The man who built Sainsbury's Nectar card thinks supermarkets need to totally rethink loyalty

One of hundreds of Lego figures is seen by a pool as construction continues in North America's first ever Lego Hotel currently being built at Legoland in Carlsbad, California, January 17, 2013. The three-story, 250-room hotel will open on April 5. REUTERS/Mike BlakeTesco’s Clubcard points can help pay for trips to Legoland.

Supermarkets are in a bad way, with falling sales and an on-going price war.

But in struggling to fend off discounters like Lidl and Aldi, supermarkets have overlooked one key thing, according to the man who helped create Sainsbury’s Nectar Card loyalty programme — their customers.

“I’m still not convinced supermarkets know enough about their customers,” Stuart Marks told Business Insider. “They need to understand what the drivers are and what makes me go to a big store when I do.”

Marks managed Sainsbury’s Reward Card, the precursor to the Nectar Card loyalty programme, in the 1990s. Both the Nectar Card and Tesco’s rival Clubcard allow people to earn points based on the amount they spend in store. Those points can then be redeemed as money off in store or as discounts on purchases from partners.

Nectar points can be put towards things like train tickets with Virgin, while Tesco’s Clubcard points can pay for cinema tickets at Odeon or days out at theme parks such as Legoland. Loyalty cards are hugely popular in the UK, with 76% of Brits carrying between one and five in their wallets.

Nectar cardNectar.comExamples of what your Nectar points could be spent on — pizzas, cars and coffee

Marks thinks that while these simple, point-earning cards were enough to keep people interested in the 90s, the big shops now need to do more to hang on to customers.

“They should be recognising historic loyalty in a very different way. Sainsbury’s knows that I’ve had a nectar card for, say, 6 or 7 years so maybe they offer me a different points system to someone who’s just signed up. Maybe there ought to be a fast-track lane for the check-out. (Waitrose does a self-scanning, fast-track checkout for customers signed up to their loyalty card service).

“We all like to feel important and at the moment I think these guys take our loyalty for granted.”

Sainsbury’s arguably did just that when, in April, it halved the number of Nectar points it gave customers, cutting the rate from 2 per £1 spent to just 1. Sainsbury’s also scrapped Nectar points for using your own bag.

Marks currently runs John Lewis’ tech accelerator ‘JLab’, which provides cash and advice to retail technology start-ups, and he believes retailers should be using technology to take advantage of the boom in data.

Supermarkets could pitch more tailored offers to customers and provide better customer service, picking up on things like card machine errors and contacting people when there’s a drop off in shopping activity to find out why. “It’s all in the data, that’s what it’s going to boil down to,” Marks says.

It’s not just the supermarkets who are missing a trick. Marks says: “I was on a BA flight from Heathrow to Manchester. It was 1 hour delayed and the last time I did that flight it was 45 minutes delayed. I’m a gold card holder. Now they know that I’ve now been significantly delayed twice and in an age of big data I’m so surprised they’re not flagging that up and getting someone to call me and just say sorry. It doesn’t cost them anything.

“I don’t think big business is using big data half as well as they should be.”

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