Tesco Uk Case Study

UCompanies are using specialized Customer Relationship Management (CRM) systems to

understand their customers’ needs at a much more granular level. Consider Tesco, the UK

retail grocery chain. Using their CRM system, the company has been able to send 10 million

customers one of 4 million variations of coupons, based on individual customer purchase

history, generating annual incremental sales of £100 million.

Tesco implemented their now-famous frequent-shopper program in 1995. Using a frequent-

shopper card, a customer gets discounts at the time of purchase and the company

gets information about their purchases, creating a detailed database of customer preferences.

The information collected has enabled management to identify several groups of customers

based on lifestyle such as “convenience,” “finer foods,” and “cost conscious.” Then they use

the categorization to customize discounts and mailings to individual customers, generating

increased sales and identifying new products to expand their offerings. At the individual

stores, data can show which products must be priced below competitors, which products

have fewer price-sensitive customers, and which products must have regular low prices to

be successful. In some cases, prices are store-specific, based on the customer information.

The information system has enabled Tesco to expand beyond groceries to books, CDs,

DVDs, consumer electronics, flowers, and wine. The chain also offers services such as loans,

credit cards, savings accounts, and travel planning. According to Don Peppers and Martha

Rogers, authors of the book Return on Customer, Tesco’s brand now stands for a great deal

more than just groceries due to their customer relationship system.