. So where will they end up?
Favourite this week is WPP whose Chairman Martin Sorrell has admitted he’s keen. Frankly, I can’t think of a better host for the business and I sincerely hope WPP pull the deal off. DunnHumby aren’t the only switched in data management business around these days, there are very interesting operations like SkyIQ where ex-Experian man Tony Mooney is in the driving seat, but DunnHiumby were the first of a breed and there’s no doubt with the right ownership they have the capability to continue to innovate. WPP clients on the other hand would benefit greatly from the insights that a deal like this might provide and I’m sure every one of them is pushing Sorrell to nail the deal.
Acquisition of DunnHumby would certainly make sense for WPP from a number of perspectives, not the least of which is the reality that big agency groups simply have to strive for a full deck of marketing disciplines if they are to make any sense in the new marketing paradigm. The next few weeks will surely decide where this is going, but it’s certainly interesting for all concerned as well as all us onlookers and I for one would be saddened to see WPP let this one go.
Phil Darby
March 17, 2015