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Loyalty Card Data Mined for Customer Intuition

Nice article over at MarketingProfs.com about a European supermarket and the customer insights they have gleamed from their loyalty card program. Tracking customer buying activity whether it be consumer products or B2B offerings is a great way to develop your customer intuition.

From the article:

The scope and capabilities of Clubcard are astounding. Tesco collects data on each head of lettuce, can of peas, bottle of wine or other item purchased by more than 10 million Clubcard members. It analyzes this tsunami of data to send a magazine with segment-specific content and six highly targeted coupons to each member four times a year.

Four coupons are for products the customer already buys, and two are for products that the customer has never bought before but is likely to buy. As of 1999, Tesco was sending out 145,000 combinations of magazines and coupons; undoubtedly, the number is higher today.

Many promotions just rob future sales, but the analysis enables Tesco to generate more than £100 million in incremental sales each year. Another benefit: “By monitoring short-term coupon redemption rates and then tracking the ongoing transactional activity of the members across all store departments, Tesco could calculate precisely the return on investment.”

Analysis of the Clubcard program led to a great pricing insight:

“If Clubcard data could identify the products that were brought by the price-conscious customers, but not by the rest of us, then lowering those prices would have a huge benefit for them, at the lowest possible cost for Tesco…. By not knowing their customers, many retailers are effectively wasting their money on price cuts that could be targeted to people who want them because they need them.”

The targeted price cuts enabled Tesco to attract more shoppers from competitors and capture the volume that supported the lower prices—all without hurting overall corporate profitability.

Knowing what products, services and experiences your customers are interested in whether by mining data about previous behavior or by monitoring their response and behavior towards marketing communications can set your business apart.

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July 13, 2004 in Blog Outsourcing, build credibility, Building Customer Community, Business Marketing, Business newsletter, CMO, Web/Tech | Permalink

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