CRM to
support the e-business strategies of Tesco
Customer
Relationship Management is one of the most important and more essential
approaches to attain customers and then retaining those customers to establish
a higher life time value for every one of them. CRM describes the broad
business strategy of the respected company consists of the sectors of
customer-interface and other extra operations related with business and
customers.
Tesco give focus
on new technology, also it has launching on company's extremely successful
loyalty card in 1995, which focused Tesco to increase extensive knowledge based
on its consumers and to segment consumers according to their shopping,
locality, and their age. By considering this idea, Tesco has carefully customized
its contributions to customers: special offer on meat products are never sent
to vegetarians customers and products of children's are not sent to childfree
customers. Furthermore, money-off coupon program of Tesco enables consumers to
attempt in respective, more expensive items, not for just to get discounts on
products which they buy regularly. Moreover, Tesco customized its business
processes and give focus on new technology for a second innovation-online
shopping. By realizing from the side of customer experience every step of the
way, Tesco recognized its technology which is more standard for the online
shopping from the UK online supermarket store
Background:
In Malaysia there are currently 50 Tesco
retail stores and seven stores on the grocery home-shopping front and 1.2
million customers each week. In 2006, Tesco also launched the Club card in
Malaysia. With Club card, it has 1.7 million customers who are active and
swiping the card each day.
Online shopping is also a new arena the
company ventured into last year for seven of its stores.
Aim/Objective:
“We know that one loyal customer is worth five
times a newly acquired customer. Unfortunately, we had a problem where loyalty
was in decline and we felt that we needed to find a way to thank our important,
loyal customers,” said Vivian Yap, marketing director of Tesco Malaysia.
Tesco also wanted to go further and understand
how consumers’ minds worked and how to be a priority brand in their purchase
choices.
Strategy:
Tesco used data from Nielsen and other
researchers focusing on customer satisfaction studies to receive information on
about marketer trends, consumer behavior and combined it with the data from the
Club card. This helped the retailer to put the customer into the center of its
decisions.
“When customers shopped, we started to fill
information as we tried to prove our understanding of the consumers as
individuals. We started to look at how we catered our approach, personalised
our offers and enablde Tesco to make viable business decisions. If we can speak
to you as individuals, ultimately we can win your loyalty,” said Ben Smith, head
of retail and media at Dunnhumby Malaysia which worked with Tesco on its
loyalty initiative.
Simply understanding purchasing habits is important – but it is
just one channel. Understanding customers and how they shop is just the start,
he added.
Execution:
Tesco took a snapshot from the information it
had from the Club card to see how consumers act as individuals and how they
shop. This information was then further segmented into how often the consumer
shops and how much they spend.
These segments then were further categorised
into ‘existing loyal’, ‘previously loyal that has lapsed’ and ‘an opportunity
customer’.
Tesco also designed a personalised promotion
that came in the form of coupons. For example, if a family likes a particular
brand of ice cream, they will be sent a promotion coupon on that particular
brand of ice cream. And the customer will know that it is personalised to them.
“Data integrity is important. It will be quite
a disaster if I sent someone who liked pasta, shampoo instead,” said Yap.
In each of its mailing lists, Tesco had almost
a million customers that it mailed. This resulted in one customer receiving up
to six personalised promotions. So the retailer went out to hunt for six
million products that can be tailored to each individual.
“It’s just amazing how different people are –
there are some commonalities – but there are interesting product choices that
people make. We then drill into the data and match it to the customer. So that
is what we did in this instance to reward loyal customers,” said Yap.
Meanwhile, to address the issue of mail
bounces, Tesco launched a targeted CRM approach. This allowed the retailer to
know the customer purchase history and their emailing habits.
For example, Tesco had a group of customers
who registered with it but never shopped with the brand. It hence had to
re-introduce itself to them. Another group of customers shopped only once but
never came back – so a separate programme was designed just for them with
incentives so that they could come back and shop.
E-mail
Marketing
E-mail marketing
strategy consists of the sending information of the products and services to
the potential customers through the e-mail. It is one of the most effective
marketing techniques to build good business relationship among potential
customers and prospective clients. Tesco realized that e-mail marketing is the
key to its online business strategy. From e-mail marketing Tesco gains nearly
60% online revenue.
Online
Advertising
Online
advertisement is the most effective process of advertising in which
advertisements are placing into the web site of the company. Tesco give focus
on online advertising campaign for the promotion purpose, for example promotion
of flower and wine in Christmas time, chocolates for valentine day etc.
Social Networking
Face book and
Twitter have the greater hand to make the closer relationship with customers
and for promotional campaign of Tesco. Presently there are 19 Tesco themed
Twitter feeds. According to the head of research and development at Tesco.com,
Tesco families were thinking about supporting their social media activity to
promote consciousness of target items. He added social strategy of Tesco would
support to improve personal relationships with its customers and loyalty.
Recently Tesco started a Friday Frenzy promotional campaign on face book for
the clothing at Tesco and was able to made an addressees of over 40 thousand
persons per week
The Tesco Loyalty Card / ClubCard Scheme
• One of the worlds most successful loyalty schemes
• Partners with other companies such as gas, hotel and car hire facilities thus giving users more opportunities to earn points
• Different schemes for different family members: Tesco Kids Club, Tesco Baby and Toddler Club, Tesco Healthy Living Club, World of Wine Club
• Allows for targeted communication, thus, there are over four million variations of its quarterly mailing to ensure that discounts and offers are tailored specifically for the customer
• Insights gained from the analysis of shopping patterns were able to be actioned into marketing and retail programs which encouraged customer satisfaction and loyalty to Tesco.
Comment Cards
• Customer Question Time sessions are held twice each year, where 12,000 customers participate. This enables Tesco to gather more data on customer views on product, price, quality, service, and community involvement
Product Offerings and Ranges
Using data gathered from Clubcard and comment cards, Tesco have been able to create a variety of product ranges to suit different target groups:
• Healthy Living: Over 400 products which are low in fat and sodium
• Free From: Produced for people who have food allergies or dietary requirements
• Special Healthy Kids Snacks: A dedicated range of kids food products that are high in fibre, fruit and vegetables
• Organic Product Lines: Tesco has over 12000 products in this range
Result:
The CRM email strategy resulted in about 3000
customers being re-activated. Loyalty retention was also on the rise with about
30% increase in customer loyalty.
“We still do mass-mailing –
I’m not saying it’s wrong – but there is a combination you need to find for the
best results,” said Yap. However the combination of coding data and Club card
data and overlaying helps half Tesco’s marketing spend and bring back in store
700 customers in the period of four weeks
