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Nectar: Making Loyalty Pay

Marketing Case Study
by

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
Cheaper
Full control
Exclusivity Concerns
Drop-off
Awareness
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
Outreach
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
Full transcript