NECTAR: MAKING LOYALTY PAY

SUMMARY
LMUKs Nectar is Britains largest rewards program Sainsbury was Nectars core sponsors; BP, Barclaycard & Debenhams founding sponsors TESCO was Nectars main competitor Easy earning & redemption of points There were 4 main ways for Nectar to earn income
Spread Float Breakage Program Support Fee

400 GB database of demographic and behavioral data Nectar offered to benefit the sponsors as well

Q.1) What should Justin King do with the program?

NECTAR POSITIVES
Extensive database, better than TESCO Wide reach due to large number of retail outlets collecting points Coalition with big brands making it a trusted & most subscribed Loyalty Program Large number of customers collecting points Benefit from economies of scale Taking into account past purchases to see that no sponsor is short-changed (Customizing Household Purchase Behaviour) Collectors are less likely to defect than single sponsor collectors

NECTAR NEGATIVES
Link between store & customer not strengthened Ambiguity in establishing specific loyalties Customers collecting from Sainsbury but redeeming points at other stores Not having complete control over Nectars activities Nectar aiding the sale of competitors products LMUK wanting for redemption to take place from multiple sponsors even though 50% of their collection is from Sainsburys

TESCO POSITIVES

TESCO NEGATIVES

Loyalty is better defined

Need to manage day-to-day details & recover the cost of a stand-alone program Lesser number of outlets resulting in tapered reach Tesco not co-operative with other partners Collating with other partners on their own terms

Effective brand building device & relationship tool Concentration purely on Tesco customers Being the boss of their own program

Q.2) What should Rob Gierkink do with the program to keep Sainsbury's happy?
Important to keep both the customers and CoPartners happy Important to maintain CR Sainsbury is a major customer traffic driver Name of Sainsbury on the card Set parameters of success for the co-partners Shares to Sainsbury to make them feel secure

Q.3) What should he do to keep the other sponsors happy?

LIST

ACQUISITION

RETENTION

Prefer Nectar Sponsors More Sales for Sponsors

Nectar Database identifies customers & non-customers Convert noncustomers to customers by incentives

Lower Rates Noncustomers attracted

UP SELL
Offer incentives for buying premium products Makes marketing easy for sponsors

Q.4) What should he do to keep the collectors collecting?

Free Bonus Points Happy Hours Grades of Collectors

Club Points

Customized Plans

Heavy Advertising

Points Summary

THANK YOU

Mayank Agarwal Subhav Budhia Prateek Chamaria Mansi Modi Richa Modi Mohd. Suhaib Sayeed

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