Twenty years ago, £1 of every £100 was eligible to earn loyalty points. Today that £1 has expanded to £15 and the loyalty market is a very different place to that in which we launched Nectar, back in 2002.
In today’s challenging economy, two-thirds of UK consumers report they are using loyalty currencies to help them economise. For us, this equates to 24 Nectar cards being swiped every second of every day. And with 18.5 million collectors, Nectar cards can be found in more than 60% of UK households.
From the outset, we knew getting the first, right partners on board would shape our destiny - for Nectar these were Sainsbury’s and BP, launch partners along with Barclaycard and Debenhams. Though some may say that Nectar’s fame was and still is synonymous with Sainsbury’s, the strength and appeal of the Nectar brand has remained a consistent draw, helping us through the challenge of partners leaving.
Like any good relationship, it’s disappointing when they don’t stand the test of time. But we’ve learned from these experiences, which has helped us make a success of our partnerships with companies like Homebase and British Gas, which have joined Nectar in more recent years.
“To maintain position, it’s imperative to take calculated risks”
Loyalty is not, and never will be, a short-term acquisition play. Those of our partners who have committed to the programme for the long term and who have put the programme at the heart of their marketing, building our insights into their promotional and CRM strategies, have benefited from a tangible return.
As lessons learnt recently by Facebook and Google show, even the strongest brand can be negatively affected by a lack of transparency with customers. And the ‘big data’ question hangs over all of us. So we abide by four data principles: transparency, added value, control and trust.
However, to maintain any market leader position, it’s imperative that at times you take calculated risks. There have been instances when we’ve taken a decision to learn ‘in market’ rather than implement operational perfection from day one. At launch, for example, our website fell over when we were inundated with consumers registering for our online promotion.
On a more positive note, when consumer research led us to believe our customers were less digitally engaged, we took the decision to test an app anyway. Today, over a million collectors have downloaded the app and they’re the most engaged of our customer base. And we’re investing our proposition in the digital arena, with Nectar’s e-store.
Over the past 10 years, we’ve witnessed a distinct shift in the power driving loyalty. With the world at our fingertips, consumers have greater choice and the market is becoming noisier and more saturated.
That said, the loyalty principle - bringing brands and consumers closer together through rewards - will remain. Our ambition is to cut through the noise and offer our customers reasons to engage with us. From both a brand and a consumer perspective, these connections will need to be ever-more individual, real and relevant.
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