As Nectar celebrates 10 years since its formation, Alex Lawson meets the loyalty firm and its founding partner Sainsbury’s to discuss what it has brought to the grocer.
Personalisation has been a buzz word in retail for some time but the gap between paying lip service to an emerging trend and delivering a targeted offer to the consumer remains vast in certain sectors.
In grocery, a straight fight has emerged between Tesco’s Clubcard, powered by partner Dunnhumby and brought back “into the heart of the business” earlier this year by group chief executive Philip Clarke, and Sainsbury’s, both of which use the data garnered to inform product ranges.
The partnership between Saisnbury’s and Nectar began in 2002 and 16.5 million of the grocer’s customers are now signed up to the loyalty scheme. Since that point, Sainsbury’s, now led by chief executive Justin King, has made back some of the market share it lost to rivals in the 1990s and has recently been on song after creating what King terms “universal appeal”.
The key difference between Sainsbury’s and Tesco’s offer – as well as that of the other key UK loyalty card, Boots Advantage Card – is that Nectar has other partners. Nectar has strategically built up its partners, including Homebase, British Gas, Expedia and recently added eBay to reach right across a consumer’s lifestyle.
“It’s a little bit like Noah’s Ark,” says Nectar managing director Jan-Pieter Lips. “Our partners are all different species. The more customers use Nectar the stronger we are.” Nectar is eyeing growth in areas including media, online businesses and financial services as it looks to broaden its 18.5 million customers.
For Sainsbury’s, director of loyalty and insight Andrew Mann explains that the partnership is all about shopper insight. “If a customer has bought a kitten or had a baby, we can see that and offer them promotions that work for them. Customers are pleased when they receive offers that identify their needs and offer solutions,” he says.
Sainsbury’s also uses the data to determine ranging in stores and the impact of promotions, and to decide what to promote next. It also offers customers the opportunity to study their shopping over the last 55 days by entering their Nectar card number online.
Lips says the next step for retailers studying data is to understand where else customers are shopping. “Connecting the dots is a very big issue,” says Lips. “Even if you see all of your own data, you really will only ever see a slim element of where your customers shop.” Nectar is now partnering with Mastercard to study shoppers’ transactions and understand their spending elsewhere on the high street.
While Morrisons chief executive Dalton Philips claims loyalty cards are “nineties”, the data – which inevitably comes at a price for Sainsbury’s and Tesco – informs range, promotions and sourcing decisions. Sainsbury’s is offering shoppers double points in store to mark Nectar’s anniversary this weekend and its savvy shoppers will doubtless take advantage.
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