Case study: Tesco Loyalty Card
One of the most successful marketing studies in the United Kingdom was conducted by Tesco prior to the launch of their Tesco Loyalty Card in 1995. A year earlier they hired a company called Dunnhumby who analysed the shopping patterns of the UK consumer. The study included looking at what customers were placing in their baskets, their shopping trends, geo location purchasing as well as spending averages across the United Kingdom. Just three months after taking on the study Tesco Chairman (at that time) Lord MacLaurin said, “What scares me about this is that you know more about my customers after three months than I know after 30 years.”
Dunnhumby’s ability to analyse the data that they collected lay down the foundations for building a huge advantage over competition, as well as putting in place a loyalty scheme that would far outshine any other ever undertaken before, not only increasing Tesco’s position as a major supermarket leader but establishing a strong brand loyalty that still exists today. Dunnhumby’s case study identified a total of eleven areas of where Tesco could focus and take advantage of over their competitors. These included trends, basket building, right product in the right place and cross-selling. The study and ensuing scheme has been so popular that books have been written on its success and the impact that it has had on the modern day supermarket industry.
There is no doubt that the way that Tesco implemented its loyalty car scheme was, at the time, the most effective of its kind to date. It remains to this day one of the most successful loyalty schemes across all industries and it is testament to the brilliant execution of a fairly simple idea.