What a year it's turning out to be for Tesco. Seemingly unable to escape the UK news these last 12 months, on Monday Tesco decided to diminish the value of its Clubcard rewards voucher with no notice.
Most people will sympathise with the reality that loyalty programmes are part of the overall commercial strategy of a company and occasionally the earn/burn value needs to be altered to maintain profitability of the company. But announcing changes without notice is simply the biggest no-no in loyalty programme administration.
We have seen countless examples of airlines and hotels making immediate changes and the backlash that goes with it. Some programmes like IHG Rewards Club in the past have allowed a grace period afterwards.
In the UK, the reason why this one really hit the media big time was because Tesco has, by far, the largest market share out of any supermarket chain. Approximately 1/3 of all households in the UK use them, and most will not use their clubcard points towards travel but towards ‘smaller luxuries' like eating out, going to the cinema with their families etc. Slashing the value of these vouchers by 1/4 just a few days before the end of the quarterly statements was a really poor . No wonder it would hit the mainstream media outlets.
Tesco didn't exactly give the full details of the changes, as Anika over at Shopper Points has unearthed a further list of 57 Tesco redemption partners which are terminating their relationship with them, including 3 which left on Monday.
Those who exchange to Avios and Virgin Flying Club will be unaffected, and even better for those who exchange to Hotels.com and Uber whose redemption value will increase from 2x to 3x, but this still requires further leveraging for it to come close to the 4x you got from the previous format.
The positive to this, if at all, is that the media backlash has caused Tesco to delay the changes until 10th June 2018 now that they have “listened to the feedback”. They also claim that those who have exchanged vouchers in these last three day will not miss out from the lower conversion values.