• LMUK’s Nectar is Britain’s largest rewards

program

• Sainsbury was Nectar’s core sponsors; BP,

Barclaycard & Debenhams founding
sponsors

• TESCO was Nectar’s main competitor

• Easy earning & redemption of points

SUMMARY • There were 4 main ways for Nectar to earn

income
o Spread
o Float
o Breakage
o Program Support Fee

• 400 GB database of demographic and

behavioral data

• Nectar offered to benefit the sponsors as well

Q3. Was Nectar Loyalty Program successful?
Pros & Cons of Nectar & Tesco Loyalty Program
NECTAR POSITIVES
Extensive database, better than TESCO
Wide reach due to large number of retail outlets
collecting points
Coalition with big brands making it a trusted &
most subscribed Loyalty Program
Large number of customers collecting points
Benefit from economies of scale
Taking into account past purchases to see that no
sponsor is short-changed (Customizing
Household Purchase Behaviour)
Collectors are less likely to defect than single
sponsor collectors
TESCO POSITIVES
Loyalty is better defined
Effective brand building device & relationship
tool
Concentration purely on Tesco customers
Being the boss of their own program
NECTAR NEGATIVES
Link between store & customer not strengthened
Ambiguity in establishing specific loyalties
Customers collecting from Sainsbury but
redeeming points at other stores
Not having complete control over Nectar’s
activities
Nectar aiding the sale of competitor’s products
LMUK wanting for redemption to take place from
multiple sponsors even though 50% of their
collection is from Sainsbury’s
TESCO NEGATIVES
Need to manage day-to-day details & recover the
cost of a stand-alone program
Lesser number of outlets resulting in tapered
reach
Tesco not co-operative with other partners
Collating with other partners on their own terms
Q2. Should Sainsbury Buy Nectar?

YES
Q1. What should Justin King of Sainsbury do with Nectar
Loyalty Programme for the coming year?
Sainsbury should buy Nectar in the coming year and then bring the given
below changes in the loyalty programme

• Sainsbury should try to minimize his customers shopping at other

supermarkets through some tweak in its present Loyalty programme.

o Sainsbury should overhaul the system, where customers no longer

receive a point for each pound spent, but instead receive larger
rewards the more they shop at Sainsbury.
o Sainsbury should aims to give loyal Sainsbury's customers more points,
meaning those who shop at a range of stores may lose out.
o Sainsbury should run the trial across all of its stores, to check the
result.
o Under this trial customers should be offered access to a new app,
which should show customers individual offers based on their previous
shops.
o This App should also have the ability to collect points using a QR code
on a smartphone.