Nectar: Making Loyalty Pay

Group 3 Satish Gera Abhay Bijlani Ashish Chopra

High Quality

Competitive Landscape

Mark & Spencer

Sainsbury's

Low Price

High Price

TESCO

ASDA

Low Quality

Companies that were part of Nectar Program

Nectars Process: How Collectors Earned & Redeemed Points scheme is operated by an independent company called Loyalty Management UK (LMUK) Customers (collectors) are given striped plastic cards (Nectar Cards) 2 Points = 1 pound () Dominant Sponsor was Sainsburys initially. Redemption is through two modes: 1) Collectors could redeem them at the stores/outlets 2) Collectors could redeem them directly from Nectar (PUMs) like offers from airlines, tour operators, theme parks & cinemas. The operating costs are low due to shared costs divided between the partners and suppliers. (For e.g. : Solo mailing would cost 0.45 whereas sharing resulted in a cost much below this that is only 0.05 ) Partners can avail themselves of a much richer data bank of their customers, analyzing their purchases across different products and purchased in different outlets.

1) What should Justin King do with the program? Solution: Sainsburys has following options: 1) Continue with nectar program 2) Start a separate Loyalty Program 3) Adopt Strategy followed by ASDA
1) Continue with nectar program Pros 2.9 % lift in the revenue Cons Shelling out more than 120 million pounds towards the loyalty program Company is competing with the partners on some commodities

Rise in revenue through the program

Cost is shared amongst the partners

Increase in number of buyers due to large number of partners

Still it was the dominant sponsor

Benefits sometimes get split due to similar offering by the partners

continued 2) Start a separate Loyalty Program Pros Cheaper in comparison to Nectars Loyalty Program Full control over the program and free hand in designing it Cons They will have to manage it themselves. Loss of continuity. Threat of moving it to other brands due to absence of Nectar Brands

3) Adopt Strategy followed by ASDA It can divert funds to non loyalty programs, towards expansion and promotions and by decreasing price of its products. With this the company will have to incur cost of new employees and set up cost in other cities.

Q 2: What should Rob Gienkirk do with the program to keep Sainsburys happy? Solution: This can be done by showing Sainsbury's advantages that the company can have if it remains associated with the Nectar Program: The programs management is outsourced to LMUK, allowing consortiums partners to concentrate on their own business. The cost of operating such a scheme are greatly reduced due to the shared cost of having multiple partners. By pooling in new sponsors, cost can be reduced further The scheme helps in availing much richer databank on their customers, analyzing their purchases across a cross section of different products, purchased in many different outlets. The loyalty scheme has a much broader appeal. Also, try to take company to different countries where Sainsbury's is not present. Help Sainsburys in developing new business as per customers insights collected by Nectar.

More points to Sainsbury's customers on purchase of their products.

Customer Advantages: Consumers who use Nectar Cards at reward partners, will collect points which can then be redeemed for free flights, meals, vouchers etc. Card subscribers can pool their points from a variety of firms rather than a single merchant, greatly enhancing their points earning potential and making rewards more attainable.

Shoppers can view how many points they have collected by viewing them online in My Nectar or phoning the Nectar Cell Call Centre. Nectar points are exchanged for Nectar Vouchers. These vouchers are collected at the cards subscribers home or via the nectar call centre.
Customers perceive the rewards as more attainable due to the availability of a number of different participating loyalty partners.

What should Nectar do to keep its other partners happy

In a collection satisfaction survey 59% rated Nectar better than other loyalty programs Nectar should be willing to share fixed cost of retailers such as customer acquisition, data management and processing. Nectar should make marketing efforts to promote other partners in order to increase their visibility and attract more customers

Lower the program support fee charged for supporting the program

Nectar should invest in employee engagement and training efforts of its partners to increase customer awareness

Nectar should provide additional benefits to those who use nector cards frequently. As a result customers of sponsors who are nector collectors will churn at a lower rate.
Nectar should aspire to form long term relationship with its partners since customer loyalty is not a short term play

Nectar should provide analytics expertise to its partners, so that its partners are aware of how much return are they getting by investing in nectar.

What should Nectar do to keep the collectors collecting?

Keeping it simple
The more partnerships you add, the more collection and redemption opportunities you introduce, the more difficult consumers may find it to keep all information in their heads. Direct and Targeted communications tailored to show the best possible redeemable options to the consumers

Staying close to customers

Just as one wants to know the changing needs and lifestyles of your customers, the same applies to Loyalty programs also. Understand the need for new platforms like mobile app to track redemption of points.

Reward the behaviour you seek

Encourage customers to purchase high-margin products through you. Encourage customers to shop more frequently and to tell their friends.

 Choose partners wisely

Partners need to be chosen wisely such that they complement the existing customers collection and redemption options.

High Value customers

A personal shopper Emailing members based on the items regularly purchased by the members.

Identify customers not visited stores lately

Attract them by coupons and special offers.