That is a quote from Mike Duke, the chief executive of Wal-Mart's international division attempting to explain why Wal-Mart has had it's hat handed to it by Tesco the leading retailer in England. How have they done it? In a nutshell by understanding their customer and giving them what they want when they want it.

According to a recent article in the Wall Street Journal, Tesco has twelve million members in its Clubcard program which gives cardholders discounts in return for their name, address and other personal information. Tesco then actively mines the data they collect to make operational and strategic decisions. It seems to be working. Tesco has 31% of the grocery market in England, nearly double that of Wal-Mart and next year Tesco plans to invade Wal-Mart's home turf by opening stores in California.

When Wal-Mart entered the British market, Tesco turned to its databases and searched out customers that always buy the cheapest item. They identified 300 items that these price-sensitive customers buy most often and lowered the price on those items. The result: customers didn't defect to Wal-Mart.

Every three months, Tesco uses its data to send a packet of coupons to its customers. The packets typically contain three coupons for products the customer buys regularly and three for goods that the customer might like, or that Tesco wants them to try. Fifteen to 20% of all Tesco coupons are redeemed, the typical industry average is just 1 to 2%.

What can a small business that can't afford to put a big loyalty card program like Tesco's into place learn from Tesco? Here are a few things:

1. Information about your customers is valuable and is worth giving a discount to get. Some of our customers at PromoterZ have wondered if they should give a discount coupon to a customer every time they give feedback. Our position is always the same: yes! The information is invaluable. Where else are you going to get it? Even if every customer gave feedback (which they never will) and got a discount, you would still be in a better position to compete because you would understand your customers better.
2. Use the information you gather to stay in touch in appropriate ways. Tesco sends out coupons that it knows its customers want to receive. In your efforts to stay in touch with your customers are you sending what your customers want to receive or what you want to send? How can you know what they want to receive? Go back to number 1 and ask them. One of our PromoterZ customers, Sport Clips, uses the system to send first time customers a coupon just in time for the next haircut.
3. Focusing on understanding customers and meeting their needs is powerful--so powerful it can even beat Wal-Mart!