Is there any evidence that the program pays out for Sainsbury? Elaborate.
Yes, there is evidence in the case that Nectar’s loyalty program pays out for Sainsbury's in numerous ways.
Nectar helped Sainsbury's acquire customers. For instance, Nectar customers who are not Sainsbury customers may have another supermarket close to their home, such as Tesco. However, because these shoppers have a Nectar card, they are more likely to travel further for their grocery shopping in order to obtain loyalty points for their Nectar card. Additionally, Nectar allows Sainsbury to target members who are not currently shopping at Sainsbury’s but live close by a location. Typically, the retailer would have a very hard time connecting these targeted individuals, and subsequently converting them to regular shoppers. However, since Nectar has their information in its database, Nectar can target them, yielding a much higher acquisition rate at a much lower cost.
The Nectar network helps Sainsbury’s retain customers. Customers are more likely to be loyal to Sainsbury’s as a brand because they receive loyalty points in return for their purchases. Nectar’s loyalty program is more effective than a stand alone program run by Sainsbury. The weekly spending at Sainsbury’s was 40% greater among shoppers collecting from the supermarket and two other sponsors. Shoppers value the ability earn points at multiple retailers, and become loyal to those retailers in the process. Shoppers who participate in these sorts of programs are less likely to defect than a single-sponsor collector.
Nectar provides invaluable customer and potential customer data from their 21 million user (13+ million active user) database. This data would be extremely costly and prohibitively time consuming for Sainsbury’s to build and maintain.
The Nectar network also provides a substantial lift to Sainsbury’s. Nectar