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Nectar: Making Loyalty Pay

Marketing Case Study

Alay Mehta

on 3 December 2012

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Transcript of Nectar: Making Loyalty Pay

Nectar issues points
£1 = 2 points Customer redeems points
£0.005 = 1 point How does it work? Partners issue points Loyalty No Loyalty 26% 17% What are the competitors doing? 12% Nectar Rewards Should Sainsbury's have a rewards (Nectar) or loyalty (Sainsbury) program? Benefits
2.9% lift in revenue due to multiple sponsors
PUM and incentive coupons
Awareness Concerns
>120 GBPm budget
Loyalty to what? Decreasing rate of earning
Control of the program
Competition among sponsors Sainsbury's Loyalty Benefits
Full control
Exclusivity Concerns
Loss of continuity What if Sainsbury's reallocated the budget to a non loyalty program? Avg Cost growth? Avg. Revenue Growth? Strategy? Renegotiate Term & Condition with Nectar £1,494million £1,578million Avg Cost Growth? Avg Revenue Growth? Strategy? Own reward card £303million £288million Expanding Premises Benefits:
Market share
Sales volume Concerns:
Profit margin for acquisition cost
New employee cost Co-Branding with
other Founder Sponsor Benefits:
Cross - sell
Lower cost to expand the reach Concerns:
Rejection from the counterpart Avg Cost Growth? Avg Revenue Growth? Strategy? New Outlets & New Staffs £470million £532million Avg Cost Growth ? Avg Revenue Growth? Strategy? Alliance with BP £1,740million £1,955million Alternative A Alternative B Arcade 3 Points Price Q&A Making Loyalty Pay John Flynn
Nurulloh Sembodo
Alay Mehta What's the best option for Sainsbury's?

Should Sainsbury's keep Nectar?
Should Sainsbury's have a loyalty rewards program?
Should Sainsbury's abandon cards?
Something else? Competitive Landscape Low quality High quality Low price High price Market Share About 57% turn over generated via Nectar
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