Sainsbury joins new loyalty card programme
compatriot groups Debenhams, BP and Barclaycard is to be launched
next week with the ambitious target of attracting half of the UK's
households in its first year. But will extending the number of
places where points can be collected and redeemed make this scheme
more successful than others?
The UK's second-largest food retailer J Sainsbury has unveiled its new loyalty programme Nectar, a scheme run in association with compatriot companies Barclaycard, Debenhams and BP.
Sainsbury said that Nectar would be the UK's most comprehensive reward programme with some 12 million households expected to join when it begins next Monday, 16 September.
Shoppers at 1,800 outlets of Sainsbury's, Debenhams and BP will be able to collect Nectar point every time they visit there, adding further points if they pay with their Barclaycard. The points will be redeemable at a wide range of outlets throughout the UK, and can also be used to pay for flights and a range of other services.
Sainsbury said that the new scheme would be backed by a marketing campaign costing more than £40 million (€63.8m), and the partner companies have set themselves the ambitious target of signing up more than half the UK households in the first year.
The Nectar programme will be operated on behalf of the four sponsors by Loyalty Management UK (LMUK), a company under common control with Loyalty Management International (LMI), which has experience of running loyalty schemes in the Netherlands, Spain, the Middle East and Canada.
LMUK has developed the programme over the last 18 months using extensive consumer research to ensure Nectar addresses many of the concerns people have with existing loyalty programmes in the UK.
The jury is still out on whether such schemes are successful in generating customer loyalty, and whether the cost of running them offsets the potential benefits they might bring. The Safeway chain in the UK scrapped its scheme several years ago after it failed to make any real impact, and it is still unclear whether customers would be more likely to remain loyal to a chain if it spent more money on keeping prices as low as possible.
That said, the schemes which offer customers more than just money off vouchers have been the most successful. Tesco's scheme, for example, allows its members to collect points in a wide variety of outlets and to spend them in more places than just Tesco stores. It has recently taken over the Air Miles account from Sainsbury which allows programme members to exchange their points for miles which can be used to offset British Airways air fares.
Offering a variety of collection and spending outlets is clearly the key to Nectar. The choice of rewards offered by the new scheme is extensive -groceries, merchandise, holidays, restaurant meals, family days out, cinema tickets and BMI and Virgin Atlantic flights - and the fact that points can be won in a wider variety of outlets will mean that rewards can be won more quickly. One of the chief complaints about previous schemes was that shoppers had to spend huge amounts at the supermarket in order to earn enough points for some of the more interesting offers.
The scheme is also simple and easy to understand. One Nectar card can be used in all the outlets, avoiding the need for different cards for different outlets, and exchanging the points for rewards can be done simply in any of the participating outlets.
