During his time on the board, Tesco became the UK's biggest retailer. Leahy oversaw the introduction of the ClubCard and knows a thing or two about building relationships with customers.
Interviewer: "You once said of yourself, Terry Leahy, I'm a loyal person by nature: one firm, one football team, one religion and one wife. And I guess we could add to that - and one Club Card. Is that where the idea came from? This idea that you would try and cement a purchaser to your business."
Sir TL: "That's right. Loyalty cards don't make people loyal. What they do is allow you to understand a little more about a person so you have the chance to alter the products, the services, the information so they're more useful to that person. And in that way, if the person can see the organisation is doing things that are useful, helpful to them, in some small way, gradually it builds loyalty."
Interviewer: "It almost sounds like you are running a charity."
I'm sure you can understand why this conversation caught my attention. First, with a tweak or two in the terminology used, I'd agree that Sir Terry Leahy's description of his aim sounds very much in keeping with what a charity should/could be doing to increase supporter loyalty.
- Learning more about the donor
- Approaching them in a way that is relevant
- Being useful/helpful/a positive aspect of their life
In reality though Tesco's use of data in building customer relationships has gone far beyond what any charity has done.
With that in mind, here's how the conversation continued.
Interviewer: "Obviously the usefulness of a Club Card to a big organisation like Tesco is that they monitor people's spending, they can get a sense of them as a consumer and they can mercilessly target them with things they hope they will buy."
Sir TL:"They can, and you can either do good or bad with that. But if you think about a doctor, they have to know something about the patient in order for them to do their best work. With a store, if you know a little bit about more about a customer – what they're interested in, how they shop and when they shop - you can do a better job.
"What you have to be careful to do is ensure you are actually creating things that are beneficial. You're not manipulating the customer."
Interviewer: "Well that's a huge amount of trust to put in an organisation that is there to make money and rewards its shareholders. I mean a doctor has their patient's best interests at heart, but a company understandably has the interests of the shareholders' at heart."
Sir TL: "Well, the best organisations do put their customers at the heart. And we were able to persuade our owners and shareholders that, the best way for them to get a return, was by improving shopping for customers."
The conversation reflects well the benefits and possible pitfalls of making the full use of data in a customer/donor relationship.
For Tesco, the loyalty card has been a huge success. But as fundraisers, I think we're all aware that our problems are rarely about too extensive a use of data, but instead, not enough.
I'm thinking about a few experiences I've had as a donor. I'm sure you'll be able to think of plenty too.
- When I changed my bank, I transferred my Direct Debits over, only to be welcomed as a new supporter by one of the charities.
- One charity just stopped collecting my Direct Debit.
- Two charities which I'd bought gifts/memberships from never contacted me for renewal, allowing my support to lapse.
- A charity I don't support emailed me to thank you for giving a gift.
There are plenty of other examples, but these show how a failure to gather or respond to data has an immediate effect on loyalty. Communication breaks down and sorting out the problem becomes a hassle.
Which is why it's actually this part of the interview with Sir Terry Leahy that stood out: "the best organisations do put their customers at the heart".
Because good experiences stand out and make people LOVE a charity, as this collection of anecdotes on the Fundraising Detective's blog shows.
Finally one last nugget from the interview. Sir Terry Leahy would spend one week every year working on the checkouts and stacking shelves. He'd also visit a store (with little warning!) every week. This seemed like a great way of keeping in touch with the customers' experience of a huge business.
Could this be another example to follow? Could you experience your charity as a donor does? What do you think of it?