Nectar founder Sir Keith Mills says points-based loyalty is becoming ‘less relevant’

Air Miles and Nectar card founder Sir Keith Mills has confirmed that he has been approached to front an acquisition of Tesco-owned data department Dunnhumby, which brought the retailer’s Clubcard to the market and works with retailers and brands worldwide. Whatever the outcome, Sir Keith says points-based loyalty schemes are becoming “less relevant” and will have to change, highlighting the importance of turning data collected into actionable marketing programs.

Since Tesco announced it was exploring options for a Dunnhunby sale in January, Mills has been linked with a potential purchase of the company. He confirmed that he has been approached by several private equity firms to front an acquisition, telling Marketing Week: “If the right proposition developed I’d certainly be interested, but I haven’t reached an agreement with any firm to front an acquisition yet.”

If the right offer comes along, the Nectar card and Air Miles founder would have a lot to bring to the table for Dunnhumby, which created Tesco’s Clubcard points system after being acquired by the retailer in 2004. With years of experience in loyalty schemes under his belt, Mills told Marketing Week that the way to win for companies is changing.

“When I started Air Miles back in the 1980s, the vast majority of companies didn’t know who their customers were,” he says. “The technique was to incentivise consumers to enable companies to better understand what their customers were buying and enabling their marketing programs to be more targeted.

“These days most do know who their customers are because technology and the way consumers interface with companies have changed dramatically. Points based customer loyalty programs are less relevant than they were 20 years ago.”

Mills says that moving forward, big gains will be made with companies that can understand not only how to collect data, but how to turn that information into valuable and actionable marketing programs.

“As Tesco did with Dunnhumby, each of the companies I’ve started have developed sophisticated data analytics businesses off the back of them. The real value sits in the back end, which is the real time and responsive marketing analytics that come off the back of the programs. That’s where the real gains for the next decade are going to come from.”

Even Dunnhumby has a couple of “Achilles’ heels”, according to Mills.

“They’re one of the leading companies that do data analytics at a consumer and product level, but the draw back is that much of its technology is old and needs to be updated. Secondly, a substantial portion of its data is driven by Tesco and Kroger, so its value will be related to what relationship it has with those two companies post any acquistional sale.”

Marketing Week caught up with Sir Keith Mills to discuss not only the potential Dunnhumby purchase and the future of loyalty, but also the businessman and experienced marketer’s plans for managing the upcoming Americas Cup World Series sailing events in Portsmouth, the UK leg of the global sailing series.

As previous Deputy Chairman of London 2012’s Olympic Games and Chairman of last year’s Invictus Games, Mills has a wealth of experience in the role of marketing in delivering a successful sporting event.

MW: How does the UK leg of the race fit into the America’s Cup and what is the scale of the event?

“The events, the first of which will take place in Portsmouth from 23 to 26 July, will mark the first of three rounds leading up to the 35th America’s Cup Final in June 2017. While the racing will take part on Saturday and Sunday, we’re expecting half a million spectators over the four-day event.

We expect it to be as big a sporting event on our calendar as a British Grand Prix or a Ryder Cup. One of the great things is that now, as a country we have demonstrated our ability to host a great sporting event, and the team that worked with me on London 2012 are applying their skills to this as well.”

MW: Are any sponsors already on board and are you currently seeking sponsors?

“We’ve appointed Ticketmaster as our ticketing site and Sportsworld as our hospitality sponsor. We’re in advance negotiations with broadcasters and will hopefully announce a host broadcaster by the first week in March. We’re also the market for corporate sponsorship, and hope to announce partners in the coming months. We’re talking to financial, insurance and energy companies as well as beer brands.”

MW: What insights are you bringing from London 2012 to the America’s Cup in terms of sponsorship?

“The branding element of sponsorship is now only a small part of what companies are looking to get from sporting event partnerships.

During London 2012, one of the major sponsors was BT, who were going through a transformation from landline to broadband services. They used the Olympic games to showcase their technology to all of their corporate customers around the world, and as a result wrote a huge amount of business off the back of the London Olympic games. Just getting eyeballs isn’t what it’s about. It’s about understanding the ROI needed by different companies to deliver very different business outcomes.”

MW: What do you see for the future of the America’s Cup and sailing in the UK?

“The event has transformed. Historically it was not a spectator sport, but now our boats are very fast and race close to the shore, so spectators can see the entire racecourse. The races are also very short at 30 minutes, which makes them very viable from a television perspective.

With technology now, even those who know nothing about sailing can see what’s going on through data which is projected onto the water, which makes the whole thing much more exciting for a television viewer. It’s a big transformation, and we hope it will start taking America’s Cup and yacht racing into the mainstream.”

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