What should Justin King do with the program?

Options present with Sainsbury:

Continue with
the Nectar
Program

Start a separate
Loyalty program

Non-Loyalty
program like Walmart and ASDA

Co-Branding with
other founder
Sponsors

Option A: Continuing with Nectar Rewards

Benefits
2.9% raise in revenue due to multiple
sponsors
Product- level Information about customers
Cost of program was dispersed among
partners
Increased customer base due to PUM and
incentive coupouns

Costs
More than 120 million pounds towards the
program
Lesser control over the program
Competition among other sponsors over
same commodity
Sainsburys CRM may be stronger if they had
their own loyalty program

Option B: Begin a Separate Loyalty Program

Benefits

Costs

Cheaper in comparison to Nectar program

Full control over program and its design
Exclusivity

Threat of moving it to other brands due to

absence of Nectar brands
Loss of Continuity
Managing the loyalty program and
associated concerns

Option C: Non-Loyalty program like Wal-mart and ASDA

Benefits
Divert funds towards promotion by lowering
of prices
Higher sales, more revenue, greater market
share

Costs
Employee cost
Costs for In-store promotions etc.

Option D: Co-Branding with other founder Sponsors

Benefits
Cross selling
Lower costs to expand the reach

Costs
Difficult to convince the counterparts

Proposed strategy
We believe Sainsburys should stay with Nectar as the programs management is outsourced to
LMUK, which allows its partners to concentrate on their own business. Also apart from the
benefits mentioned in the strategy(A), to lower the financial costs, Sainsbury can negotiate with
Nectar for additional benefits (like awarding extra points to its won customers, increased
branding activities etc).

Q2

Measures to keep other sponsors happy

Spend more on analytics, help sponsors not
just with data but with insights

Share acquired customer information with more

effectively

Aggressively communicate the advantage of Nectar over

solo and how it is beneficial in terms of RoI.
Make sponsors aware about the benefits such as
share customer acquisition cost.
Nectar should help smaller sponsors in
gaining visibility and access to wider market

Nectar should introduce some additional

incentive to redeem points at the same
store where they were collected as most
customers are redeeming at Sainsburrys.
Nectar should allow points to have
some expiry date so that sponsors
dont have to unnecessary bear
Breakagecost.

What should he do to keep the collectors collecting?

Target customers with the best available redeemable options customized on the
basis of their buying patterns
To ensure continuous collection reduce the number of inactive customers by luring
them with coupons, special offers etc.
Motivate collectors to earn points from multiple sponsors, thus increasing retention.
Nectar should chose their partners on the basis of the customer behaviour
Create a Reward system, where certain group of collectors get rewarded for showing
certain patterns
Increase PUMs frequency to improve recall and hence activity
Roll out of Nectar mobile app

Thank You