Customer Relationship Management (CRM) in Tesco

Customer Relationship Management (CRM) is referred to as an activity by which businesses try to sustain retention of customers as well as trying to amplify the loyalty of customers. Different strategies as well as tactics are applied by different businesses to ensure that the objectives of the CRM are achieved successfully (John, 2011). However, there is a vital role being played by information technology towards CRM development. Information technology is not only a concept/terminology but also a practical actuality.

History of Tesco

Tesco’s history can be reflected back to the previous century’s 2nd decade. It was started as a small shop by Jack Cohen selling groceries on a stall during his time in London. Tesco business continued to exist and in a little while it came out to be the most important provider of grocery in the country (Bose et al., 2002). Currently, Tesco is the biggest retail company in the United Kingdom in terms of its international sales and its market share within the country (Mukund, 2003). Over the previous years, Tesco has endured various fierce forces of competition in the form of more strong and vigorous competitors; nevertheless, it has remained capable to administer itself so as to come out as the champion of groceries in the United Kingdom. Initially, Tesco began to trade in food and drinks; however, in more than a few years, it has managed to diversify into numerous vital businesses, for example, consumer electronics, clothing, and financial/monetary services.

Objectives of CRM in Tesco

• To build a continuous relationship with the customers and increase on the customer base.
• To assess the needs as well as values of the customers in order to raise the growth of revenue by satisfying customer needs.
• To recognize individual customers and improve on customer satisfaction.

Strategies developed to achieve the objectives

Strategies Developed to Achieve the Objectives

To achieve the objective of building a continuous relationship with the customers, Tesco is using a strategy of multi-channel client management. This refers to a design, coordination, deployment, as well as assessment of channels to improve the value of customers by means of appropriate customer gaining, maintenance, as well as development. The main point for this is the highlight on the customers as a strategy meant to create in the firm more values (Payne et al., 2005). Therefore, Tesco has diversified its channels by which existing and potential customers can interact with the business. The Internet, ATMs, kiosks, call centers, networks for home shopping, direct marketing, and catalogs, and brick-and-mortar stores are currently commonplace through which the consumers of Tesco’s products buy the products.

To achieve the objective of assessing the needs as well as values of their customers in order to raise the growth of revenue by satisfying customer needs, Tesco sends the Club card account to over 10 million clients each quarter, listing the profits earned from the shopping of the customers. They also have extra coupons and vouchers, intended to reward and offer enticements for shopping behavior (Bose et al., 2002). The main scheme benefit for Tesco and its clients is that the analysis of data drives the organization’s customer decision-making directly to promotions, category management, local store ranging, and even the location of the store. This has put Tesco at the apex of other organizations in terms of customer relationship.

To identify personal customers, Tesco has carried out market segmentation. In this case, the whole concentration is on the customer. Unlike where other persons frequently put much importance on other components, for example, technology, Tesco’s much emphasis is put on the customer as the basis for identifying their individual differences in terms of their needs. This has increased customer loyalty to the business.

Tactics Applied Alongside the Strategies to Achieve the Objectives

Analyzing customers and grouping them into different segments based on factors like regency, value, frequency, lifestyles, promotional responsiveness, lapse rates, redemption of coupons, and behavior. Tesco uses the knowledge formed through the Tesco club account scheme to visibly identify the customers’ value (Mukund, 2003).

Tesco’s approach to mining advanced data has assisted them in deeply understanding customer behavior. This tactic has encouraged more customer relationships in the business, commanding more demand for the products.

Gathering frequent feedback from customers to improve existing offers and introduce new services. Tesco controls the biggest online grocery store in the world through Tesco.com. This tactic has increased revenue and customer loyalty (Temporal, 2008).

Tesco targets promotions only to customers, improving the likelihood of customer acceptance and reducing marketing costs. Through its CRM tactic of promotions targeting only the customers and this has been used appropriately thus reducing on the costs of marketing a result which the whole company has benefited from as well as appreciated. Therefore Tesco has also utilized the effectiveness of the media of the Club Card system and this has allowed Tesco to reserve some money in as far as promotion costs are concerned and enhancing sales too.

Key Terminologies

• Channel: Refers to the contact point of a customer or a medium by which the business and the customer interact. This is vital in selecting the strategy and tactics during CRM (Rangaswamy et al., 2005).

• Information Technology: Refers to the use of computers to store, retrieve, manipulate, and transmit data in the business environment. Tesco uses information technology to conduct its strategy of online selling of products.

The above discussed benefits indicate that CRM implementation is critical in nature to the companies. Therefore implementation as well as CRM adaptation is as well essential in the impression that it helps the business to identify customer groups on which the resources of the business can be utilized regarding strategic customer relationships. This has put Tesco in a flamboyant position in as far as CRM is concerned and because of this the business commands higher profit margin as discussed above. Therefore every business needs to adopt a better CRM in order to flourish in the business sector.