Generous to a fault

Finding the Nectar points sweet spot

Using test and learn in targeted campaigns to optimise customer engagement and Return on Investment (ROI).

We know that customers love receiving targeted Nectar points offers and the higher the percentage discount is, the more likely they are to engage with a brand and redeem the offer. So, we asked the question “What is the optimum discount to offer to achieve high customer engagement (redemptions), whilst also returning a positive Sales to Cost Ratio (SCR)”. And “are there other data points we can use to strengthen the results?”. In this case study we’ll take a look at different campaign tests we ran and the results.

Media Planning

The Challenge

Finding the right balance will be different for each brand. Influencing factors include offer product Retail Sales Price (RSP), shopper groups targeted, seasonality and other media activity.

To find the right balance for your brand/s we recommend incorporating test and learn into your targeted campaigns and using the results to influence future strategy. Our robust evaluation methodology, using control groups, allows us to measure uplift across several metrics versus customers that didn’t receive a targeted offer.

Recent results

As part of annual planning in 2022/3 with a client in the Household, Beauty & Petcare space we had the opportunity to incorporate test and learn into their overall customer strategy for Coupon at Till. The client’s objective was to maximise engagement and return a positive SCR for each campaign. We wanted to understand what worked best, on a campaign-by-campaign basis, for their various brands and to use this knowledge to inform future waves of activity.

The tests

We ran a series of tests across different customer groups and brands in their portfolio. Our tests aimed to understand the relationship between offer levels, redemption rates, previous coupon redeemers and SCR. Key results and how we’re using them for future campaigns are given below.

Coupon redeemers test

“If shoppers have redeemed any coupons in Sainsbury’s in the last 52 weeks, how much more likely are they to redeem a coupon for this campaign vs non-redeemers?”

We tested this on existing buyers of the brand by splitting the group into redeemers and non-redeemers. There was a big difference! We saw a 211% increase in redemptions (26% vs 8.4%).

Key learning: Wherever possible we now prioritise past coupon redeemers for this brand, and other brands in the portfolio, vs non-coupon redeemers.

Bonus Nectar points offer tests

“We know that shoppers love targeted offers and are more likely to redeem a coupon the higher the offer is. What is the optimum offer level to gain a high level of shopper engagement whilst achieving strong returns for the brand?”

We tested this on both brand buyers and competitor customers. Both groups were split into two and given competing offers of 25% off and 40% off the offer product. Unsurprisingly for both groups, the higher offer achieved a higher redemption rate, with an uplift of between 14% (Brand) and 19% (Competitor). However, the higher offers achieved a slightly lower SCR, with a decrease of between 3% (Brand) and 6% (Competitor). SCRs for all groups were positive and ranged between 1.19 and 2.01.

Key learning: This showed us that the sweet spot for offer levels for this brand (if a key objective is strong SCR) is higher than 25% but less than 40%. Further offer tests of 30% and 35% are now being carried out to optimise any future campaigns for this brand / similar brands in the portfolio.

Summary

These tests were set up to measure the short-term results of campaigns on engagement and uplift and had the key objective in mind of returning a positive SCR. Other objectives (such as achieving longer term changes in customer behaviour and increase in Lifetime Value) may require a different approach. The Nectar360 team are always here to discuss!