Customer Relationship Management
Customer Relationship Management (CRM) refers to theconnectionconcept as a principle in organizations conceivably supported by the application of suitable information systems where organizations emphasizes on the edge between itself and its clients. Through customer relationship management, knowledge within an organization is shared in order to ensure that customers constantly get services at a high level. The concentration on customer relationship management among organizations has turned out to be a significant concept (Parvatiyar&Sheth, 2001). Organizations have to a larger extend come to terms with the significant costs that are associated with the loss of customers thereby are coming up with measures to comprehend, measure, manage as well as improving customer retention. Customer relations management assist the organizations to scrutinize how to enhance enduring customer values. Customer software systems entails sales, marketing as well as consumer functions with benefits, for instance, understanding consumer buying habits, enhanced pointing out of potential clients, elevated customer satisfaction. Furthermore, the CRM tools are inbuilt on organizations e-commerce systems thereby permitting the firms to establish an elaborative image of their clients as well as their membership base. The outcomes of these measures include value-added marketing, sales process, customer services, exploration and recording.In this paper, we shall analyze Tesco’s Supermarket customer relationship management analysis.
Tesco supermarket is one of the leading retail chain stores in the United Kingdom. It is also considered the third largest chain store globally after Wal-Mart in the United States of America and Carrefour in France. The organizations has active operation stores across the world located in Europe, Asia and North America and it conquers more that 30 % of the total United Kingdom’s retail market. The origin of Tesco can be traced back to 1919 when Sir Jack Cohen founded the now successful chain of stores. The firm introduced its club card scheme in 1995 as a customer relations management concept that was designed to offer special services to its customers in a distinct manner (Rowley, 2005). Furthermore, the organization also incorporated the www.tesco.com in 2000, another customer relations management tool that that enhanced it e-commerce trade. The organization also adopted the First Class services in the 1990s followed by “One on Front” service that was established so as to reduce the time used to check out for its customers in its retail stores. Through the organizations Club cards, information on several areas for instance, customer services, merchandising, pricing, promotions, communication effectiveness and all other customer related concepts were easily generated.
Moreover, the organization established the ‘Customer Championship’ in the 2001-2002 as well as the ‘Learn Thinking’ being incorporated in the same period. In order to ensure that the organization is more accessible by its clients, the firm also launched a fixed contact for both telephone and mobile phone. Furthermore, Tesco designed ‘My Time’ initiative that targeted women in providing them with the latest products about spa, beauty salons, as well as price cut cosmetics among other female loved products. The aim of all these services as well stated by the organization’s CEO, Sir Terry Leahy during the organizations general annual report in 1998 was to fulfill the mission aimed at expanding customer’s loyalty to the organization for their entire life. The organization had been regarded as the premier practitioner of CRM due to its familiarity of customer’sthoughts, feeling and impression bout shopping. The organizations Club card loyalty program for instance was aimed at ensuring that the organization balances its business and the customers.
After its founding in 1924, Tesco organization had for long pursued to a large extend price based strategies in its operations. Nevertheless, in early 1970s, with most of the organization clients becoming wealthier and less moved by the prices, the organization was forced to get back to the drawing board. Throughout the 1970s and 80s, the organizations management team started focusing on building superstores that were approximately 20- 50,000 square feet with new outlooks and store ambiance. In the 1990s, the organization management launched a sequence of store setups for instance, Tesco Express that was 3,000 square feet, Tesco Metro, which was 7-15,000 square feet, Tesco Extra, Homeplus stores that were mainly for non- food products. During the same period, the organization began expanding to global markets in nations like China, Japan, South Korea, Thailand, Malaysia, Hungary, Poland, Turkey, Check republic, India and the United State among others. By 2009, the global organization was experiencing billions of pounds as income and profits. The organization objective at that time was to ensure that by 2015, more than its turnover would be from outside the United Kingdom. The organization also planned that it would open another 500 new stores in the following one year outside the United Kingdom, thereby creating additional employment opportunities across the globe.
Nevertheless, in the early 1990s, Tesco management began realizing that the success of the organization in the long term is not dependent on pursuing an antagonistic as well as advanced growth but it must focus on getting close to its customers. It was at this juncture that led to the organization development of what has become to be known as the global largest and most successful customer relations management ingenuities. According to the organization, the core statement and purpose for these initiatives was to create values for the customers and earn a lifetime loyalty, an aspect that was considered the best model of practice.
Tesco organization customer relationship management steered up in the 1990s when the firm began working closely with Dunnhumby, which was a marketing company. This partnership led to the initial test launch of loyalty card arrangement in 1994 that was in six stores. This was enhanced since it had worked perfectly in other parts of the world and through an analysis that established two important findings. First, the organizations realized that in several of its stores, the top 100 customers were valuable in terms of sales as the lowest 4000. Secondly, the organization also found out that the highest 5% of the organizations customers accounted for 20% of sales at the same time the lowest 25% of the customers only accounted for 2%. Therefore, the scheme that was a key launch to the organization staff, which had been announced all over was Tesco Clubcard that rewarded customers through offering them with loyalty points for each one pound spent with the firm. The pointswould then be redeemed for either the organizations products in the stores or with other companies incentives, for instance, vacation attractions, hotels, holidays and travel explorations among anyothers.
Image 1: Tesco Club Card
The customer loyalty programs by organizations had become increasingly significant as indicated initially with several industries and retail sectors. Retailers adopting the club cards encouraged their client’s loyalty through offering value to them. This tapping into the customer loyalty enhanced mutual benefits, which was a healthy relationship in marketing and incorporated other variables like trust, pledge, gratification and value (Palmer, 2005). In comparison to its competitors, Tesco brags of a high customer loyalty program that has been enhanced by the Tesco Club card. This is important in offering the organization a competitive advantage. In as much other organizations have come up with effective loyalty programs, they have not been able to create worth for their brands in the consumers eyes thus creating consumer dissatisfaction.
The Tesco Club card program as indicated earlier was launched in 1995, which has direct benefits to all the customers who owns it by allowing them to earn one pound at any organizational store or website and at times offers double points on special offers. Afterwards the points are stored as they accumulate and the customer card holder is awarded with vouchers equal to the value of the points accumulated at least four times annually (Gummesson, 2008). The vouchers are then used for shopping in the organization’s stores or in the Club card dealers where their values are quadrupled. Moreover, the Club Card holders are also eligible to access several Club card clubs owned by Tesco, for instance, healthy foods, food and Christmas, baby toddler. The organization’s customers also benefit from the expediency of buying in far distance places through their partnership with Virgin Atlantic.
Furthermore, Tesco Club card is also significant in rewarding customers with green points that allows them to be part of the sustainability measures by allowing them come along with their own carrier bags when they are shopping. This is entailed in the organization’s ten point community plan that is aimed at increasing greenness in all Tesco stores and enhance their image in the eyes of the community (Charlesworth, 2009). The plan also has incorporated the organization effort to come up with thicker and degradable bags that are not harmful to the environment. In applying these schemes, the organizational customers embrace environmental friendly conduct that effectively enhance sustainability.
In the same way, Tesco as an organization also enjoys some measure of benefits from the Tesco Club cards programs. These benefits that are allowed to the organizations customers permits the organizations to comprehend consumer behaviors and enable them to micro segment them so as to determine and fit their lifestyles and habits. The information obtained from this ensures that the organization effectively target consumers with more of individualized promotions in addition to other marketing programs (Gummersson, 2006). The organization through the Club Card system is also in position to gather all the deep information about customers purchasing habits at the same time maintain feedback channels that enhance a direct communication with the clients thus building trust and loyalty from the customers. The rich information that the organization is able to get from the Club Cards system is also continuously upgraded and reinvigorated in a bigger way. This has enhanced Tesco to have knowledge of its customer base, thereby increasing sales as well as gaining commitment from its customers. The organization has also benefited from the Club Card system thorough accessing getting efficient operational gains such as stock selection, display and staffing levels.
Through the Tesco Club card, the organization has been able to transform the use of the data on the card in an effective online marketing approach. Several transformations have been made on the organizations website Tesco.com. This is because the Club card has been turned digital whereby information about individual consumer are interrelated with other sources for instance mobile phone information, social networking information, methods of payment in order to ensure the delivery process has more individualized offers to the customers (Hart, 2003). Therefore, the organization is in position to offer its value to the ideal customers using the programs.
The Club card scheme has been applied by the organization from the time it was introduced till this moment in almost all its markets. From the beginning, the organization aim was to capture, analyze and most significantly apply the information gathered from the data each single day in making of decisions. For instance, the organization is able to detect the place and when purchases were made, and the amount paid by the customers as well as the specific products purchased.
In the years that the CRM tool of Tesco Club card has been applied, the technology has turned out to a strong tool in marketing thereby leading to increased sales and profits in the retail sector of the organization (Stair & Reynolds, 2010). This has played a significant role for the organization in line with the current high competition in the market place where customers are turning out to be important thereby demanding organizations to shift focus and concentrate on them. This has also enabled the organization to attract and retain more customers. The organization through the initiative in CRM has also enhanced interactions with its clients thus making them feel at home and appreciate thus enhancing loyalty.
Through CRM, Tesco Club card has enhanced the connection between the organization and the existing operations and transactions through application of tools like database that is used in assisting in consumer behavior tracking. This has enabled the organization to establish predictable marketing approaches and focus on identifying on what the consumer perceive as valuable and endeavoring to satisfy it. In addition, through the Club card, Tesco made a step ahead and entailed practices that are aimed at creating a close relationship between the organization and the customers. This has enabled a mutual benefit through the organization learning more about the customers and the customers also understanding the employees better. This has ensured that both parties remain relevant to each other. The implementation of the CRM at Tesco like other organizations has significantly contributed to the success of the organization and ensured its success (Hassa & Parves, 2013).
Tesco organization integrated its customer relations management programs in the early 1990s. This was when the organizations collaborated with marketing services organization called Dunnhumby. The initial outcome of this collaboration was launch of the first loyalty cards scheme in some of its stores. With regards to the Tesco club card, the CRM initiative has enhanced the organization chain performance with a close contact with all their customers. It has enabled the firm to make its customers happier at the same time benefitting the organization through increased sales. The main reason that was behind the Club card for Tesco was to gain knowledge and information about the shopping routine of the organizations customers at the same time offering something back to them in return. This program created a new point of sale technology and through digital integration, it also addressed the customers’ needs and other questions at a personal level. Overall, the organization has seen best results through making use of the customer relations management tool to establish, uphold, and enlarge connections with the organizations customers.
Moreover, the accomplishment of Tesco organization customer relations management in creating worth’s and benefits for all concerned parties is determined by the supplier and the consumer of its goods and services. Nevertheless, due to the advancement of technology and utilization of technological tool program, the firm has been in position to make good use of the scheme to enhance the values of its shareholders through establishing an effective relationship. This relationship touches the most significant customer’sbases. This is the case because the integration of the tool was as a result of efficient application of technology at the same time incorporating relationship marketing to provide profitable objectives in the long term (Hassan & Parves, 2013).
Approaches of Tesco customer relations management offered effective way of delivering value for the business firm and its investors since they are entirely customer focused on. Through the organization CRM tool technology, Tesco’s business practices enhanced it to plea to its prevailing and probable customers more diligently, making an occasion for reciprocal understanding and providing restored worth to each other. Towards the end every three month, several Tesco customers provided with the supermarket’s magazine talking about the newest and special offers of the corporation’s products and services, while many more of Tesco shoppers are reached by the CRM tool.
Overall, Tesco is one of the most renowned practitioner of CRM relating to its awareness of the customer feelings,discernment and sentimentabout grocery shopping. Applying demographic information, daily lifeinformation, and information on total money spent on food items, and customer reaction to offers and advancements generated by the Tesco Clubcard. Tesco has concentrated on customer gratification by coming up with customer needs and divisions to which specific tailoredvouchers are granted to discrete segments.
In as much as there may be other arguably issues that have contributed to the success of Tesco organization, The Clubcard customer relations management has been a major success factor in the business organization. This technological too has played a significant role in the organization relations with the customers. It is also the main reason behind why many consumers are turning to Tesco, away from its competing firms. Therefore, a customer satisfaction is a performance function of an organization. Enhanced customer satisfaction leads to high customer loyalty an aspect that several organization are currently aiming at. Customer satisfaction apart from being an organizational goal, it is also an important marketing tool. Organizations should therefore strive to keep profitable customer bases as they present the backbone of organizational survival. Organizations cannot survive in modern days without CRM that has been enhanced by the advancement of technology. Furthermore, the success of organizations does not only entail how they carry out their day to day of their activities, but depends on the level of what they are able to do to their customers in return to gain their loyalty. It is therefore significant that organizational leaders come up with best strategies to address the needs of customers and create a direct personal relationship with them. This will enable them have a close connection with them at the same time understanding their need closely. It therefore becomes an important tool for marketing research and decision making in organizations.
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