Sir Terry Leahy: My lessons on building and measuring loyalty

 

 

 

Knighted for services to retailing, and renowned for transforming the supermarket industry in Britain by growing Tesco to the largest chain in the country through innovative customer loyalty incentives such as the Clubcard, few are better qualified to talk about loyalty and customer-focused initiatives than Sir Terry Leahy.

 

 

During Leahy's 14 years as CEO, Tesco more than quadrupled sales from £13.9 billion to £62.5 billion, due in no small part to a variety of innovations that he spearheaded. During his tenure, Tesco introduced new products, store formats and lines of business, while he also pioneered new ways to engage customers, including the development of the Tesco Clubcard - the customer loyalty scheme that today provides insights into shopping habits of approximately half of all UK households.

 

 

So what does loyalty mean to Leahy?

 

 

“The true source of loyalty is to create benefits for people,” he explains. “That’s really what builds loyalty. Sometimes people concentrate too much on devices like a loyalty card, such as the Clubcard. These really are just methods by which you create loyalty. They don’t create loyalty in themselves. The only way you create true loyalty is by your behaviour over time - do you in a transparent, reliable way, create benefits for people?”

 

Appointed as chief executive of Tesco in 1997 – having initially joined as a marketing executive in 1979 – Leahy wove this thinking into the fabric of the business, with the primary focus on the customer.

 

 

He says: “The core purpose of Tesco was to create benefits for people in order to enter long-term, lifetime loyalty. The whole experience has to be continuously improved in small and important ways, places, the range, the service, the quality, the convenience of the shopping, and we captured that sentiment in our advertising slogan: ‘Every little helps’ and what that meant was, that we were going to understand people’s lives, and we were going to make small, constant improvements to the shopping service and in that way add some benefit and be more useful to customers and that would build loyalty.”

 

 

And the establishment of the Tesco Loyalty Card provided unprecedented understanding of people’s lives. Introduced in 1995, the Clubcard became the world’s most successful retail loyalty scheme, enabling the business to be able to analyse shopping habits to devise marketing campaigns and develop personal relationships with customers, tailoring discounts – all of which now seems par for the course, but at the time was ground-breaking stuff.