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15 the dunnhumby journey " What scares me about this is that you know more about my customers in three months, than I know in 30 years." Sir Ian MacLaurin, Chairman Tesco, November 22nd 1994 on hearing the results of the Clubcard trial

16 dunnhumby has been instrumental in the evolution of customer data. When we first began working with Tesco in 1994, dunnhumby was a young, entrepreneurial, database marketing specialist that had gained a reputation for the clever management of geodemographic data for clients like BMW and Mercury, the telecommunications provider. From the sample data of the Clubcard trial, which was running across just 14 stores, Tesco could see it had billions of items of transactional data, but it hadn't yet been able to extract profound insights from the information. Beginnings... dunnhumby immediately got to work analysing the Clubcard transactions, delivered to their offices on computer tapes. At this point in time, we were analysing around half a percent of Tesco's shopping baskets - around 500,000 different items. One of the most interesting insights to come from the analysis was that Tesco's most loyal shoppers, a small proportion, accounted for a massive part of its profitability; the 80- 20 principle. Before the data had been analysed, the economic significance of these loyal shoppers had not been appreciated. Today, around 50- 60% of Tesco's profit comes from 20% of its customers. It didn't take long for Tesco to act on this golden information and start engaging with these valuable customers. The Amersham store invited 300 customers to meet the store manager over a breakfast of orange juice and croissants. That morning, the car park was crammed with BMWs and Mercedes as some of Tesco's most affluent customers clamoured to form a closer relationship with their local supermarket. Another Tesco manager used the information to personally apologise to his customers while his store was being refitted. Before Clubcard had come onto the scene, Tesco would have put an ad in the local newspaper. Now, the store manager was able to write personal letters apologising for the inconvenience, giving advance notice of disturbance with some money- off coupons. On the morning of November 22nd 1994, Clive and Tesco Marketers Tim Mason and Grant Harrison presented the results of the Clubcard trials to the Tesco board meeting. Their argument was simple. If the Clubcard replicated the sales growth seen with any colour you like as long as it's any colour you like