How Edwina Dunn and Clive Humby launched the Clubcard

Edwina Dunn and Clive Humby
Edwina Dunn and Clive Humby – Dunnhumby

Most retailers – from your supermarket to your local coffee shop – now run some sort of loyalty scheme whereby they collect data on you and your shopping habits in return for a small discount. The practice is so widespread now that it’s amazing to think that as late as the mid-1990s the idea was seen as revolutionary. The couple most responsible for bringing the concept into the mainstream are husband-and-wife team Edwina Dunn, 57, and Clive Humby, 60.

The two met while working for US software consultancy CACI, mining census data to help retailers pick the best location for their stores. However, they were frustrated by the company’s decision to maximise profits at the expense of research and development. So in 1990 they quit to found their own consultancy, Dunnhumby, helped by a major infusion of cash from an angel investor. They began advising clients, such as food wholesaler Booker, on how to use customer data to improve their business.

The company was profitable almost from the beginning. But the major breakthrough came when Humby met a senior Tesco executive in 1994, who revealed that the supermarket giant wanted to develop a customer loyalty card, but was unwilling to pay the £50m it estimated such a card would cost. Dunn and Humby reckoned the card could be put in place for a fraction of the £50m. Despite some scepticism on the part of the supermarket, a small trial in a handful of its stores showed that the cards could provide a “geyser of data”, which Dunn and Humby showed could be used to boost sales. The board was so impressed by the results and by Dunn and Humby’s subsequent presentation that Tesco rolled out the concept across all of its branches.

The trial was a success – the cards provided a “geyser of data”, which the firm realised it could use to boost sales. The board was so impressed by the results and a subsequent presentation that Tesco rolled out the concept across all of its branches.

This decision helped to ensure that Tesco enjoyed a long period of unprecedented growth and dominance over its rivals. And the success of the Clubcard ensured that Dunnhumby would go on to do several other projects with Tesco, including the launch of its banking service. It also drew the attention of other retailers, most notably US chain Kroger. A joint venture between the two helped Kroger fight back against Walmart, delivering 45 consecutive quarters of revenue growth. By 2011, Dunnhumby was making an adjusted turnover of £248m, with profits of £46m. That year, the couple sold their remaining stake for £93m.

They have since become involved with start-up Starcount, both as investors and executives – Dunn is chief executive, while Humby is chief data scientist. Starcount uses social media to analyse consumer behaviour, by focusing on a small subset of 600,000 “stars” who are the most influential in determining consumer behaviour. Although it has only been running for four years, it is already breaking even, and has recently raised £5m in a fundraising round.

As far as their tips to entrepreneurs go – they have to be able to “put themselves in their customer’s shoes”, say the couple. Setting up on your own is “really hard work” – so you “have to believe in your idea” and be “relentlessly optimistic and passionate”. Of course, working for yourself can be fun too – but don’t kid yourself it will be easy.

66% off newsstand price

12 issues (and much more) for just £12

That’s right. We’ll give you 12 issues of MoneyWeek magazine, complete access to our exclusive web articles, our latest wealth building reports and videos as well as our subscriber-only email… for just £12.

That’s just £1 per week for Britain’s best-selling financial magazine.

Click here to take advantage of our offer

Britain is leaving the European Union. Donald Trump is reducing America’s role in global markets. Both will have profound consequences for you as an investor.

MoneyWeek analyses the critical issues facing British investors on a weekly basis. And, unlike other publications, we provide you with the solutions to help you turn a situation to your financial advantage.

Take up our offer today, and we’ll send you three of our most important investment reports:

All three of these reports are yours when you take up our 12 issues for £12 offer today.

MoneyWeek has been advising private British investors on what to do with their money since 2000. Our calls over that period have enabled our readers to both make and save a great deal of money – hence our position as the UK’s most-trusted investment publication.

Click here to subscribe for just £12