This article was previously published in Global Convenience Store Focus.
Hailed as a “first for a UK supermarket” and a “breakthrough innovation”, Tesco has announced a significant new programme as part of its UK loyalty strategy.
As one of the most iconic programmes in the country, the current Clubcard loyalty programme was launched almost twenty five years ago and the scheme now boasts over 17 million members in the UK alone and operates in a number of European markets. By the end of this year, UK customers will have the option to enjoy “Clubcard Plus” – a new model for loyalty for the UK grocery sector that charges customers a fixed and consistent subscription fee in return for a range of benefits they choose.
Tesco’s loyalty programme has played a huge role in loyalty marketing history since its Chairman’s famous comment following the success of their initial Clubcard trial in 1994 – “What scares me about this, is that you know more about my customers in three months than I know in 30 years.”
So when the Clubcard programme recently announced such a dramatic addition to its loyalty strategy, it captured the attention of journalists, C-Suite Executives and consumers alike. For now, the details are sketchy, however “Clubcard Plus” is the name Tesco has given to its new subscription model, charging a monthly fee of £7.99.
Clubcard Plus – What Are the Benefits:
According to Chief Customer Officer Alessandra Bellini, Clubcard Plus subscribers can get up to four key benefits from the programme each month once it launches later this year:
- 10% off two “big shops” in-store.
- 10% off selected Tesco brands in-store (such as F&F clothing and Tesco Pet).
- Double data from Tesco Mobile.
- Tesco Bank credit card with no foreign exchange fees abroad.
Naturally, each of these options comes with its own terms and conditions and the full details are promised later in the year when the new programme is unveiled in full.
Who Will Benefit:
While individual consumers will have to evaluate their own potential savings from the fixed charge of almost £100 a year, a useful article illustrated the potentially powerful impact of the approach which increases substantially in direct proportion to the typical basket spend of the cardholder as shown below.
Evaluating Tesco’s Subscription Strategy – ThisisMoney.co.uk
Will Subscription Drive Stability or Growth?
While investors delight in subscription models given their potential to deliver consistent recurring revenue in otherwise cyclical industries, the key to the success of this strategy remains wholly dependent on consumer response and adoption.
Amazon of course has managed to craft a proposition so compelling that “shoppers would be ‘irresponsible’ not to join”, however commentators seem less excited about the power of Tesco’s value proposition so far. For example, while Tesco remains the grocery market leader, its share is declining and with UK consumers increasingly supporting discount stores such as Lidl and Aldi, it seems hard to imagine that the idea of paying a subscription fee for in-store discounts will convince price sensitive shoppers to stay or come back.
Forbes also noted the lack of any benefits or savings for Tesco’s online shoppers who already pay a monthly subscription fee for delivery – adding cost and complexity for these shoppers rather than streamlining for simplicity. And while online shopping has been a challenging channel commercially, it may have finally reached its long-awaited tipping point for success with online supermarket Ocado becoming the fastest-growing grocery brand in recent analysis of the UK’s grocery market.
Conclusion:
With the UK grocery sector so volatile, a subscription model makes perfect sense – but only if the benefits to consumers are truly fantastic. Amazon Prime’s powerful combination of delivery and multi-sector benefits such as entertainment products have driven customer expectations to an all-time high – and at exactly the same price point, so it’s certainly all-to-play-for in this exciting market.
Tesco has a long and successful history with loyalty, and has been credited with being “the first organisation to use customer insight to actually run its business well” rather than just “make their marketing more effective”. With so much as stake, let’s hope they’ve done their market research thoroughly on this concept and can deliver a truly powerful subscription package to drive profitable growth.
About Us:
Liquid Barcodes is a leading global loyalty and digital marketing technology company specialized for the convenience store and foodservice industries. Our proprietary cloud-based technology platform allow retailers to create and manage their digital marketing campaigns with a proprietary process we call the “customer connection cycle’ to engage, promote and reward customers activities in real-time across digital and media channels.
How we do it:
We have developed the most advanced loyalty and digital marketing technology platform specifically for convenience store and foodservice retailers globally.
Retailers use our self-service dashboard to create and manage loyalty driven marketing campaigns that increase purchases with their existing customers, as well as effectively target and acquire new customers through partners or paid media channels.
One core component of live loyalty is gamification. We have gamified branding, loyalty and promotions. We believe this approach is essential in order to get customers’ attention and ultimately truly engage them with repeatable actions thereby winning their loyalty.
Check out some of our exciting/proven results here:
About Me:
Chief Content Officer, Liquid Barcodes and Independent Loyalty Consultant
With over twenty-five years marketing experience, I specialise in loyalty marketing consulting, managing consumer loyalty propositions, strategy and operations. In addition to working with Liquid Barcodes, my clients have included Telefonica O2, Three Mobile, Electric Ireland, Allied Irish Bank and The Entertainer, as well as Avios – the global points currency for some of the world’s top airlines. I am also a judge for the Loyalty Magazine Awards.
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