Tesco adds Clubcard loyalty to its online store

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By: Wise Marketer Staff |

Posted on November 25, 2002

Tesco adds Clubcard loyalty to its online store

The UK supermarket chain, Tesco, has extended the reach of its loyalty programme to its online grocery customers through a new online rewards scheme on its web site, Tesco.com.

Tesco has been under pressure from rival supermarket Sainsbury's since the launch of the popular Nectar programme (see Sep. 12, 2002) of which Sainsbury's is a founding partner, along with Barclaycard, BP and Debenhams. The unqualified success of the Nectar programme did come as a surprise to many in the industry as the popularity of loyalty cards had appeared to be waning.

Following the short-term Who wants to be a millionaire? competition for its Clubcard members (see Oct. 23, 2002), Tesco's main response to Nectar, having conducted successful trials during August 2002, has been to take its own Clubcard loyalty programme into the online world.

But industry analysts, Datamonitor, sees both advantages and disadvantages to the move, citing the company's typically "clever marketing and deft online touch" as a good sign, but also drawing attention to Nectar's online failure due to stronger-than-expected public demand.

How it works Customers earn reward points that are converted into e-coupons and vouchers, which can then be redeemed online. With the pilot scheme finished, all 10 million existing customers are now being encouraged to request vouchers and log on to the website to redeem their new points.

Essentially, the new e-coupons and vouchers extend the existing Clubcard scheme into the Tesco.com virtual store, which already handles some 85,000 visitors each day. And, as with Nectar, the scheme also offers customers additional benefits through Tesco's alliances with its various reward and redemption partners.

The company has recently signed deals with two new retail partners, allowing Allders (department stores) and Dollond & Aitchison (opticians) to award Clubcard points in their stores as well.

Using data The company has made good use of the customer data gleaned from its Clubcard programme, allowing it to target customers based on their known spending and shopping habits. Already, an array of customised mailshots highlight different offers and advantages to well segmented groups of consumers.

But despite its well planned online operations, Datamonitor warns that the web site must run smoothly even under unpredictable load to avoid having the same problems as Nectar. During Nectar's first few days, up to 10,000 new members were trying to register online every hour, bringing the web site to a standstill - a situation which, some two months later, has finally been resolved. As Datamonitor points out, goodwill quickly turned into frustration as irritated consumers either had problems checking their account or were prevented from registering online.

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