The benefits of knowing your customers

UK grocery chain Tesco was in trouble in the early 1990s. Falling profits, a depressed share price and European competition entering the market were just some of its woes.

Rather than ‘copy the leader’ as many companies do, Tesco decided customer data, not profit through own-brand labels and profit per square metre, was the key to growth and eventual market domination. By the end of 1995, Tesco had transformed itself, reversed its negative trends and overtaken, for the first time ever, the previous market leader, Sainsbury’s. Tesco remains the market leader today.

All thanks to learning from its customer base. A Clubcard offered customers a 1% discount and based on the in-depth data provided by the cards, Tesco stores could refine their stock selection, displays and staffing levels, and learn about individual customer’s buying habits. The card also allowed the company to segment its customers and communicate directly, and differently, with each segment to build loyalty.

Tesco kicked off a customer-centric culture by new training to empower all staff to look after customers the way they think best. It also moved into new retail services including online shopping, financial services, Tesco-branded mobile phone services and home broadband services, all made possible by its ability to tap into the wants and needs of its customers via the data gathered from the Clubcard.

Discussion question

How much do you and your team really know about the wants, needs and exciters of your internal and external customers?