Sainsbury’s Nectar card scheme has always been less than generous when compared to its closest counterparts; Nectar points are arguably harder to earn and worth less than the likes of Tesco Clubcard. It is no bad thing, therefore, that Sainsbury’s has decided to trial a shake-up of the scheme, particularly as its competitors such as Tesco, Lidl and Waitrose have all revamped their loyalty schemes in the last few months.
In an age where shoppers have a wealth of resources at their fingertips, allowing them to be savvy about where they shop, how and for what, the biggest challenge for retailers is finding a compelling way to discourage cross-retailer shopping.
The premise of the new Nectar scheme is to reward those shoppers that commit to continually buying their full household shop at Sainsbury’s – regardless of its size or value. Here comes the first challenge – it will be near on impossible to determine whether a shopper is truly ‘loyal’ or if they are in fact buying some items elsewhere.
Sainsbury’s cannot make accurate assumptions about things that are not in the shoppers’ baskets – for example has Mrs. Jones bought carrots somewhere else this week or are carrots simply not on the menu? Still, it is a step towards encouraging repeat behaviour among shoppers, which can only be seen as a positive.
However, supermarkets must now decide if repeat purchase is more important than high spend as a means of determining loyalty. For example, customer X could spend £10 each time they shop but shop 10 times with a retailer, but customer Y might spend £100 in just 1 visit. When changing rewards for loyalty, supermarkets need to consider how they retain and show adequate value to important high net worth shoppers.
A high spending family that has been used to receiving points for pounds may well feel hard done by under a scheme which overlooks £££s spent in favour of rewarding ‘perceived share of spend’. Most importantly, a loyalty scheme should not be complex; it should be clear and communicate simply what is required from the shopper and the reward that will be received in return. I fear this scheme lacks simplicity in message and clarity in terms of likely reward.
As consumers continue to expect more from retailers, loyalty schemes must evolve to remain relevant and valuable. Simplicity and personalisation are both key to reward shoppers in a way that matters to them the most; retailers should consider how they can further deliver on these metrics.
The Holy Grail will come from the retailer that makes it so easy for shoppers that they don’t need to carry a loyalty card; they are simply recognised through their payment method and the offers are made more valuable through being personalised to them based on their shopping habits.
On a more positive note, this trial does fulfil some of these fundamental requirements. First and foremost, it is taking on a more personalised approach to loyalty, similar to the recently refreshed myWaitrose offers.
Sainsbury’s should optimise this by using the loyalty card data smartly to better serve its shoppers – stocking the right products, in the right stores and tailoring the right offers to individual shoppers through the app to keep them engaged. Secondly, it is now app based which means shoppers have access to their offers at the click of a button; bringing loyalty schemes firmly into the digital age via a device commonly used when shopping.
Sainsbury’s has recognised a need for change although. However, I personally think further and much grander steps will be needed to restore the value of loyalty schemes in Sainsbury’s and indeed other UK retailers.
Matt Lee is director at shopper media agency Capture