We ran a poll on Twitter recently which wasn't intended to be taken too seriously as we know LNER will be sticking with Nectar at least in the short term.
#POLL what do you think @LNER should have done with Nectar?
- Scrap it immediately (before a replacement is available)
- Keep it temporarily until a replacement is offered
- Offer it as an option alongside a better frequent traveller scheme
- Keep it as now - the only scheme
— Save EC Rewards (@SaveECRewards) August 29, 2018
Looking at the result it seems like Nectar has left a bitter taste in the mouth of our Twitter followers. The majority of people said they want to get rid of Nectar immediately, although if you combine the 'moderate' options (keep Nectar either temporarily or as an option) these edge slightly ahead.
Of course the poll is highly biased towards those who remember East Coast Rewards and would like to see the return of a similar scheme, it'd be interesting to know what a wider sample of their customer base would think. Does Nectar (in its current form) drive extra sales or do people just collect points because it's there and there's no other option?
Can Nectar offer any serious benefits? If Nectar remains either due to contractual reasons or it drives custom for the less loyalty savvy there's a number of things they could build around it.
Loyalty scheme on top of Nectar
An example of this currently is the Virgin Trains West Coast Traveller scheme. This is intended for frequent travellers and offers benefits in addition to Nectar points if you meet the qualifying threshold. Once you qualify you are able to take advantage of the scheme benefits.
I don't think the Traveller scheme benefits would suit the East Coast (free weekend first class leisure travel sounds nice but it doesn't suit everyone particularly if your work pattern means your leisure trips are during the week, also VTWC Pendolinos tend to have more first class space), but offering a scheme for the highest spend travellers like GNERtime or NXEC 'escape' on top of Nectar would be one way of rewarding the highest spending travellers. There should also be additional rewards offered to season ticket holders similar to the GNER365 scheme.
Verdict: this scheme is the easiest to understand, it's effectively Nectar and an additional scheme running side by side but you can participate in both at the same time.
Tiers unlock rewards
A problem with Nectar being a coalition scheme is you can't be as generous as you could if you have your own in-house scheme. For example you might be happy giving one of your customers a free ticket for spending £500 but you'd not want to give a Sainsbury's customer a free ticket for spending £500 in-store as they've provided LNER no business.
One way round this would be to introduce tiers that unlock certain rewards that can be paid for with Nectar points. For example if you hit the first tier you may be able to purchase 1st class lounge passes for points, if you hit the second tier it could allow you to purchase standard class reward tickets for points and the next tier could unlock first class rewards tickets for points. Those who don't hit the appropriate tier could still use their points for money off tickets as available currently.
The number of rewards you could buy with points would be limited but you could accumulate more allowance to buy rewards if you hit the tier twice.
For example if the top tier was £1000 in LNER spend to reach and it gave you the chance to buy 4 first class tickets at 1000 Nectar points each you would then get an additional 4 added to your allowance when you hit £2000.
Verdict: this sounds complex and would need to be explained clearly but it does encourage people to redeem their points with LNER rather than spending them elsewhere. It would enable reasonably priced points redemptions without the need for reimplementing a points scheme of their own.
Nectar points can only be redeemed on LNER tickets of type 'Advance' this means (last time I checked) that they couldn't be used on sales fares. Sometimes the sales offer a fixed price ('LNER Flat fare' is the ticket type) and because this is not called 'Advance' the fare is not eligible to redeem with Nectar points.
Some of the sales have had very low prices - e.g. £5 between London and Yorkshire, £10 between London and the North East and £15 between London and Scotland. That'd be 1000, 2000 and 3000 Nectar points respectively if the points were allowed to be used with sales fares.
This would be open to everyone unlike the 'tiers' suggestion above and the ability to pay with points could be promoted via Nectar as this may encourage some of their customers who don't normally consider the train to redeem some points to try out LNER during the sale.
Verdict: this should be in addition to either the 'loyalty scheme on top of Nectar' or the 'tiers unlock rewards' idea. It would be a good way of leveraging Nectar to bring in new business by encouraging people to spend their points in a sale. It would mostly be a way of attracting Nectar users that currently don't use LNER rather than a way of rewarding the regulars.
When the franchise was awarded to VTEC the original Stagecoach press release said it would be possible to earn Nectar points in the Foodbar, it turned out that this never happened. I'm not sure whether it was scrapped because the EPOS couldn't support it or was it because it was decided it wasn't worth it?
I don't think implementing the ability to earn Nectar points in the Foodbar would be worth it on its own, I can imagine the average transaction is under £10 and so most people won't be worried about the ability to earn points. It could also negatively affect the customer experience if implemented badly, if it slows down the transaction time it can increase the queuing times when it's busy.
If it was decided to implement Nectar in the Foodbar it would make sense to offer benefits on top of the ability to earn points. For example it could also offer a hot drinks loyalty scheme like many coffee shops offer, swipe your card each time and then get a free drink after you've made a certain number of purchases. The data could also be used to offer suitable surprise and delight offers (e.g. if someone regularly buys Hop on Board it would make a good surprise and delight reward) or an offer to tempt customers to use the Foodbar if they don't normally. It could also be possible to offer bonus points on particular items if it's needed to promote a particular range.
Verdict: there's probably little to gain by enabling the EPOS to accept Nectar unless the new ones that have been rolled out recently have already been specified to support it. If it is supported it would be good to build in additional benefits on top of the ability to earn base points. From a business point of view it would have to be decided whether they'd have any benefit in linking a customers Foodbar purchases with their online purchasing data.
Making it easier
The process of earning points online isn't too difficult, you have to enter your card number once and it is remembered by the website, your points automatically post when you make an eligible booking with your online account. The main drawback is FirstGroup websites (e.g. GWR) give Nectar points on all travel whereas LNER only gives points on their own so this isn't an incentive for those who already book everything on a FirstGroup website to switch to LNER. The main incentive for booking direct is the seat selector (and free WiFi if in standard class).
The main challenge is spending the points. Currently you have to redeem points for an LNER eVoucher that then requires you to enter the number manually on the LNER website. It would be better to have some integration with Nectar where if you click "redeem my points" on the LNER website it'd redirect you to the Nectar page to authenticate and verify how many points you want to spend and then will redirect you to the LNER website when complete (similar process to how PayPal works).
The current Nectar integration with ticket machines is very poor. It allows you to enter your Nectar card number on the payment screen even if none of your tickets are eligible and it also only lets you enter the number manually rather than swiping the card. The first obvious usability improvement would be to support swiping the card in the card reader.
But more could be done to make things easier for passengers. For example a passengers online account could list preferences such as the railcards that they hold, their season ticket photocard number and even whether they prefer first or standard class travel. Currently if you buy a season ticket from the machine it has to ask for all details including the photocard number. If these details were stored online a passenger buying their season ticket could insert their Nectar card and have their photocard details filled in automatically, if they are renewing an existing season ticket that was purchased online or from the machines it could also offer to renew without having to enter all the other details. For non-season ticket purchases it could use the railcard data in the profile to offer tickets with the appropriate discount applied. This would make purchasing quicker for passengers and would provide a reason for using the card in the machines. Passengers could also then also save their favourite journeys so if they enter their Nectar card first it can bring up more appropriate one click suggestions than the defaults normally displayed.
As the Nectar account would then be used to link the ticket machine purchases with the online account it would mean it's easier for passengers to keep track of their bookings and also be able to requests refunds or delay repay easier.
As mentioned above FirstGroup gives points on all rail travel, so those who are committed to Nectar (if they exist) will likely be using one of these sites for all their rail travel. It could make sense for LNER to match this if their contract allows it, they could then offer a slight bonus (e.g. 3 points per pound) for journeys on LNER services. This would then put it slightly ahead of FirstGroup if you want to earn points on rail travel on multiple operators.
LNER gets 5% commission for tickets on other operators booked through their site. Offering Nectar points on rail travel would mean that at least 1% of the total fare would go to Nectar, also some of the costs go towards credit card processing too so LNER only makes a relatively small amount of commission on third party bookings. The additional sales data may still be useful in order to build a bigger picture of the customer.
Although we're not big fans of Nectar it's sometimes a good idea to take a look at ideas which can make the most of what we have. Obviously we would prefer to have a loyalty scheme tailored to rail travel but also consider some options that can build on top of Nectar should that not be possible.
While LNER remains a Nectar partner they also should use it as a way to attract Nectar users who previously haven't thought about using LNER. Allowing passengers to redeem Nectar points in the sale is one way to do this.
Finally the Nectar card could be used to automate some processes (such as season ticket and railcard details) when using ticket machines if the card is linked to your online account