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Welcome to Loyalty MagazineLoyalty Magazine reports on customer retention,loyalty schemes, rewards, affinity, CRM, call centre issues, direct and viral marketing, mobile and internet channels for both B2B and B2C enterprises. It covers all global markets and business sectors, including retail, financial services, travel and hotels, telecoms and electronic commerce. |
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Monday, 17 August 2009 15:38 |
 Double points from Tesco – clever or desperate?
Tesco has surprised the highly competitive UK foodstore market by announcing that from today (August 17) it will offer double loyalty reward points with its Clubcard loyalty scheme.
This means that cardholders will get two points for every £1 they spend across the store and online.
A family spending £90 a week at Tesco between now and Christmas could now earn £34 in Clubcard vouchers instead of £17.
Tesco set new ground with its loyalty card in the nineties, and quickly used the scheme to learn and respond to customer shopping behaviour. The Clubcard reward scheme helped Tesco knock Sainsbury’s off the top spot, and it remained the biggest UK supermarket for nearly two decades.
At the time Tesco launched Clubcard rewards, the boss of Sainsbury’s said it would never launch an ‘electronic greenshield stamps” scheme, but followed soon afterwards.
More recently however, Tesco has been attacked on two fronts. Asda, owned by Wal-Mart, and Wm Morrisons have been challenging Tesco on price, and Sainsbury’s has been making impressive ground with a policy of providing high quality food at affordable prices. There is also massive pressure from the budget stores such as Aldi and Lidl which have attracted new customers during the recession.
Tesco, has done little over the years to update its reward scheme or make it more interesting. It still sends out hundreds of thousands of paper mailshots each quarter with notification of the Clubcard holders’ rewards despite its environmental stance. It offers green rewards for shoppers who use their own bags, it has improved recycling and it is aiming for carbon neutral buildings but fails to see the irony of its massive quarterly mailshot. It has recently come under fire from the government for hiding the fact that it has failed to reduce plastic bag use by more than 50%.
Clubcard relaunch
Tesco embarked on a £150 million pounds re-launch of Clubcard in May but this spend went mainly on television advertising. This second stage, including the double points is estimated by analysts at Oriel Securities to have a cost £400m a year if it is continued.
Tesco double points is expected to last at least until November, when the pre-Christmas rewards mail shots will be landing on consumer’s doormats.
Tesco is not saying what it plans to do after that.
History has proved that there is always a risk in doubling reward points because it devalues their worth. Greenshield stamps proved this. At one point quadruple points were being offered by petrol stations, and motorists were given reams of stamps with each visit. Finally, Greenshield started printing quadruple stamps, and the devaluation, and demise of the scheme got underway. Tesco performance trails
In June, Tesco posted a 4.3% increase in underlying first-quarter sales, its best quarterly performance for two years. But its rivals are doing better.
Asda, J Sainsbury and Wm Morrison Supermarkets, Britain's number two, three and four grocers have recently reported sales growth of 7.2%, 7.8% and 8.2% respectively. Tesco's market share is now down to 30.8% from 31.6% a year earlier, according to the latest figures from market researcher TNS.
Sainsbury’s and Nectar
Tesco is not the only supermarket to run a card loyalty scheme. Sainsbury’s is a participant in the Nectar multi-retailer loyalty scheme which offers two Nectar points for every pound spent in store. 1,500 Nectar points are worth £7.50 if they are redeemed in Sainsbury's but possibly less if the are redeemed in other Nectar merchants.
Different approach from Asda – reward your staff
UK supermarket giant Asda has announced this year’s £1.6 million bonus scheme for staff.
Those with a minimum of three years service receive an average bonus of £130. Over 67,000 Asda employees have been with the company for five years.
To read the news story on this click here |
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