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Clubcard Loyalty Provides Tesco With the Most Sophisticated Customer Databank

If you thought the ‘nudge theory’ was a version of the 1970s ‘nudge, nudge, wink, wink’ style of comedy, think again.

It is in fact the latest wheeze being adopted across a number of branches of government to get you to change your personal habits. And they are using data as the driving force behind it.

Taxes Are Still Useful, Though

Up till now the main thrust behind changing behaviour patters has been taxes. If people’s health is an issue, slap more duty on alcohol and cigarettes. There are few definitive studies confirming that such tax actually influences habits for the good. It seems to be more that those who enjoy these vices just have to pay more for them, but they don’t cut their consumption, except temporarily.

The same doesn’t seem to apply to motoring. It’s not that people are addicted to driving, but that they are a captive group, they need to get about, so they are fleeced more.

So, the principle of directing people through their pockets has been well established. Today there is only talk of ‘nudging’ them, instead. This is more carrot than stick, at least in theory.

The Government now has a Behavioural Insights Team (BIT) responsible for finding discrete and politically safe ways of nudging people into better lifestyles.

Loyalty Data

The current buzz word, prime obsession in health circles is obesity. Link that with a general perception in officialdom that people are naturally unhealthy eaters, poor sleepers, non-exercisers and work-obsessives and we see their current target clearly.

So, they have latched on to the idea that the supermarkets (and other retailers who operate loyalty schemes) know more about people’s eating habits than any other organisation, certainly the doctors.

Tesco Clubcard now boasts 15 million UK members since its launch in 1995. Every Tesco purchase is logged forever. So if people can be persuaded to buy more healthy food, less unhealthy food, so the ‘nudge theory’ goes, then they will have been influenced by their friendly supermarket, not told to do so by nanny Government with a Big Brother approach.

It may carry even more weight when applied to children. If you are advised that you appear to be buying too much chocolate and not enough fruit and vegetables for your children, will that nudge you to pull your socks up, for fear of being accused of child abuse?

The Prime Minister is known to favour this theory, also known as ‘tailored advice’. A scheme allowing people to monitor their neighbours’ energy consumption patterns to help drive down costs, is still around if not widely adopted.

GPs who failed to submit their tax returns on time were told by letter how honest the medical profession is generally perceived to be with a ‘very high tax compliance’ rate. Apparently this ‘nudge’ worked, with a 35% success rate, tenfold the normal direct letter approach.

The Data Is Too Valuable to Use In This Way

It is far from clear that the supermarkets are quite so keen on using their data resources in this way. Some nudge supporters advocate ‘nudging’ them with a bit of fiscal incentive….

When supermarkets first got interested in loyalty cards as a means of data storage, they had to develop expensive infrastructure for storage and retrieval. As time has gone on and the information began to acquire immense currency for advertisers and themselves, there was a payoff with the IT investment.

Some choose to focus on the top 10% of customers (who account for around 40% of sales) as their business intelligence solutions. However, in the end, even a casual, occasional shopper unwittingly provides data about himself that will be useful to the retail business themselves or to sell on.

Now they integrate consumer data (who they are) with purchase behaviour data (what they buy) to produce the holy grail of modern commerce, the targeted-ad customer. The beauty of real-time data feeds from thousands of branches is that the profiles are updated continuously and accurately.

The Tesco’s loyalty scheme is the most sophisticated in the world now. Paying out rewards 4 times a year means there are 4 Christmases, they can offer apparently unbeatable deals and give all users the lasting impression that loyalty pays.

The Tesco retail model may be looking tired and under some competitive strain, but not the loyalty part of it. Be sure, others like Nectar, Avios, Boots, airlines, hotels, restaurants, community shops are all developing theirs to emulate and then better the Tesco’s one.

If at some point they see an advantage in co-operating with arms of the government to reach into people’s lives, they will.

Read On:

Just How Valuable Is Your Web Data?

Advertising Gets Really Personal

Personal Data: Government Plans a Rich Harvest

Shock and Sell, Cry and Buy: The Slogans of Advertising

Image: Burrows