Data is the sweet nectar of loyalty programmes

Last week Nectar card overtook Tesco Clubcard in terms of member numbers with 16.8 million versus 15 million, and so it seems fitting that this edition of the Retail Marketing Focus sees the first in a series of articles written by Clive Humby, co-founder of customer insight specialist dunnhumby, the firm that has managed Tesco Clubcard since its inception.

Over the past 12 months, retailers have ramped up their loyalty offers and last year Tesco’s Clubcard was the focus of a great deal of the supermarket’s marketing as it offered Double Points to drive loyalty, reward its customers and increase take-up of the card.

Despite partnerships with 14 brands including EDF Energy, BP and Homebase and more that 400 online retailers, Nectar is most widely recognised as the loyalty scheme to which Sainsbury’s belongs.

The thing is, despite being the loyalty card that rivals Tesco and Sainsbury’s subscribe to, Nectar and Clubcard are completely different programmes and after speaking to a number of experts on loyalty, it doesn’t seem to matter one iota, which has the most cardholders.

What really is important is what each scheme does with those members.

Stuart Evans, general manger of loyalty firm ICLP, says that Nectar needs to break out of the points and rewards mentality as that is the old game as the new game is leveraging the business through data.

“Sainsbury’s can’t compete with Tesco without data as the long-term strategy is more important than rewards and promotions,” he adds.

Where Tesco has been using Clubcard data to drive its business since it was introduced 15 years ago and has long been hailed as the pinnacle in customer insight, it’s only recently that Sainsbury’s has begun to really compete with Tesco in terms of its data use.

In the past two years Nectar has been developing tools that mean Sainsbury’s can mine deeper into data from its cardholders, which Nectar managing director Jan Pieter Lipps says means Sainsbury’s has been “rapidly catching up” with its rival.

Where I think Nectar has the upper hand over Tesco’s Clubcard data is that it can share information between its partners. Lipps says this gives it a unique view of customer behaviour, outside of the supermarket sphere.

This is something the loyalty coalition demonstrated this week with the launch of Yahoo! Consumer Connect which combines online user data with supermarket data from Nectar to allow advertisers to deliver online campaigns and track their success against offline behaviour.

Where it gets complicated for Sainsbury’s is the introduction of incentives that compete with Nectar incentives, such as its “coupons at till” initiative.

Anamaria Chiuzan, senior marketing manager from The Logic Group, warns that what consumers want is simplicity, and when there are layers of incentives running alongside each other, the loyalty landscape gets cluttered you risk confusing the message to customers.

In his column, Humby will discuss a number of issues surrounding customer insight and how brands and retail business can make better business decisions by putting the customer at the heart of the way their people, systems and processes work.

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