Talking about Tesco: Targeting gets very personal
*Tesco combines social data with purchasing history
*Expensive goods only offered to the affluent
*Speech from Phillip Clark in Istanbul
*Offering Clubcard rewards for Facebook “likes”
Tesco has revealed plans to segment its 18 million Clubcard customers into separate groups when they log onto the company’s website.
The segmentation will be based on their previous spending patterns, with a key test being whether the customer has previously bought a large number of Tesco Finest-branded items – the supermarket chain’s premium range of foods.
The move is said to be an attempt to offer shoppers more promotions specific to their needs, with affluence and age being key variables.
Tesco’s chief executive Phillip Clark has admitted the supermarket group is collating comments from customers on social media sites, payment card information, and various types of mobile phone data to customise higher priced offers only to people it feels can afford them. Depending on how affluent customers are, or whether they have young children, they will be offered a different range of offers and discounts or different results when they search for certain foods.
In a speech to the Consumer Goods Forum in Istanbul, Clarke said Clubcard was critical to Tesco’s plans.
“Data about food is more insightful than any other kind of data: you are what you eat,” Clarke said.
“But now we’re turning Clubcard digital, correlating the data we have about what food people buy with sources of data – social networking data, mobile phone data, payment methods – so we can get to know our customers better still, and use that understanding to deliver an even more personalised offer.”
Clarke said he was investing £1bn in an bid to boost flagging sales in the UK.
Coverage from daily newspapers and the marketing media give varying points of view on this.
Retail Week picked up on the fact that the Tesco home page will look very different depending on what your income bracket and spending patterns are.
It commented: “Drilling into the details of the plan raises questions about how different the site will truly feel, and that speaks to how the data is used and to how aggressive the customisation is. For example, the more decisions are made — or, more precisely, perceived by customers to be made — about spend levels and then displaying higher priced items, the more resistance might be encountered. But if it’s mostly based on showing more of what customers have been buying, it’s much less likely to be an issue.”
The Daily Telegraph reported that one “key test” will be if a customer has purchased a lot of Tesco Finest, the grocer’s premium line. If they had, much more of that line will be displayed, which is no different to what Amazon has been doing for years. Purchase a lot of murder mysteries, and you know what you’ll be hit with on your next homepage visit to Amazon.
The concensus is that it is the leveraging other data that moves Tesco into uncharted territory, where the customer, and the data authorities may have a rather more negative point of view.
Many websites show what a consumer has been browsing and has purchased previously. Google will even personalise advertisements based on your browsing history.
But if that same homepage starts showing things that could only be known by examining social site comments or phone data, that’s when consumers may start becoming uncomfortable.
Clarke explained in Istanbul that site testing had gone a great deal further than simply looking at prior purchases. It logged how choosy a consumer was and what criteria they used to make decisions. “When a customer visited our website, we would use (CRM) data to tell us if the customer was more swayed by price or quality,” Clarke said. “We’d then display the type of mattress that best reflected that shopper’s characteristic. Sales grew by 10%.”
Tesco officials have been quick to stress that all customers will be able to see all products when they visit Tesco.com. It will be the sequencing — and which items are on the homepage and other key pages — that will be impacted.
This is important. Tesco boasts more than 75,000 products on its site so the sequence of products displayed will undoubtedly have a huge impact on product selection.
Unless a shopper has a very specific product in mind and is willing to do a site search to find it, the typical customer will only look through a limited number of pages of any one product before making a choice.
To head off potential criticism, Tesco is offering to share with its customers a report containing all of the data the chain has about them if the customer is willing to pay £10.
Tesco links Clubcard points to Facebook likes
Tesco is trialling an initiative whereby Clubcard points will be rewarded to a consumer that “likes” a Tesco Direct product or service on Facebook and thereby acts as an advocate.
Online shoppers can earn double Clubcard points when they like, share or buy products on Tesco’s Facebook page in the four-week trial.
“More and more of our customers are using Facebook to chat about and recommend products they like from Tesco Direct,” said Matthew Entwistle, marketing director for general merchandise online at Tesco. “And we know our customers also like to collect extra Clubcard points, so we’re really pleased to offer them a fantastic way to do both things at the same time. It’s our way of saying thanks for supporting us online.”
To earn the extra points, customers register for the Share & Earn Facebook app through Tesco’s Facebook page. Customers can then post any products they ‘like’ to their Facebook wall. If their friends buy products by clicking through the Facebook post, the sharer and the purchaser will both earn Clubcard points for the purchase. Each customer can earn a maximum of 7,500 Clubcard points through the four-week trial.
Tesco currently has more than 800,000 followers on Facebook, and sells more than 120,000 products through Tesco Direct.
Coming soon: Exclusive interview with former Tesco CEO Terry Leahy.