The Customer Services at TESCO Supermarket

Introduction

This section provides the background on Tesco Supermarket, such as its market share, and revenue turnover. It also highlights the areas that the research shall cover.

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Literature review

A definition of customer service is provided, in effect paving way fro the exploration of customer service, as practiced by Tesco. Consequently, customer relationship management from the point of view of Tesco has also been examined, in addition to the benefits that customers at Tesco gain. Further, the research paper has also examined enhanced regulation adherence and customer service at Tesco.

Methodology

The design that this research study has taken has been provided, along with the tools adopted fro data collection. Further, the technique for data analysis has been explored, along with the ethical considerations for the research study. Ultimately the limitations that this study was faced with have also been assessed.

Introduction

Tesco plc is a leading retailer in the United Kingdom, in terms of domestic market share and global sales. Globally, Tesco is ranked third after the United States-based Wal-Mart, and Carrefour of France, in terms of revenue generated. With regard to profits however, Tesco plc ranks second, after Wal-Mart. The original specialization of Tesco supermarket was in the line of food and drinks, although over the years, the supermarket chain has diversified to a number of other areas, such as consumer electronics, telecommunication, clothing, financial services, health, home, dental plans, car insurance, renting and retailing of DVDs, music downloads, CDs, software, and internet services (BBC News 2008). Such a diversification has been necessary, in a bid to satisfy the needs of the supermarket chain’s customers.

In addition, the diversification has also been carried out with a view to appealing to the various market segments. In this case, the application by the retail chain of own-brand products has helped in not only winning, but also maintaining the loyalty of customers, and this has also meant increased business. Statistics by TNS Worldpanel indicate that as of August 2008, the market share that Tesco held in the UK was 31.6 percent, representing an improvement by 0.3 percent within the space of one month. The market share of the supermarket chain has been witnessing a dramatic rise on a monthly basis for as far back as March 2008, a time when the market share of the retail chain stood at 30.9 percent across the various product categories on offer at any Tesco supermarket outlet.

More that £1 out of every £7 that customers spend on any one given supermarket chain in the UK goes to Tesco. This represents a 14.3 percent of all the money that is spent by customers in supermarkets in the UK (BBC News 2008). Little wonder then, that the issue of customer service is handled with utmost care and concern by the management at Tesco. Furthermore, Tesco has also established overseas operations, in a bid to provide for the needs of its growing customer base not only in the UK, but also abroad. In 2007, the revenue that the retail chain realized as a result of non-UK operations increased by 18 percent in February 2007, compared with a similar period in 2006. That Tesco supermarket has gained success in its operations is not in doubt. This success could for the most part, be attributed to the supermarket chain’s ‘ruthless ability’ to concentrate on ensuring that their customers attain a great value for the money that they spend at any one of its various outlets (Tesco 2004).

The supply chain of Tesco supermarket appears to have fully embraced this policy, with the result that the supermarket chain continues to experience a rise in terms of revenue turnover year-in-year-out, thanks in large part to satisfied customers. Moreover, the entire Tesco conglomerate is committed to providing its various market segments with desirable products at a low cost, and on the basis of the demands of the market in which it operates (Rowley 2005). Over the last one year, Tesco has realized a rise in profits at a rate of 10 percent, with the result that the retail chain has embarked on an expansion plan in the UK and abroad. This is with an intention of opening up more branches to enable it delivers its products and services to tits customers with relative ease.

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Further, this is also with a view to enabling the company to reach the customers from diverse segments. In addition, Tesco has gone a step further in ensuring that its customers gets their products on time and on demand, by embarking on home delivery services under the name Tesco Direct (Tesco 2004). This service that operates on a nationwide scale, intends to make use of Tesco Direct vehicles, in addition to the services of TNT Logistics UK, a firm that provides logistics services in the UK, and which has been awarded contract on five years by Tesco, to enable the home delivery services initiative to be a success.

In a bid to enhance customer service for the company, Tesco is at the moment also exploring the option of utilising social networking tools. In this case, Tesco Tech Support, a unit of the retail chain, has embarked on the creation of a CRM (customer relationship management) system, with a view to exploring ways through which the firm’s customer service could be enhanced to a higher level, in addition to easing this process.

To ensure that its customers gets a value for their money through the purchase of the firm’s products and services and at an affordable price, Tesco has also sought to implement a major overhaul of its corporate tax structure, and more so when it comes to its overseas operations (Smith 2004). Consequently, the company has already identified tax havens from where it can carryout its operations, thus ensuring customer affordability of its products and services. Other incentives that Tesco has successfully employed in order to reward loyal customers include the use of Tesco Clubcard, in which shoppers gets to accumulate points upon making a purchase, with the ultimate price of a holiday, for example, at stake.

In this day and age of Internet technology, Tesco has also not lagged behind in terms of Internet marketing. Since as far back as 1994, Tesco has been utilizing the Internet as a tool to promote its wide range of products and services, and as a selling point for its products and services following the 2000 launch of Tesco.com.

The purpose of this research paper is to critically analyse customer service at Tesco. In this case, the various products and services on offer at the retail chain shall be explored, along with how the firm aspires to satisfy its customers through innovative products and service (Humby & Hunt 2003). In addition, the study shall also seek to examine the views and opinions of customers that have been shopping at the supermarket chain, in order to assess the kind of customer value that they obtain from the chain, in addition to the areas that they feel that the retail chain ought to improve to enhance its customer service program.

Literature review

Customer service

Customer service is a term that is used in reference to the activity of service provision to one’s customers prior to a purchase, at the time of purchasing, as well as after a purchase has been made. Turban (2002) contends, “Customer service is a series of activities designed to enhance the level of customer satisfaction – that is, the feeling that a product or service has met the customer expectation” (Turban 2002). The importance of customer service differ with respect to the industry in question, the products that are on offer, and also on the basis of the individual customers, in terms of their tastes and preferences.

With regard to the actual provision of customer service, this could be achieved via the use of an individual, like in the case of a customer care desk or sales representatives. Alternatively, self-service, for example, Internet sites, through automated means could also be applied. The overall service experience that a customer manages to obtain will have a bearing on their experience regarding a product in question. Usually, customer service forms a fundamental part of the value proposition that a firm attaches to its customers. With respect to the overall efforts of sales process engineering, it is important to note that customer service occupies a central role in as far as the ability of an organization to generate revenue and income is concerned (Selden 1998). In light of this, there is a need to ensure that customer service forms an integral part of an organization’s overall strategy, when it comes to systematic improvement of the products and services delivery processes, in order to enhance a value that a customer obtain for their purchases.

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Dall and Bailine (2002) are of the opinion that the level and quality of customer service appears to have diminished markedly of late. The authors further contend that such a diminishing effect may be as a result of little understanding or support by the management of organizations regarding the priority to give to customer service policy. On the other hand, Arussy (2005) is of the opinion that one of the leading hindrances when handling customer service issues is the need to see to it that attention is focused on the critical and right areas, usually assessed via what is known as Key performance indicator. Whereas it may not be challenging to establishing a working KPI for adoption, nevertheless the real challenge comes when one has to make a choice between few available KPIs that are best placed to highlight a firm’s overall strategy.

CRM (Customer relationship management) for Tesco

Customer relationship management is made up of those processes that are usually adopted by a firm with a view to organizing and tracking the contacts that such an organization has, not just the current customers but also prospective customers as well. In order to facilitate these processes, there are CRM software that are available in the market, whereby information pertaining to the customers, as well as the various forms of interactions that a firm could have with such customers are entered for storage purposes, to enable employees from diverse departments of the firm to access them.

By and large, the goals of CRM are to enhance customer service delivery, and also to make use of the contact information of customers to enable the firm target the market with more precision. Even as it is possible to implement CRM without the need of undertaking major investments in terms of the needed software, nevertheless the use of software comes in handy, with regard to the issues of examining the full benefits that a firm stands to gain by embracing a CRM strategy. On the other hand, a majority of the vendors of CRM software emphasise the fact that there is a need to embrace a holistic approach (Malthouse & Calder 2005), in order to ensure that the implementation process is a success.

A majority of the initiatives usually flop owing to a limitation with respect to the implementation step during the installation of the software. In this case, the implementation step goes on without making a provision for the support, context, or even a comprehension by the employees on its operation (Arussy 2005). According to Rigby and colleagues (2002), there is a need to ensure that CRM tools are implemented “only after a well-devised strategy and operational plan are put in place” (Rigby, Reichheld & Schefter 2002). CRM software proponents argue that the software not only enables a firm to oversee its relationship with its existing and potential customer in a more effective manner, but it also ensures that such a firm is in a position to undertake its business operations in ‘a more customer-eccentric manner’ (Malthouse & Calder 2005).

The CRM system that Tesco has adopted has become the envy of many business establishments. While exploring its customer base, Tesco discovered that the retail outlet’s top 100 customers had a similar worth as that attached to 4,000 customers at the bottom. Further, the firm discovered that one quarter (25) percent of its customers at the bottom only translated into a mere 2 percent of the retail outlet’s sales. On the other hand, the top five percent of the customers representing almost one quarter (20 percent) of the entire sales revenue that the company made (Barnes 2003). Similar to a majority of the other firms that have truly embraced the CRM program, Tesco awoke to the realization that all its customers differ in terms of their revenue contributions to the firm. This realization led the firm to utilize a different yardstick while measuring its valuable customers; the use of value expenditure, coupled with frequency of purchases (Humby & Hunt 2003).

The slogan, “Every little helps”, has almost turned into a philosophy of the firm, which is why the CRM program that Tesco has adopted remains amongst the most innovative globally. What is more, customers appear to love it, if the rise in terms of sales revenues and increased frequency of shopping by customers is anything to go by. Tesco has mainly been involved in the areas of food retailing within the UK, before the decision by the firm to diversify its operations, to other countries.

It is important to note here that the retail market has attained little growth for the past 20 years, seeing that this is an already mature market, and one of the strategies that a firm could adopt in order to beat competition is to diversify, and to ensure that they offer a wide range of products and services that are unique from those of competitors. In the case of Tesco, the firm has managed to record tremendous growth, even in the face of a mature market, and this is a demonstration that the retail chain has managed to attract and win over customers, by way of seizing market share from its equally competitive business rivals (Cook 2002).

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The CRM program by Tesco began when the retail chain decided to introduce the Clubcard way back in 1995. In this case, the retail chain opted to offer its customers points, upon making of purchases, in addition to providing its loyal shoppers with slam rebates. At the time, a majority of Tesco’s competitors played down this move as just another old strategy. Sadly, they failed to realize that Tesco, by implementing the CRM program, was benefiting from valuable customer information, through their use of the Clubcard that the firm had issued them with.

In addition, the retail chain was also establishing a robust customer database, thanks to the membership information card. In this case, Tesco managed to obtain from the Clubcards such vital information as the type of products that customers were purchasing at any one given moment, as well as the products that they were shunning. Also, the card helped the retail chain to gain an insight regarding the areas within the store that a majority of the customers opted to spend more time at, on the basis of their spending on different items. On their part, the customers at the different customer outlets were out to receive vouchers from the store, for those items whose chances of purchase were high. In addition, there were also offers by the retail store to the customer, so that they could explore other parts of the firm’s store that they were yet to visit, or were yet to lay their eyes on (Smith 2004). At the same time, there were various lifestyle magazines that were established, for purposes of serving a multitude of customers.

Moreover, the store managers made phone calls to their high-value customers, to inform them of new products or services and items on offer. In addition, these high-value customers were also given special privileges upon making their shopping visits to the retail stores such as the provision of valet parking (Tesco 2004), amongst a number of other privileges. Tesco also created other cards in 1996, such as a mother’s card, in addition to the student card. In this case, these cards came with different offers in such a way as to best suit the different needs of their holders (Tesco 2004).

Further, Tesco introduced another customer relationship management product, this time in the form of a travel service by way of forming an alliance with Lunn Poly. This alliance enabled the retail chain to provide discount services to customers for otherwise high-street priced items. Tesco also forged a partnership with RBS (Royal Bank of Scotland), to integrate Visa with its Clubcard. In addition, Tesco sought to provide goods at a discounted rate to some of its cardholders through B & Q, a home improvement chain that is well established. A multitude of financial services were added to the list of already existing products and services in 1997, notably Tesco Direct.

It is important to note here that the issue of value addition was compulsory in as far as the functional items on offer by Tesco are concerned. For instance, priority in terms of store parking would be granted to expectant mothers (Tesco 2004). In addition, the same case would also apply to changing facilities. Moreover, shopping assistants would also be called upon to assist expectant mothers with their shopping. In 1998, following the deregulation of utilities in the UK, Tesco embarked on a journey of providing telecommunication and electricity products and services. The same year also saw the firm adding a clothing line to its already large assortment of products on offer to customers, in effect giving birth to the NEXT clothing line. In 2000, Tesco entered into a joint venture initiative with the automaker General Motors in a deal that would enable GM customers to make car purchases from designated Tesco outlets (Tesco 2004).

The age of Internet marketing has really caught the attention of a majority of the marketers and customers alike. As a result an increasing number of marketers prefer to recoup from the cost-cutting measures that are a characteristic of Internet market, and also employing it as a strategy to reach certain niche markets that would be hard to reach via conventional marketing strategies. Tesco has also not been left behind in the quest to enhance its customer base through the use of Internet (Peppers & Rogers 2004). The journey to internet marketing for the firm began way back in 1994, but it was only in 2000 that the firm fully embarked on a campaign to sell its goods and services online, through the creation of its website, Tesco.com

Enhanced regulation adherence and customer service at Tesco

At the moment, tesco.com is regarded as a leading global home delivery business. In this case, Tesco makes home deliveries to a wide range of customers in it’s over 300 stores. Well over 2,000 delivery vehicles are involved in these home deliveries, and it is estimated that the delivery vehicles makes an average of 250,000 home deliveries for the online customers on a weekly basis (BBC News 2008).

As expected, the issue of the escalation in terms of fuel prices, coupled with the dire need by tesco.com to lower environmental impact should rank as a significant business objective. Accordingly, tesco.com has entered into a business agreement with Microlise, a firm that has gained recognition as a leading expert in the distribution network. In this business deal, tesco.com will be installing portions of the distribution and fleet portfolio for Microlise, with a view to lowering fuel usage, and also to enhance customer service, in as far as the retail store’s home delivery fleet is concerned. As a result, tesco.com shall be called upon to see to it that the firm’s large-scale operations with regard to home delivery are carried out in an economical and efficient manner (BBC News 2008).

In this case, the retail chain shall emphasise more on the style of driving for its delivery vehicles, with regard to safety and fuel economy, not to mention the need to increase customer service. With regard to the enhancement of customer service, the Microlise systems that shall be installed onto the delivery vehicles owned by tesco.com shall come armed with an in-built routing system. In this case, it will be possible for the operators to estimate the anticipated arrival time for the vehicle. The information so generate helps the retail chain to create short text messaging (SMS) services directly, and send these to the customers, once the delivery vehicles is near the point of delivery.

Benefits of Clubcards to Tesco customers

The holders of a Tesco Clubcard are out to benefit as the recipients of two entry points following every single £1 that they get to spend in any one of the Tesco’s retail outlets in the UK. On the other hand, it is also possible for a cardholder to amass double points on those items that are on offer (Dall & Bailine 2004), not to mention an additional one point for the reuse of shopping carrier bags. This is a testament to the fact that Tesco is not only committed to ensuring that it satisfies its customers by providing a variety of competitive products, but at the same time also ensuring that it supports the recycling initiative, in a bid to maintain a greener environment.

Once accumulated, the points are released in the form of vouchers and statements that are issued to customers on a quarterly basis (Rowley 2005). In this case, the vouchers or statements are commensurate to the number of accumulated points by a customer. It is possible for a customer to spend the vouchers that they receiving store, across the various Tesco retail outlets in the UK. Alternatively, customers also have the choice of Clubcard Deals. The deals are valued at four times their actual worth on the issued vouchers further cementing the need by the retail store to cultivate and improve customer service (Humby & Hunt 2003).

With Clubcard Deals, customers are in a position to have access to magazines as well as day trips at a discount. Starring from August 17, 2009, Tesco sought to launch what it is calling Clubcard 2, in which all online as well as in-store purchases would draw double points for every single point that a customer spends on any Tesco product. Besides, holders of Clubcards gain a free access to other clubs that are under the umbrella of Clubcard, and these includes toddler and baby club, wine club, food club, and healthy living club. Furthermore, Tesco awards its Clubcard holders by giving them a chance to save vouchers so that these can be mailed to them at Christmas time, akin to Christmas savings scheme.

Methodology

Introduction

The purpose of this research paper is to critically examine customer services at Tesco supermarkets. In order to facilitate in the gathering of the required information, this research study has deemed it appropriate to make use of a semi-structured questionnaire as the primary data collection tool of choice. In addition, the research design that this study wishes to explore is qualitative in nature. Data analysis shall be via the use of such statistical tools as SPSS (Scientific Package for Social Sciences), in addition to Microsoft Excel (MS Excel). It is the intention of this research study therefore to classify the impact that the quality of customer services that Tesco gives to its existing and potential customer has had on them. Moreover, the study also wishes to explore the perceptions of the customers with regard to the type and quality of customer service that they get from this retail chain, as well as the areas of customer service in which they feel Tesco should improve on.

Research design

Creswell (2008) argues that a research design is a framework for collecting and utilizing sets of data that aim to produce logical and appropriate findings with great accuracy and that hopes to adequately and reasonably rest a research hypothesis. This, according to this author, is especially in a case whereby a quantitative study is being undertaken. There is a need to appreciate that a research study could either be qualitative, or quantitative.

Creswell (2008), states that there are five main differences between the two approaches. The first is the different ontological assumption. Quantitative research assumes that there is only one external and objective reality whereas qualitative may suggest that multiple subjective realities can coexist. The second difference is on the epistemological assumptions. Qualitative research usually provides a more detailed and profound analysis of the specific situation. The openness between the parts is much higher than with quantitative method, which can facilitate the generation and creation of new theories. The participation of both parts is evident and they can discuss problems and explain uncertainties or ambiguities. This level of depth and detail is not achievable in quantitative research if the individual only answers closed questions.

The philosophical background of qualitative methods lays emphasis on the benefits of better understanding of the social interactions from an organization context, as well as the human behaviour meaning. This shall often entail the development of an emphatic understanding grounded on a subjective experience, and also an understanding of the links between behaviours and personal perceptions as the author attempt to do in this research. Patton (2002) is of the opinion that qualitative research usually provides a more detailed and profound analysis of the specific situation.

This research study shall employ the use of qualitative research design. This means that the views and opinions of the study’s respondents shall be explored regarding the issue of the kind of customer services that they normally get from Tesco supermarkets. Williamson (2009) asserts that due to the appropriate and sensitive application of qualitative research, it has yielded new direction and insights. Further, this research study that was adopted was also inductive in nature, and this was in line with the nature of a qualitative research, often seen to employ the inductive strategy, as a way of ensuring the completeness and specificity of a research design.

According to Creswell (2003), qualitative design ensures that inductive strategies of a study get integrated in such a manner as to yield desirable results. Furthermore, qualitative research assist a researcher to embrace contextual conditions while at the same time also acting as a tool for detecting novel issues, and aiding in the development of theories that are grounded on empirical evidence. Besides, qualitative methodologies tend to have high validity levels, while at the same time also preserving data flow in a chronological manner. In any case, qualitative data is rarely vulnerable to retrospective alterations (Creswell 2003).

In addition, the use of qualitative research design helps a researcher to better comprehend individual as well as group experiences regarding situations, experiences and meanings of themes of a research, prior to the testing and/or development of more explanations and general theories (Frankel & Devers 2000). The reason as to why this research study opted to employ qualitative research is due to the fact that qualitative research design tends to be by and large, flexible and emergent, resulting in a study that is not only engaging and interactive to both the researcher and the subjects, but also one that is quite dynamic.

Bogdan and Taylor (1998) argue that the dynamism of a qualitative research results in a relationship between a researcher and his/her subject that is open to change, in effect adding on to the richness of the potential research findings of a research study. It is with such a perspective in mind that this researcher opted to embrace a qualitative research design for this study.

Data collection tool

Frankel and Devers (2000) contend that good qualitative studies usually provide answers to important and stated research questions. Nevertheless, there is a need to appreciate that the activity of developing sound research questions is usually faced with challenges. This often occurs when conceptual and theoretical frameworks of the study have not been developed well in advance. With a qualitative research study, it seeks to pursue research in specific areas since the available substantive and theoretical literature has failed to sufficiently capture the much-needed data (Frankel & Devers 2000b). This therefore assists in overcoming potential pitfalls to a research study.

For purposes of data collection, this research study employed the use of semi-structured and self-administered questionnaires to the study’s respondents. It is important to note that the study’s questionnaire utilized open as well as closed questions. According to Collins and Hussey (2003), one of the advantages of employing open questions is that there is a variety of possible replies to be obtained “where each respondent can give a personal response or opinion in his or her own words” (Collins & Hussey 2003 p. 179). This enhances the likelihood of a researcher drawing out insightful and unforeseen responses.

Sample

According to Creswell (2008), sampling is one element of the statistical practice that concern itself with the selection of unique observations that are anticipated to surrender some knowledge about a population in question, specifically for purposes of forming some statistical inference.

The study surveyed 80 customers by way of a self-administered questionnaire in order to gain an insight into the issues of the researcher study. Use was made of systematic sampling, in which every tenth customer entering Tesco Metro Dundee had a questionnaire administered to him or her.

Data analysis

For purposes of analysing the findings of this study, a use was made of statistical tools of data analysis, such as SPSS (Scientific Package for Social Sciences), as well as Microsoft Excel (MS Excel).

Ethical considerations

The researcher explained to all participants the purpose of this study and also guaranteed all participants that their identity would be maintained anonymously, and that the interviews would be realized individually. Also the researcher guaranteed all participants that the results would only be used for research purposes. Participants were also made aware that participation in the research was on voluntary basis. Moreover, the filled-out study questionnaires were destroyed once data had been complied and analysed.

Study limitations

When carrying out a research project there are always a number of limitations, and this particular research study was no exception. One of the main limitations of this research project is time. When a researcher is time-constrained, they may rush through a research project without paying a great deal of attention to the research questions. Another limitation is the inability of the researcher to conclusively assess the honesty of the study’s respondents regarding the responses that they gave to the study’s questionnaire.

Another restriction for the study was that it only explored the views, opinions and experiences of the existing physical shoppers at Tesco, thereby locking out from the study online shoppers, as well as potential customers. In effect, this could act to diminish the richness of the research findings. Furthermore, only 80 respondents could be assessed by the research study, owing to time and financial constraints, and the researcher also sees this as a potential limitation to the scope of the study. The study also sought to generalise the research to only one particular Tesco retail store; the one located in Dundee.

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