About his new book, artificial intelligence and of course Tesco Clubcard
It was quite an admission. There was no mention of Artificial Intelligence (AI) in Tim Mason and Sarah Jarvis’s second edition of ‘Omnichannel Retail’, because they didn’t see it coming.
“Well Google didn’t see it coming either,” he commented in a one to one interview with Loyalty Magazine. “ChatGPT took them completely by surprise. It blindsided them. It hasn’t been one of those long term development projects. It seemingly happened overnight. So I don’t have to apologise.
So putting that small omission to one side, what does Tim, who was instrumental in launching the revolutionary Tesco Clubcard in 1995 and who now works as CEO of Eagle Eye, think has changed in the last decade, and importantly, what is going to happen next?
“I am increasingly of the view that knowing who your customers are has been a defining element in the last couple of decades. It has meant a change for the customer too. For Tesco, knowing who you are has made you more attractive and valuable to them, but you have to join the club. This is a big change which is not insignificant.”
Does he approve of dual pricing that forces customers to carry their loyalty card with them” And what about the Which? Report that suggests Tesco was massaging the data and not abiding by the rules on pricing?
“You can occasionally have an administration error but Tesco is not a business that would put prices up to put them down. People make stupid mistakes, but this has received a disproportionate amount of attention.”
You have said that personalisation and know your customer has been a very significant change in the last decade. What has been the result?
“It has turned the world into the haves and the have nots. Those companies with a loyalty program can handle the changes and stay in touch with, and learn from their customers’ behaviour. Those without that data cannot. Now there is an exciting opportunity for AI and analytics aligned to really tune the message communication and offer truly relevant marketing. It will be a move from Thursday offers to ‘you just walked into our store. This is what we would like to offer you.”
Hasn’t that been the retail dream for at least 20 years?
Possibly, but now, the customer is walking into the store with a communications device in their hand, and an incentive to engage with the store. If it isn’t possible for them to shop holding a phone, then they can use their watch. It will happen. People will be connected 24/7, so a message will be buzzed that they can get £1 off, £2 off. They will pay attention.”
Are we in a situation today where widespread change is needed in loyalty?
I’m not sure. I can see that marketing needs to change. It should be more personalised and more relevant. This is easy if there is proximity and simplicity. To really do it well needs real time engagement. There is value around this. But you don’t need to bin what you have already. What is certain is that loyal customers are more valuable than other customers and this is nothing to do with points. Loyalty is aspirational for customers, but firms need to understand them and know why they are loyal. It is critical that there is understanding of what customers want to earn rewards for. Some people might want a weekend away in the country, but not everyone will.”
Do you think customer loyalty programs understand their customers today?
Yes. Better than companies who don’t have one. I spent the first half of my career (until Tesco’s Clubcard launch in 1995) creating an environment and culture that was customer centric and valued the customer. The second half has been about generating data to do a better job of it. Pre-Clubcard, it was unbelievably hard to create the culture to put customers first.”
Is the whole world convinced? No. A lot of people don’t believe culturally or intellectually in loyalty. Amazon claims to be the best loyalty company in the world and it has huge capability, but they do things that are so jarring and disloyal.”
How can AI help?
“You have to give people reasons to be recognised and AI can help with that. For example in France a program uses 8 algorithms to work out the correct offer for a customer. AI initiatives have tremendous capability that is developing all the time. The challenge is working out which questions to ask of the AI. If you get it right, then you can drive lifetime value.
Is there a third book on the horizon?
The current way of marketing started mid Loyalty, with the opening of digital channels and Apps and this has further accelerated. Customers using a brand or a store’s App are more valuable. Suddenly data analytics just got a great deal more capable. This trend is accelerating all the time. There is not a boardroom where the implications of AI are NOT being discussed and the technological development is far from done.
Is Loyalty done?
Absolutely not. Look at ASDA. Coming very late to the market, they launched a straightforward loyalty program offering pounds not points and now have millions of customers engaged.
So Loyalty and AI are a team?
AI needs data. If you have data then you can move forward with the technology as the opportunities increase. If you don’t adapt, you will get left behind.
And the remaining challenge?
To use the data gathered to make store based shopping more interesting.
Omnichannel Retail – How to build winning stores in a digital world by Tim Mason and Sarah Jarvis (second edition) is published by KoganPage