Multiple object of desire |
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| Colm Carey reviews a book on how Tesco tries to gain and maintain customer loyalty |
The mind and matter theory of modern business which
leaves you feeling that big companies do not mind and that you, the
customer, do not matter, lies at the heart of a new book, Scoring Points – subtitled How Tesco Continues to Win Customer Loyalty.
To be honest, reward cards or any other so-called loyalty schemes
leave me cold. The idea of having 'relationships' with banks,
supermarkets or mobile phone companies is an odd notion. Do not send me
a loyalty card and then have me standing in a queue for basic service
or make me jump through hoops to have my problem solved.
Anyone who works in marketing will have heard people wonder how
companies expect customers to show loyalty when there is no reward.
Banking and insurance are prime culprits. You stay with your bank or
insurance company for years but get nothing in return. One often finds
that new customers get better terms than those who stick around.
Retailer loyalty cards are meant to address this imbalance by making
sure that sticking around delivers goodies on a regular basis. In the
case of Tesco, it was not always so. A culture shift was required in
the multiple to bring to life change driven by comments from Tesco
customers looking for something back from the retailer giant.
There is a lot of useful information in Scoring Points and as such
it constitutes a manual on how to set up and run a loyalty card scheme.
But unless you are in the market for a scheme much of the detail is
redundant and gets in the way of the main story.
Just like celebrity marriage, store card loyalty can involve more
than one object of desire. In 2004, there were about 2.5 loyalty cards
in every household in the UK so people are covering more than one base
or, if you like, bed hopping in search of variety.
How many reward cards lie unloved? How many are sitting in drawers
like the Lyons Tea Minstrels of old? Remember feverishly collecting
Green Shield Stamps? How many decommissioned cards would an amnesty
deliver?
We learn the intriguing fact that by 2002 world airlines had a
liability for 8,500 billion 2frequent flyer miles worth around US$500
billion. That would probably get you a flight to Mars when Ryanair
decides to open up the route.
People tune in, sign up and drop out of these schemes, so getting
them up and running is just the tip of the iceberg. Maintaining
interest over time is the real skill. Two of the authors of Scoring
Points were involved in the creation of the Tesco Clubcard.
Tesco management are made to sound like gung-ho, over-the-top types
from an old British war movie. But even the most cynical might be
impressed with the can-do attitude that drove the project forward. In
true retail style, impossible deadlines were set and largely met by the
project team huddled in their secret bunker in an abandoned office
building somewhere deep in England.
All of this happened back in the halcyon days of 1995. It is hard
now to imagine how excited everyone was at the notion of a card that
could track and gather customer data given that ten years later your
every move and transaction is tracked and analysed by cards, cookies
and the ubiquitous mobile phone that can do most everything.
The payback to Tesco from the card was not just the fact that it
kept people returning back to their stores to earn more cash but that
they spent that cash on luxury goods. So customers feel Tesco has
bought them a little luxury and the brand wins because the cash does
not replace regular spend. As they say, every little helps.
Scoring Points is based on the UK Clubcard experience and it shows.
It is hard to imagine being able to translate the phrase “the British
just love their supermarkets” to the Irish context. The nation of
shopkeepers has become a nation of shop lovers.
The logistics and statistics involved in running the Tesco Clubcard
are rehearsed in great detail by the book's authors and will, no doubt,
make compelling reading for those of a train spotting disposition.
Anoraks united will love Scoring Points.
A more valuable snippet of information is revealed by the
acknowledgement that the stockmarket hates grocery price wars. They
drive down the value of the companies whose shares it trades. A ringing
endorsement of what savvy marketers and suppliers have been saying for
years. Adding value yields more than slashing costs. Some day the
banking industry will understand this and stop banging on about
interest rates.
While Scoring Points is a book about Clubcard but in the final
analysis it represents a handbook on how to create and manage a process
that proves the point made by Frederick Reichheld, author of The
Loyalty Effect, that “profit is a consequence of value creation” and
not of pandering to the lowest common denominator. It is worth a read
but you might do better still by giving it to your bank manager.
Colm Carey is director of The Research Centre and is a consumer pyschologist.
