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4 Clive Humby, Chairman and co- founder of dunnhumby, argues that a pensioner who may have a small shopping basket but spends a large proportion of their weekly pension on a grocery shop is more loyal than a shopper who dips in and out of a retailer, sometimes buying big ticket items like a plasma screen TV. dunnhumby's insight teams have spent aeons fine tuning their analysis to ensure these schemes really do reward the most loyal customers, not just those who spend a large amount occasionally. If the business only looked at customer value, a metric that judges customers on how much money they spend, loyal shoppers like pensioners would miss out on rewards. Rewards! Towards ? 100m ( about £ 86m) was handed out in rewards by Casino supermarkets to its loyalty card customers in 2008. Casino prints a ' cadeau- meter' on its quarterly statement to clearly show how many points a loyal customer has collected and what rewards they will be able to collect. Similarly, £ 400m a year is handed out in rewards by Tesco to its Clubcard customers. For both Casino and Tesco, this is how they say thank you to their customers. Or as Tesco Clubcard's 1995 launch campaign put it: ' Clubcard is the world's biggest Thank You card.' Kroger offers its customers a similar token of appreciation through the Kroger Plus card. What used to be considered a discount card like many other supermarket cards in the US is now regarded as something of real value by its customers. " They seem to know exactly what I like, and they give me coupons for things I actually need. I appreciate that, especially right now," said one customer. Four times a year Tesco sends its customers money in the form of vouchers that they can spend freely towards their shopping bill. This is where the £ 400m figure comes from. Often these Clubcard vouchers are worth £ 20 or more, and will appear in a mailing alongside promotional discount coupons from the customer's favourite products and brands. The Clubcard is a contract between Tesco and its customers. In exchange for recording a customer's shopping behaviour every time they swipe their Clubcard, Tesco customers earn one point for every £ 1 spent; these points are translated into vouchers where one point is worth one penny. any colour you like as long as it's any colour you like They seem to know exactly what I like, and they give me coupons for things I actually need

5 Aside from the obvious monetary rewards, Clubcard enables Tesco to really listen to its customers and respond to their needs. From launching new ranges like Healthy Living to sending out 8m personalised rewards statements and continually improving the experience of shopping in stores, Clubcard helps Tesco keep its loyal customers happy. Edwina explains why Tesco Clubcard is so popular among customers: " Distilled down to its simplest level, if you shop regularly at Tesco, then every time you shop you're getting 1% off your basket for free. This is purely the reward, money off; it's not to do with the vouchers. Then there's another layer of offers. Why wouldn't you want one?" From a honeymoon to a university course and a funeral Some businesses have taken the wrong attitude to rewarding customers, which has tainted perceptions of loyalty programmes. Like the airline programme where you collect points for years to discover that they can only be redeemed out of season, or the vouchers expire too soon. In contrast, Tesco's Clubcard vouchers are redeemable for two years and many Tesco customers take pride in collecting their points to exchange for coupons and treats. As well as simply cashing in their quarterly vouchers in a Tesco shopping trip, Clubcard customers can exchange points for four times their value with special Tesco Deals. Vouchers cover the whole spectrum from holidays to day trips from magazine subscriptions to university courses from car services and MOT to Airmiles and jewellery. You can even pay for a funeral with Tesco Clubcard points. Today Tesco Deals is one of the largest sales agents for theme park tickets in the UK. It issues £ 31m in vouchers every year to 1m Clubcard holders. In 2002, Legoland Windsor opened for one night exclusively for Tesco shoppers with a firework display. The Moneysavingexpert forum, a chat room for frugal British consumers keen to swap money saving tips, is buzzing with stories of happy Tesco shoppers who've cashed in their Clubcard points. One woman who calls herself TIGS writes: " I have had two holidays in Disneyland at Christmas thanks to the Tesco Clubcard deals. I would have never been able to afford to take my kids to Disney if it hadn't been for my Clubcard points." secret weapon