Lessons from the UK’s biggest loyalty scheme

What’s the secret to loyalty program success? James Frost, marketing director at Nectar in the UK, shares some of his tips and insights.

Could you give a brief overview of the Nectar program to date?

Nectar is the UK’s largest loyalty program. Customers can collect Nectar points when shopping for groceries, doing DIY, booking a holiday, paying household bills, buying petrol and even getting their car serviced.

Just last year, in September 2012, we celebrated Nectar’s 10^th birthday. Since launch, Nectar has given back over £2 billion of rewards to its 19 million collectors, including money off shopping, travel, days out and cinema tickets.

We’re also pleased to say that that this year (and also in 2012) Nectar was awarded the ‘Best card-based loyalty program’ at the Loyalty Awards for Europe & Middle East.

Who are Nectar’s main rivals?

The other big loyalty programs in the UK are Tesco Clubcard and Boots Advantage Card.

The loyalty sector is a busy, competitive place. What makes Nectar stand out?

From a customer point of view, I’d have to say the huge number of ways in which people can collect Nectar points. At present, people can collect Nectar points on over 50% of their household spend which means the points quickly accumulate. The other programs tend to offer relatively narrow opportunities to earn points.

What has been Nectar’s biggest success to date?

A hard one, since there have been so many highlights recently, but I think when we became the UK’s biggest program, overtaking Tesco Clubcard. That was a big moment for everyone here.

And its biggest mistake/learning?

Our biggest learning has been about how quickly you can shift from old fashioned marketing (paper and plastic) to new tools (like apps and digital offers). Whilst the new generation is all for these things, the older generation aren’t as quick to move as you would like them too. So we’ve found we need to keep a good balance of both, and let the customer decide how they want to engage with you.

What do you think Nectar will look like in five years’ time?

We see there being a shift from simply rewarding customers for transactions, to rewarding interactions too. We’ve already been doing this at Nectar by rewarding people with points for donating clothes to Oxfam (a UK charity), for re-using plastic bags when buying their groceries at Sainsbury’s, and encouraging people to switch to paperless billing with British Gas (the UK’s largest utility supplier).

What are your preconceptions of Australia, in particular the Aussie marketing and loyalty landscape?

Dangerous to generalise being a Pom, but I think Australians are a fairly straightforward bunch, and hard to fool, which means loyalty programs need to have real substance to them, not just ‘fluff’.

Do you think Aussies are loyal people?

Absolutely. Our research shows that loyalty program membership in Australia is very similar to the UK and actually slightly higher than the US.

What’s keeping you up at night?

Jet lag!

James Frost will be speaking at ADMA’s Engage events in Sydney, on Tuesday, and Melbourne, on Thursday. Visit the ADMA Engage website for more details.

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