Supermarket Mobile: Tesco Mobile launches differentiated pricing to cross-sell mobile to supermarket customers whilst locking in the mobile base

arranged blue grocery carts

Tesco Mobile has introduced differentiated pricing for Tesco Clubcard members as part of a new “Supermarket Mobile” marketing initiative. Tesco Mobile describe Supermarket Mobile as an exploration of what happens when the worlds of supermarket and Mobile combine.

Exclusive prices for Clubcard members

Clubcard members – Tesco’s free to join loyalty program – are now offered preferential “Clubcard Prices” for Tesco Mobile.  Discounts are available on a selected range of handset contracts, sim-only contracts, pre-pay bundles and sim-free devices. The differentiated pricing approach mimics the discounted Clubcard Prices seen in Tesco supermarkets for standard supermarket goods.

Tesco Mobile differentiated prices example: 100GB for £14 per month to Clubcard members , otherwise £17.50 per month.
Tesco Mobile differentiated prices example: 100GB for £14 per month to Clubcard members , otherwise £17.50 per month.

Examples of savings for Clubcard members (CM) versus non-Clubcard members (standard) include:

  • Pay monthly sim-only:
    • 12-month plan with 25GB for £12 per month (CM), or £15 per month (standard)
    • 18-month plan with 100GB for £14 per month (CM), or £17.50 per month (standard)
  • Pay monthly handset plans (36-month device financing terms):
    • iPhone 11 with 25GB for £27.99 per month (CM), or £32.99 per month (standard)
    • iPhone 12 Pro with unlimited data for £49.49 per month (CM), or £59.49 per month (standard)
  • Rocket Packs (30-day pre-pay bundles)
    • 50GB for £15 (CM), or £20 (standard)
    • 100GB for £20 (CM), or £30 (standard)
  • Handset (sim free)
    • Apple iPhone 12 Mini 64GB is 564.99 (CM), or £579.99 (standard)

Tesco leverages Clubcard to tighten its grip on the Tesco Mobile base, while cross-selling mobile to its larger supermarket base

Tesco has two valuable customer bases to manage: ~19m supermarket Clubcard customers and ~5m Tesco Mobile customers. Although it has full control of its Clubcard base, Tesco Mobile is a 50/50 joint venture between Tesco and O2 (now VMED O2).

The challenge for Tesco is to convert more of its much larger Clubcard base into Tesco Mobile customers, whilst also creating tangible loyalty benefits for its Tesco Mobile customers to stay and grow their spend within the Tesco family.

Previously the strongest pricing rewards on Tesco Mobile offers were restricted to Tesco Clubcard Plus subscribers paying a £7.99 per month subscription fee. These Tesco Plus subscribers automatically received double data on their Tesco Mobile plans and earned double Clubcard points on their Tesco Mobile spend, in addition to discounts off supermarket spend and other Tesco brands

Tesco Mobile now offer a comprehensive range of pricing and Tesco loyalty benefits to Clubcard members.

  • Exclusive lower prices on selected contracts, top-ups, and sim-free devices (Clubcard Prices)
  • Clubcard points for every pound spent with Tesco Mobile, and
  • Double the value of Clubcard vouchers when spent at Tesco Mobile

All Tesco Mobile customers continue to enjoy a guarantee of no mid-contract price rises.

Although promoted as a Tesco Mobile initiative, the driving force of Supermarket Mobile is the Tesco supermarket parent.

Tesco’s supermarket business is aggressively leveraging Clubcard to offer discounted supermarket prices to counter growing competition from discounters Aldi and Lidl. Tesco wants its supermarket customers to pay for discounted supermarket prices with brand loyalty to avoid a straight-out price war with Lidl and Aldi.

Extending Clubcard discounted pricing to Tesco Mobile allows Tesco to better tighten its grip on its ~19m Clubcard customers and ~5m Tesco Mobile customers, whilst also increasing the opportunity to convert the much larger pool of Clubcard customers into Tesco Mobile customers.

VMED O2 also stands to benefit as the increased loyalty of Tesco Mobile customers translates into wholesale mobile customer growth from hosting the MVNO.

Supermarket Mobile means Tesco Mobile customers now join Tesco’s supermarket customers in choosing whether to receive lower prices in return for demonstrating higher loyalty to the Tesco brand.