Tesco Loyalty

Amongst loyalty programs, Tesco’s Club Card is considered to be the gold standard. The Club Card loyalty program is more than ten years old now and serves as a huge competitive advantage for Tesco. The brains behind Tesco’s Club Card program is an outside contractor – Dunnhumby.

What Dunnhumby did for Tesco was new for the industry, but not an entirely new concept all together. The idea of “loyalty programs” previously existed within the airline industry, however never before had a robust loyalty program been established for an industry with such frequent purchases as grocery. This allowed Tesco to obtain an enormous amount of information about its customers.

Soon after testing began on the Club Card program, Tesco's then-Chairman 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." The value of the loyalty program quickly became clear: loyalty programs’ competitive advantages exist in marketing intelligence.

With this new marketing intelligence Tesco was freed to engage with customers in new, personalized ways. Customers were offered discounts and coupons customized to their buying habits and also offered different discounts to encourage them to explore new products and categories. With this type of personalized marketing, soon loyalty to Tesco emerged within the UK market. If shoppers weren’t shopping at Tesco they were missing clear opportunities to save money.