Tesco readies more changes to Clubcard as it looks to get back to ‘rewarding loyalty’

Tesco has hinted at more changes to its Clubcard loyalty scheme as it looks to build on work it has done to improve consumer perceptions of the brand through a focus on loyalty, as well as its own-brand offering and marketing.

CEO Dave Lewis said the relaunch of Clubcard last year with contactless technology had “reinvigorated engagement” and given the company “more capability going forward”. In particular, he highlighted synergies between Clubcard and Pay+, Tesco’s mobile payments app, which now has more than 500,000 users across the Tesco business.

“Clubcard has always been a big part of Tesco. It’s fair to say we hadn’t invested as much in that in the right ways historically. We’ve gone through a process which is taking it away from just being a promotional tool and getting back to being a reward for loyalty,” he tells Marketing Week, speaking at a press conference this morning (11 April).

“A very important part of enabling the plans was ‘re-carding’ and getting contactless so the utility becomes a little bit more modern. And then there is an awful lot of things we can do – if you take Clubcard and put it together with Pay+ you have the only loyalty and payment device in the marketplace. There is an awful lot we can do. I won’t tell you what but you should expect more.”

READ MORE: What happened to Tesco’s big plans for a digital Clubcard?

Lewis sees Clubcard as key to rebuilding Tesco’s brand health, which sank following the accounting scandal that hit the brand just weeks after he joined. Since then, Tesco has seen consumer perceptions of the brand triple across a number of metrics.

In particular, Tesco highlights a 15-point increase in its NPS score to 53.7 and growth in its quality perception, which was up by 12.2 points between January 2014 and February 2018, and value perception, which tripled to 18.8, according to YouGov BrandIndex.

And while its overall index score (a combination of a range of metrics including quality, value and recommendation) has seen a threefold improvement, Tesco is still behind the rest of the market. Current measures show Tesco with a BrandIndex index score of 21.3, behind all its major competitors bar Asda and the supermarket sector overall.

Despite the fact Tesco is still lagging the market, Lewis said he believes the improvement is “notable”, particularly for “such a big brand that is so ubiquitous in the UK market”. However, he admitted there is still more work to do.

“All the differentiators will ultimately drive the brand perception to where we want it to be,” he explained. “I don’t want to give you all the impression that we’re happy with where we are; we’re happy with the progress we’ve made but there is so much more we can do.”

We’ve gone through a process which is taking [Clubcard] away from just being a promotional tool and getting back to being a reward for loyalty.

Dave Lewis, Tesco

Beyond Clubcard, another key area of focus has been redeveloping its ‘value’ own-brand range. Initially Tesco got rid of its ‘Everyday Value’ range in fruit and veg in favour of Farm Brands, which generated £550m in sales last year. After conducting a “segmentation model”, it has identified seven additional brands to add, including a new vegan range, Wicked Kitchen.

Alessandra Bellini, chief customer officer, explained: “We asked our customers and what we discovered is that people didn’t feel really valued when they were buying something called ‘Everyday Value’. People want to, especially in that tier, feel they are really savvy, and that they have made a good deal, and brands are the way you do that.”

Lewis said its advertising, which is now focused on ‘Food Love Stories’ and ‘Weekly Little Helps’ is also helping to drive up brand perception, appreciation and engagement. And the plan is to continue with these campaigns: “History tells me that if you have a marketing campaign that is working, don’t change it.”