Tesco: 66 points for Dave Lewis – No.28 – Fuel Save

Today is 39 (thirty-nine) days until Dave Lewis takes the helm at the UK’s biggest retailer. Grocery Insight are counting down to the start of his reign with an improvement point per day. Due to the growing nature of the list causing issues with our template, please click on Tesco to see all the posts containing the 66 ‘to do’ points. Today we consider Clubcard Fuel Save.

One of the last initiatives from Philip Clarke was the introduction of Fuel Save, which was a technological step forward in a sense of using the Clubcard as an accumulative tracker of spend, as well as tracking purchases. To reward customers for using their Clubcard, the spend is rolled up over the month with every £50 spent enabling the customer to receive 2p off a litre of fuel.

The savings do expire with customers having until the end of the following month to spend their savings at the pump. Using the Clubcard means that savings can be applied at the pump to bring the price per litre down. So there are several benefits to the customer, effectively the customer doesn’t need to do anything bar continue to spend, with every spend tracked and added.

Its recently been extended until February 2015 when we presume Dave Lewis will review it alongside the other metrics in play, it wont be cheap to offer fuel savings up to 20p per litre. Especially when like for like sales continue to fall, pointing to the fact that no new customers are coming through the door?

The issue for customers is that its not the easiest metric to understand, there have been issues with the expiration of savings and customers being unclear about when their savings can be used, with stores sent in highlighters so colleagues can highlight the summary at the bottom of the receipt.

I  think Fuel Save is a good mechanic but at the wrong time, arguably when they were flying it would have been a way to further enhance loyalty. The issue now is that customers won’t cross the road for this, new customers have to spend with Tesco to benefit and I don’t believe there are enough ‘reasons to believe’ for customers around range, promotions, pricing and stores to grow the spend. Customers won’t spend £50 blindly for 2p off a litre, not with Aldi / Lidl as apparent as they are.

There is the secondary consideration that its just too confusing for customers, many of which forget coupons when shopping (hence the mobile wallet to come) so asking them to remember when savings expire…. It won’t happen.

Fuel Save isn’t cheap, and it remains to be seen whether Dave Lewis will continue with it. For me, it seems an expensive way of trying to retain loyalty. Giving customer the option of replacing points with Fuel Save could be an option, successful cards such as myWaitrose don’t offer points, rather choosing to offer free coffee, newspapers and offer money off across the store on selected products.

A difficult one, but Fuel Save could well be one of the first things Dave Lewis takes the axe…. Does it deliver sufficient returns?