UK supermarket Tesco has 22 million Clubcard customers and 18 million Tesco app users, but how to create individual offers based on the massive amount of data? CXM recently sat down with Eagle Eye’s EagleAI division head, Cédric Chéreau to discuss how the chain is personalising those many interactions, driving ROI through smart offers and challenges for customers.
Can you give us a background or if you will, how did this all come about?
We started to talk with Tesco around a year and a half ago. And their initial intention was to find a solution that will help them to personalise even more because they’ve already personalised a lot of elements of their loyalty programme. Also to help them to digitise their customers.
They already had an app and all these things, but they really wanted to accelerate and they were looking for something that could help them on that front.
How does the solution that they’ve taken from Eagle, how does that help fulfil those two things?
Eagle Eye is an English-based company and one of the products has the capability to personalise interaction with customers.
So, it is a platform that is connected to the post system of the retailer that we’re working with. And it can execute every personalised mechanic that you can think of.
But that platform is not the “nervous system.” On top of that, we have EagleAI, and that’s the company that I founded, that is the brain that creates the personalised offers that the other platform will execute in real time.
How is it personalising Tesco’s offers?
What we’re doing with EagleAI is we’re building on the fly completely individualised offers for each customer, and I’m insisting on this, it’s not a segmented approach, it’s really one-to-one. So it’s understanding the customer behaviour of each individual, and understanding the potential of each person to define the right parameters of an offer.
Let’s start with a very simple example. We both like cola, but I drink much more than you and I have three kids and they’re completely crazy about cola. So your natural behaviour at Tesco is to spend £10 on cola a month. My natural behaviour on coke at Tesco is £30.
Because we’re different and you do almost all your shopping at Tesco and I also shop at other stores that are competitors of Tesco. Okay, you can receive an offer tomorrow on if you buy £12 of cola next month, meaning that you would spend a little bit more, but the deal is very aligned with what you’re spending naturally.
And I could receive an offer on with a reward if I spend £50 on cola, meaning I need to buy a little bit more, not more in general. I just need to buy more of my natural behaviour on total cola.
So, where does the magic happen?
What’s smart is that we don’t have to create the offers one by one, and that’s why it’s AI.
The machine is looking at each individual customer and we’re addressing millions and millions of customers with not only cola, but for all the brands and products that you can think of at the same time, and the machine is creating all the variances of all the offers at the same time.
And then we’re feeding the system either the Eagle Eye platform that will execute it in real time at PO or it can be outside of the PO and that’s what’s happening at Tesco. Everything is happening outside of the PO system.
You accumulate the rewards based on what you’re spending during the whole month. So it’s not on one transaction, it’s on the whole month. At the end of the campaign you get all the accumulated rewards from the all spending.
The intention with the challenges, the personalised challenges is to identify the right products, the right brands for each customer.
And both of us are using wrong example by the way, because bananas and cola are not the right examples because I would say that’s the easy one because everybody’s buying bananas, everybody’s drinking cola more or less.
What we’re doing also with the AI is being able to identify very strong brands for each customer individually. So of course we’ll find bananas and cola because those brands are very important. The great thing about AI is that we will be able to identify that very niche Italian cheese that you buy on a regular basis.
And we know because of the AI that product is very important for you as a customer. So we’ll do a mix and match between the big blockbusters and the more niche products or brand. So it is very appealing for customers.
Would it recommend things to go along with a wine I buy?
Absolutely. It is not necessarily built that way, but it is exactly what it’s doing. An important concept is that we’ve put at the core of the solution that we developed. It is customer centric. So we are looking for the right brand for each customer. We’re not looking for the right customers for each brand. That’s very, very important.
So because we’re looking at everything that you bought in the past, at other retailers that we’re working with, we’re looking at everything that you bought over the last 12 months. We can see the connections between the products that you bought and we can see the connections with similar customers.
So. we can see that customers are buying products that you’re not buying. maybe we can suggest a product that you should like because your lookalikes are buying it. So it’s not necessarily looking at the connection between the products, not in a way that a human could understand it.
I like wine and cheese is obvious, but maybe the AI will say you like wine, you like cheese, you should like that laundry product, which doesn’t make sense for us, but it’s seen the pattern from a data perspective.
How come you’re able to get this up and running so quickly?
That’s a very, very good question. The beauty with the solution that we developed, the personalised changes is that it’s a end-to-end solution. So you just need to receive the past transactions from the customers and then we can run our algorithm and set up the solution and the whole platform within a few weeks. We don’t need a lot of interaction with them, and we don’t need them to develop something specific in their system.
We take care of almost everything. The only thing that Tesco is validating is the product images, the way the page will look, the design of course, and the offer, but we take care of everything else for them. And that’s why it is so quick in five weeks, as soon as we have access to the data, we can have the changes up and running.
After the pilot, Tesco has targeted 10 million customers to address with the Clubcard changes from our platform. And we offer up to 20 different challenges for each individual customer. Each offer is completely personalised with retail challenges for each customer.
Depending on each customer, the challenge threshold is completely personalised and the rewards are also completely personalised. So that’s what I’m saying, everything is completely personalised for each customer.
And how successful has the project been?
So I can talk about insights from Tesco specifically, it’s from their Christmas trading statement. Ken Murphy said that personalised Clubcard challenges offered to 10 million customers across the festive period contributed to record level of digital engagement.
So he recognises the role that the personalised challenges played in the digitization of customers. In terms of KPIs, what do we see? We see, because it’s incremental by design, the way that we build the solution, you cannot earn anything unless you spend a little bit more with the retailers. So it is incremental by the retailer and the brands can’t lose in that game.
And the customers can’t lose either because all the challenges are designed to correspond to their shopping behaviour. Once again, at the beginning, it’s customer centric. I mean it’s the core of the philosophy. So for every pound that will be distributed as a reward. What we calculated with all the retailers that we work with that we’re working with on average is will generate at least £7 of incremental sales.
Is this a deliberately gamified approach?
That wasn’t intentional on our part. But, I would say it came as a cherry on the cake, as the idea was to personalise the offers to make them more efficient and more relevant for customers. That’s the mission we had at the beginning, and we realised after the few first campaign that it was actually a little bit gamified,
We put a little more work on the gamification thing. But it came afterwards, if you see what I mean. It was not intentional at the beginning. It was more how can we be more relevant and smarter in the way that we personalise promotions.
For clarity, can you explain the difference between Eagle Eye and EagleAI?
So EagleAI, as I said, is this personalised royalty platform that is executing the smartest loyalty programme in the world. Eagle Eye is a parent company, working with Woolworths in Australia, Asda, John Lewis, Waitrose in the UK. And places like Loblaws in Canada, all the big retailers in the world and we have existed for 20 years. EagleAI, the company that I co-founded is much younger, based in Paris and was formerly known as an another name. But that company was acquired by Eagle Eye two years ago.
Adding to the conversation, Shama Wilson, Tesco Group Membership and Loyalty director said. “Clubcard unlocks the best value from Tesco, and we are constantly looking for ways to offer even more to our customers. Millions of people tap their Tesco Clubcard when they shop, benefiting from thousands of exclusive deals through Clubcard Prices across food, clothing, Tesco Mobile and Tesco Bank.
“Clubcard Challenges is a brilliant way for customers to collect up to £50 worth of extra Clubcard points, which when used with our 100+ Rewards Partners could be worth up to £100. The personalised challenges and rewards are based on customer’s individual spending habits and are a brilliant example of how we are moving towards greater personalisation through Clubcard.”
It will be interesting to see how other loyalty cards and supermarkets respond in making offers more personalised and driving greater spend and loyalty.