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Tesco, the giant and most successful supermarket chain in the U.K., has a CRM system that is the envy of many. Tesco found, while looking at its customer base for a typical retail outlet, that the top 100 customers were worth the same as the bottom 4,000. It also found that the bottom 25% of customers represented only 2% of sales, and that the top 5% of customers were responsible for 20% of sales. Like many other companies that have embarked on CRM programs, Tesco realized that all customers are not equal! Tesco now measures valuable customers by the frequency of purchase and value of expenditure. When Tesco says, "Every little helps", it really means it. Its CRM program is certainly one of the best in the world, and customers love it. Tesco has been principally a food retailer in the U.K., in a mature market that has grown little in the last 20 years or so. That Tesco has grown its business at all is a testament to consumer attraction, when the only route to growth is taking market share from competitors. Its CRM program started with the Clubcard in 1995, offering points on purchases and giving a small rebate to loyal shoppers. Dismissing the initiative as nothing new, competitors did not realize that Tesco was capturing valuable information with every swipe of the card and building a powerful database of customers, which it gained through card membership information. The card provided Tesco with vital customer information such as what products they wer and were not buying, where they were spending their time in the store, and where they were not, as measured by spending. Customers received vouchers for items they liked to buy and offers to explore parts of the store that they hd not yet seen. Different lifestyle magazines were created for different customers, and high-value customers got calls from the manager of the store, valet parking when they came to shop, and other special privileges. In 1996 Tesco created a student card and another card for mothers, with offers suited to their needs. Tesco then added a travel service through a partnership with Lunn Poly, giving discounts off high-street prices. It also combined its card with Visa through the Royal Bank of Scotland, and offered discounts on DIY goods through well-known home improvement chain B&Q. In 1997 it added a full range of financial services, and the Tesco Direct service. Adding value was mandatory to these functional items so, for example, expectant mothers were given priority parking outside the store, changing facilities, and personal shopping assistants to help them. In 1998, after the U.K.'s deregulation of utilities, Tesco began to offer electricity and telecommunications products and services. Also in that year, clothing was added to the range through Next. By this time, Tesco had identified 108 customer market segments. This year, 2000, a joint undertaking with General Motors allows customers to buy cars from Tesco. Noting the interest of some customers in the Internet, Tesco also sells online, delivering products to the customer's door, by refrigerated truck, if necessary. Visit the company's website (www.tesco.com) and you get the same friendly look and feel that people get in Tesco's physical stores. Everything is made easy, and you can buy groceries, books, CDs, furniture, videos, and other items, as well as arrange your personal finance. And, of course, every time there is a transaction, the points mount up. And as the points accumulate, more and more relevant special offers and privileges are given. All in all, the company offers great value and a great experience. The company is now well on its way to becoming a successful international brand, expanding into Asia by taking over the Lotus supermarket chain in Thailand, where customers can now buy scooters (tescooters) and have them delivered to their homes. But adding value to the customer relationship is still the driving force behind Tesco's success. As a result of Tesco's efforts to delight the customer, its profits and market share figures rose tremendously over time, making it a prime example of how technology, coupled with a human touch, can provide customers with a great experience.
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Orient
Pacific Century