Friday, 23 July 2010

What’s the point of loyalty points?

For reasons that are too complex to explain, I found myself being driven through the middle of Slough yesterday evening. A rare treat, you would have to agree. Slough boasts one of the largest Tescos I have ever seen. I clearly don’t get out enough because these Tesco Extra stores are a now a feature of many large towns and cities.

However, it wasn’t just the gleamingly large two-floor-ish-ness of this Tesco store that caught my eye. It was a rather aggressive message emblazoned across the front of the store. No, not Slough graffiti: this had been put there by management.

“Asda vouchers accepted here” it read (or words to that effect). It was alongside an equally pointed message: “Morrison vouchers accepted here”.

My eyebrows were raised with interest, whilst the other occupants of the car quietly wondered at my sanity at such interest in a supermarket.

What is interesting about the tactic, apart from its bare-faced cheek, is that neither Asda nor Morrisons have a loyalty scheme: both compete purely on price.

Tesco, who are offering double loyalty points this summer, have a three-pronged competitive spear, compared to Asda and Morrison’s single spear:
  1. They are keenly priced on many lines
  2. Customers are encouraged to join the loyalty scheme and then earn additional money-off rewards
  3. Customers get further targeted offers for more savings from the loyalty scheme.
Oh, and of course, Tesco are also accepting vouchers issued by rival supermarkets. Neat. They are proving themselves a thoughtful and resourceful opponent.

Which makes me wonder why more companies don’t look at the value of marketing data?

Marketing data can be generated on purpose, eg through loyalty schemes or other devices, or may just be sitting on a file server unloved and unused. Marketing data often has a relatively low cost and a surprisingly high value – when it’s used properly.

Interesting place, Slough.

1 comment:

  1. "Which makes me wonder why more companies don’t look at the value of marketing data?" - as an ex-marketing insights manager and long time operations improvement person, I believe it boils down to a few issues.

    Marketing data often highlights issues, in other departments, where the company is failing i.e. in the case of supermarkets, not having enough stock on the shelves so people buy other brands or stop buying. So is the business ready to accept that marketing has data that shines a light on to all aspects of business performance whether good or bad? are others wiling to accept marketing as the department that have access to this? Does marketing have the skill to talk to others about what they are seeing and why it is important.

    Marketing data which tracks offer, response, purchase often sees the purchase as being driven by the offer alone and so bigger and better offers are made or vast amounts spent honing the imagery or copywriting on the offer. My experience is that the response experience can have a much greater effect on the purchase than the offer but this is outside of the control of marketing.

    Marketing is often seen as the little brother of Sales and part of the same department how many times do you meet a Head of Sales and Marketing?? What is the purpose of marketing, my view "to raise awareness of the product or service", the purpose of sales "to turn awareness into purchase" So marketing data is seen to be the same as sales and we already get that don't we??

    Marketing data shows behaviour over time, which is how it becomes information. Typically businesses aren't prepared to wait and want to act on data, believing it to be information and insight and are surprised when their "insights" are incorrect.

    Finally people forget to link the data collected with the personal info of the customer. So storyboards or understanding of why a customer behaves in a certain way are not built up.

    Thinking about what Tesco have done, yes they have sacrifised some margin on the vouchers but in return they now know which customers go to Morrisons (half price/BOGOF offer driven) and which ones go to Asda (every day low prices), really good for honing the marketing message but also the supply chain. As they, Tesco, move from Buy One Get One Free to Half Price (there is a difference in the way people buy items under these offers even if for two items the price to the consumer is the same) this helps them understand which customers are at risk and what would be the response to any price driven offers in the future and hence how to structure their supply chain to meet the demand.

    After all, I believe that the Tesco Clubcard is a suply chain improvement tool first and loyalty card second. Tesco Clubcard came about at the same time as Tesco started to investigate lean practices and at the heart of Lean is understanding the customer & market.

    Hope this helps, Mark

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