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Scoring Points

Scoring Points






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    Scoring Points Scoring Points Presentation Transcript

    • Scoring Points How Tesco is Winning Customer Loyalty AUTHOR: Clive Humby and Terry Hunt with Tim Philips PUBLISHER: Kogan Page Limited DATE OF PUBLICATION: 2004 NUMBER OF PAGES: 276 pages Book pic
        • The retail and food industry is a very competitive sector.
        • One way of gaining brand loyalty is through a customer loyalty program.
        • Scoring Points teaches you how to make customer loyalty schemes work.
    • Questions of Loyalty
      • Types of Loyalty
        • Purge Loyalty.
        • Pure Loyalty.
        • Pull Loyalty.
        • Push Loyalty.
      • How Loyalty Schemes Create Value
        • More purchases.
        • Provides the ability to mass-customize marketing communications.
        • Assets value of data.
        • Lets companies track customer trends.
        • Minimizes waste.
        • Helps promote trust.
      • Secrets of Program Success
      • Love the program. Marketers, staff and managers should love the brand and be committed to the program that represents the brand.
      • 2. Have a clear view of what loyalty means and how it can be used to expand customer good will.
      Questions of Loyalty
    • Making Loyalty Pay
      • The Economics of Loyalty Marketing
        • Investment in cash.
        • Investment in people.
        • Customer charter.
        • The cost of stopping.
      • Foundations of a Loyalty Scheme
        • Opt-in or automatic.
        • Anonymous or personalized.
        • Flat-rate or top-down.
        • Rewards on-demand or cumulative value.
      • Loyalty Currencies
        • 1. Points encourage members to collect and spend their units of value.
        • 2. Discounts gives members price cuts on selected items.
        • 3. Information provides objective and useful facts to members. This deepens trust.
        • 4. Privilege provides members with additional perks such as access to airport VIP lounges, free gifts, etc.
      Making Loyalty Pay
      • The DNA of Loyalty
      • Brand values. It is the active expression of the brand’s value and personality - qualities that customers recognize and admire.
      • Business dynamics. The opportunities and constraints of the business should reflect on the construction of the loyalty program.
      • Customer behavior. The program should encourage profitable customer behavior.
      • A loyalty scheme gives you the chance to rediscover your customer and develop customer good will.
      Clubcard on Trial
      • The following factors made the launch a success:
        • Momentum.
        • Simplicity.
        • Control.
        • Involvement.
        • Preparation.
        • Ambition.
        • Commitment.
      Because We Can
      • Investment in the mailing program, although risky and costly, yielded positive results. It identified individual customers, built customer knowledge and enabled more relevant services to the customers.
      • Maintaining Momentum
      • Tesco concentrated on maintaining momentum by:
        • Offering exclusive events to members.
        • Attracting different segments with customized programs and schemes.
        • Offering gifts and rewards to shoppers who earn a certain number of points in a specified period.
        • Partnering with other retailers.
        • Offering extra incentives to members who extend their purchases in more departments in the store.
      Every Little Thing Helped
      • Data derived from the loyalty program is relevant if you can transform it into meaningful information and translate it into knowledge.
      • Measuring Customer Loyalty
        • Recency. A simple measurement of when a customer last shopped.
        • Frequency. Measures how often a customer shops.
        • 3. Value. Measures how much “value” is placed on the brand, and how the retailer is seen to provide to a particular household
      Data Lovely Data
      • Problems with Data Warehouse
      • Format - what is the simplest way to give data a common denominator?
      • Time - how fast will the data be organized? How fast does it take to generate info?
      • Scale - what are the useful data?
      • Quality - what is the best balance between quality and quantity?
      • Cost - what is the program’s ROI?
      • Culture - how will data be managed?
      • Corporate ego - size is not everything. Know the company’s limitations.
      Data Lovely Data
      • What Tesco Learned About Data
        • Pragmatism. Ask questions you can answer.
        • Progression. Build on each new discovery.
        • Approximation.
        • Learning. Knowing what works with the customers.
        • Defense. Use data to defend against competition.
        • Segmentation. The opportunity to target specific segments and customers
      Data Lovely Data
      • What Tesco Learned About Mail
      • Talk, listen and learn. Direct mail gave Tesco the opportunity to communicate with members as well as the chance to learn, refine and improve.
      • Give people what they want.
      • Constantly experiment. Direct mail gave Tesco the opportunity to experiment on a new marketing approach at a scalable but discreet manner.
      • Measure. Gave Tesco the chance to gauge how and if a program works.
      • Review then predict.
      • Make it fun.
      Four Christmases a Year
      • The company sends the magazines through the mail rather than getting it in the store. The advantages are:
        • It supports the “ thank you ” scheme and idea of the program.
        • It promotes featured items in the store and encourages members to spend their Clubcard vouchers in the featured products.
        • It is a medium to talk to customers. The magazine updates consumers on store improvements and new ranges.
        • Magazines can be customized according to target segments which leads to improvement of its customer base.
      The Quarterly Me
      • Five Problems for the Data to Solve
        • Price sensitivity.
        • Ranging for customers.
        • Range creation.
        • Promotions.
        • Competitive attacks.
      • Discovering That You Are What You Eat (Reading and understanding data)
      • Shopping patterns reveal the different lifestyles customers have – hence, the various products purchased. By identifying a particular lifestyle segment, the management was able to think about helping people with their particular needs.
      You Are What You Eat
    • Lifestyles Become Habits
      • For relevant and helpful data and for segments to work, it must be:
          • Identifiable. You must be able to allocate a segment for all your customers using the data collected through the loyalty program.
          • 2. Viable. It has to be large enough to provide economic benefits to the company. In other words, it has to be large enough to make it economical as a business-generating tool.
          • 3. Distinctive. Segments must be clearly different from one another.
          • 4. One-to-one marketing.
        • Tesco also offered another loyalty program that combines the benefits of earning points, and the convenience of using the card as a temporary substitute for cash when shopping.
        • Instead of introducing a card with a fixed limit, Tesco offered a pre-paid card that lets the customers set their own limits.
        • Tesco Personal Finance (TPF), the brand’s banking service was created.
        • It also allowed the company to target the right financial service products to the right customers at the right time.
      Launching a Bank
      • What Tesco Learned About “Sub-Clubs”
      • Identify real emotional needs.
      • Make a clear business case.
      • A sub-club is not just for Christmas.
      • Unconditional benefits are powerful.
      • Be a “chosen” not a “given”.
      • Special interest creates a general effect.
      Babies, Beauty and Wine
      • One of the challenges facing Tesco is to prevent the current loyalty program from turning into a “ bore ” to the customers and its members.
      • Partner with various companies and offered attractive deals.
      • Partnerships and alliances made bigger deals possible.
      A Bigger Deal
      • How Clubcard Helped Tesco.com
      • A single customer service.
      • A single customer view.
      • Lower customer acquisition cost.
      • Bringing new customers to Tesco.
      • Minimizing cost.
      • Accelerating to non-food.
      From Mouse to House
    • BusinessSummaries.com is a business book Summaries service. Every week, it sends out to subscribers a 9- to 12-page summary of a best-selling business book chosen from among the hundreds of books printed out in the United States. For more information, please go to http://www.bizsum.com. ABOUT BUSINESSSUMMARIES