Esso UK is expecting a boost in fuel volumes following the launch of its Nectar loyalty programme on June 1. Patrick Rutherford, the company’s retail sales manager, said the full effect of the launch wouldn’t be immediate, but would follow key developments already in the pipeline for the Nectar programme, to be introduced in 2020: "We believe this will be the leading loyalty programme in the fuel space, and we think it will drive volume for the Esso brand and for our dealers and branded wholesalers," he said.
One of the key developments likely to make a difference to the impact of the Nectar programme is the launch early next year of a redemption offer. Motorists collecting Nectar points will be able to redeem them on Esso’s dealer forecourts to make savings on both fuel and shop purchases.
"This was one of the major drivers for us to go with Nectar," said David Chilton, Esso Global Loyalty Programmes manager. "From research we know that loyalty drives consumer behaviour with 84% of shoppers telling us they would change their behaviour ie return more often if they could redeem their points to save on fuel; plus 61% of consumers say loyalty is a factor in determining where they fill up. It is really compelling, and for us a really exciting proposition."
One of the things that keeps people engaged in a loyalty programme is the amount of time it takes them to earn a reward which Esso research says is between six to eight weeks. "After that they tend to lose interest," explained Chilton. "With a programme like Nectar, because of all the earning opportunities, the length of time it takes for a consumer to earn a reward is in that sweet spot. What we’re doing is bringing a reward to a consumer that they really value savings on fuel in a time frame that makes it really relevant for them. That’s really the power of the Esso Nectar programme and I think that’s a differentiator for us. Dealers stand to gain the most from the programme when customers remember to swipe their Nectar card on all of their transactions; the better we understand consumer behaviour, the more loyalty we can create. We have been working really hard with our branded wholesalers (BWs) and dealers on making sure all staff are trained and engaged with Esso Nectar, as the interaction at till is what really counts."
While not all Esso retailers have been keen to give up Tesco’s Clubcard points scheme, Chilton is very excited about the move to Nectar: "We feel very confident this is the right move. The Nectar programme is an established household name, with 19 million members; it completes 35 swipes a second; and annually issues 52 billion Nectar points which equates to about a quarter of a billion pounds. It has nine million digitally contactable consumers (via app or email). This is a big programme.
"Clubcard did great things for our business, but it’s not as digitally focused as Nectar. The Clubcard scheme was about collecting points. Nectar is by design a coalition-style arrangement with multiple points of collection or issuance partners, as opposed to Clubcard which is really focused on the Tesco family of businesses. Consumer attitudes to loyalty are significantly shifting they are looking for instant gratification. Our research says consumers really value the moment they get the reward. We want consumers to associate that with our brand."
Esso research has revealed that most people 87% of customers have both Nectar and Tesco Clubcards, so it’s not a huge upheaval for customers to use either card. As far as the Esso brand is concerned, the Clubcard offer will still be in place on its Alliance sites so customers can still get Clubcard points on Esso fuel and in-store.
Nectar has recently gone through a period of transition (it was acquired by Sainsbury’s from Canadian firm Aimia in 2018 for £60m) which has resulted in some re-energisation of its purpose, direction and investment, according to Rutherford.
"Nectar’s model is about speed and efficiency," he said. "With the progressive options it offers that’s really where we see it as being a partnership that will allow us to respond to future needs to adapt."
Esso is keen to take advantage of the fact that consumers spend nearly £5k a year on fuel and grocery, which can be very rewarding in terms of accruing loyalty points what the Americans call the ’gas/grocer’ relationship, according to Chilton: "We see that model replicated all over the world. Now with Esso and Nectar coming together, we are the only fuel major with that relationship in the UK."
All of Esso’s large direct dealers are signed up to the new Nectar programme MFG, Rontec, Euro Garages; plus Greenergy retailers are participating at a very strong level, according to Rutherford: "Most retailers have seen the value of what we’re trying to do. They’ve been very engaged, and particularly because we’re trying to ensure we’ve got a flexible tool that we can use with their feedback once we learn more about what really works."
From a technology perspective Rutherford said there are very few barriers for retailers to participate, as the equipment is the same. In terms of cost he said it’s very fair in that retailers are paying for points they’re actually issuing whether those points are as part of a promotion, or bonus points of some sort, tied up with their agreement, it should be very transparent how the commercials work.
"We’ve tried to make it clear, you pay for what you use," stressed Rutherford. "The programme makes it a lot easier for retailers to understand which types of promotions work in the future which offers the consumers are most engaged with. With the support of Nectar’s back office helping us with the analytics, we can jointly get better. Although we don’t own the data, we have good access to the insights.
"If you’re doing a business plan as an independent dealer, you need something that’s going to keep you competitive and with a brand that’s going to support the retention and growth of consumers on your forecourt. Nectar is very important for delivering that, but it needs to be delivered in a manner that generates net value for retailers.
"We’re always looking at ways we can expand and support those retailer relationships and in a way that makes the investment worthwhile. We are examining constantly to determine how best to invest in the future.
"Nectar is the result of some detailed analysis and study we began three years ago. We’ve been very proactive in this space a deal like this doesn’t just happen overnight.
"We saw Nectar as an opportunity we’d like to have. We know we need to have a strong marketing offer to support the Esso brand and make sure it goes from strength to strength."
Highlights from Esso’s detailed research and analysis
60% of Nectar customers are interested in redeeming their points on fuel at Esso(2018 Nectar Panel research)
41% of customers were likely to visit Esso more often if they could spend their Nectar points there
(Source: 2017 Esso UK BVC; Redemption research July 2018; "Average past 10 fills versus next 10 if able to redeem points on Esso fuel")
Britons spend £86.57 on average per week on fuel and groceries (£4,500 per year)
(Research commissioned by Esso and conducted by onepoll.com with 2,500 UK adults in May 2019)