It was announced earlier this week that Sainsbury’s customers using Nectar’s scheme will earn one point for every £1 spent in store or online from April 2015, down from the two points per £1 offered now. Instead, Sainsbury’s customers will earn more bonus points through events and increased personalised points offers including 10x points on fuel events, a “Christmas Double Up on points” event on products such as toys, entertainment, seasonal, electrical, home and clothing as well as one-off competitions.
Will Shuckburgh, Nectar’s managing director, told Marketing Week: “Loyalty is about building personal relationships, about understanding customers and saying thanks with engaging rewards and offers. The change is designed to take loyalty to the next level by being more personal and relevant in offers that will drive a more engaging relationship between customers and Sainsbury’s.”
He adds: “The analogy people always talk about is trying to get back to the local butcher shop where the butcher will know everyone that was coming in and would say thank you in different ways – someone would get a bone for their dog, someone would get an extra sausage. A trite example maybe but it shows that level of personalisation that there used to be and the relationships between customers and where they shop. What Sainsbury’s are doing by significantly increasingly the bonus points people will be able to earn from April is rally making the programme more relevant to how people shop and rewarding them for that shopping behaviour.
“Over the 10 years since Nectar launched we have acquired much more capability in terms of the technology that is available to personalise the thank you from Sainsbury’s. We also have much more insight into customers to make it [Nectar] more relevant and exciting.
“It will be a much visible programme through the use of bonus points.”
The decision created a stir on Twitter and on comment boards. One Marketing Week reader declared: “This seems an act of desperation that will backfire and encourage more people to jump ship to Lidl and Aldi. Bad move!”
Shuckburgh says it that it had anticipated some disquiet about the changes but predicts customers will grow to love the scheme when it relaunches next year. “We knew customers cared about loyalty points and Nectar. This is a difficult change to explain and until customers see it in action [the benefit of the changes will not be seen]. It’s great that customers really do care. They are our members so we listen carefully. When customers see the significant opportunities to earn bonus points when there is far more visibility and excitement about the programme they will be engaged with it.”
Other critics have suggested Sainsbury’s is looking to cut costs in the wake of falling sales and a greater focus on reducing base prices. When asked if the changes would be more or less costly Shuckburgh says: “[This is about being] more effective and personalised with rewards not about changing the level of investment.”
Jon Banerji, director of customer experience at GfK , says despite the furore the changes to Nectar will not have a long term impact on loyalty to Sainsbury’s.
“I would imagine that the negative comments on social media will be fairly short-lived. GfK FRS data shows that just under half (48.9%) of Sainsbury’s shoppers redeemed Nectar points in the last 12 months and, even for these shoppers, Nectar points are just one part of the reason for shopping at Sainsbury’s.
“There will be lots of other reasons why they will remain loyal – location and convenience; the Sainsbury’s brand and its values; and the other rewards that they offer, such as the new ‘price match’ with Asda. More generally our research suggests that points-based schemes are under increasing attack from cashback rewards which are being promoted as more transparent and tangible. Lidl also picked up on this with their recent ads highlighting the alleged complexity of the new Morrisons scheme.”