How Tesco And Sainsbury's Use Loyalty Cards To Capture Customer Data

Part 1

You should address all of the following tasks:

• Describe customer data capture and use, with specific reference to the Tesco Club Card scheme.
• Use an appropriate flow chart method to map out the data capture process.
• Critically discuss data use in terms of assisting company performance.

Part 2

Consider the issues facing a rival supermarket considering implementing a similar reward card system. Describe and evaluate the issues in terms of systems analysis, design and implementation.

Customers' Data Capture Strategies

In recent times almost all the retailers have introduced loyalty cards to acquire customer personal information. Tesco and Sainsbury, the two leading grocery stores of the UK have implemented the loyalty and rewards card system and have been greatly benefitted so far despite some glitches. The companies also encourage customers for card subscription and advice to keep on using the loyalty cards. The more the customers purchase via loyalty cards, the more information the companies can gather from their customers, like their demands, their budget, their wish list (Humby, Hunt and Phillips, 2014).

This report will highlight Tesco’s customer data capture strategies and proper use of those data for their own benefits. This report will also highlight Sainsbury Nectar card system and the issues they face daily.

There are multiple ways to capture customer data.

Customers’ data capture strategy using Loyalty Cards: Loyalty programs offer discounts in filling out a form with name and address. The customers can avail discounts via loyalty cards in exchange of their personal information. The company provides a plastic card, the customers can take the advantage of the latest deals and offers provided by the company via the plastic card. Tesco’s Clubcard is one type of loyalty card.

Customers’ data capture strategy using identifying possible customers by sending emails: The customers subscribe and provide all the personal details during registration for the loyalty card, that’s how Tesco get to know their customers and their interests. The companies then approach their customers by newsletters or e-mails (Mukerjee, 2013).

Customers’ data capture strategy using Encouraging web registrations: The customers, if registered with a particular company’s website, the company can be aware all the details of the customers’ browsing behaviour. Once the customers get registered, the company gains the access to the pages they are looking at (Frow and Payne, 2013). In this way, too, Tesco can capture customer data and can further contact with them to collect more and more data.

Customers’ data capture strategy using Selling brand products: The companies always try to sell their brand products to gain more and more brand value. Tesco is no exception. Therefore, they always focus on selling unique products which are not easily available in local stores.

There are ways to use the customer data which the company capture.

Customers’ data use strategy using Loyalty Cards: The companies can know the customers’ details via the loyalty cards. Tesco’s Clubcard is one type of loyalty card and both the customers and the company have been greatly benefitted from the Clubcard loyalty card (Mukerjee, 2013). Tesco capture all the customers’ data via Clubcard, they can know all the customers’ demands and budget.

Customers' Data Use Strategies

Customers’ data use strategy using identifying possible customers by sending emails: The companies can know the customers’ demands and wish lists by sending emails. Tesco can know all the details of the customers when they register for the Clubcard. Also Tesco can get to know their registered customers’ appeals by sending mails and can stay connected with them all the time (Mukerjee, 2013).

Customers’ data use strategy using Encouraging web registrations: The companies will not only know the customers’ demands but can also connect to the customers all the time. The customers who want to get the benefits of Tesco will have to register with Tesco company for the Clubcard and along with Clubcard registration they can get the benefits of online shopping facilities, in this way the company can know their potential customers and their personal information (Frow and Payne, 2013).

Customers’ data use strategy using Selling brand products:  The companies can earn brand value selling brand products. Tesco now focuses on selling ‘venture brands’ that are unique products and are not available in the local stores. They sell their own products ChokaBlok ice-cream, Yoo Yoghurt and NutriCat in their respective stores, that is why these products are only available in Tesco’s stores and not in other stores (Frow and Payne, 2013). In this way, Tesco has increased their brand value in the market (Mollah, 2014).

Tesco wants to provide its customers with a total shopping experience that means the customers can buy all their favourite items from one store (Christopher and Peck, 2012).  Tesco will have to keep records of all their customers thus they have adopted the Electronic Data Capturing (EDC) system to gather and generate reports on customers’ transactions.

EDC aids Tesco to operate and manage business activities by combining accumulated data, analytical models and the retailing tools using the software like Decision Support System, Management Information Systems, Transaction Processing System. Management Information Systems, Customer Relationship Management (Berman, 2016).

The customer data is collected by the following means- Strategic, Tactical and Operational.

Strategic- EDC analysis the spending powers of the consumers and based on that Tesco have targeted price-sensitive customers and wealthy customers separately. Tesco via EDC can acknowledge the likes and dislikes of specific products, based on customers’ reviews they can further open a branch to enhance business activities (Hassan and Parves, 2013). 

Tactical- Tesco's Clubcard store all the necessary information and then the management team analyse the whole Clubcard database and make tactical decisions accordingly (Hassan and Parves, 2013). Tactical management includes the factors like an assessment of every information available in the database, pricing tariffs, business forecasting, budgeting and customer withholding (Hassan and Parves, 2013).

Appropriate Flow Chart Method to Map Customer Data Capture Process of Tesco

Operational- Operational business strategy involves short term decisions which Tesco take for their business enhancement. Short term decisions are taken on a daily basis, weekly basis and monthly basis. The operational business reports include staff availability and the stocking products (Wood, 2013).

Tesco’s Clubcard and customers availing benefits using Clubcard: Tesco collects their customers’ data via Clubcard loyalty scheme to enhance their business activities, they also promote their products online via their official website. Tesco keeps records all the products bought by the customers with the purchase date (Ziliani and Bellini, 2013). Therefore, being aware of the customers’ demands Tesco avail discounts on those products which customers want to purchase (Ziliani and Bellini, 2013).

Tesco customers’ data use to know the customers’ demands and give them discounts: With the advent of online shopping, Tesco has moved to big data, big data makes it simpler for Tesco to meet one’s demands or needs. Tesco via Clubcard can guess the budget of every particular customer based on previous purchase history (Student, 2015). 

 Tesco’s customer data use via online marketing and mobile marketing strategy: Tesco has planned a unique strategy for online marketing, they have planned to offer low-cost products to price-sensitive customers and luxury expensive products to rich customers. They have also developed mobile apps to allow customers to find the nearest Tesco store (Student, 2015).  The customers have the opportunity to add more Clubcard points to their account by scanning their mobile device during checkout. The customers are now connected to smartphones and also connected to the network all the time. Tesco grabbing this opportunity send emails regarding latest products, latest deals and latest offers (Student, 2015).

The issues Tesco’s rival Sainsbury’s Nectar Retail card is facing regarding system analysis, design and implementation

Issues regarding system analysis

Sainsbury’s Nectar Retail card offers same benefits and both the customers and the company have benefitted so far, but still, the Nectar card fails to offer its primary objective in some cases and that is the reason Sainsbury lose some market share. At first, the modern families prefer shopping little and often across nearby suitable stores rather than supermarkets, they also do not prefer planning a hefty weekly shop (Demoulin and Zidda, 2014). Secondly, if any customer wants to buy a toothpaste, they can have it at a local store at a very much affordable price, whether if the same customer visits Sainsbury, his or her choice of toothpaste will be imposed by the company with discount (Demoulin and Zidda, 2014). Thirdly, online shopping has come into the picture, the customers are purchasing items online from numerous sites, they are not limited to Tesco and Sainsbury anymore. Fourthly, the customers receive too many unwanted calls on the latest deals and offer on products from the companies and those are really disturbing ones. Sainsbury’s Nectar Retail card face all these concerned system analytical issues (Demoulin and Zidda, 2014).

Critical Discussion of Customers' Data Use by Tesco in Terms of Performance

Sainsbury’s shoppers have complained that the Sainsbury’s Nectar Retail card have some technical glitches. According to the customers, their cards are showing inaccurate points and balances (Wright and Sparks, 2012). They have to take the negative feedback of the customers into consideration and should work on the design issues so that the customers can get an agile service. Nectar took initiatives and added extra security features to their cards, the customers will now have to enter a secondary authentication method to secure their account. Though their database and system is secure now, still Sainsbury have to constantly update their system and database to ensure safety and security (Wright and Sparks, 2012).

The employees should know to access the Internet properly, they should know to use the electronic customer data capturing system, TPM tools to implement the latest business strategies for potent management which are quite costly (Mägi, 2013). The EDC includes installation, processing, software updates and sustaining, so it is quite costly to adopt for all the employees. Secondly, the database and the system data cannot be retrieved if the server goes down or net connection disintegrates, therefore the employees should have a backup facility to use the card system effectively.

It is expected that once the customers subscribed for the loyalty cards they will use it for every single purchase, but unfortunately, this is not the case (Mägi, 2013). The research conducted by Wright and Sparks stated that many cards are not used during the purchase time, the customers do not want to use the card while they pay small cash amounts. Sainsbury being aware of this slothful attitude of the customers has introduced the card system for collecting rewards points. The card system enables customers to buy products at a cheaper rate. However, there are many customers who do not know to use or handle the Nectar card properly, the Sainsbury will have to take further initiatives to let the customers know every detail of the card system (Mägi, 2013).

The customers who are using the card will have to follow the company’s suggestions about a particular product and its price, the customers will have to visit the store more often and have to visit specific days and within a specific time. Therefore, it is quite hectic for the customers to use the card system.

Conclusion

It can be concluded from the above discourse that the leading groceries of the UK have taken a significant approach to enrich their business and they are successful in their venture. They constantly encourage the customers to subscribe for the loyalty cards and in this way Tesco and Sainsbury build relationships with their customers. They gather the customers’ useful information like their budget, their demands, their wish lists and based on that they send newsletters or e-mails to let them aware of the latest deals and offers. The companies offer discounts on the products their customers want to buy to earn more and more revenues. Tesco has taken an innovative approach. They prepare their website sections separately for price-sensitive customers and wealthy customers and this strategy certainly benefits them. This report also showcases the customer data capture strategies of Sainsbury Nectar card system and the issues they face.

References

Berman, B., (2016). ‘Developing an effective customer loyalty program’. California management review, 49(1), pp.123-148.

Christopher, M. and Peck, H., (2012). ‘Marketing logistics’. Routledge.

Demoulin, N.T. and Zidda, P., (2014). ‘On the impact of loyalty cards on store loyalty: Does the customers’ satisfaction with the reward scheme matter?’. Journal of Retailing and Consumer Services, 15(5), pp.386-398.

Frow, P.E. and Payne, A.F., (2013). ‘Customer relationship management: a strategic perspective’. Journal of Business Market Management, 3(1), pp.7-27.

Gudonaviciene, R. and Rutelione, A., (2014). ‘Decisions of customers loyalty programs formation’. Economics and management, (14), pp.397-406.

Hassan, A. and Parves, M., (2013). ‘A Comparative Case Study Investigating the Adoption of Customer Relationship Management (CRM) The Case of Tesco and Sainsbury's’. International Journal of Managing Value and Supply Chains, 4(1), p.1.

Humby, C., Hunt, T. and Phillips, T., (2014). ‘Scoring Points: How Tesco is winning customer loyalty’. Kogan Page Publishers.

Mägi, A.W., (2013). ‘Share of wallet in retailing: the effects of customer satisfaction, loyalty cards and shopper characteristics’. Journal of Retailing, 79(2), pp.97-106.

Mollah, M.D.A.S., (2014). ‘The impact of relationship marketing on customer loyalty at Tesco Plc, UK’. European Journal of Business and Management, 6(3), pp.21-55.

Mukerjee, K., (2013). ‘Customer-oriented organizations: a framework for innovation’. Journal of Business Strategy, 34(3), pp.49-56.

Passingham, J., (2013). ‘Grocery retailing and the loyalty card’. International Journal of Market Research, 40(1), p.55.

Rowley, J., (2015). ‘Building brand webs: Customer relationship management through the Tesco Clubcard loyalty scheme’. International Journal of Retail & Distribution Management, 33(3), pp.194-206.

Student, A., (2015). ‘An Evaluation of the Effectiveness of Supermarket Loyalty Schemes Contributing to Brand Loyalty in Bognor Regis: A Study of Sainsbury's Nectar Card (Doctoral dissertation)’.

Wood, A., (2013). ‘The value of customer and prospect databases as a corporate asset’. International Journal of Retail & Distribution Management, 31(12), pp.638-643.

Wright, C. and Sparks, L., (2012). ‘Loyalty saturation in retailing: exploring the end of retail loyalty cards?. International Journal of Retail & Distribution Management’, 27(10), pp.429-440.

Ziliani, C. and Bellini, S., (2013). ‘From loyalty cards to micro-marketing strategies: Where is Europe's retail industry heading?’. Journal of Targeting, Measurement and Analysis for Marketing, 12(3), pp.281-289.