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The Very Important Thing

In: Computers and Technology

Submitted By iosebashvili
Words 5888
Pages 24


Nectar: Making Loyalty Pay
Persuading British households to do anything was not easy, yet, in the 18 months leading up to
March 2004, Loyalty Management UK (LMUK) had induced over 54% of them to try collecting Nectar points and 40% to persist, making Nectar Britain’s largest rewards program. Each week it added
50,000 new members (whom Nectar called collectors). Rob Gierkink, CEO of LMUK, was pleased with his team’s accomplishment.
In March 2004 Justin King had just taken over as group chief executive at Sainsbury’s, the supermarket chain that was Nectar’s largest issuer of points. He saw that more than half of
Sainsbury’s 240 million pound (₤) annual marketing budget went to Nectar and said: “Nectar represents a significant investment for Sainsbury’s, and I can’t help but feel that if we put the investment into more staff in our stores we’d see a better return. I was part of the senior management team that turned around the ASDA supermarket chain before it was sold to Wal-Mart, and the changes we made at ASDA were all about price and value for money. ASDA didn’t have a loyalty program.” He continued:
But I do understand the value of knowing more about what our customers are doing dayto-day and this is part of the value we get from Nectar. We use the Nectar data on our customers to help us determine which stock to carry in which stores. The Nectar data also allows us to do much better and more targeted marketing to our customers.
In six months time I’ll be presenting the new strategy for Sainsbury’s to City analysts [a reference to London’s investment banking community] including my view on Nectar. Joining
Nectar 18 months ago was one of the biggest decisions of Sainsbury’s previous management team, and now I have to decide whether I’m behind it or not.

The Founding of Nectar
By the time they…...

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