Sainsbury’s overhauls Nectar scheme to ‘genuinely reward loyalty’

The changes mean Nectar customers will receive points based not just on how much they spend, but also on how frequently they shop and how long they’ve been shopping with the retailer.

Sainsbury’s is overhauling its Nectar loyalty scheme, making it digitally-led and app-based for the first time and shifting rewards away from being based just on how much is spent as it looks to “genuinely reward customers” for choosing Sainsbury’s more often.

The changes, which are being trialled at its Isle of Wight stores, will see customers receive points based not just on how much they spend, but also on how frequently they shop and how long they’ve been shopping with the retailer: the more loyal a customer is to Sainsbury’s in the long-run, the more they’ll be rewarded.

The revamped Nectar, which Sainsbury’s bought for £60m from parent company Aimia earlier this year, allows customers to choose their own offers online or via the Nectar app from a curated list based on the products they buy most often. They will then earn points on these rather than on their total spend.

It is an interesting move for the supermarket giant, given that Waitrose recently scrapped its own ‘Pick Your Own Offers’ scheme after people complained it was too confusing.

However, Bryan Roberts, a retail analyst at TCC Global, says Sainsbury’s digital-first approach should help it to avoid some of the mistakes Waitrose made.

“This trial certainly acknowledges the direction of travel for shopper loyalty programmes in that it is more personalised and digital-led,” explains Roberts.

“Sainsbury’s initiative, thanks to being smartphone-based, will avoid some of the pitfalls of the Waitrose effort and will go a fair way to making Nectar a lot more relevant to its participants. I also really like the fact that it addresses frequency and tenure as well as spend – this is a step-change in creating a more meaningful ‘thank you’ for genuine loyalty.”

The new scheme, which will run indefinitely on the Isle of Wight, will offer points of equal value to the existing scheme (500 points will still be worth £2.50) and customers’ existing points will also be safe and worth the same. There are no changes to the Nectar scheme at other Nectar partners.

Rob Meakin, managing director at Loyalty Pro, says the move reflects a growing trend of the importance supermarkets, retailers and businesses in the hospitality industry are placing on customer retention – and that other UK chains will likely follow suit.

“Putting the customer first is an absolute priority for an industry which is so steeped in fierce competition; consumers are increasingly looking for the better deals with wallets squeezed tightly due the rise of inflation and uncertain times ahead,” Meakin explains.

“Consumers now expect a certain level of personalisation with deals they make – this is what we’re calling the ‘membership economy’, where everyone is now expecting the VIP treatment with tailored rewards that reflect the consumer’s own buying patterns. As more and more consider loyalty as a sort of currency, the battle between the UK’s top supermarkets will only intensify.”

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