Whatever people think about Tesco, the UK’s leading supermarket, they know their customers.

Last month I was lucky enough to attend a talk by Giles Pavey, Head of Analysis at Dunnhumby, the Tesco subsidiary that was instrumental in the creation of Tesco’s Clubcard customer loyalty scheme.

As a trained Marketer, I know how frequently Tesco is held up to marketing students as a case study in how to get inside the minds of your customers. Hearing Giles talk about the extent of Tesco’s profiling did not disappoint. Frankly their customer knowledge and targeting is gobsmacking.

Tesco are massive. The 3rd largest retailer in the world with stores in 14 countries across Asia, Europe and North America. But there are lessons companies of any size can learn from them.

Tesco claim they have only two sources of competitive advantage.

1. The ability to learn more about their customers faster than the competition.
2. The ability to turn that learning into action quicker that the competition.

Tesco monitor their customer behaviour rigorously. They mine this data for insights. Then they take action on these insights, identifying areas to capitalise on and areas of concern.

Where they get the most traction is from taking action. Through action, they drive changes in customer expectations and behaviour.

They took action on their customers’ frustration at long checkout queues, initiating a “one-in-front” policy – if there was more than one customer in front, they would open another checkout. Similarly they responded to customer demand for longer opening hours by introducing 24 hour stores.

The learning here is to TAKE ACTION. So many businesses have fascinating insights in their hands but don’t bother to take action on them.

Tesco seek to continually add value through enhanced services and reduce costs through improvements in the supply chain and logistics.

Here’s a great example of how their profiling of customers through their Clubcard scheme gives deep learning that can be used to drive increased sales.

Avatar DVD launch
1st week after launch. Price point = £18.99
Target audience: Film buffs, early adopters.
Viewer profile: Have been waiting eagerly for the release. Blu-ray player owners.

3 months after launch. Price point = £10.99
Target audience: The blockbuster viewer or someone making a gift purchase.
Viewer profile: Prepared to wait for a reduction in price.

12 months after launch. Price point = £4.99
Target audience: The discount shopper.
Viewer profile: Likes mainstream movies.

Interesting Tesco facts:
Tesco have the most profitable online grocery site in the world
Tesco.com is one of the Top 10 most visited sites in the UK
The Tesco Finest range is the biggest brand in the UK

[Picture: James Tuckermans]

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