Case | HBS Case Collection | December 2004 (Revised December 2005)

Nectar: Making Loyalty Pay

by John A. Deighton

Abstract

Loyalty Management UK (LMUK) manages British supermarket chain Sainsbury's frequent-shopper card program, called Nectar. LMUK uses Sainsbury's sponsorship as the magnet to attract other retailers into a profitable, multisponsor loyalty network. Examines the economics and consumer behavior of retail loyalty programs and allows comparison of the brand-building power of a single-sponsor program to the promotional power of a multisponsor program. Describes the launch of the program and its first 18 months of growth, at the end of which it is the largest loyalty program in Britain. Illustrates the use of the program to deliver customer-specific promotions to the 13.5 million-member database and how the program evaluates the success or failure of specific promotions.

Keywords: Customer Focus and Relationships; Business or Company Management; Supply Chain Management; Marketing Strategy; Networks; Marketing Channels; Advertising Campaigns; Outcome or Result; Growth and Development; Retail Industry; Great Britain;

Citation:

Deighton, John A. "Nectar: Making Loyalty Pay." Harvard Business School Case 505-031, December 2004. (Revised December 2005.)