Tesco The CRM Champion

Presented By: Wadekar Vishal

Introduction - Tesco
Various customer services schemes such as First Class Service Initiative, loyalty Card Scheme etc. Tesco has moved from customer service to customer delight. Presentation discusses the customer service initiatives at Tesco. Tesco followed the model of pile it high and sell it cheap.

Background Note
The first store was opened in 1929 in Burnt Oak, Edgware. By 1930, around 100 stores were operating under the Tesco label. In 1948, the first self-service Tesco store was opened in St Albans. Gradually Tesco grew over 400 stores. In 1960, Tesco began selling clothing, household goods, fresh foods and groceries. In 1968, Victor Value came under the companys fold. In 1974, Tesco began operating petrol pumps.

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Tesco pioneered the large format stores concept in the UK. By now Tesco was renowned for its competitive prices. Entered in France in 1994, Hungary and Poland in 1995. In 1995, joint venture with the Royal Bank of Scotland as Tesco Personal Finance (TPF) TPF offered customers a wide array of personal finance services. In 1996, entered the Czech Republic. In 1998, entered in Northern Ireland and Thailand. In 2000, Tesco established tesco.com and began operations in Taiwan.

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In 2001, Tesco acquired a 53% stake in Dunnhumby. In 2001, a host of new ranges of food products were launched. In May 2002 Launched 1st store in malaysia. By mid 2003, Company was operating 2291 stores around the world.

A Master at CRM
Tesco mass-customized the magazines by sending it to their customers. Every magazine had a unique combination of articles, advertisements related to its offerings and third party advertisements. Promotional coupons were distributed though this magazines. Launched Loyalty cards which fall under the domain of customer retention strategies. Collection of data through this Cards, which formed the basis for formulating strategies that offered customers personalized services in a cost effective manner.

Answer for RPM

Retail price Maintenance system had restricted Retailers from pricing goods below a price agreed upon the MRP. Tesco were not able to compete on price with small retailing outfits. Tesco came up with an idea of Trading Stamp, this stamps were given to customers in return for making purchases at its stores. Customers can redeem this stamps against cash or gift. This strategy of Tesco proved very successful and this lead to worked towards getting the RPM abolished.

Adoption of Strategies
In 1979, company successfully launched a price cutting campaign named Checkout at Tesco. In 1985, Tesco Launched the Healthy Eating initiative which aimed at conveying the nutritional value of the company to the customers. In 1990, Tesco came with three new formats stores, Tesco Metro: To serve local community of region, Tesco Express: Combination of petrol pump & convenience store, Tesco Extra Store: Hypermarket focused equally on food and non food merchandise.

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In 1995, Tesco launched the Clubcard Loyalty scheme. Tesco adopted the policy of offering its service to customers in innovative ways. Instance: Tescooters (scooters) were purchased by the thailand customer and it was delivered to their home. With www.tesco.com company emphasized on Ecommerce. In 2000, company tied up with a Safeway Inc to launch an online grocery shopping services

CRM The Tesco way

In 1993-94, Tesco launched the First Class Service. In 1994, company launched the One on Front scheme to reduce the time of customers at check-out counters. Tesco store personnel ensure that if there was more than one person at any counter will lead to open for the person second in line. In 1994, Tesco began tied up with Dunnhumby. Tesco began testing of Clubcard Loyalty Scheme. In this way Company started collecting the Database of customers like name, add, dob, e-mail etc.

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With the help of data mining they analyzed the data and classified the customers into four broad categories: Premium, Standard, Potential and Uncommitted. Further analysis on the type of product purchased. Customers were categorized along dimensions such as, value, convenience, frozen, healthy eating, fresh and kids. Tesco began giving many special privileges, such as Valet parking and personal attention from store managers to customers. Special cards were created for students and mothers. Special attention given to expectant mothers in the form of personal shopping assistants.

Tesco used the info.

Tesco used the information generated by the Clubcards in following ways: Pricing Merchandising Promotions Customer Service Media Effectiveness Customer Acquisition Market Research Customer Communication.

Reaping the Benefits

Tesco adopted the rifle shot approach instead of the carpet bombing approach Due to the captive customer base and the cross-selling opportunity, the cost of acquiring customers for its financial service was 50% less. Due to the data Tesco was able to offer better services to the customers. Tesco was ensured that the footfalls in its stores did not decline on account of competitive pressures.

Tesco developed a totally new product rage, Tesco Finest for the high income bracket who are attracted by rivals. Tesco, removed the impulsive products like candies from off-shelf still company earned profit.

Customer Service to Customer Delight

Tesco adopted the four-pronged approach: launch better & bigger stores, offer competitive prices, increase the products offered and focus on remote shopping services. Tesco, employed a dedicated team of employees, called Price Checkers.

Every Customer Offered Help (ECOH)

All employee were given clear instructions about the way in which they were expected to deal with customers like: Greet customers, Offerings them help and Wishing them a good day.

In 2001 02 Tesco, introduced Customer Chamapions in its stores. It also collaborate with suppliers to develop a Lean Thinking. Company also followed a continuous replenishment of policy to ensure at leat 99% of stock availability. In 2003, company launched a fixed line telephone and mobile phone service in the UK. Tesco launched a new initiative targeted at its women customers name Me Time

Me Time was offered ladies free sessions at leading health

spas, luxury gyms and beauty saloons and discounts on designers clothes, perfumes and cosmetics. In 2003, company cut a total $60 million off on a vast range of products to continue offering competitive prices.

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