Loyalty Card and Customer Loyalty: Case of Tesco in the UK - Essay Example

The Customers join the loyalty schemes by completing a form with their personal details i.e. addresses, email address, telephone number, etc. In return the customer is given a plastic card that is scanned into the system at every purchase of goods or services; and points are awarded to the card, which is later turned into vouchers. This helps the retailer to build an individual customer purchasing habits profile; as all the information is entered into the database, i.e. about the preferences in terms of products or services. The importance of having a database on customer purchase profiles is that it helps in the segmentation of the retailers’ customer base, hence ensuring that the right marketing strategies are used such as direct marketing and special offers to meet customers’ requirements (Rowley, 2005). Loyalty schemes are widely used by different sectors in the retails, for example, the travel agents, financial service providers, hospitals, and supermarkets.

Loyalty cards are an important tool of marketing. Retailers around the world – from Tesco to smaller chains – use loyalty cards to retain existing customers, generate new customers; gather data on the customer decision process, and increase the spending of the customers in their stores (Sharp, Byron, and Anne Sharp, 1997). The Clubcard loyalty card scheme or Tesco has the same objectives. It is the most important part of customer relationship management (CRM) of Tesco. The objective of CRM at Tesco is to increase the brand in consumer preferences to such a level that becomes a lifetime customer of Tesco. This enables Tesco to utilize the lifetime economic value of the customer.

It is three times easier to continue with the present customer than to attract a new one (Philip Kotler, Kevin Kohler, 2006). This mindset guides the loyalty card scheme at Tesco. Besides this, the loyalty card scheme, the Clubcard, succeeded in increasing the revenues of Tesco.