Tesco’s launch of Clubcard Plus last week takes the retailer’s long-running loyalty scheme into new territory, being a subscription option, and is the final piece in the turnaround engineered by CEO Dave Lewis.
Costing £7.99 a month, members can get 10% off two big shops in store every month via a code in the Clubcard app or get twice as much data from their Tesco Mobile phone contract, as well as regular discounts on Tesco products.
Lewis, who steps down next year, told last month’s Festival of Marketing conference that, at the time he joined, the Clubcard loyalty scheme had become little more than a promotional tool and had not seen any significant investment for some time.
“It’s a huge asset … but it wasn’t fit for purpose,” he said. “So we went contactless, we made digital vouchers and we’ve now started very specific digital Clubcard pricing” where the retailer differentiates pricing at certain periods based on loyalty scheme membership.
He noted how Clubcard draws people further into the Tesco ecosystem – the more they engage with, say, banking or mobile, he reported, their engagement with grocery grows. And this is despite those other businesses having been run as if they are entirely separate.
“If you put it all together, the bundle of Tesco benefits is huge,” he said. (For more, read WARC’s report: What brands can learn from Tesco’s turnaround.)
“If you think about what Amazon is buying [Whole Foods etc], it’s actually what Tesco already has,” he added. “We’ve just never put it all together in one customer relationship. What Clubcard Plus allows us to do is bring it together through that loyalty program without having to change all the businesses behind it.”
Only available to in-store shoppers, the new membership option aims to drive footfall, which is where the CEO's initial turnaround efforts were focused as he brought “brutal objectivity” to bear on the supermarket chain’s problems.
Back in 2014, penetration was unchanged but volumes sales were down as the frequency of visits had decreased as people took part of their shopping elsewhere and the basket size had shrunk when customers were in store.
“If your penetration doesn’t decline, and you’ve got people in your store, your whole marketing effort is to take away reasons why anybody feels they need to take any of their shopping somewhere else,” he said.
So for the first three years of the turnaround “the only marketing activity we did really was in our store”. No big marketing or advertising campaigns, just the brand guarantee and increased recruitment of people – “we changed the relationship in the store”.
Sourced from WARC