How Tesco continues to win customer loyalty

Notes from the book Scoring Points by Humby, Hunt and Phillips on the story behind Tesco's customer data strategy.

Terry Leahy (Chairman of Tesco) said:

Let me tell you a secret. The secret of successful retailing. It's this: never stop listening to consumers and giving them what they want. I am sorry if that is a bit of an anti-climax.. but it is that simple.

There are 6 categories of retail promotion:

1. Same for less – here's a favourite at a lower price
2. Same plus – here s a favourite with an added extra (25 per cent extra free
3. More of the same – You normally buy one packet. Now buy two at a bundle price (three for the price of two)
4. Switch brands – You normally buy the market leader brand. Here's a cheaper alternative (taste the difference for less)
5. Trade up – You bought the secondary brand – but no you can try the market leader, without having to pay more (new low price)
6. Try something different – You've never bought anything like this from us before, now you can (introductory offer)

Loyalty is an emotional response based on empathy, not a logical response based on bribery.

Market research become customer insight. Success is measured in share of customer not just share of market.

If you don't know your customers as individuals it's like trying to play the piano in boxing gloves… You make a lot of noise but it's not always very pretty.

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Tagged as: customer, loyalty, market research, promotions, retail marketing