Tesco's Loyalty Program and Customers Satisfaction - Essay Example

? Does Tesco loyalty program measure up to s satisfaction? Does Tesco loyalty program measure up to s satisfaction? Tesco is a retail company in the United Kingdom founded in 1919 by Jack Cohen and comes second after Wal-Mart in terms of profitability in the retail industry (Pearson Education, 2011). The company mainly deals in the food industry sector through the two main brands of its foods segment, Everyday Value and Finest that have led to the company having 60% of profits and sales mainly from the United Kingdom while 40% comes from other parts of the world. Tesco deals in electronics, food, cloths, mobile, and internet service with competitors being “Morrison, Asda, Sainsburry’s, Waitrose, Iceland, and Aldi’s” (Jennifer, 365). The main reason for the business high sales and profits are that the business aims at always being the best in whatever it sets to do (Humby et al, 2008). Tesco prides itself of three main pillars aimed at augmenting their satisfaction as a means to up sales as customers, communities and the employees. From an abstract position, this would seem to be the case, but is it? This study aims at answering the question by investigating if Tesco’s loyalty program measures up to customer’s expectation (Pearson Education, 2011). The study will make great use of secondary data for the formation of the conclusion. The study will mainly consider the various ways Tesco uses to meet customer needs and make the overall conclusion if these efforts are bearing enough fruit for effective customer expectation delivery. This will allow the study to make a concrete conclusion to meet the need for the formation of a conclusion that will be a guide for us to meet the needs of this research on if it is meeting customer expectations (Egan, 2001). The aims to introduce a customer loyalty card at Tesco began in 1993 with project Omega that would later lead to the roll out of Tesco customer loyalty card in 1995 previously known as “Thank you card”. Customer satisfaction entails the ability of a business to meet the needs of their customers as much as they expect. The existence of an organization especially in the retail industry as Tesco is in is very much dependent on the ability to meet customer satisfaction and expectations. The introduction of customer loyalty card was aimed at meeting customer expectations and needs better through the following ways. Tesco Loyalty Card Tesco in the aim to augment consumer satisfaction and retention of loyal customers through rewarding them introduced loyalty cards for its consumers. This was a revolutionary technique aimed at gaining a competitive advantage over its main rivals Marks and Spencer, Waitrose and Sainsbury (Plimmer, p. 377). The Club card aimed at rewarding loyal customers for the purchase of items at Tesco shops. One point was awarded for every dollar spent and other currencies earn a one point to the client for each unit of currency spent and the use of Tesco cards for access to all other products of the company (Jennifer, 366). The points can be redeemed for flying time, used for club card deals for use for three times the value and the ability to be converted to Avios. These allowed the company a means to offer appreciation to their clients and the customers feel cared for and appreciated to make the comeback increasing service and retention of customers. Tesco Baby Club and Student card There have been improvements to the loyalty card by Tesco with the aim of augmenting the benefits and tailoring the uses of these cards to the specific needs of the customers. The student card was aimed at rewarding students for making purchases at Tesco through the incorporation of benefits and bonuses on products tailored for students. Increased utility by the teens increased their allegiance to Tesco and allowed the company to meet their demand by giving their preference and requirements feedback. The Tesco Baby Club was aimed at women in their pregnancy terms and through to two years after child birth. This was exceptionally received with almost 40% of future English parents being members by 1999 translating to increase by 24% of sale of baby products. There have been additions to the baby products in Baby Club to include higher children to age five aimed at meeting the demand with positive results being observed from augmented sales of these products (Christopher, 1993). Understand the Customer The key to understanding the customer is to have information on how the client spends and their likings on some items then use this to formulate marketing strategies. After introducing the Tesco loyalty card, the company was able to collect customer information and analyze it with the help of DunnHumby and gained knowledge on patterns of customer behavior (Christopher, 1993). Tesco was able to learn customer tends allowing for accurate measurement of promotions, negotiation power, defense against competitors and global growth among other advantages. This allowed the company to provide the customers with goods tailored to their specific needs in more precision than the competition could master. This separated Tesco from the competition and augmented its ability to meet customer needs and expectations. Variety Tesco has introduced many products to be able to suit the divergent needs of the customers it serves. This was evident from the use of the loyalty card where the customer was studied depending on their buying needs and patterns and the various levels of products that were needed by the different age segments of the population (Castaldo et al, 2013). This allowed Tesco to segment the clientele according to their ages and product specification through use of demographic data from the loyalty card to forecast the level of goods required, the type of products needed and the ability to pay. From this understanding and consideration of quality and quantity, the retail giant was able to produce new products for the customers. This was an effort to satisfy high variety of customers with products including Tesco Brand, Best of British, Tesco Brand, and Tesco kids, World foods, organic, Free From, clothing, electrical, Tesco mobile among other products (Castaldo et al, 2013). This has been an effort to attract, serve, and retain different categories of clients with the aim of increasing client base and satisfaction leading to high profits and sales. Building a Valuable Brand The brand of a company is implementing by the kind of service is very instrumental in ensuring high customer satisfaction. Tesco through the slogan “Every Little Helps” (Plimmer, p. 377) has demonstrated over the last years that strategic positioning through the development of a globally recognizable brand that resonates with the consumers is important. Brand through better service delivery has been beneficial to Tesco owing to the creation of the most valuable brand in the United Kingdom by the introduction of the Loyalty card allowing for better services that differed from the competition. The loyalty card allowed for the introduction of “a good, better, best” (Mesure, 2003) philosophy that is being implemented by the company to augment brand loyalty and maintain existing customers while gaining new customers through word of mouth advertising. Online Marketing The data available from the loyalty card were a massive boost for the company in the development of Tesco.com that has grown to be the largest e-tailer of grocery in the world (Egan & Harker, 2005). The main reason for this is that the data and the quarter yearly mailing of loyalty card holders aided in identification of potential customers, sampling their needs and feedback as well as their demographic, social, and economic characteristics. The ability to meet client expectations by the application of technology to augment customer experience is clearly visible from the manner in which Tesco revolutionizes the grocery business and the introduction of online shops. In conclusion, the loyalty card is measuring up to the expectations of the customers at Tesco. This has been seen from the high rates of customer retention and continued increase in profits since the loyalty card was introduced in 1995 (Humby et al, 2008). With this in mind, Tesco has been very monumental in augmenting customer satisfaction through card loyalty as demonstrated by illustrations and mechanisms employed by the company in the study body. The result is that Tesco has been ahead of the competition and marking the most successful company in implementing the loyalty card. These repeat clients are what have made Tesco a second leading retail giant in sales and profit in the world. Therefore, profit and sales have very strong relation to client expectation as depicted by Tesco where its customer loyalty card has brought the tremendous competitive advantages. The benefits of the loyalty card has been great that has propelled Tesco to be the world’s most flourishing internet supermarket and fastest growing financial service company in Europe, hence the conclusion is well correlated with the results. A recommendation on further study is to establish an understanding of other measures that can be used to meet customer satisfaction by supermarket enterprises. References Mesure, S., "Loyalty card costs Tesco ?1bn of profits - but is worth every penny", The Independent, 2003-10-10.       Christopher, M., Payne, A., & Ballantyne, D., (1993), Relationship marketing, Butterworth Heinemann in association with the Chartered Institute of Marketing. Egan, J., & Harker, M., (2005), Relationship marketing, London, SAGE. Humby, C., Hunt, T., & Pphillips, T., (2004), Scoring points how Tesco is winning customer loyalty. Sterling, VA, Kogan Page. Castaldo, S., Grosso, M., & Premazzi, K. (2013). Retail and Channel Marketing. Cheltenham, Edward Elgar Publishing. Plimmer, G., (2010), Scoring points: How Tesco continues to win customer loyalty. Journal of revenue and pricing management, 9, 377-378. Jennifer, R., (2007), Reconceptualising the strategic role of loyalty schemes, Journal of Consumer Marketing, Volume: 24 Issue: 6 Page: 366 - 374      EGAN, J., (2001), Relationship marketing: exploring relationship strategies in marketing,. London, Financial Times. Pearson Education, (2011). Tesco Case Study How Tesco Became the UK's Largest Retailer. [S.l.], Datamonitor Plc. Read More