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EDITIONS
Friday, 20 September, 2002, 10:29 GMT 11:29 UK
Nectar launch leaves a bitter taste
A mans hand on a computer keyboard
Nectar tried to woo the online client - and failed

Nectar - the new customer loyalty reward scheme run by Sainsbury's, Debenhams, Barclaycard and BP - doesn't taste so sweet any more.


To send this volume of letters out driving people to the website and not have the capacity in place is a serious flaw

Andrew Didcott, internet expert
Amid a blaze of pre-launch publicity, the scheme - by far Britain's biggest - mailed 10.5 million UK households telling customers that their existing loyalty schemes were being thrillingly amalgamated.

The sign-up procedure couldn't have been easier, and the benefits - pooled information for the firms, better rewards for the customers - looked tempting.

Shame things didn't quite work out that way.

Technical hitch

Nectar's Achilles' heel, predictably, was technology.

Orlando
Spend a very great deal of money, and you can go here cheaply
Although the scheme was open to applications by post, over the phone or online, it offered those who registered on the internet a reward point bonus.

But when the deadline of 17 September rolled around, those millions hoping to sign up online found that they were locked out.

Not just once, but over and over again.

The situation got so bad that Nectar admitted defeat in the short term and has asked customers wishing to register or to see their account balance to not do so until further notice.

At one stage, according to Ian Barber of Barclaycard, the Nectar website was getting 10,000 visits an hour.

Too many, too soon

"The online operation was simply taken by surprise by the demand, the whole thing has been far from ideal," Mr Barber says.

Sainsbury's shoppers
Sainsbury's shoppers have taken to the internet too quickly
A Nectar spokeswoman - who, perhaps understandably, did not want to be named - blamed the hitch on the huge number of inquiries.

New members of the now superseded Sainsbury's loyalty scheme used to post or drop off application forms, and Nectar was taken aback by the proportion that chose to go online this time.

But on this occasion, it seems the prospect of extra reward points proved too tempting.

Communication problems

Internet experts say that Nectar's planning may have been at fault.

What Nectar members can get
500 points earns:
2.50 off shopping at J Sainsbury or Argos
5 off a meal at T.G.I Fridays or Brewster restaurants
2,000 points earns:
Two free cinema tickets
Free admission for one adult and one child to York's Jorvik centre
10,000 points earns:
Family admission to an English Heritage site
37,500 points earns:
Fly to Orlando for 62.40

"To send this volume of letters out driving people to the website and not have the capacity in place is a serious flaw," says Andrew Didcott of internet performance analysts Keynote Systems.

According to Mr Didcott, it is possible to construct sites that work that are able to deal with up to a million visits an hour - but proper planning is essential.

"All I can think of here is that marketing has not been properly communicating with the IT side, or vice versa."

Very very sorry

Nectar is profusely apologetic about the mess.

The firm increased its internet server capacity six-fold within 48-hours of the launch.


I can't see anything that Nectar does that is radically new.

Andrew Fowler, retail analyst at Merrill Lynch

Nevertheless, Nectar is still advising customers to phone rather than visit the website.

They have promised that customers calling the centre that say they have had difficulties registering online will receive the bonus reward points.

Just look at those rewards!

But those points won't go far.

According to the Nectar launch brochure, the 100 bonus points on offer won't be enough to claim a single item.

McDonald's meal
One day, a small part of this could be yours

Instead customers need 500 points before they can claim a reward - a free medium extra value meal at McDonald's, maybe, or 2.50 off shopping at Sainsbury's.

What is more, it could potentially take customers a long time even to get to the 500 point mark.

All customers have to do to claim their free burger meal is spend 250 in Debenhams or Sainsburys.

Alternatively those aspiring to climb onto the lowest rung of the Nectar reward ladder need do is spend 1,000 using their Barclaycard or purchase 500 litres of petrol from a BP.

As for those with loftier ambitions, all they need do to earn a cheap flight to Orlando is spend 75,000 with Barclaycard - simple.

Andrew Fowler, retail analyst at Merrill Lynch, sees Nectar as simply a repackaged version of a concept that may have had its day.

"I can't see anything that Nectar does that is radically new," he says.

"At the end of the day, customers will work out they still have to spend a lot of money with these firms in order to get anything worthwhile.

"In truth, all these schemes do is help bolster loyalty amongst existing customers rather than attract new custom."

 WATCH/LISTEN
 ON THIS STORY
Loyalty Management UK Chairman Keith Mills
"We're getting 10,000 hits an hour - beyond our wildest expectations"
See also:

17 Sep 02 | Business
14 Sep 02 | Moneybox
05 Jun 02 | Working Lunch
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