Sainsbury is finally getting value for money out of its relationship with the Nectar loyalty card. Improvements to the way it uses data are set to deliver a 10-fold increase in incremental sales generated from the scheme in 2005 compared with just four years ago, said the retailer.
More efficient use of the data in Sainsbury’s campaigns has meant a greater return on investment, equating to a rise in direct marketing-derived sales from £35m to more than £400m.
The success may finally quell speculation that Sainsbury was looking to ditch the scheme.
Sainsbury chief executive Justin King had previously said he was reviewing the retailer’s involvement with Nectar, which was costing the supermarket more than £120m annually.
The boost also comes as welcome relief to Nectar owner Loyalty Management UK, which has faced a year of speculation as to whether founding partner Sainsbury, which is the anchor supermarket for the programme,
would pull out. It also follows another coup this week for Nectar after rival scheme Tesco Clubcard was left one partner short when Dollond & Aitchison ditched the number one retailer in favour of Nectar.
However, Sainsbury is now without a head of customer analytics since Alex Fovargue, who led improvements to its data management, left.
Speaking at a conference in Australia before his departure, Fovargue said internal data management at Sainsbury had now been transformed. “You would typically ask the IT department to extract data and they would come back after six weeks with something that wasn’t complete. We were in a continual cycle of not getting data when we needed it. We were operating on gut feel.”
The supermarket has moved from mass mailings to highly targeted communications. These can combine customer survey findings with transactional data, and enable individual stores to address specific issues and appeal to local customers with targeted coupons.