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Case talks about the business plan of Nectar and how company introduced new way of loyalty
Challenge faced in the case
Case mentioned the challenged faced by Sainsbury and how nectar helps the company to retain its
customer with loyalty program. How Nectar established and grew its business.
Sainsbury’s has following options and it can choose one of these options and formulate its
strategy based on the evaluation of these options:
1. Should Sainsbury’s continue with Nectar or should Sainsbury’s follow Tesco and
have a separate loyalty reward program?
2. It also has an option to have their own loyalty program
3. Any other option
Facts of the case
Making Loyalty Pay talks about the loyalty program undertaken by Loyalty Management UK
i.e. LMUK which managed British supermarket chain and one of the biggest retain chain
The following composition of the customers shows the response gained by the largest
54% customers – collect Nectar points
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40% customers – persist
Addition of 50,000 new customers every week
Sainsbury’s sponsorship is a center of attraction for LMUK.
Company tries to fetch the retailers and makes a profitable multi-sponsor loyalty
Nectar has collaborated with many big brands and retail stores including Sainsbury, BP,
Debenhams, Barclaycard, Thresher, Adams, Vodafone, Ford, All: Sports, e-Energy etc.
In order to map the different product purchase behaviour of a panel of a million Nectar
collectors in Sainsbury’s, it has recently joined hands with the world’s largest retail firm
Taylor Nelson Sofres. The result of this association accounted store brands for almost
50% of Sainsbury’s revenue.
Earning and redeem of points:
The shoppers belonging to Nectar carry a plastic card and produce it whenever they
make a purchase and they are credited with the program points
There are two ways to redeem the Nectar points:
1. While checking out at the end of the visit
2. Redeeming from Nectar either by calling the call centre or by visiting website
Evaluation of the case
Should Sainsbury’s continue with Nectar?
Approximately 57% of the revenue
is generated by Nectar’s loyalty
Multiple sponsor and incentive
coupon awareness drives around
2.9% lift in the revenue
It has a tough competition with the
great competitors and it has to
sustain in the competition in the
Sainsbury’s is spending more than
120 million pounds towards the
loyalty program of Nectar, because
of which the earnings are
Should Sainsbury’s have its own loyalty program?
This option is cheaper as compared
to Nectar’s loyalty program, as it
doesn’t have to pay any fee to
It may take time to get established
and Sainsbury’s may find it
difficult to create the awareness for
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It will have a full control over the
program and have a free hand in
designing the policies of the loyalty
the program to its valuable
There is a threat that the customers
may shift to the other retail stores
because of non-association of
Should Sainsbury’s discontinue with the current loyalty program and divert the
funds in non-loyalty program?
It can divert the funds allocated to the loyalty program towards the expansion and the
promotions. It may help the Sainsbury’s to increase the sales volume and ultimately the
market share. However, in this plan, it would have to incur the cost of the new employees
and set up cost in the other cities.
Considering the data in the given case, there can be two possible solutions for
Sainsbury’s which it can implement in the current scenario. They are as following:
1. As Sainsbury’s has its own brand name, it can start with its own loyalty program and
be independent of the Nectar. It will help Sainsbury’s to enhance the brand equity and
in future it may also act as a competitor to Nectar for the best loyalty program host.
2. It can continue its association with Nectar for the restructured values of money. It
may award points for every 3 or 4 pounds spent. This will help Sainsbury’s
financiallyand strengthen the financial aspect of the company.
À partir des intégrations