I remember 18 years ago when Tesco launched Clubcard that David Sainsbury disparagingly called the initiative “electronic Green Shield Stamps”.
I remember 18 years ago when Tesco launched Clubcard that David Sainsbury disparagingly called the initiative “electronic Green Shield Stamps”. He could not have been more wrong in describing it solely as a promotional scheme.
The data provided by Clubcard was used to inform new and existing store investments, category ranging, competitor tracking and product and store promotion, as well as aid other initiatives such as the move into financial services. It was a massive success and fuelled significant growth for Tesco.
Sainsbury’s quickly recognised that it needed a similar tool and the Nectar card was adopted. Loyalty was seen as a key aspect of retail marketing; in the US, cards became the norm for all supermarket operators.
Dunnhumby, which analysed customer data for Tesco, was hugely successful as a result, opening businesses around the world.
I now wonder whether loyalty cards are as relevant today, and if customers have become promiscuous in their shopping habits.
The internet enables unparalleled price transparency. It is so easy - there is no need to drive around visiting stores.
And retailers encourage it with price-matching campaigns.
It is interesting to reflect on the role of loyalty cards in this new world. Tesco has developed several new Clubcard initiatives in recent years: double points, both generally and in selected departments, have been added to the offer, and reward schemes allow points to be used to pay for a range of leisure activities rather than merely redeemed in store.
The most interesting development has been the increased use of untargeted vouchers, rather than specific incentives that are known to appeal to individual consumers. Promotions offered to all customers, giving either discounts off petrol or the next trip to the store, have become an important feature of food retailing.
There seems to me to be an implicit acceptance that stronger mechanics are necessary to change behaviour today and that the subtle data-based techniques of the past are not adequately effective. The market is more competitive and loyalty is tougher to earn.
The other question is whether the ‘switching shopper’ values quarterly vouchers when choosing their store or, in hard-pressed times, whether they prefer a more immediate reward.
All retailers aspire to build customer loyalty through a whole range of techniques. In today’s world of changing attitudes - particularly among Generation Y consumers - pressurised discretionary spending and the availability of clear price comparison data, competition is intense. I fear that promiscuity rather than loyalty is now the norm.
- David Wild, Former chief executive, Halfords