Dulux Decorator Centres (DDC) has 192 stores across the UK, offering a comprehensive range of decorating products, services and advice.
What was the problem?
DDC’s existing loyalty scheme and CRM solution was not clearly differentiating the business in the market and needed to deliver growth within its key customer strategies of:
- Acquiring customers through direct channels
- Increasing transaction frequency and value
- Retaining customers
What was the solution?
In 2005 DDC joined Nectar Business as a launch Partner. Nectar Business is a B2B loyalty programme structured in exactly the same way as Nectar’s consumer loyalty programme. However, it is designed specifically for SMEs. B2B brands such as DDC can reward their customers with a currency with which they are familiar – Nectar points. Customers can collect and spend points with a number of B2B partners like DDC and Viking as well as B2C partners like Sainsbury’s and BP.
DDC was seeking a more effective and cost-efficient loyalty programme than its existing proprietary scheme, and was attracted to Nectar’s ability to provide advanced data analytics, including a database with information on over 1 million SMEs. This database provides information such as size of business and industry type alongside purchasing information from SMEs spending across all of the Nectar points issuing partners.
Since joining Nectar Business DDC has continued to acquire new customers through low cost coalition channels such as the points update mailing distributed to active Nectar Business customers on a quarterly basis. DDC will include a Nectar points incentive targeting trade SMEs who do not currently shop with DDC, but whose profile suggests they have strong potential to become a customer. In 2010, 10 per cent of DDC’s new customers came from the Nectar Business base.
DDC has also conducted activity with other Nectar Business partners. Working with BOC (the largest supplier of industrial gases in the UK), whose customers share a similar profile. DDC and BOC identified which of their stores were in close proximity to each other and could be used to cross sell one another’s offering. Leaflets containing information on the benefits of shopping at DDC and where to find your local store were distributed in BOC stores and likewise, similar leaflets on BOC were placed in DDC stores.
DDC also utilises the scheme to increase customer spend through placing ‘spend stretch’ offers in Nectar Business mailings which go out to the most engaged Nectar Business customers. DDC uses a Nectar Business headroom model to calculate how much individual customer spend in DDC can be stretched, based on actual spend in the last 12 months. Using this calculation collectors receive a conditional Nectar points offer based on the model. 2010 results showed DDC customers signed up to Nectar Business had increased their spend by as much as 33 per cent in some cases over a 12 month period when compared to non-Nectar customers.
DDC has also found the scheme has had a positive impact on retaining its best customers. In 2010 DDC’s best performing Nectar customers had significantly higher retention rates over a 12 month period than non-Nectar customers. While Dulux products are available to purchase from other retailers, the ability to collect and spend Nectar points when buying these products direct from DDC has proved a compelling reason to help drive spend through Dulux’s own retail channel.
As a result of the partnership’s success there has been significant focus placed on Nectar Business’ in-store presence. Over the last few months all DDC store point of sale materials have been refreshed, including end-of-aisle displays, till mats, posters and external walls. DDC in-store promotions strategy has shifted to a Nectar points only incentive. Segmented customer lists have been provided to Store Managers, including details of recent Nectar sign-ups, and as a result of sophisticated data modelling by Nectar, those customers who looked most likely to lapse were identified. Managers were therefore empowered to contact these customers with relevant offers to maximise their spend potential and improve retention.
What results were achieved?
The Nectar Business loyalty scheme has become a significant part of DDC’s business strategy. As more DDC customers sign up to the scheme, the initiative continues to have a tangible impact on the bottom line:
- Since launch, DDC’s investment in Nectar has yielded significant ROI.
- Over two thirds of all DDC account holders collect Nectar points when they shop at DDC.
- A Nectar customer is worth nearly six times that of a non-Nectar customer per annum. What’s more, DDC customers who are Nectar collectors have a significantly higher retention rate than non-Nectar customers.
In 2010 Nectar Business won a ‘Special Award’ at DDC’s annual conference, for being integral to its business, testament to the impact the programme has made on the DDC business since launch.
John Adams, head of commercial at DDC, comments:
“We joined Nectar Business as our incumbent solus programme had a high cost, was taking up a considerable amount of resource, and we weren’t seeing the desired financial benefits. For the past 6 years since joining Nectar Business we have seen the Partnership be effective in driving acquisition, retention and spend uplift, and it has exceeded all ROI expectations. As a result, today Nectar Business is an integral part of our customer strategy, and is key in differentiating our business in a competitive market”
Activity going forward – how is the success being carried forward?
In 2011 DDC is planning on re-launching Nectar in-store to ensure ongoing momentum. This includes developing Nectar store segmentation that will look at KPIs such as penetration, value, swipe rates, as well as Nectar penetration in the local area. This will allow the development of realistic individual store targets.
A further development is that DDC has recently signed a multi-year agreement for Nectar to manage all of DDC’s direct marketing activity to both Nectar and non-Nectar DDC customers. The agreement includes the delivery of monthly customer life stage direct mail campaigns and managing the delivery of specific tactical direct mail campaigns, testament to the success of the partnership to date.
Benefits to DDC of engaging in a full campaign management solution include:
- More detailed segmentation of DDC’s customer base through highly-targeted offers, including a store-by-store segmentation plan.
- Enhanced sales penetration planning and targets.
- Efficient delivery of the message and offers through a single communication strategy.
- Benefits gained from a coordinated contact history for each customer.
Louise Isaacs, head of Nectar Business, comments:
“Our new agreement with DDC to manage all their CRM, in addition to their loyalty programme, is testament to how strong our partnership has become. Since day one of the DDC-Nectar partnership DDC have fully integrated Nectar into the day-to-day workings of their Business and it is clear they have reaped the benefits across a number of key business areas. This has not only helped DDC to maximise the potential of their existing shopper base, but also to grow it in a tough economic climate”.
