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March 2014

Innovative Use of Personalization

The Goal

n 2011, Tesco made a number of changes to its Clubcard statement coupon, including increasing the volume of manufacturer coupons and reducing the redemption periods. Under this approach, Tesco or a supplier selected customers for every coupon offer they wanted to run.

Unfortunately, customers complained that the coupons they received were for things they didn't buy. This lack of relevancy led to a decline in overall participation and redemption rates. The shortening of the redemption period had an adverse effect as well, given that it made coupons harder to redeem.

As a result, Tesco reviewed how members were targeted for the offers and created a new targeting algorithm designed to strengthen engagement while also increasing sales.

The Initiative

Called the Clubcard Bonus Coupon Mailer, the initiative tailored different offers to Tesco customers based on their previous purchases. It launched in 2013 with 12 personalized coupons mailed to each loyal Clubcard customer. While the creative was the same for each customer, no two customers received the same set of offers.

The Results

Both customer feedback and results from the first trials of the Bonus Coupon Mailer were encouraging. Sales among those customers who received the mailer increased, based on redemption rates.

In 2014, the UK mailer is on track to increase same-store sales by 0.4% as well as significantly increase in-store spending per member spending. On average, the mailer is delivering more than £5 of additional store spending per customers mailed.

The Bonus Coupon Mailer program remains popular with customers as evidenced by their high levels of participation, and likely due to their clear appreciation that the coupons reflect their purchasing patterns. The program now includes nine additional Tesco markets around the world with similar positive results and customer feedback.