Loyalty runs out of honey, try ‘intrinsic’ value

In a week when both Barclaycard and Vodafone publicly announced that they were parting company with Nectar, the optimistic headline on your Nectar article “Taste of things to come?” was wonderfully ironic (MW July 14).

Keith Mills is a very clever guy. Not only did he brilliantly help persuade the IOC to award London the 2012 Games, he also persuaded the chief executives of a number of large British companies to sign up to a “loyalty” programme of a type whose heyday passed over a decade ago.

Nectar has failed in its fundamental client promise – that customers would be persuaded to cross-shop among the partners by the incentive of faster rewards. The truth is that the rewards value as a percentage of purchases is minimal. At the biggest partner, Sainsbury’s, the vast majority of customers redeem in-store for cash just as they did before. Most Nectar “collectors” are passive. Customers have rumbled Nectar as its partners are now doing.

Barclaycard and Vodafone have decided that there must be another, better way. The new managements at Sainsbury’s and Debenhams must be rueing the day their predecessors signed up.

There is another, better way. The future lies not in extrinsic “rewards” but “intrinsic” value – in the form of higher-quality product, wider customer choice, better customer service and a superior customer experience. Delivering all-round superiority is tough and goes way beyond the marketing department, but it has to be done.

Extrinsic points-based schemes like Nectar are a marketer’s Band-Aid whose sell-by date has long passed.

David Miller

Client partner

Miller Bainbridge & Partners

London EC1

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