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Tesco: loyalty still matters, 23 years on

Tesco has been at the forefront of customer engagement ever since it launched its loyalty scheme with the Clubcard in 1995. One year after that, Clubcard holders were spending 28% more at Tesco and 16% less in arch-rival Sainsbury’s. The latter soon followed suit with its Reward card, launched the same year and, in terms of loyalty cards and their ubiquity in the UK market, the rest is history.

These days, 10m active households have signed up to Tesco Clubcard and it is among a minority that gives shoppers a contactless scan for their loyalty cards. In customer terms, the retailer also rates for personalisation and ranks well for responding quickly to customers’ Facebook queries.

In 2018, Tesco also stands out for the speed of its collection and the flexibility of its delivery service. Shoppers can collect their online orders from its in-store lockers, while orders can be delivered or collected the same day. Tesco is one of just 1.3% of retailers to have its own lockers and the supermarket is one of a small minority to offer nominated time delivery, too.

When it announced its half-year profits to 26 August 2017, Tesco explicitly said its focus on the customer experience had helped to lift sales and drive profits. How did it measure this? The supermarket said it had seen the largest improvement in its industry in its net promoter score, which lifted by 11 points. This success was reflected in accolades for the supermarket generally and its bakery business specifically.

In order to stay competitive in its quest to deliver for the customer, Tesco has had to take some hard calls as well. In June last year, it announced moves to simplify its customer service operations. From February 2018, it has brought them together into a single expanded contact centre operation in Dundee, where 250 extra staff have been taken on. Its Cardiff centre was then closed, with the loss of more than 1,000 jobs in South Wales.

These decisions go to the heart of the supermarket’s strategy to focus on the customer, while transforming the business to a sustainable and cost-effective model capable of meeting the demands of a fast-changing retail environment.

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