Given the recent troubles of venerable loyalty coalition programs around the globe, we've written extensively about the need for longtime coalition operators to begin reimagining these programs in the light of disruptive technology and a renewed push for sole proprieter programs that allow for more relationship control. The Drum has an update on the United Kingdom's Nectar coalition loyalty program has taken up the challenge by, to paraphrase the Kinks, giving the people what they want.
By Rick Ferguson
The Drum article points up one of the main obstacles to traditional coalition relevance: younger consumers in particular are less inclined than their forebears to wait patiently to earn enough program currency to redeem for a reward of any lasting significance. The youngs want instant gratification - and they want it now. To meet this need, Nectar's new Managing Director James Moir has launched new initiatives such as swipe-to-win promotions that can net Nectar collectors healthy injections of bonus points - and the program may work with partners to include physical rewards in the instant-sweepstakes offerings.
In addition, Moir has lined up additional program enhancements, including expanding the digital side of its business as well as bringing new partner brands on board to capture missing pieces of the estimated two-thirds of household spend currently captured by the coalition. The bottom line - Moir understands that consumer behavior is changing, and that Nectar needs to change along with it. Money quote:
"There's a lot of talk around how loyalty is changing, and how customer expectations are changing, but exactly what they're changing to...I don't think we know the answer to that yet. But from the research we've done, we know that value is as important as it's ever been. Facing into the next few years in a post-Brexit world, people generally feel a little unnerved. More customers say they feel worse off than they did a year ago.So value is as important as ever being, and loyalty cards play a really important role in that. But we're not blind, customer expectations are changing."
Loyalty programs - even programs as successful as Nectar - must evolve or die. Moir understands this reality - but can Nectar change fast enough? The program is still married to such old-school tactics as vouchers and plastic loyalty cards, which will quickly become relics of the ancient past in a world being overtaken by digital wallets, geolocation, and blockchain. It remains to be seen whether small tweaks to existing coalition structures will be enough to keep them relevant in this world of instant gratification and digital immersion.
Still, Nectar remains an important relationship to many of its estimated 20 million members. As long as Nectar continues to seek ways to enhance the value of those relationships, it will remain an integral part of UK consumers' lives.
Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.