Bryan Roberts, global insights director, tcc global
When Sky announced Sky VIP, its loyalty programme in 2017, I felt ripples of admiration among loyalty professionals in the retail industry. The scheme rewards customers based on the length of time they’ve been with Sky. Rather than trying to draw in new customers and keep them, it rewards existing customers—and compels you to check the benefits before you think of leaving.
Sainsbury’s Nectar card trial works in a similar vein. The digitally-led and app-based loyalty scheme, being trialled in the Isle of Wight from Thursday (12 April), will shift rewards away from being based on value of spend, to the frequency of shopping trips as well as the length of time that shoppers have been JS customers.
The new app will select various bonus points offers based on what is frequently purchased, and the more you shop in Sainsbury’s, and scan that app at the till, the more generous the offers will become. One person may earn five Nectar points for purchasing a loaf of bread, but another more loyal customer may earn 10 points.
It’s a refreshing move, and the way that we expect to see loyalty schemes going: digitally-led and personalised.
When done well, personalisation can be very meaningful and can be a strong driver of affinity and loyalty. Although an admirable idea, the downfall of Waitrose’s Pick Your Own Offers scheme was shoppers’ confusion—remembering which products had been picked proved challenging for some. By keeping everything in one app, Sainsbury’s customers won’t face the same issues.
This digitalisation is likely to improve the use of the loyalty card across different store formats. Most grocers find that loyalty cards are mainly used for big weekly shops, while use in convenience stores drops off. Shoppers don’t fancy digging around in their wallet or purse for their loyalty cards when they are only buying bits and bobs: and arguably doing so is a bit of an antithesis to a frictionless retail experience. With added incentives to earn more points on frequency of visit and reduced effort to use, it’s likely that this strategy will help to buck that trend and see more balanced use of the Nectar card across different shopping occasions and channels.
This is a step-change in creating a more meaningful ‘thank you’ for genuine loyalty. And it’s the sort that will make shoppers think twice when choosing whether to go to their local Tesco or Sainsbury’s.
We know that loyalty is harder to come by than ever before. Today, shoppers have easy access to at least 10 food stores, and that’s before we consider the manifold online options. Switching costs are virtually zero now and the lack of emotional loyalty to any given retailer means that shoppers are quick to jettison their main store if something cheaper or easier appears.
Sainsbury’s is supercharging its loyalty scheme – and while it’s just a trial right now – other retailers should be sitting up and taking note. Shopper expectations are shifting and they want a genuine ‘thank you’ from the retailers to whom they give the most business.
Originally published in The Grocer on 13.04.2018